Despite fraud charges, Charles Banks still in wine business
The arrest last week of prominent winery investor Charles Banks on fraud charges has called into question the fate of his California wine empire.
A federal grand jury indicted Banks in Texas Friday for allegedly defrauding former pro basketball player Tim Duncan, whom he had long served as a financial adviser.
Later that day, the Securities and Exchange Commission filed a complaint against Banks on related charges in federal court in Atlanta.
Duncan’s money went into Terroir Capital, an investment vehicle that consists of two funds, one for wineries and one for hotels, and in a sports merchandising company, Gameday Entertainment, where Banks is a part owner and the chairman of the board.
[...] the Terroir funds, which Banks founded and still runs as managing partner, are conspicuously absent from the indictment and the similar complaint from the SEC.
Terroir Capital has stakes worth an estimated $200 million in California wineries including Mayacamas, Wind Gap and Qupé.
Would Terroir go bankrupt, forced to sell its share in the wineries?
“Tim Duncan settled all of his claims with Terroir (recently), and he actually remains an investor,” said Kevin McGee, Terroir’s chief operating officer.
A joint motion filed in U.S. District Court in Colorado on June 27 confirms that Duncan and Banks settled the claims in arbitration.
The terms of the settlement are not public, but both Wells and McGee said that Duncan’s stake in Terroir remains the same as it was before he took any legal action.
“We’re separate and not affected by what happens” in court, said Bob Lindquist, founder and part owner of Qupé in Santa Maria Valley, in which Terroir took a majority share in 2013.
Coupled with Duncan’s lawsuit, the news of the Sandhi divestment raised questions for some in the wine industry about whether Banks’ business was as sound as it once seemed.
“There was never any dispute,” Parr said, claiming that he wanted to bring Sandhi under the same umbrella as his and Moorman’s other winery, Domaine de la Côte.
If Banks is found guilty, he’d be forced to pay considerable penalties; his personal financial woes could force him to sell some or all of his stake in the fund, thereby affecting the overall health of Terroir.