According to the SEC’s complaint, between January 2018 and September 2021, Charles Winn, through Scott-Britten, Stewart, and Alexander, its sales representatives, and marketing materials, represented to investors that Charles Winn would buy investment-grade wines for the investors, later sell the wine at a profit, and would share in a portion of the profits with investors. As alleged in the complaint, using sales scripts provided by Scott-Britten and Stewart, Charles Winn’s sales representatives, including Alexander, falsely represented to investors that their money would solely be used to purchase and store wine, the wine could be expected to achieve a return ranging between 10% to 45%, and the company would not receive any compensation or profit until the wine was sold. The complaint further alleges that these statements were false because Charles Winn, through Scott-Britten, Stewart, and Smith, used no more than 43% of the investors’ money for the purchase and storage of wine, made minimal payments to investors, and misused investor funds by spending them on a variety of non-wine uses, including at least $1.7 million for payments to individuals, including up-front commissions to Charles Winn sales representatives, payments to back office staff, and payments to Scott-Britten, Stewart, and their family members or affiliated entities, and Smith. As alleged in the complaint, Scott-Britten and Stewart orchestrated the fraudulent scheme, and Alexander and Smith participated in it.
Source: Charles Winn LLC (Release No. LR-25699; Apr. 20, 2023)