SEC Files Charges in Fine Wine Investment Fraud Scheme

Charges of fraud have been brought by the Securities and Exchange Commission against Charles Winn LLC, its senior managers, Aaron David Scott-Britten (also known as Aaron David, Aaron Scott, and Aaron David K. Britten), and Ohran Emmanuel Stewart (also known as Elliott Stewart), as well as Casey Alexander, a senior sales representative of Charles Winn, and Charlie Jake Smith, the company’s record managing member, for allegedly raising at least $8.5 million through the fraudulent and unregistered offer and sale of securities

The SEC’s complaint alleges that between January 2018 and September 2021, Charles Winn deceived investors by representing through Scott-Britten, Stewart, and Alexander, its sales representatives, and marketing materials that Charles Winn would purchase investment-grade wines for the investors, sell the wine at a profit later, and split a portion of the profits with investors. According to the complaint, using sales scripts supplied by Scott-Britten and Stewart, Charles Winn’s sales representatives, including Alexander, misrepresented to investors that their money would only be used to buy and store wine, that the wine could be anticipated to generate a return ranging from 10% to 45%, and that the company would not receive any compensation or profit until the wine was sold. The complaint also claims that these claims were untrue because Charles Winn, through Scott-Britten, Stewart, and Smith, only spent 43% of the investors’ funds on the purchase and storage of wine, made only minimal payments to investors, and misappropriated investor funds by using them for a range of non-wine purposes, including at least $1.7 million in payments to individuals, including upfront commissions to Charles Winn sales representatives, payments to back officers, and payments to other business expenses. According to the lawsuit, Scott-Britten, Stewart, and Alexander all took part in the fraudulent scheme that was orchestrated.

The SEC’s complaint, filed in the Central District of California, alleges that Charles Winn, Scott-Britten, Stewart, and Alexander violated Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, that Alexander also violated Section 15(a)(1) of the Exchange Act, and that Smith violated Sections 5(a), 5(c), 17(a)(2), and 17(a)(3) of the Securities Act. Additionally, Scott-Britten and Stewart are named in the lawsuit as control persons under Section 20(a) of the Exchange Act. A prohibition on Scott-Britten and Stewart holding office as an officer or director of a public firm is also requested, along with injunctive relief, disgorgement plus prejudgment interest, and civil penalties against Charles Winn, Scott-Britten, Stewart, Alexander, and Smith.