White Plains. Hudson Valley tequila producer pleads guilty to securities fraud scheme

| 15 Nov 2021 | 03:03

Joseph Cimino, 57, of Warwick and the founder of a tequila brand based in the Hudson Valley, pled guilty Monday, Nov. 15, to one count each of securities fraud and wire fraud before U.S. District Judge Vincent Briccetti.

Each charge carries a maximum sentence of 20 years in prison.

According to the press release from Damian Williams, the United States Attorney for the Southern District of New York, that detailed the plea, Cimino admitted that he fraudulently solicited 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,” Williams said.

A spokesman for the U.S. Attorney’s Office said the name of the tequila company, where specifically it is located and whether it is still operating isn’t public at this point.

The particulars

According to court documents and statements in court, from in or about 2014 to 2018, Cimino raised approximately $935,000 from at least 25 investors based on fraudulent representations. To attract investors, Cimino 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.

The United States Attorney also said Cimino falsely inflated his company’s sales. For example, in July 2017, Cimino 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.

The Federal Bureau of Investigation and the U.S. Securities and Exchange Commission assisted in the investigation.

Cimino is scheduled to be sentenced by Judge Briccetti on Feb. 18, 2022.