The U.S. Securities and Exchange Commission has accused a Hudson Valley tequila producer of conning investors out of nearly $1 million and then spending most of the funds on himself.
Joseph Cimino, 56, of Warwick, was charged with violating securities laws in soliciting investments for 6 Degree Tequila LLC, in a civil complaint filed Feb. 17 in U.S. District Court, White Plains.
Cimino founded 6 Degree Tequila in 2014 and ran it until January 2018, according to the complaint, when investors who had discovered the company’s true financial condition removed him as the manager.
Cimino raised $985,000 from 24 investors from late 2014 to mid-2017. He personally solicited each investment, the SEC said, and often used tequila tastings in the sales pitches.
But the sales pitches, the SEC said, were false.
Cimino allegedly gave at least two prospects a list of purported investors, for instance, that included friends and family members who had not invested in the company.
He gave another prospect a 40-page booklet that showed a $40,000 net profit on $260,000 in sales in 2015, the year before the product was launched, according to the SEC. A financial statement showed 891 cases of tequila sold in Puerto Rico in 2017, when actually fewer than 200 cases were sold.
The company”™s operating agreement gave Cimino 51% interest in the enterprise and sole management authority. Profits and losses were to be shared on the basis of each member”™s share in the company.
Cimino was to reimbursed for expenses and receive no salary unless the investors consented.
But more than $470,000 was transferred from 6 Degree Tequila”™s bank account to Cimino”™s personal checking account, the SEC alleges, often within days of the company receiving investments.
He also allegedly used the company”™s bank account for personal expenses, including $58,000 for credit card debts, $28,000 on cars and $7,600 in ATM withdrawals.
6 Degree Tequilla has been inactive since mid-2018, according to state Division of Corporation records, but BlueSky Spirits LLC, another company linked to the tequila enterprise, remains active.
When investors removed him as manager, $1,800 remained in the company bank account, according to the SEC, and he immediately used those funds to pay an auto loan and a hotel bill.
Efforts to contact Cimino for his side of the story were unsuccessful.
He describes himself in a LinkedIn profile as have an “unwavering commitment to integrity” and “exceptional emotional intelligence.”
A March 2017 article in The Tasting Panel magazine says Cimino is the son of a Sicilian cattle rancher who immigrated to the U.S. at age 18.
The article says the tequila brand was starting to experience rapid growth. Cimino is quoted as saying that 6 Degree sales were doing great in Puerto Rico, the brand was a big hit in Hong Kong, and the company was sponsoring a BMW series race car to advertise the tequila.
“Cimino also maintains great working relationships with his backers,” The Tasting Panel reported.
The SEC is asking the court to make Cimino disgorge all ill-gotten gains and pay a monetary penalty.
