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Charles Banks agrees to sell his share in Mayacamas

He's scheduled to enter prison for fraud on Tuesday, Sept. 5.
by Kerana Todorov
September 05, 2017

Charles Banks has agreed to sell his share in the historic Mayacamas Vineyard before entering prison for fraud, according to court records.

In June, Banks was sentenced in San Antonio, Texas, to four years in federal prison and ordered to pay $7.5 million in restitution for defrauding now-retired NBA Spurs star Tim Duncan. Banks, who was Duncan’s financial advisor, is scheduled to enter prison Tuesday, Sept. 5.

Banks had invested in prestigious wineries over the years. In 2013, Banks purchased Mayacamas with Ohio entrepreneur Jay Schottenstein, chief executive officer at American Eagle Outfitters and Express, and other members of the Schottenstein family.

But as a convicted felon, Banks must divest himself of control of winery properties, his lawyers stated in court filings.

On Aug. 24, U.S. District Judge Samuel Bieri, the San Antonio federal judge who sentenced Banks earlier this summer, approved a confidential agreement reached between Banks and the Schottensteins. Under that agreement, which has been sealed, Banks agrees to transfer his shares in Mayacamas to the partnership, according to court records.

Proceeds from the sale were expected to raise at least $7.5 million in restitution money, according to court records.

Banks, of Atlanta, Ga, and the Schottensteins, have been in court for months in Napa and Delaware over Mayacamas’ ownership after Banks’ indictment and fraud conviction.

As part of a settlement reached in August, Banks agreed to step down as director and officer of CBSchott, Mayacamas, and Lokoya Vineyards [editor's note: Lokoya Vineyards is not affliated with Lokoya the brand, which is owned by Jackson Family Wines], the business entities that own the Mount Veeder winery and vineyards, according to court filings.

Banks has appealed his sentence. The $7.5 million will be placed in an escrow account pending the outcome of the case, according to court filings.

The settlement spares the government and third parties “the time, expense and uncertainty of seizing” Banks’ shares and “putting them to auction,” according to a court filing.

On Aug. 28, a Napa County Superior Court judge dismissed a civil complaint the Schottensteins and CBSchott had filed against Banks this year. That hearing came after a flurry of motions in state and federal court.

Four days earlier, Banks filed a motion to postpone his self-surrender to federal prison officials, originally set for Aug. 25, to Sept. 27, arguing he needed more time to facilitate a number of transactions before entering prison, including the transfer of assets into a blind trust, the completion of the sale of his interest in Mayacamas, and the dismissal of the Delaware case, according to court records.

Banks founded and was majority shareholder at Terroir Capital LLC, a company manages wineries and other companies, including Qupé, Cultivate and New Zealand’s Trinity Hill. Terroir has been marketing Mayacamas wines.

Prosecutors opposed the request, arguing Banks had had five months since his conviction to resolve his financial affairs. They also said Banks had not been forthcoming in resolving his restitution obligations and had misrepresented his assets, according to the court filing.

The prosecutors who opposed Banks’ motion to postpone his self-surrender to late September, also said Banks could not be trusted to handle Terroir entities, according to court records. Allowing Banks more time to manage these assets “exposes the investors, including the victim in the present case, to the risk of greater loss than they have already experienced,” according to the federal prosecutors. Duncan, the retired NBA Spur star, has had other investments with Banks’ companies, according to various press reports.

Banks has been assigned to the Montgomery Federal Prison Camp at Maxwell Air Force Base in Alabama, according to the prosecutors’ filing. “This facility is not far from his home and his family and attorneys will have access to him at that location should any additional documents need to be executed regarding the CBSchott matter, the Terroir entities, or anything else that may require his personal attention,” the prosecutors wrote.

U.S. District Judge Biery on Aug. 25 only agreed to re-set Banks’ self-surrender date to Tuesday, Sept. 5, saying that Banks has filed an appeal and continues to deny he owes $7.5 million to the victim, according to court records.

The judge also noted Banks’ wife, a co-owner of the assets, was described in court as a “sophisticated businesswoman in her own right” and that Banks has appointed a trustee, according to the order.

Banks’ criminal case began in September 2016 when he was indicted in San Antonio for fraud stemming from a multi-million deal involving a sports team apparel and merchandise company with financial ties to Banks.
Federal officials said Banks in 2012 spurred Duncan to loan $7.5 million to the company, Gameday Entertainment LLC.

Banks, Gameday’s president, then led Duncan into guaranteeing another $6 million note to benefit Gameday by misrepresenting the true nature of the transaction, according to federal officials. Banks also failed to disclose commissions, loans and other payments linked to these transactions.

Gameday was dissolved in January 2017, Banks’ attorneys said in a court filing.

The U.S. Securities and Exchange Commission, which sued Banks in September 2016, in July obtained a judgment against the financial advisor. Under the decision, Banks is prohibited from serving as an officer and director of a public company. Banks is also barred from the securities industry. He also has to pay back illicit profits.

In New Zealand, Banks is no longer involved in Trinity Hill, one of the wineries in Terroir’s portfolio.

Steven Law, a spokesman for New Zealand’s Overseas Investment Office, which approves foreign purchases of sensitive land assets and significant business acquisitions, wrote in an email that Banks has resigned as director of Trinity Hill Limited.

“We are not aware of Terroir having any other interests in New Zealand than Trinity Hill,” Law said in an email.

Banks’ Terroir has been working to sell Mattei’s Tavern, “the principal asset of the Terroir Hotel Fund,” and Leviathan, “a valuable asset of the Terroir Wine Fund,” according to a federal court filing.

Banks will be on supervised released for three years after his release from prison.

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