(October 22, 2020) Securities Commissioner Travis J. Iles entered an Emergency Cease and Desist Order to shut down an illegal bait-and-switch scheme involving fine wines. The order names Charles Winn, LLC, a UK firm falsely claiming to be in the United States, and seven sales agents.
Charles Winn and the sales agents are accused of engaging in a telemarketing scheme to target investors in Texas and throughout the United States. According to the order, Charles Winn claims it will identify and purchase a portfolio of fine wines on behalf of investors, manage and store the wines, and then sell the wines for a profit. The promoters are allegedly telling potential investors the wine brokerage program returns an astounding 15 to 27 percent per year.
The order found the scheme is replete with fraud. According to the order, Charles Winn claims to be located in the United States but is actually operating out of the UK. Its sales agents are allegedly using aliases to conceal their identities, and they are receiving undisclosed commissions for their sales. Although the parties are touting lucrative profits, the order explains investors have been unable to readily liquidate their portfolios, as Charles Winn is requiring additional investments in the scheme before they can begin to sell the wine for a return.
“Fine wine may appreciate over time,” said Commissioner Iles, “but investments lose significant value when hidden commissions and bait-and-switch tactics cut into any purported profits. Promoters must always truthfully disclose all material information before investors commit to any security – and this requirement applies to traditional securities like stocks and mutual funds as well as novel products like portfolios of wine.”
According to the order, Charles Winn is also attempting to leverage concerns over recent changes in the markets due to COVID-19. For example, as part of its pitch, it is allegedly telling potential investors the “global financial crash” has “destroyed” most major asset classes, including equities and commodities. According to the order, Charles Winn is contrasting the performance of traditional investments with the gains attributable to fine wine as a means of encouraging investors to purchase investments in its fraudulent wine brokerage program.
The order names Charlie Jake Smith, Oscar Valentine, Christian Fonté aka Chris Font, Casey Farrell, Joe Adams, Helen Stanley and Michael Jones as sales agents. Charles Winn and these sales agents are not registered to sell securities in Texas, and the agency has not registered the wine brokerage investments.
“We believe Charles Winn and its unregistered sales agents are targeting investors in other states,” said Joe Rotunda, Texas Enforcement Director. “We urge investors to investigate before they invest, and to contact their local state securities regulator if they believe they are the victims of fraud.”
Texans can contact the Texas State Securities Board by email at firstname.lastname@example.org or by telephone at 512-305-8392. Investors in other states can locate their state securities regulators using this tool from the North American Securities Administrators Association (NASAA).