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San Francisco Chronicle​

California wine executives plead guilty to $360,000 bribery scheme

Deutsch Family Wine and Spirits, which produces the popular Josh Cellars, employed two executives who have pleaded guilty to bribery. Esther Mobley/S.F. Chronicle Two California wine executives pleaded guilty to bribing a powerful alcohol distributor and a retailer to promote their products in exchange for approximately $360,000 in gift cards, luxury watches, golf trips and baseball tickets. Prosecutors in February charged Matthew Adler of Walnut Creek and Bryan Barnes of Hermosa Beach (Los Angeles County) with commercial bribery, saying that Adler had given money and gifts to employees of a wine distributor and that Barnes had given gift cards to an employee of a wine retailer in exchange for favoring their company's products. Court documents do not name the companies involved in the scheme. But Adler and Barnes' employer was Deutsch Family Wine and Spirits, which produces or imports some of America's most popular wine brands such as Josh Cellars and Yellow Tail, and the distributor was Southern Glazer's Wine and Spirits, the country's largest alcohol wholesaler, according to a source with knowledge of the case. Advertisement Article continues below this ad Both Adler, who was charged with a felony, and Barnes, who was charged with a misdemeanor, entered guilty pleas in federal court in Oakland in April. Between 2016 and 2021, Adler used a third-party vendor to bribe distributor employees with thousands of dollars in prepaid Visa and American Express gift cards; a $6,750 Panerai watch; a Bentley car rental; tickets to spring training baseball games; custom suits; $2,370 concert tickets; and more. He took four distributor employees on a trip to Pebble Beach, which 'cost tens of thousands of dollars and included rooms, golf and caddie fees, spa treatments, and thousands of dollars in room incidentals,' prosecutors said. Deutsch Family Wine and Spirits, which produces Yellow Tail wine from Australia, employed two executives who have pleaded guilty to bribery. Liz Hafalia/S.F. Chronicle Deutsch Family had a marketing budget of $1 million per year, according to the filing, but Adler lied to his company's accounting department about how he was spending his funds: In 2019 he said he spent $47,131.49 attending a wine and food festival, but he actually sent that money to distributor employees. Adler left Deutsch Family in 2021 and began working for Demeine Estates, a subsidiary of Napa Valley's Lawrence Wine Estates, according to a news release. Adler's attorney declined to comment. Advertisement Article continues below this ad Barnes, meanwhile, sent thousands of dollars in prepaid gift cards to the alcohol buyer of a retail chain with 'more than 100 Southern California stores,' prosecutors said. An attorney for Barnes did not respond to a request for comment. Maintaining sellers' independence is a cornerstone of U.S. alcohol law, which has mandated a three-tier system — a separate producer, distributor and retailer — since the repeal of Prohibition. Without this separation, powerful alcohol producers could influence stores to carry their products instead of others, which would diminish competition, particularly at the expense of smaller producers. Southern Glazer's Wine and Spirits has frequently been accused of anticompetitive behavior. The embattled company recently settled a major lawsuit with a competitor that complained Southern had illegally boycotted it, and last year the Federal Trade Commission sued Southern for illegal price discrimination. In 2022, the Internal Revenue Service and the Alcohol and Tobacco Tax and Trade Bureau descended on Southern Glazer's office in Union City in what officials described as 'an official activity.' Advertisement Article continues below this ad Adler has a hearing scheduled for September and Barnes for October.