It was 10 years ago that a company controlled by Charles Augustus Banks IV purchased the historic Mattei's Tavern in Los Olivos. In the years since, Banks co-founded Sandhi wines and bought controlling interest in Qupé.
On June 28, Banks was sentenced to four years in prison following a guilty plea to a single federal wire fraud charge. He still faces a civil lawsuit and a Securities and Exchange Commission (SEC) lawsuit.
The sentencing and an especially harsh dressing down from United States District Judge Fred Biery in a San Antonio, Texas, courtroom marked a spectacular fall from grace for the once high-flying Banks.
Banks was arrested in September 2016 after being indicted on four wire fraud charges by a federal grand jury. Banks and his wife, Ali Banks, by then were no longer living in their Montecito mansion, having returned to Atlanta, Georgia, where they lived prior to their Santa Barbara County investments.
The charges were in connection with a claim made by former San Antonio Spurs superstar player Tim Duncan that Banks, his longtime financial adviser, has swindled him out of millions of dollars. Duncan had invested in one of Banks' many companies, Gameday Entertainment.
Gameday came under the umbrella of Banks' Terroir Capital LLC, a company that also had funds invested in wineries and hotels.
Banks made his first local investment in 2000 with Jonata Vineyards in Ballard Canyon. He later sold Jonata. In 2009, he formed Sandhi Wines with Rajat Parr and Sashi Moorman. It was added to his Terroir Life Wine Group portfolio. In 2016, Banks sold his interest in Sandhi to Parr, Moorman, and a third investor.
In 2013, Terroir Life (then Terroir Selections), purchased controlling interest in Bob Lindquist's Qupé.
Banks' most significant Santa Ynez Valley impact came from his acquisition of Mattei's, which he purchased through his Santa Rita Land & Vine LLC. With plans for renovating the restaurant and building a large inn around it, Banks declined to renew the restaurant lease with brothers Matt and Jeff Nichols, closed the space and spent nearly two years renovating and updating it. The restaurant reopened in 2013 under chef Robbie Wilson. It closed in January 2016.
By then Banks' Terroir Capital had partnered with Santa Barbara-based Mesa Lane Partners, a real estate investment, development, and hospitality firm, to develop Mattei's as what the partnership called a full-service wine country resort. The plan called for construction of an inn with 64 luxury suites, reopening of the restaurant, a full-service spa, outdoor pool with a bar, a retail boutique selling local craft foods and artisan wares, a gym, on-site parking and valet, and 3,000 square feet of indoor and outdoor special event and meeting space. The anticipated opening was spring 2018.
That construction never happened and for the last year, Mesa Lane Partners has been renting Mattei's out as an event space on an occasional basis.
It's expected that Banks' Santa Rita Land & Vine LLC will divest itself of its Mattie's ownership before the end of 2017, leaving Mesa Lane Partners ready to proceed with Mattei's development by early 2018.
As part of a plea deal in April, Banks pleaded guilty to one of the fraud charges.
During his two-day sentencing hearing this week, Judge Biery expressed outrage that more than 100 of Banks' family and friends had written letters of support for him. According to Ann Marsh, the courtroom reporter for the financial magazine, Financial Planning, Biery pointed out a letter written by Banks' mother as an example of people who appeared to think, according to the judge, that what Banks had done was much ado about nothing.
He even asked Banks if he wished to withdraw his guilty plea.
"I certainly have the power to do that and we'll let your mother come and watch the government prove not only this count but prove everything else against you. Now, do you want to do that?" Banks replied, "No sir."
Banks is free until late August when he has to turn himself in for the start of his sentence. He was also ordered to pay $7.5 million in restitution.
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