Securities Commissioner Travis J. Iles entered an emergency cease and desist order to stop an illegal international whiskey investment scheme. The order names Whiskey & Wealth Club Limited, a firm based in England and Scotland, as well as its principals and sales agents.
According to the order, Whiskey & Wealth Club is advertising the scheme through the internet – using a website, and promoting advertisements published in Reddit, and social media platforms such as Facebook, YouTube, Instagram, and LinkedIn. It is also allegedly using other media to bolster its legitimacy, including various press releases and articles published in Forbes, Bloomberg, Yahoo Finance and Fox Business News.
The pitch is simple: whiskey improves with age and investing in whiskey improves returns over time. Investors purchase casks of whiskey from foreign distilleries, store the whiskey in overseas facilities and then sell the whiskey for a profit. Whiskey & Wealth Club is touting the returns – claiming investors can earn between 12 and 20 percent annualized returns if investors hold their whiskey for at least three years and preferably five to 10 years. Whiskey & Wealth Club purportedly provides discounted brokerage services, permitting investors to liquidate their whiskey for a below-market fee.
Although Whiskey & Wealth Club is reportedly touting the profits it earns after three years or longer, there’s a problem: according to the order, Whiskey & Wealth Club has been incorporated for less than three years. Moreover, according to Companies House, the UK registrar for corporations, Whiskey & Wealth Club’s corporate accounts are also overdue.
“We’re alleging that Whiskey & Wealth Club is touting its success in profiting from sales of casks of whiskey that are at least three, five or ten years old,” said Joe Rotunda, TSSB Enforcement Director. “That’s misleading. The company has not even been incorporated for three years.”
The order also accuses Whiskey & Wealth Club of deceiving investors in other ways. For example, the order alleges Whiskey & Wealth Club is not disclosing material risks. It is also allegedly refusing to provide investors with a contract that identifies the terms of the investment until after they send money as a deposit. In other words, the order accuses Whiskey & Wealth Club of requiring investors to send money to the firm to secure an investment before they are provided with a contract that outlines the terms and conditions of the investment.
“You should never send your money to a promoter that withholds your contract,” said Commissioner Iles. “Investors deserve to know the terms of an investment and the obligations of a promoter before sending money, not after. The contract you receive could just be a thank you card.”
Whiskey & Wealth Club is not registered to offer securities in Texas, and its securities have not been registered or permitted for sale in Texas.
The order also names Scott Sciberras, a Co-Founder, Director and CEO, William Fielding, a Co-Founder, Director and COO, Alex Mook, a Wealth Manager, Richard Falconer, a Wealth Advisor and Benjamin Dunlop, a Senior Wealth Manager. They are not registered to offer securities in Texas.