Former wine executive Charles Banks reported to the Federal Prison Camp at Maxwell Air Force Base in Montgomery, Ala., Tuesday, beginning a four-year sentence for fraud at the minimum-security facility. Days before he surrendered to authorities, he ended two legal battles with one move: Court documents show Banks has agreed to sell his stake in Napa's historic Mayacamas Vineyards and that the money from the sale will go toward restitution for retired NBA star Tim Duncan, the man Banks was convicted of defrauding.
Banks, 49, a former financial adviser and the founder of Terroir Life, which owns or manages nearly a dozen wineries in California, New Zealand and South Africa, pleaded guilty in April to duping Duncan, his longtime client. In June he was sentenced to four years in prison followed by three years supervised release. Banks was also ordered to pay Duncan $7.5 million in restitution.
Banks has been tangled in civil court with his business partners at Mayacamas, the Napa winery he and his wife, Ali, purchased in 2013 with American Eagle Outfitters and DSW chairman Jay Schottenstein and his family. Mayacamas was not part of Terroir. The Schottensteins sued Banks in April for breach of fiduciary duty, asking him to step down as winery president. (Lawyers for both Banks and the Schottensteins did not respond to requests for comment.)
As a convicted felon, Banks must rid himself of control of all wine properties he has ownership or interest in. And because the Securities and Exchange Commission obtained a judgment against Banks in the Duncan matter, he is prohibited from serving as an officer and director of a public company and is barred from the securities industry.
Court records show that U.S. attorneys have complained to the court that Banks has dragged his feet in terms of settling his financial affairs, including his stake in Mayacamas. Despite the orders that restitution begin immediately, Duncan had yet to receive any money as of Aug. 24, when lawyers applied for a judicial order seeking to liquidate Banks' 50 percent stake in Mayacamas.
But U.S. District Judge Samuel Bieri, the San Antonio federal judge who sentenced Banks, approved a confidential agreement that day between Banks and the Schottensteins. According to court records, under that agreement, which has been sealed, Banks agrees to transfer his shares in Mayacamas and step down as director and officer.
The Schottensteins released a statement today, noting the sale without mentioning Banks by name. "This represents an exciting and happy new chapter for Mayacamas Vineyards,” said Jay Schottenstein. “Since 2013 our family has been committed to the long-term stewardship of this property, and assuming 100 percent ownership assures the continuity of our vision and the preservation of this historic estate.”
Proceeds from the sale were expected to raise at least $7.5 million, according to court records. In light of the agreement, and after a string of motions by Banks' attorneys in Napa Superior Court, the Schottensteins' case against Banks was dismissed on Aug. 28.
Court documents declare Banks' financial matters as "convoluted." Banks transferred interest in his house to his wife, and the value of his financial and ownership holdings in various entities are uncertain. Liquidating his interest in Mayacamas appears to be his best shot at obtaining capital to pay Duncan's restitution.
Banks has appealed his sentence. The $7.5 million will be placed in an escrow account pending the outcome.
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