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Joseph Cimino, the founder of a tequila brand based in the Hudson Valley, pleaded guilty on Monday, Nov. 15 to securities and wire fraud charges.
As part of the plea, the 57-year-old Cimino, a resident of Warwick in Orange County, admitted fraudulently soliciting investments for his company.
“As he admitted in court today, Joseph Cimino lied about his tequila business’s finances to lure investors and then diverted investor funds in order to line his own pockets," Damian Williams, the US Attorney for the Southern District of New York, said. "Now Cimino awaits sentencing for his fraudulent conduct.”
According to court documents and statements in court:
- From 2014 to 2018, Cimino raised approximately $935,000 from at least 25 investors based on fraudulent representations. To attract investors, he falsely inflated the amount of capital that he had raised from prior investors, and falsely described as investors several individuals who, in fact, had not contributed any funds.
- Cimino also falsely inflated his company’s sales. For example, in July 2017, he claimed in an investor report that year-to-date sales totaled 3,410 cases of tequila, when the actual sales totaled only 350 cases. Similarly, in October 2017, he falsely claimed that year-to-date sales totaled 6,035 cases, which was approximately five times the actual total.
- Cimino further claimed in October 2017 that his company would receive reimbursement for 800 cases of tequila supposedly destroyed at a Puerto Rican warehouse as a result of Hurricane Maria. In reality, no inventory was destroyed in the hurricane, and the company lacked insurance.
- Cimino also misused a substantial portion of investor money that was intended to fund the operations of his tequila business for personal expenses. For example, from 2014 to 2018, he transferred approximately $472,000 of investor money to his personal bank account in order to subsidize his food, entertainment, and other living expenses.
Cimino pleaded guilty to one count of securities fraud and one count of wire fraud, each of which carries a maximum sentence of 20 years in prison.
He is scheduled to be sentenced on Friday, Feb. 18.
Williams praised the investigative work of the Federal Bureau of Investigation. He also thanked the U.S. Securities and Exchange Commission for its assistance in the investigation.
This case is being prosecuted by the office’s White Plains Division.
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