perusing dockets

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JimHow
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Re: perusing dockets

Post by JimHow »

If I were John Fox's lawyer I would be saying:
"John. Every action you take from this point forward should be focused on preventing this from transforming from a civil matter into a criminal matter. Selling is a good first start."
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AKR
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Re: perusing dockets

Post by AKR »

He's going to get lien's slapped on that building, once litigants figure out what is going on.

At least one of them has gotten a prejudgment attachment.

If Ron Wallace was able to extract 11mm from oenophiles in his fairly short lived local scam, just think where PC will end up when all is said and done...

I bet they've also had ~1% per year shrinkage in their pre orders liabilities as customers literally die, and widows/spouses/estates have no idea that there are a few thousand bucks of PA waiting there. Unlike K&L they don't mail you anything when stuff comes in.

I'm still cleaning stuff from family estates from decades ago.

====
I agree with JimHow on the sentiment above, but its probably too late. Maybe his staff can save their bacon.
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Re: perusing dockets

Post by JimHow »

I can't believe that the California Attorney General's office and the California State Police (white collar crime unit?) are not obtaining court approval for a late night raid of these premises, securing physical assets, getting a trustee appointed, obtaining ex parte levies on bank accounts, etc., etc. I just don't get it. I must be missing something here. It seems Rare LLC did a small fraction of what PC has done. Are the victims of this criminal fraud just not filing complaints with law enforcement? If not, why are they -- or their lawyers -- not doing so?
Country lawyer from Maine scratching his head here.
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JimHow
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Re: perusing dockets

Post by JimHow »

I'd be curious to hear what HM$ thinks about this situation.
He's a business lawyer from Texas, another crazy state, like Kalifornia.
It is fascinating to me because, based on my experience, in a state like Maine -- and Colorado, apparently, and many others, I am certain -- there would be arrests and criminal charges.
But I'm just a country lawyer from Maine, and I'm sure I must be missing something completely obvious here.
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Re: perusing dockets

Post by stefan »

Jim, I asked you earlier about fraud, and you said that damage has to be proved. Is damaged proved? Fox has not run off with funds AFAIK. If they have options for pre arrivals they sell, are they guilty of fraud? Their web site says that they have purchased the wines. Maybe they even have invoices; I don't know. It is clear that they have sold pre arrival without having paid for the wines, but you hedged when I asked whether they had committed fraud. And if not fraud, what laws have they broken?

If PC is just a business having problems, why would the cops get involved?

I am in deeply into PC pre arrivals ($18-20K). I can try to force the issue by demanding refunds, but that is unlikely to be successful. I will try that in the near future, months in advance of trial dates, if the container that supposedly comes in in a few weeks does not arrive or does not contain many of my wines, but it seems not very likely that PC will actually cut me a check. Good CA lawyers are too expensive for me to hire to sue PC given my (small by their standards) potential loss, and what PC has in stock is not very interesting for me. I wouldn't mind trading in some of my purchases for store credit, but that lowers my priority for recovery if PC goes bankrupt before I cash in. Moreover, what if I choose the wrong orders to cancel; i.e., what if I cancel wine that actually does come in? PC is still receiving shipments, after all, even if their suppliers refuse to release wines until PC's checks have cleared.
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JimHow
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Re: perusing dockets

Post by JimHow »

Bill:
My practice is currently about 90% criminal defense and 10% bankruptcy.
Thus, I do not do civil litigation.
So, I am about the last person to ask when it comes to civil claims.
However, I've done a little bit of civil litigation in the past.
And I have the following observations, which could be 100% wrong.
In fact, based on the actions of the California lawyers involved in the PC case(s), I'm assuming I am indeed wrong.
Nonetheless, here are my observations:
Perhaps foremost, and from what I can see, this is incorporated in the complaints against John Fox, a business like PC can't just accept such substantial funds based on such grossly material misrepresentations. This is what I have been complaining about for years about PC. They can't say: We will sell you 2010 Margaux for $425 when in fact they have no prospects whatsoever of acquiring that wine at that price but they collect hundreds of thousands to help finance the construction of their "award-winning" building in Oakland.
That's what we call fraud.
Judging from this most recent story posted by David, that is in fact what has happened. They collected money from customers, in part on their 30+ year history of success, without any realistic likelihood of getting 2010 Margaux at $425 (or whatever). This money should have been kept in escrow -- and the funds not spent -- until the wines were purchased. Obviously, by his own words in that article posted by David, that was not done. (As a criminal defense attorney, I would tell John Fox to shut his freaking mouth. In my opinion, in that article, he has admitted to massive criminal theft.)
So…
What do you do if you have given $20,000 of your hard-earned dollars to John Fox.
I would drive from College Station to Dallas, Texas, to the law offices of Spector & Johnson.
I would convince attorney HM$ to file suit in Texas. I would pay him a retainer up front and work out a contingent fee agreement with him whereby he would receive 33% or some other percentage of whatever he collects from PC. )(I think there is a very strong likelihood that your $18-20k is in serious jeopardy, Bill, and I urge you to consult counsel as soon as possible. Don't put your head in the sand about this based on your past positive experiences with PC. That is a big part of the problem here. They have been in business for so long. They have worked the pyramid scheme so successfully. People don't want to believe the extent of the problem, due to past positive experiences with PC. Now that they are selling, Bill, this is an enormous red flag. It is time to get out. In fact, it may already be too late.)
Here is where my lack of civil litigation experience gets me confused, and where I am speaking out of my ass.
I do not understand why these lawsuits against PC all have to occur in CA. I do not understand why you have hire a CA lawyer to sue PC in CA.
If PC is engaging in interstate commerce in TX and are shipping wines to TX, I do not understand why TX would not have jurisdiction for your suit, and why PC would not therefore have to defend your suit by hiring a TX lawyer.
If I were your TX lawyer, I would file an ex part motion for trustee process. This would require a showing of a "substantial likelihood of success" against PC. A TX judge, without any knowledge by PC, would grant you the right to levy John Fox's bank accounts, and file liens against his real and personal property, up to the amount of your claim.
Obviously, that would give you substantial leverage and priority as you proceed forward and attempt to prove your claim. You would have to file these liens and levies as "foreign judgments" in CA. This would provide you with some protection, although, at this point, if HK collectors have million dollar claims against PC, it may be too late for your $20k.
If you were living in Maine I would do all of this in Maine.
But, again, I just do criminal law. Civil litigation is not my area of expertise. But I do not believe these cases all have to be brought in CA. I believe you can file in TX. Did the Koch Bros file all their claims in CO?
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Re: perusing dockets

Post by AKR »

IANAL but I once drank wine with someone who was, and my understanding of getting these prejudgement liens is that it works best if there was a formal contract.

there's a summary here, caveated with all the warnings about google / jailhouse lawyering

http://www.credittoday.net/public/2443.cfm

The problem is that getting a determination of what is "too long" for futures is kind of imprecise. So some aggrieved persons are heading to court for that determination.

Dr. Wong's lawyer was astute enough to realize that having a contract drawn up of what was due, and when, would serve them well over the longer term, even if it cost $500-1000 in fees to draw it up. That let them grab, by my count, at least $10k so far. Or at least the sheriff has that, and when they get a judgment, or a bankruptcy filing, at least the legals fees will be covered.

But without that, people are in a more vexing spot.

A few months ago there was 800 wines in stock, mostly a lousy selection, with lousy prices. It's far worse today, maybe 500 wines.

But I don't think the situation gets better.

My counsel is the same as when I first realized somewhere chewing through the dockets, that I should invert my thinking on this.

Instead of coming up with tortuous contrived explanations for the facts, why not just hypothesize the simple, but uncomfortable: PC has been effectively borrowing from lenders operating without any metrics, credit reports, transparency, or surveillance. So the only way they ever realize something is amiss, is when the obligor is not performing.

I think they've been insolvent for a decade personally. We'll see when this all shakes out.

===========

California is releasing criminals left and right from its overcrowded corrections system.

It's hard to see where there is the will to investigate, prosecute and lockup this kind of criminal, since their headlines aren't very gory.

Perhaps some of the irate Chinese buyers will have their own methods of encouraging payment.
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Re: perusing dockets

Post by DavidG »

Bill, this is very disconcerting. From what I can tell, in case of bankruptcy, those who sue are treated preferentially to those who have unfilled orders. I'm sure there is more to it than I understand. For example, is filing suit sufficient or do you have to have won a judgment?

I would at least look into this further by talking to an attorney to explore the cost of filing a suit and how that would affect your standing should PC file for bankruptcy. You might be able to demand that they deliver either the wine or the money, which would eliminate your concerns about which orders to cancel and leave open the possibility that your ship might still come in.

Jim has given you good advice to start with Howard.
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stefan
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Re: perusing dockets

Post by stefan »

Thanks for the advice and the legal briefing.
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AKR
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Re: perusing dockets

Post by AKR »

I wonder if the building is even in the business name, or is in some other entities name.

Maybe that's what has stopped people from attaching that.

For some reason I thought the judgments had to survive 90 days without a BK filing to get priority.

or maybe i'm thinking of attachments.

Not sure how much meat is on the carcass anyways.

I have a hard time believing anyone has been shipping to them in the last year or two without money up front.

So I think what they show on their website is what they have.
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Re: perusing dockets

Post by stefan »

>>
I have a hard time believing anyone has been shipping to them in the last year or two without money up front.
>>

Me, too. I read somewhere that shipping of at least one container was held up until PC paid in cash.
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Re: perusing dockets

Post by AKR »

I took a skim through their in stock Rhone and Bdx.

These are ok deals given the situation I think ... but they will not solve peoples entire issue

00 Haut Bages Liberal $48
96 Lynch Moussas $30
10 Le Crock $26
86 Nairac $30
10 Durand St Joseph $28
10 Clos St Jean CNDP $45

Not much of each.

I do not recall seeing that Lynch Moussas the last time I skimmed their ever shrinking in stock list.

Its quoted for less than I paid on release, and its a solid Casteja styled Pauillac.

(Trottvielle and Batailley are his other estates, and are cut from the same cloth)
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Re: perusing dockets

Post by JimHow »

Just checked their site for the first time in a long time.

I think I'll order a couple of their 2010 Lafleur 6 liter bottles, on "pre arrival," at the bargain price of $7,250.00 each.

And throw in a 3L of LMHB, "pre-arrival," for $3,615.00 while you're at it.

<rolls eyes>
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DavidG
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Re: perusing dockets

Post by DavidG »

Today's offer of 2004 Pol Roger Winston Churchill pre-arrivals at $140 would be irresistible if it weren't for the history. It feels like the discounts just keep getting bigger to keep the cash coming in. The increasing frequency and magnitude of these too-good-to-be-true deals suggests increasing desperation on PC's part.
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Re: perusing dockets

Post by Blanquito »

DavidG wrote:Today's offer of 2004 Pol Roger Winston Churchill pre-arrivals at $140 would be irresistible if it weren't for the history. It feels like the discounts just keep getting bigger to keep the cash coming in. The increasing frequency and magnitude of these too-good-to-be-true deals suggests increasing desperation on PC's part.
I felt the same way about the vintage Pol Roger blanc de blanc in these offers.
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Re: perusing dockets

Post by DavidG »

Yes, Patrick, the blanc de blancs was another siren song. Chardonnay in 2004 was apparently a star in Champagne, and Pol Roger does it beautifully.
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Re: perusing dockets

Post by DavidG »

Things are looking worse over at the Wine Berserker's PC thread. Stories of more lawsuits. It's been 10 days since the last special pricing offer has been emailed. They've stopped allowing people to convert undelivered pre-arrivals to store credit for in-stock wines. PC is saying it will take 6 weeks to issue refund checks. They still say that wine will be arriving. But the buzzards are circling over on WB, with predictions that they'll file for bankruptcy by January 4. I hate to see this happening. I never bought from Carolina Wine Company or Rare LLC and didn't know anyone who was burned when they went under. But this one hits closer to home.
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Re: perusing dockets

Post by Blanquito »

DavidG wrote:It's been 10 days since the last special pricing offer has been emailed.
If the email sales have really dried up, that would be the most damning sign that the end is truly nigh. No more emails would mean no more prearrivals, which for PC would mean no more revenue stream (no matter how ill-gotten). And the end of email sales blasts smells like some higher authority has put the brakes on and/or John Fox has finally accepted the realities of the situation.

Even if things aren't as bad as they look, their ability to generate new sales at this point must have taken a real beating or worse. Hard to see how they avoid bankruptcy without a serious infusion of new capital, but given the damage to the brand, who would want in at this point?

And it is sad, as much as I can get sad over a retailer.
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DavidG
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Re: perusing dockets

Post by DavidG »

I'm not sad for the retailer. I'm sad for the customers who will be left holding the bag.
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Re: perusing dockets

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DavidG wrote:I'm not sad for the retailer. I'm sad for the customers who will be left holding the bag.
Good point, I wonder how that would all shake out if PC declares bankruptcy.
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Re: perusing dockets

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I predict they will survive. If they have survived this far despite all these judgments, million dollar suits, etc., there must be something about their equity situation that we're not seeing. Perhaps they have very valuable debt free real estate? There must be a plan in there somewhere. Although I haven't read what's going on at the other wine website.
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Re: perusing dockets

Post by JCNorthway »

Would like to hope they survive - at least until I could get my one lonely case of 2010 GPL!
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Re: perusing dockets

Post by AKR »

Their RE is mortgaged to the hilt, with other liens on top for unpaid property taxes etc.

It's not in their business name anyways, the store is titled under 1011 University LLC.

We'll see if that matters if there has been the level of commingling of personal/business monies alleged in some lawsuits.

The guy who wrote the last (3rd) mtg loan in July 2015 is a local pawnshop/hard money lender, Saul Gevertz.

I doubt there are unencumbered assets of size.

It's possible that someone might have lent against whatever inventory/paid for undelivered stuff that is there, and gotten a UCC recording of that.

Seem to remember that CWC pulled that trick!

==============

It does look like they are gearing up for a BK filing by stockpiling as much cash as they can, with the eventual outcome of some kind of liquidation.

My hunch is that it does NOT end there, given the scope of the fraud involved.
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Re: perusing dockets

Post by JimHow »

Wow. Just shaking my head here.
The bigger the lie….
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hm$
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Re: perusing dockets

Post by hm$ »

Sorry, I am just seeing this.

I agree with the BD that suit in Texas (establishing jurisdiction over PC here) is not an issue, but I don't see how a Texas court would have the ability to place a pre-judgment lien on physical property located outside our state. If we knew where they banked, and that bank has a branch in Texas, then we probably have something.

With respect to a bankruptcy, any relief you get would have to be in effect for 90 days to beat out a preference challenge (assuming of course, PC files for bankruptcy).

And I'd want my retainer in old Bordeaux, not a damn contingency fee.

hm$
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Re: perusing dockets

Post by JonB »

I am out. PC staff readily agreed to cancel orders and start the process for a check refund (which without a doubt I'll never see), and AMEX started the process for a refund/chargeback (they credit your card account, and contact the merchant, but since the wine was not delivered, and PC agreed to a refund.....PC has nothing to contest).
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AKR
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Re: perusing dockets

Post by AKR »

JonB wrote:I am out. PC staff readily agreed to cancel orders and start the process for a check refund (which without a doubt I'll never see), and AMEX started the process for a refund/chargeback (they credit your card account, and contact the merchant, but since the wine was not delivered, and PC agreed to a refund.....PC has nothing to contest).
It's possible that the card co. will agree to a credit today for your chargeback, and then reverse it some months later after their investigation. So keep good records and escalate if you have to.

The advantage of pushing the loss on to a large financial institution is that they will have the clout to get law enforcement involved, eventually. Even if that will take a long time.* I once worked at a financial firm that was bilked out of 600k by an employee in our 300 person division. The firm wasn't happy with the meager restitution offered, and got the US attorney involved. It took 3 trials but they got their conviction ... and a point was made to employees. The process took a long time, years upon years.

* Ron Wallace timeline - his frauds were conducted from 99-03. His firm was put into administration by 04. By 07 convictions were obtained. By 11 it was apparent no restitution was ever going to be made, and there were other parole violations. So by 12, the hard time started. Release dates are probably sometime in 17. Some (uninvolved) LE people have told me that if this ishandled at federal level it will move slowly, like the pace above. Local authorities might move faster, but the victims are scattered nationally/internationally, and local officials may have different priorities than white collar fraud.
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Re: perusing dockets

Post by JonB »

Yes, this is good advise, thanks.

I learned from the Sam's case......I kept a log of PC phone calls where they stated expected arrival dates, and saved emails, and printed off the "pre-arrivals" policy on PC's website, and provided all the documentation to AMEX.....just to support that a) the merchandise wasn't delivered; b) I couldn't request a credit 60 days after the charge because the product was not supposed to be delivered until later; c) when it became clear they were just giving the run around, I requested a refund, the merchant agreed to the order cancellation, and so requested a credit (chargeback).

It is something like the Fair Credit Billing Act of 1975 that provides a basis for credits where they are within 100 miles, purchases greater than $50, and within 60 days of charge.....so anything beyond that is purely good will between the credit card company and the consumer.
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Re: perusing dockets

Post by DavidG »

I posted this in a separate thread so it would be more easily searchable than "perusing dockets."

Premier Cru filed for bankruptcy yesterday afternoon. A few details thanks to Don Cornwell (more details available on the Wine Berserkers board):

They filed Chapter 7 (liquidation), not Chapter 11 (reorganization).

They list estimated assets of $7 million and liabilities of $70,285,181.

Secured claims are $936,033.
Unsecured priority claims are $175,000.
Unsecured claims are $69,174,148.

Estimated assets are mostly inventory of $6,800,000, $6.5 million of which is listed as being "on site" and $300,000 which is held by other parties.
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