Charles Banks Sentenced to Four Years, Terroir Capital Fate Unknown

FILED JUNE 28, 2017

US District Judge Fred Biery has handed down a four-year prison sentence to Charles Banks, founder of Terroir Capital, for swindling millions out of NBA legend Tim Duncan. Charles has also been ordered to pay $7.5 million in restitution to Tim.

BACKGROUND. Charles Banks was charged with four counts of wire fraud as a result of his business with former NBA player Tim Duncan [see WSD 09-12-2016]. Tim 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. The Feds began their investigation of Charles shortly after Tim filed suit, and Charles eventually pled guilty to two of the four counts of wire fraud in April [see WSD 04-03-2017].

APPEALING TO THE JUDGE. WSD was on the ground in San Antonio for Day 1 of the sentencing, and because Charles had already pled guilty to wire fraud, we anticipated a swift decision from Judge Biery. However, it turned out to be a long, drawn-out process that took all day yesterday and did not wrap up until this afternoon.

That's because a federal fraud charge can carry no jail time or it can put a person in the clink for 20 years, so each party spent ample time trying to sway the judge to either soften or harden the sentence being dealt to Charles.

From our vantage point, it looked like Judge Biery had his mind made up from the get-go. He seemed agitated throughout the duration of the sentencing, looking at the clock, sinking back in his chair - closing his eyes, and really just carrying an overall expression of "let's hurry up and get this thing over with."

The defense team's main strategy was to take the blame from Charles and pile it on Gameday chief Jeff Neal, who the judge reminded the courtroom is not on trial. But Charles took the stand today telling Tim: "I'm sorry and I accept responsibility for what I've done," according to local reports.

TERROIR CAPITAL FATE IS UNKNOWN. What all this means for the future of Charles' Terroir Capital company remains to be seen.

One of the witnesses called to the stand yesterday implied that Terroir Capital, the parent company of Agharta, Leviathan, Fable Mountain Vineyards, MulderBosch and Qupe, among others, is sunk.

Wendy Kowalik, owner of Ball City Consulting and financial consultant to Tim Duncan, said they've had "significant issues" in receiving paperwork from Terroir. It is her impression that even if Terroir is liquidated, they won't be seeing any money out of them, claiming most of Terroir's land is already "fully collateralized." The government repeatedly questioned the legitimacy of Terroir Cap with Wendy up on the stand alleging the number of employees at the company is unknown, and drawing attention to the company's expenses.

The government and Wendy painted such a grim picture of Terroir, that the defense called Terroir cfo Kyle Hill to the stand (someone they had no intention of using as a witness) to try and refute the allegations.

Kyle said the winery was not "some big ponzi scheme" like the government claimed, and added that they've actually received high valuations for the company. Still, it ended up being a he said/she said type situation and the health of the company remains unclear.

We'll have more as this story develops.

LIDL STORES IN NORTH CAROLINA OUT FOR BLOOD

As predicted, the opening of the first US locations from German grocery giant Lidl, has set off a price war in those locations, according to Bloomberg.

Looking at just the microcosm of Winston-Salem, North Carolina, Bloomberg found: "At a Walmart Neighborhood Market in Greenville, South Carolina, 75-ounce bottles of Tide were going for $8.94. Across the street, at the new Lidl, shoppers could take home 100-ounce bottles of private label detergent for $5.49, and the same name-brand Tide unit cost $8.97."

Discount grocers currently have about 4% of the US grocery market. Taking into account both Lidl and its competitor Aldi's business model of low prices, low overhead, and heavy selection of private label offerings, global consulting firm Bain & Co. predicts the discount grocery segment will grow five times faster than conventional US grocers through 2020, reports Bloomberg.

"The smaller chains are going to struggle to meet the price competition," said Mikey Vu, a partner in Bain's retail practice. "Losing 3 percent of sales could put these guys out of business."

Most of the commentary in the article was about dry groceries, but did include a little nugget from a regular Winston-Salem shopper. "The prices on the wine weren't bad..but I didn't recognize the brands," said Woodrow Haney, a 72-year-old retired brewery worker.

WSD BRIEFS:

E&J GALLO ADDS TWO TO BAREFOOT REFRESH SPRITZER LINEUP. Moscato Spritzer and Rose Spritzer are the newest additions to the canned wine brand, alongside Summer Red and Crisp White. Just in time for the Fourth of July weekend, the new spritzers are now available nationwide for $10 per four-pack.

RODNEY STRONG WINE ESTATES NAMES NEW VP, OFF-PREM NATIONAL ACCOUNTS. Anthony Capobianco has been appointed to the newly created position of vp, off-premise national accounts, responsible for leading a team of national account directors to expand the winery's presence and share in the off-premise, per a release. Anthony brings extensive national account experience, previously working at Crossmark, MillerCoors and Treasury Wine Estates. "We have created this additional role and centralized our national account team under Anthony's leadership, demonstrating our commitment to this important segment of the business and supporting the significant investment of our distributors against our national account customer base," says president Carmen Castaldi.

BEAM SUNTORY COMPLETES HEADQUARTER RELOCATION. This week Beam Suntory completed the relocation of its global headquarters to downtown Chicago. The 110,000-square-foot building houses more than 500 Beam Suntory employees. "Importantly, cities are driving the growth of our industry and tomorrow's trends. This move puts our business squarely in the center of the action, closer to our customers and consumers in one of the world's greatest cities," says chief Matt Shattock.

Until tomorrow,
Your Editors

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

"Sometimes you make choices in life and sometimes choices make you." -- Gayle Forman

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