The ‘Madoff of wine’ stole millions for Ferraris and dates

[Published October 29th, 2016]

By Michael Kaplan

Photo by Shutterstock

John Fox was irresistible.

Collectors of high-end wine would feel a twinge of excitement when his name materialized in their e-mail inboxes, offering vintages that made oenophiles salivate. Through his Berkeley, Calif.-based Premier Cru, the dealer sold rare wines at crazy discounts — like the $2,600 bottle of Petrus that typically went for $4,000 at auction.

Of course, if a deal seems too good to be true, it probably is.

It was revealed in August that Fox ran a $45 million Ponzi scheme for 23 years, making him the Bernie Madoff of wine. Clients purchased futures — essentially, wine before it’s bottled — under the presumption that Premier Cru would deliver in six months to two years. By buying early, they received reduced prices of 10 percent to 30 percent.

In reality, the offered wine had never been purchased. The incoming funds were used to fill orders of customers who had already been waiting years for their wine.

“If a guy sent $1 million,” said Daniel Posner, owner of Grapes the Wine Company in White Plains, “Fox would ship wine to 20 of his $50,000 guys.”

But where did the rest of the money go? A large chunk was diverted to Fox-controlled bank accounts opened under phony names. The married merchant bought himself a $165,000 Ferrari and blew $900,000 of client cash on women he met via the Internet.

Around 9,000 creditors around the world got caught in Fox’s web of lies and luxury. Former Credit Suisse chief Adebayo Ogunlesi was robbed of $479,000. Hong Kong financier Lawrence Wai-Man Hui fronted Fox nearly $1 million from 2011 until 2015 — with just one bottle to show for his cash bleed.

Among the local victims is Upper East Side resident George Zicarelli, a retired video editor who worked for years at “60 Minutes.” The 75-year-old and his wife, Ann, lost some $250,000 — nearly all of it leveraged on credit cards — to Premier Cru.

Zicarelli got into collectible wine in 1984, while strolling past the Park Avenue wine retailer Sherry-Lehmann and seeing a flier for wine futures. He spent $600 for a case of 1982 Mouton Rothschild, took delivery two years later and sold the wine for $1,000. A few more of these investments followed before he saw a Premier Cru ad in a 1992 issue of Wine Spectator.

The married merchant bought himself a $165,000 Ferrari and blew $900,000 of client cash on women he met via the Internet.

“I bought two cases of 1990 Romanée-Conti for $18,000. That was a good price,” said Zicarelli, recalling that other merchants charged well over $20,000 for the same wine. “[Fox] delivered right away.”

Zicarelli and Fox hit it off — personally, enjoying dinners at Peter Luger, and professionally.

“A friend at Sherry-Lehmann would sell me stuff that John Fox couldn’t get,” said Zicarelli. “I would flip them to John and make a profit, maybe a couple hundred dollars at a time. John did right by me and I kept going: buying wine, selling wine, flipping wine, drinking wine.”

It turned into a part-time job for Zicarelli — albeit one that required financial acrobatics.

“I was in debt up to my ass,” he said. “I had maybe $600,000 on the credit cards.” But he always figured that his good friend Fox would come through with fabulous deals.

“He supposedly worked the gray markets, buying from restaurants,” said Zicarelli. “Around [the economic collapse of] 2008, John got slower with the deliveries. But he trusted me and I trusted him.”

In truth, Fox’s scheme was hit hard by the financial crisis, which slowed sales, as well as a few sour grape-growing seasons.

“When 2011, 2012 and 2013 were undesirable vintages, nobody was buying the wines for future delivery,” said Zicarelli, echoing an opinion expressed by Posner. “As a result, he didn’t have the money to get the 2009s and 2010s that he owed people.

“It got really bad in 2013,” Zicarelli added. “He kept giving me excuses, and he had $200,000 of my money.”

George Zicarelli lost $250,000 to Fox.

Annie Wermiel

Even for those willing to accept his stall tactics — “Fox said that he needed to wait until all the other retailers received their allocations of wine before he could ship,” said Posner, “which doesn’t make sense” — by 2015 signs of doom became difficult to ignore. Collectors commiserated about him on wine Web sites. Fox was so desperate for cash, he offered prized bottles at frighteningly deep discounts — such as 1996 Lafite Rothschild at $640 while it sold at auction for more than $1,000 — presumably with no intention of making good on orders.

By January 2016, Fox had stopped taking Zicarelli’s calls. His old pal resorted to voice mail: “I told him that he ruined my life.”

To cover his credit card bills, Zicarelli said he “took $150,000 out of my 401(k), sold some wine and used $50,000 from a cashed-in life insurance policy.” The retiree, who lives in a rent-controlled apartment, said, “I still owe about $12,000.”

Fox, who declined to comment for this story, filed for personal and corporate bankruptcy in January, claiming $70 million in liabilities. Bankruptcy court officials noticed irregularities in the records of Premier Cru — such as $45 million worth of wine orders but no paper trail leading to the bottles themselves — and notified the FBI. In August, Fox pleaded guilty to one count of wire fraud and agreed to pay restitution, as he can, to clients. The plea deal will recommend 6 ¹/₂ years in prison at his sentencing Dec. 14.

A New York area Wall Streeter who got dinged by Fox to the tune of $30,000 admits he should’ve known better but greed got the best of him.

“I’m a smart guy and control business risk,” said the investment professional who asked for anonymity. “I was extremely skeptical but the prices were too good for me to not buy in. It was a classic Ponzi scheme that hit all the triggers: Value, wine, the collector mentality. I’m bummed about losing my money but also about not getting my wine.”