Tequila Brand Owner Accused of Illegally Raising $1 Million from Investors
The Department of Justice alleges he even lied about tequila being destroyed in a hurricane.
Investing in a tequila company certainly has its allures. Celebrities from Snoop Dogg to Sammy Hagar have tied their names to alcoholic beverages, and in the case of George Clooney, the already wealthy A-list actor famously netted himself a nine-figure payday when he sold his Casamigos tequila brand. That said, not all of us have Clooney-esque star power—so instead, the Department of Justice (DoJ) alleges that the owner of the New York-based tequila brand Six Degree used a different method to drum up investors: fraud.
Joseph Cimino was arrested last week and charged with one count each of securities fraud and wire fraud, both of which carry a maximum sentence of 20 years in prison. "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," U.S. Attorney Audrey Strauss said in announcing the arrest. "Now Cimino faces the sobering reality of federal securities and wire fraud charges."
The DoJ alleges that, from 2014 to 2018, Cimino raised approximately $935,000 from at least 25 investors, but about $472,000 of that money went into his personal bank account. Meanwhile, the tequila brand apparently wasn't performing as well as Cimino was telling people. The DoJ says that, at different times, sales were inflated by about five to ten times the actual number of cases sold, with Cimino even allegedly stating that the company had sold its tequila over a year before its first sale. He's also accused of falsely inflating how much money had been raised and where that money came from, falsely representing "that certain individuals were investors in the Tequila Company, when in reality they had not invested any funds."
Finally, in probably the most egregious allegation levied against Cimino, the DoJ says that, in 2017, he told investors that the company would be reimbursed for 800 cases of tequila destroyed in Puerto Rico during Hurricane Maria, when in fact, "the Tequila Company had no insurance and none of its inventory had been destroyed in the hurricane."
"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," FBI Assistant Director William F. Sweeney Jr. stated. "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."