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Justice News

Department of Justice
U.S. Attorney’s Office
Northern District of Ohio

Tuesday, June 23, 2015

New York man sent to prison for making false statement about operation of Sandusky winery

A New York man was sentenced to 15 months in prison and fined $10,000 for making false statements relative to a loan and his operation of a winery near Sandusky, said Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio.

David J. Kraus, 53, of New York, New York, pleaded guilty earlier this year to making a false statement to the United States Department of Agriculture – Farm Service Agency (USDA-FSA).

Kraus, the owner and operator of Kraus Winery, Inc., aka Kraus Vineyard aka Hermes Winery, knowingly and willfully made a materially false, fictitious and fraudulent statement or representation to the USDA-FSA in connection with the agency’s administration of the Direct Loan Program, a program meant to benefit family farmers. Specifically, on December 15, 2009, Kraus knowingly and willfully provided a 2008 federal income tax return, purportedly filed with the Internal Revenue Service to a USDA-FSA Farm Loan Officer. The tax return had not been filed with the IRS and substantially inflated the winery’s net losses.

The false statement was part of a fraud scheme during which Kraus sold and directed the sale of grapes and wine valued at approximately $2 million which had been pledged as collateral for loans totaling $594,870, and failed to remit the proceeds from such sales to the USDA-FSA as required by the terms of the loans.

He was employed as a psychiatrist and vintner at the time of the false statement.

Assistant United States Attorneys Robert Kern and Noah P. Hood prosecuted the case following an investigation by the United States Department of Agriculture, Office of Investigator General.

Financial Fraud
Updated June 23, 2015