Banks Pleads Guilty to Fraud, Steps Down at Terroir Capital

FILED APRIL 3, 2017

This morning Charles Banks, founder of Terroir Capital, pled guilty to wire fraud in federal court in San Antonio. Your editor was on-site to provide the details.

Charles did not file your standard plea agreement, rather he went with what's called a factual basis, meaning both he and the US government provided their side of the facts in the case that will be used to determine sentencing. The key difference between filing a factual basis versus a plea agreement is that Charles still has the right to appeal.

BACKGROUND. You will recall, Charles Banks was indicted on four counts of wire fraud as a result of his business with former NBA player Tim Duncan, who sat in on today's proceedings [see WSD 09-12-2016]. Tim, who remains an investor with Terroir Capital, sued Charles for allegedly urging him to invest in multiple hotels, wineries, and most importantly a company called Gameday Entertainment, without making him aware of Charles' own interests in those businesses.

Charles filed a motion to dismiss three of the four counts on grounds that the Western District of Texas lacks jurisdiction [see WSD 01-04-2017]. He pled guilty only to the second count of wire fraud, "specifically the sending of two signed signature pages relating to a $6,000,000 loan guarantee and a subordination agreement from San Antonio, Texas to California," per court documents.

As for the other three counts of wire fraud, they will most likely be dismissed. Though, the government hasn't ruled out further prosecution of those counts. The sentencing will take place June 27.

EFFECT ON TERROIR CAPITAL. Our readers likely know Charles' name from his wine industry dealings as the co-founder of Terroir Capital. The Terroir portfolio includes brands such as: Wind Gap, Leviathan, Agharta, Whetstone Wine Cellars, Cultivate Wines, Trinity Hill, Mulderbosch Vineyards, Marvelous, Fable Mountain Vineyards, Qupe, and Mayacamas Vineyards and Estate.

SF Chronicle is reporting Charles has stepped away from the "day to day management" at Terroir, and coo Kevin McGee has been promoted to ceo.

Meanwhile, Charles personally owns half of Mayacamas Vineyards with the Schottenstein family and all of Cultivate Wines. Because convicted felons can't manage wineries, he may have to put his wine interests into a blind trust or sell them. Charles' attorney tells SF Chronicle that Charles and the Schottenstein family are solving their dispute over Mayacamas in the Delaware court system [see WSD 03-29-2017]. Recall, Charles wants to sell his portion.

We'll have more as the story continues.

PROXIMO MOVES PORTFOLIO TO RNDC, SGWS IN EIGHT STATES

Proximo Spirits has made some changes to its distribution footprint in the US, moving from Breakthru Beverage to Republic National Distributing Co. and Southern Glazer's Wine & Spirits in a total of eight markets.

RNDC won the portfolio in six new markets, including Florida, Colorado, Maryland, South Carolina, Virginia and Washington, DC, effective May 1. And SGWS picked up the business in Pennsylvania and Delaware.

LOST SPIRITS WINS PATENTS FOR RAPID-AGING TECHNOLOGY

California's Lost Spirits Technology has received two patents on its rapid-aging spirits technology. Lost Spirits' unique maturation method involves "contacting wood with an unmatured distilled spirit under heated conditions and contacting the resulting heat-treated spirit with actinic light," per the patent application.

Lost's portfolio of products made with this technology include: Lost Spirits rum and Abomination whiskey.

The company's goal is to create a "new spirits growth platform" through the launch of matured spirits that are "impossible to produce via conventional spirits-making techniques." And the patents will allow Lost Spirits Distillery to commercialize, protect and further develop its technology, per a release.

Until tomorrow,
Your Editors

Emily Pennington - WSD@winespiritsdaily.com
Sarah Barrett - sarah@winespiritsdaily.com

"The best thing one can do when it's raining is to let it rain." -- Henry Wadsworth Longfellow

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