Basalt wine merchant Ronald Phillip Wallace, 47, has pleaded guilty to federal fraud charges in Los Angeles. Using his now bankrupt companies, Aspen Valley online and a mail order business called Rare LLC, he bilked customers of $13 million by selling "bogus" wines and wine futures. Some of the customers sound pretty savvy:
Paul and Maurice Marciano of Guess? clothing, Seattle Mariners pitcher Jamie Moyer, WB Network executive Garth Ancier, and "Rush Hour" producer Arthur Sarkissian.
According to the Government, it was a Ponzi or "borrow from Peter to pay Paul" kind of scheme:
Wallace allegedly used "early deposits" from new customers to pay off old ones, according to the plea agreement. Clients sent him money to purchase popular wines or wine futures, a long-established method used by the top wineries in the Bordeaux region of France to get the highest prices for their vintages. In most cases, officials said, Rare LLC never obtained or owned the wines.
While Wallace has agreed to pay restitution, he is facing up to 70 years in prison, and apparently didn't save much, since he qualified for the public defender's services. The chances of him being able to repay his victims probably is about as rare as the wine he promised them.