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Winery investor Charles Banks faces fraud fallout

Charles Banks, prolific winery investor and partial owner of Napa Valley’s Mayacamas Vineyards, has indicated that he will plead guilty to one count of federal wire fraud, raising more doubts about his ability to maintain his current involvement in wine. Reporting by Gretchen Greer, Chris Mercer and William Kelley.

It emerged last week that Charles Banks has decided to plead guilty to one count of wire fraud in a case to be heard in San Antonio, Texas, which carries a maximum prison sentence of 20 years. The case was set to be heard on 27 June, reported Napa Valley Register.

Banks was indicted in San Antonio on two counts of fraud in September 2016, after retired San Antonio Spur Tim Duncan claimed that Banks, his longtime financial adviser, had persuaded him to invest over $13 million in Gameday Entertainment, a sport merchandise company partially owned by Banks. Duncan said that he had yet to see any return on his investment.

Banks initially strongly denied any wrongdoing. However, last week, his lawyer indicated that he would plead guilty to one of the counts of fraud.

Banks’ case is not directly related to any of the wineries that he has invested in via Terroir Capital, a fund that he founded, but a guilty plea could have repercussions for his role in wine.

Terroir Capital announced that Banks would be ‘stepping back’ as CEO of its Terroir Life winery fund. Chief operating officer Kevin McGee has been promoted to chief executive officer.

The fund has said that it will continue operations as normal and is not involved in the Duncan case.

But it emerged that the group faces uncertainty in New Zealand, where it owns Trinity Hill winery in Hawke’s Bay.

New Zealand’s Overseas Investment Office (OIO) said that, in light of Banks’ guilty plea, it would re-consider whether he passed its ‘good character’ test for foreign investors.

It said, ‘The OIO has met with Terroir Winery Fund’s representatives to make it clear that in our view Mr Banks is unlikely to meet his on-going obligation to remain of good character. If Mr Banks is not of good character, then we will seek to have him removed as an individual with control of sensitive land in New Zealand.’

The OIO praised Terroir for voluntarily reporting the issue.

Banks became a key player in wine after purchasing a stake in Napa Valley’s Screaming Eagle in 2006. Upon leaving the cult winery in 2009, he founded Terroir Capital and has since invested in Wind Gap and Qupé wineries in California.

Banks is also believed to personally own half of Napa Valley’s historic Mayacamas Vineyards, which is part of a joint-venture with members of the Schottenstein family.

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