2021-02-17 DOJ SDNY press_release 120 KB 5,975 chars

Liquor Entrepreneur Arrested For Defrauding Investors

Caption: United States v. Assistant Director-in-Charge of New York Field Office of Fbi, et al.

summary

Joseph Cimino, founder of a tequila company, was arrested for securities and wire fraud after allegedly defrauding 25 investors of $935,000 by fabricating sales figures, inventing investor claims and hurricane losses, and diverting $472,000 for personal expenses, facing up to 20 years in prison per charge.

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Joseph Cimino, founder of an Orange County-based tequila company, was charged with securities fraud and wire fraud for deceiving at least 25 investors into providing approximately $935,000 between 2014 and 2018. He falsely inflated sales figures—claiming 3,410 cases when actual sales were 350, and 6,035 cases when only about 1,200 occurred—and fabricated claims of hurricane-related inventory losses and non-existent major investors. Cimino diverted $472,000 of investor funds to finance personal expenses, including groceries, pet supplies, and entertainment, in direct violation of investment agreements, and now faces up to 20 years in prison on each count, with a parallel civil case filed by the SEC.

narrative

Joseph Cimino, the 56-year-old founder of a tequila company based in Orange County, was arrested on February 17, 2021, for orchestrating a multi-year securities and wire fraud scheme that defrauded at least 25 investors of approximately $935,000 between 2014 and 2018. He systematically misled investors by fabricating financial statements, falsely claiming sales volumes—such as reporting 3,410 cases in 2017 when actual sales were only 350, and 6,035 cases when actual sales were barely 20% of that—and inventing claims that major investors had contributed funds when they had not. Cimino also lied about a supposed $200,000 insurance claim for tequila destroyed by Hurricane Maria, despite the company having no insurance and no inventory loss. In addition to these deceptions, he transferred $472,000 of investor money into his personal bank account and used it for groceries, pet supplies, entertainment, and other personal expenses, in clear violation of the operating agreements provided to investors. Cimino was charged with one count each of securities fraud and wire fraud, each carrying a maximum 20-year prison sentence, and was presented before a federal magistrate judge in White Plains. The U.S. Attorney’s Office for the Southern District of New York prosecuted the criminal case with assistance from the FBI Hudson Valley White Collar Crime Task Force and the Orange County Sheriff’s Office, while the Securities and Exchange Commission simultaneously filed a parallel civil action against him. The case underscores the severity of misrepresentations in startup fundraising and the federal government’s coordinated response to protect investors from fraudulent schemes.

Enriched metadata

Scheme: pre-ipo-fraud (95%)
Court: Southern District of New York
Outcome: charged
Victim loss: $935,000
Victims: 25

Classified pre-ipo-fraud(confidence 95%). EDGAR detection: forms S-1/Form D/1-A· recall 72% / precision 8%. detection rule →

Extracted insights

Dollar amounts 3

$1.00M $1 million $1M–$10M
$935K $935,000 $100K–$1M
$472K $472,000 $100K–$1M

Entities 6

agency assistant director-in-charge of new york field office of fbi
person audrey strauss
person his own lifestyle
person joseph cimino
company orange county-based tequila company
scheme_term securities fraud and wire fraud

Triples 13

Joseph Cimino arrested for Securities Fraud And Wire Fraud
Joseph Cimino is founder of Orange County-Based Tequila Company
Joseph Cimino raised Approximately $935,000 From At Least 25 Investors
Joseph Cimino falsely inflated Tequila Company's Sales In July 2017 To 3,410 Cases When Actual Sales Were 350 Cases
Joseph Cimino falsely represented Tequila Company's Year-To-Date Sales As 6,035 Cases In October 2017 When Actual Sales Were Barely 20 Percent
Joseph Cimino fabricated claim about 800 Cases Of Tequila Destroyed At Puerto Rico Distributor Warehouse Due To Hurricane Maria
Audrey Strauss is United States Attorney For Southern District Of New York
William F. Sweeney Jr. is Assistant Director-In-Charge Of New York Field Office Of FBI
Joseph Cimino presented before United States Magistrate Judge Judith C. McCarthy In White Plains Federal Court
Joseph Cimino spent investor funds on His Own Lifestyle
Joseph Cimino made false representations from 2014 To 2018
Joseph Cimino falsely represented Certain Individuals As Investors When They Had Not Invested Any Funds
Joseph Cimino falsely implied in December 2015 Tequila Company Had Sales When Initial Sales Did Not Occur Until 2017

View original DOJ press releasejustice.gov

Extracted body text (5,975c)

Press Release Liquor Entrepreneur Arrested For Defrauding Investors Wednesday, February 17, 2021 Share FacebookLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. XLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. LinkedInLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. Email For Immediate Release U.S. Attorney's Office, Southern District of New York Audrey Strauss, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”) announced that JOSEPH CIMINO, the founder of an Orange County-based tequila company, was arrested this morning and charged with securities fraud and wire fraud arising out of his fraudulent solicitation of investments for the company. CIMINO will be presented before United States Magistrate Judge Judith C. McCarthy in White Plains federal court later today. U.S. Attorney Audrey Strauss said: “Joseph Cimino allegedly raised nearly $1 million in investor funds for his start-up tequila company by lying about the company’s finances, and then spent a significant portion of that money to finance his own lifestyle. Now Cimino faces the sobering reality of federal securities and wire fraud charges.” FBI Assistant Director William F. Sweeney Jr. said: “Through falsely inflating capital, misleading investors, and lying about other aspects of his tequila company, Cimino, as alleged, raised nearly $1 million in furtherance of his fraudulent scheme. While his alleged illegal activity continued over a period of four years, today’s arrest has effectively shattered any hopes he may have had of continuing to scam innocent investors.” According to the allegations contained in the Complaint[1] unsealed today in White Plains federal court: From 2014 to 2018, CIMINO raised approximately $935,000 from at least 25 investors ostensibly to fund a tequila company that he founded (the “Tequila Company”). Throughout this period CIMINO made numerous false and misleading representations in an effort to attract and maintain investors. For example, in multiple communications with prospective investors, CIMINO falsely inflated the amount of capital that the Tequila Company had raised from other investors, and falsely represented that certain individuals were investors in the Tequila Company, when in reality they had not invested any funds. CIMINO also fabricated or falsely inflated the Tequila Company’s sales in a number of investor communications. In December 2015, CIMINO made statements in an email to a prospective investor falsely implying that the Tequila Company already had sales, when in fact, the company’s initial sales did not occur until 2017. In July 2017, CIMINO falsely represented in an investor report and quarterly profit and loss (“P&L”) statement that the Tequila Company’s year-to-date sales totaled 3,410 cases, when its actual sales totaled only 350 cases. Then, in October 2017, CIMINO falsely represented that the Tequila Company’s year-to-date sales totaled 6,035 cases, when its actual year-to-date sales totaled barely 20 percent of that number. CIMINO further claimed to investors in October 2017 that the Tequila Company would receive reimbursement for 800 cases of tequila that were supposedly destroyed at a distributor’s warehouse in Puerto Rico as a result of Hurricane Maria. That statement was a fabrication. In reality, the Tequila Company had no insurance and none of its inventory had been destroyed in the hurricane. In addition to deceiving investors about the Tequila’s Company’s financial condition, CIMINO used investor money for personal expenses, including groceries, pet supplies, and personal entertainment. From 2014 to 2018, CIMINO transferred approximately $472,000 of investor money from the Tequila Company into his personal bank account, and used a significant portion of those deposits for personal living expenses, contrary to the operating agreements provided to investors. * * * CIMINO, age 56, of Warwick, New York, is charged with one count of securities fraud and one count of wire fraud. Each charge carries a maximum sentence of 20 years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge. Ms. Strauss praised the investigative work of the FBI Hudson Valley White Collar Crime Task Force and Orange County Sheriff’s Office. Ms. Strauss also thanked the Securities & Exchange Commission for its assistance in the investigation. In a related case, the Securities & Exchange Commission brought a civil action today against CIMINO in U.S. District Court in White Plains. The criminal case is being prosecuted by the Office’s White Plains Division. Assistant U.S. Attorneys Benjamin Gianforti and Daniel Loss are in charge of the prosecution. [1]Links to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth below constitute only allegations and every fact described should be treated as an allegation. Contact James Margolin, Nicholas Biase (212) 637-2600 Updated February 17, 2021 Topic Securities, Commodities, & Investment Fraud Component USAO - New York, Southern Press Release Number: 21-028

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