Owner of Berkeley wine store ordered to turn over computer in bankruptcy hearing

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Rachael Garner/File

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A judge issued a court order Thursday stipulating that the owner of a Berkeley wine store facing several lawsuits for fraud turn over a computer that could hold millions of dollars worth of banking information that his store received for pre-ordered wine that was never delivered.

Fox Ortega Enterprises Inc., the corporation that owns the wine store Premier Cru, filed for Chapter 7 bankruptcy Jan. 8. If the court approves the petition, the four pending lawsuits against the company will become void. The cases regarding the lawsuits are currently stalled until further notice is given concerning the bankruptcy.

According to the petition, Premier Cru has $7 million in assets and owes about $70 million in total liabilities to 9,200 entities and individuals. The individual unpaid claims range from a few hundred dollars to hundreds of thousands of dollars.

“That computer … should contain the best information to determine ‘where the money went’ (or didn’t go) with respect to tens of millions of dollars of future contracts,” reads the motion by trustee Mark Bostick — who is investigating possible abuse or unlawful conduct by bankruptcy petitioners — requesting that the computer be turned over.

If evidence of fraud is discovered during the bankruptcy investigation using potential information found on the computer, owner John Fox could lose corporate protections and become personally liable for the debts of his company. Fox could also face jail time, according to Tom Boothe, a lawyer and plaintiff in one of the lawsuits.

Boothe said he spent about $160,000 between 2009 and 2015 on wine futures, or preorders, that were never delivered. He noted that he bought the wines from Premier Cru because its prices were about 10 to 15 percent cheaper than other suppliers.

Another plaintiff, Lawrence Hui, purchased more than $980,000 worth of wine and wine futures between August 2011 and October 2014, with fewer than 100 bottles of the 1,591 bottles he ordered delivered, according to a complaint he filed in October.

Fox’s lawyer, Stephen Finestone, declined to comment on the client’s possession of a separate computer. He also declined to say whether Fox maintains that he did not engage in fraudulent conduct.

If the court approves the corporation’s bankruptcy petition, regardless of whether Fox is found personally liable, Fox Ortega Enterprises Inc.’s assets will be liquidated and distributed to creditors.

Priority, however, will be given to the trustee’s salary, taxes and the corporation’s mortgage.

It is “too early” to know whether all consumers who have pending wine orders will receive their money back after the trustee sells all of the company’s assets, Finestone said.

The next bankruptcy hearing will take place Feb. 8 at the U.S. Bankruptcy Court for the Northern District of California.

 

Contact Jessica Lynn at [email protected] and follow her on Twitter at @jessicailynn.