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Wine Industry Insight
More than two years after Wine Industry Insight broke the inside TTB storyÂ about Jeffry Hill’s vast wine fraud scheme,Â (June 25, 2014: “TTB Carpet Bombs Hill Wine Co With Felony Allegations”) he was arrested Wednesday, Nov. 2Â following the unsealing of a federal grand jury indictment charging him with four counts each of mail fraud and wire fraud. Federal prosecutors are seeking at least $1.5 million in restitution.
Hill was arrested in Clovis where he lives now. According to court documents and a statement from the U.S. Attorney’s office, Hill made his initial court appearance in Fresno Federal Court and was released after surrendering his passport.
Links to Wine Industry Insight‘s 12 articles on the case are at the bottom of this article.
The full indictment and arrest warrant filed with the court may be accessed at this link by Wine Executive News premium subscribers.
Scroll down for the full news release from the U.S. Attorney’s office.
The following is the entire news release from the Department of Justice, U.S. Attorneyâ€™s Office, Northern District of California:
NEWS RELEASE, NOVEMBER 2, 2016
SAN FRANCISCO – A federal grand jury in San Francisco indicted former winemaker Jeffry Hill for mail fraud and wire fraud in connection with his operation of a Napa Valley- based wine company, announced United States Attorney Brian J. Stretch and Alcohol and Tobacco Tax and Trade Bureau (â€śTTBâ€ť) Assistant Administrator for Field Operations Tom Crone.Â The indictment was unsealed this morning.
Hill, 38, formerly of Napa, Calif., now of Clovis, Calif., ran Hill Wine Company (â€śHWCâ€ť).Â HWC was in the business of making and selling wine and wine inputs, such as pre-fermented grape juice, among other things.Â HWC operated a winery and tasting room in Napa County, Calif., on the Silverado Trail, and used winemaking equipment at other facilities, owned by others, in Napa County and Sonoma County, Calif.Â According to the indictment, Hill defrauded HWCâ€™s customers by misrepresenting the geographic origin and grape varietal of the wine and wine products that he sold, thus causing customers to pay more than they would have otherwise, or to buy products that they would not have otherwise.
Federal regulations establish â€śAmerican Viticultural Areas,â€ť or AVAs, which are geographically delineated regions with particular wine growing characteristics.Â The Napa Valley AVA is one such AVA in California.Â Under federal regulations, wine can only be labeled as originating from a particular AVA if not less than 85% of the liquid volume of the wine is derived from grapes grown within the boundaries of the AVA.
Napa Valley wine is seen as premium wine and often sells at a higher price than wine from other parts of California, and grapes grown in the Napa Valley AVA are generally more expensive than those grown in other parts of California.
According to the indictment, Hill allegedly grew or purchased grapes, pre-fermented grape juice or wine grown outside of the Napa Valley then sold bulk grape juice, bulk wine, or bottled wine made from these non-Napa Valley grapes while representing these products to have been made from Napa Valley AVA grapes.
Similarly, Hill allegedly misrepresented as cabernet sauvignon wine that was made from other varietals of grapes.Â According to the indictment, customers paid over $1,500,000 for fraudulently mislabeled wine, grape juice, or wine products.
Hill also allegedly took steps to conceal and hide his scheme to defraud.Â Among the things Hill allegedly did to hide his conduct was alter or create false bills of lading and other records; maintain false records of inventory so as to misstate the geographic origin or varietal of grapes, wine, or grape juice in his companyâ€™s inventory; falsely state to his companyâ€™s employees that grapes grown outside of Napa Valley were grown in Napa Valley; move grapes or wine between his companyâ€™s three facilities to obscure the origin of the grapes; and instruct employees who picked grapes to mislabel the origin and varietal of grapes that they picked.
According to the indictment, Hill instructed grape growers outside of the Napa Valley AVA never to tell anyone that he, through his company, had bought grapes from them.Â In all, Hill has been charged in the indictment with four counts of mail fraud, in violation of 18 U.S.C. Â§ 1341; and four counts of wire fraud, in violation of 18 U.S.C. Â§ 1343.
Hill was arrested today in Clovis, Calif., and made his initial appearance in federal court in the Eastern District of California, in Fresno, Calif.Â He was released on conditions.Â His next appearance is scheduled to be at 9:30 a.m. on November 16, 2016, before the Honorable Laurel Beeler, United States Magistrate Judge, at 450 Golden Gate Avenue, San Francisco, Calif., for an initial appearance in the Northern District of California.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt.Â If convicted, the maximum statutory penalty for a count of violating 18 U.S.C. Â§ 1341 or 18 U.S.C. Â§ 1343 is twenty yearsâ€™ imprisonment and $250,000 or twice the amount gained or lost as a result of the scheme.Â The court may also order that the defendant pay restitution, if appropriate.Â However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. Â§ 3553.
Assistant U.S. Attorney Benjamin Kingsley is prosecuting the case with the assistance of Denise Oki, Bridget Kilkenny, and Jessica Meegan.Â The prosecution is the result of an investigation by the TTB and the Internal Revenue Service-Criminal Investigation.