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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 FBI announced that Joseph Cimino, the founder of an Orange County-based tequila company, was arrested Tuesday morning, Feb. 17, and charged with securities fraud and wire fraud arising out of his fraudulent solicitation of investments for the company.
Cimino is scheduled to appear in White Plains Federal Court Tuesday afternoon.
“Joseph Cimino allegedly raised nearly $1 million in investor funds for his startup tequila company by lying about the company’s finances, and then spent a significant portion of that money to finance his own lifestyle," Strauss said. "Now Cimino faces the sobering reality of federal securities and wire fraud charges.”
According to the allegations contained in the complaint unsealed 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.
- Throughout that time, 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 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, has been charged with one count of securities fraud and one count of wire fraud. Each charge carries a maximum sentence of 20 years in prison.
"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," Sweeney said. "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.”
Strauss praised the investigative work of the FBI Hudson Valley White Collar Crime Task Force and Orange County Sheriff’s Office. She also thanked the Securities & Exchange Commission for its assistance in the investigation.
In a related case, the Securities & Exchange Commission brought a civil action against Cimino in U.S. District Court in White Plains.
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