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Justice News

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

Wednesday, August 6, 2014

Owner Of Sandusky Winery Indicted For Actions Related To Government-Backed Farm Loans

A five-count indictment was filed in federal court charging the owner of a Sandusky winery with crimes related to the securing and repayment of loans for the winery, said Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio, and Anthony Mohatt, Acting Special Agent in Charge, U.S. Department of Agriculture, Office of Inspector General.

David J. Kraus, 52, of New York, New York, was charged with conversion of property pledged as collateral with a farm credit agency, making numerous false statements, including on a loan application to a federally-insured bank.

“This defendant is charged with defrauding a program designed to help struggling or family farmers by, among other things, unlawfully pocketing millions of dollars from the sale of wine and grapes,” Dettelbach said. “Those who seek federal assistance must follow the rules, whether they are food stamp recipients or want to own a winery. These programs are for the public good, not personal enrichment.”

Kraus was the owner and operator of Kraus Winery, Inc., also known as Kraus Vineyard, Hermes Winery, and Sand Hill Winery, located near Sandusky.

Count 1 of the indictment charges that between January 2006 and November 2012, the defendant knowingly, and with the intent to defraud, disposed of and converted to his own use, or the use of another, property pledged as collateral for loans from the U.S. Department of Agriculture – Farm Service Agency.

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, according to the indictment.  

Counts 2 through 4 of the indictment charge that Kraus made various materially false statements and representations to officials at the USDA-FSA in connection with the same loans between December 2009 and September 2010.

For example, Kraus falsely reported to a USDA-FSA farm loan officer that the winery had only received a few small checks for grape sales and had no wine sales in 2009, when, in fact, the winery had grape sales totaling approximately $60,000 and wine sales totaling approximately $271,380 in 2009, according to the indictment.

Count 5 also charges Kraus with making false statements on a loan application submitted to Citizens Bank on or about July 22, 2010, for purposes of influencing the bank’s action in connection with said application.

The case is being prosecuted by Assistant United States Attorneys Robert W. Kern and Angelita C. Bridges following an investigation by the United States Department of Agriculture, Office of Inspector General.

If convicted, the defendant’s sentence will be determined by the court after review of factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense and the characteristics of the violation.  In all cases, the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.

An indictment is only a charge and is not evidence of guilt.  A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.

Updated March 12, 2015