Craig Dean was sentenced at Southwark Crown Court today to 3 years' imprisonment for conspiring to defraud customers in a £4 ½ million champagne investments scheme that traded as the House of Delecroix. His fellow conspirators, Lee Rosser and Julian Blee, are already serving prison sentences for their parts in the fraud.
Background
The House of Delacroix business was started in early 1996. It was based initially in Wimbledon, with Lee Rosser and Julian Blee as its directors but later transferred to Amsterdam as a Dutch Antilles registered company. The business also boasted offices in Paris and Singapore, though these were found to be simply service addresses for the sole purpose of implying a successful international presence.
Craig Dean (35), joined the House of Delacroix in March 1996 to take charge of the sales operation. He had worked for Rosser and Blee before when they ran a whisky investment business from Gibraltar.
"The biggest party for a thousand years is to run out of fizz".
The House of Delacroix advertised through response cards inserted in life-style magazines. The advertising slogan used was "The biggest party for a thousand years is to run out of fizz".
Delecroix's marketing material selectively used predictions of possible shortages in supply in a concentrated and biased way so as to provide an almost undeniable argument that millennium champagne would prove to be a highly successful investment. A finite production of 325 million bottles per year was compared with a predicted demand of 380 million bottles. Investors were offered Lantz 2000, a label created by the defendants, at £30 per bottle (excluding taxes) which on closer inspection fared unfavourably with similar quality labels then retailing at about half that price (including taxes).
Sales practices used previously in their whisky investment venture were adopted. A tele-sales force was recruited to follow up advertising leads and was trained to use a pre-prepared prompt sheet when talking with clients. When asked "Who is Delacroix?", the ready answer given was "We are a spirit broker with 15 years experience in the whisky business, moving into champagne to meet the market demand".
Potential clients were enticed with offers of free competition entries, a free membership newsletter to keep up-to-date with market developments and the promise of selling their champagne through "pre-millennium auctions" arranged by the House of Delacroix to help them realise their investments. It was all part of their "unrivalled service". Such auctions never materialised.
The House of Delecroix ceased business in August 1997 by which time it had achieved around £4 ½ million in sales revenue.
The proceedings
The investigation into this champagne fraud arose out of inquiries into the earlier whisky fraud. Dean, from Worcestershire, was charged in July 1999 after his extradition from Portugal. The trial opened on 23 January 2001 and Dean was convicted by unanimous jury verdict on 8 February.
The co-conspirators, Rosser (31), and Blee (32), entered guilty pleas before the trial opened and received sentences of 1 ½ years and 1 year respectively. (They were already serving sentences of 7 years and 4 years respectively which had been handed down at the same court on 16 October 2000 for their parts in a whisky investment fraud operated by them under the names of Cavendish Wine Merchants and Hamilton Spirit Management. Craig Dean was not indicted in the whisky investment fraud.
The indictment
Craig Dean, between 31 December 1995 and 1 August 1998 conspired with Lee Jay Rosser and Julian Blee to defraud such persons as might be induced to purchase lots of champagne, as investments, from the House of Delacroix (a company incorporated in the Netherlands Antilles) by:
- falsely pretending that the company was operating a genuine and honest business;
- presenting the company to potential clients as an expert in the champagne field who was able and willing to use its commercial experience and knowledge of the market for the benefit of its clients and by encouraging potential clients to rely upon its expertise;
- pretending that the prices at which the company offered to sell lots of champagne to potential clients were fair and reasonable, and offered genuine and reasonable prospects of substantial profits resulting from future increases in value;
- falsely pretending that the company was willing and able to arrange the sale of the champagne for their clients at auction prior to the millennium.
Notes for editors:
In March 1997, the SFO, through Press briefings, warned the public to be cautious about alcohol investments. It received wide newspaper coverage.
The SFO is investigating a number of other suspected similar alcohol investment frauds.
