Hermes Vineyards owner indicted

Federal government alleges David Kraus, 52, sold about $2 million in assets used as collateral for federal farm loans
Andy Ouriel
Aug 6, 2014

 

ouriel@sanduskyregister.com

Federal authorities levied a five-count criminal indictment against the owner of a local winery, accused of bilking the government for loans made to his business.

Hermes Vineyards owner David J. Kraus, 52, allegedly sold about $2 million in assets representing collateral for federal farm loans equaling roughly $595,000.

“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,” according to a statement from Steven Dettelbach, a U.S. attorney for the northern district of Ohio. “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.”

The indictments come almost two years after federal authorities, including those sporting bulletproof vests, raided this vineyard and seized some documents. The winery’s located on Ohio 4 near Miller Road.

Among the charges Kraus, a New York-based psychiatrist, faces and explanations from the federal government:

• Count No. 1: Kraus sold $2 million in grapes and wine, “which had been pledged as collateral for loans,” totaling about $595,000. He also “failed to remit the proceeds from such sales to the USDA Farm Service Agency.”

• Count Nos. 2, 3 and 4: Kraus made various and substantial false statements and representations to federal officials related to these loans.

• Count No. 5: Kraus made false statements on a loan applications submitted to Citizens Bank on or about July 22, 2010, “for purposes of influencing the bank’s action.”

It's not immediately clear exactly what penalties Kraus could face if convicted, either on certain or on all counts.

A Hermes Vineyards employee, answering the phone late Wednesday afternoon after the Register place a call, said she’s unsure of the winery’s future. The winery stayed open shortly after the indictments came down.

An indictment is a formal charge and does not denote guilt or innocence.

Comments

Wjones44

Wow! Not good!

deertracker

I guess some fight and others rob..........millions!!!!!!!! Call the NAAWP!

KnuckleDragger

That would be about as effective (because it doesn't exist) as the NAACP, who prefers to blame everybody else but themselves for problems in the black community. Besides, what does this have to do with race? A criminal is a criminal. White or black, if you do the crime, you do the time. This idiot stole the taxpayers money and he should be punished for it just as anyone else should.

Dr. Information

deer never passes up an opportunity to bring up race.

JMOP's picture
JMOP

Overkill on federals being armed and with bulletproof vests. When this story first broke, I thought the winery was being run by some Mob members.

yea right

we are all a threat to National Security..since 9/11..and homeland security has taken over..after all you jay walk and you will have 20 cop cars and swat there to meet you on the other side of the road and be taken to that island south of Florida..

sugar

Maybe the GD government should stay out of the loan business, too easy to rip these bozos off, and it's NOT the Feds money, they have no money, it's taxpayer money. Dumb clucks.

Wjones44

So is the winery open or not? I'd like to go a few more times before it shuts down.

Another Opinion

Why would you support someone who stole from the taxpayers?

Wjones44

Because I'm an alcoholic

Tsu Dho Nimh

lol

k9unit

:) ^

Brick Hamland

Plus everyone steals from tax payers... and if you were that concerned about tax payers money you would go more often now because all the proceeds will go back to the tax payers (or at least the government) since operations will be watched by a receiver or government oversight... "becasue i am an alcoholic" was one of the best posts i have ever seen on here... well done

Wjones44

Thank you Mr. Hamland. I speak the truth good sir.

Darwin's choice

Friend of joe yost? He'll get off with a slap on the wrist....

WeThePeople1965

Not with the federal government. The feds don't play.

Babo

So what local pol covets the property? Odd that when Baxter defrauded the government to pay off Citizens Bank, no feds got involved. And no feds got involved to go after the contractors who defrauded the government in the housing grant fiasco. No feds got involved with the massive thefts at OI's Cold Creek. The feds never went after those conduits in the weapons sales from Perkins PD. And of course we won't see the feds stand up for the people of Sandusky with the massive thefts by Joe Yost.

The fact that this is a wealthy out of town person who owns valuable land in vacationland has nothing to do with the fact that he got singled out for prosecution by the feds while all the local yokels walk right?

Ralph J.

LIKE. Dave's dad is a staunch Republican. Democrats get a free pass.

Julie R.

Wow Babo, you sure hit the nail on the head with that comment. All the fraud that's been going on with property in Erie County for a looooong time (even the title companies know all about it ---- one said it's unreal), yet this guy gets singled out for prosecution.

I also wouldn't trust that Citizens Bank for all the tea in China. I wouldn't trust KeyBank (main headquarters corrupt Cleveland, Ohio), either.

WhatTheHeck

Julie R. please stop the fact less babble. You are an idiot. Seek mental help.

Julie R.

I'll bet you wish it was factless babble.

There you go again

What's fact less about her comment? And even if it is fact less, these comment sections provide readers methods to voice an opinion. You know....it's called First Amendment. Gees....

deertracker

Julie is right. The way property taxes are assessed in EC is downright corrupt. Give her a hard time all you want but she is not lying!

Julie R.

@There you go again: Sorry, but I'm not voicing an opinion. I've never said anything yet that isn't a fact and a matter of public record. If you think what I say is just an opinion, why not contact Maximal Properties LLC and ask why no title company around would ever give out title insurance on the property he obtained at a court-ordered scam sheriff sale. (btw, a scam is a fraudulent or deceptive act)

k9unit

Go back under your rock, susie^

sugar

More dirty crony cap.

Ralph J.

And now the rest of the story.
http://www.sanduskyregister.com/...

ram03

Who takes grapes as collateral? Bet the real banks laughed him to the door.

Momma-of-2

Citizens Bank does....it's a joke!

Babo

Grapes are a crop/commodity just like corn or soybeans and many banks are familiar with agricultural lending

thomtom

I see all the grape vines are dead.

Ford1

To: Babo, your comments regarding the weapons case in Perkins wasn't clear.

Sandusky Register Staff:
Perkins Twp.
Feb 15, 2012

Perkins Township trustees and former police chief-turned-convict Tim McClung have reached an agreement on money the two sides owe each other.

McClung, who is more than halfway through a one-year sentence in federal prison, has agreed to drop all claims on money the township owes him for unpaid benefits he accumulated during his tenure as police chief.

The payout he’s surrendering is substantial — about $26,530, accumulated from unused vacation days, sick time, comp time, holidays and similar benefits.

The township, in turn, is wiping McClung’s slate clean on matters of restitution. As part of his sentencing, he was ordered to pay the township about $8,630 in restitution.

The township will keep the $26,530 and McClung won’t have to pay $8,630.

McClung is serving his sentence in a federal prison in West Virginia

Babo

Here's the link to McClung's sentencing hearing wherein US District Judge James Carr openly questioned why the conduits (including prominent local businessmen) for the gun buys were not prosecuted.

http://www.sanduskyregister.com/...

LivinOnTheLake

How does what McClung did relate to what this NY based guy who Hermes Winery did? Two totally different cases. Yes they both are about money but that's it. This is the problem with these story comment sections, you all get off-topic and bring other crap into the discussion.

Babo

The issue I tried to point out is the selective nature of federal prosecutors decisions to NOT prosecute local politicians and their friends while going full out on private citizens for what used to be civil not criminal acts.

I happen to believe the conduct that the conduits, or fences if you will, of the guns stolen by McClung from Perkins PD that were paid for with federal funds engaged in was far worse criminal behavior than the sale of business assets that secured a loan. These "businessmen" bought stolen weapons and undermined the integrity of a police department. Through leverage of their political connections they were never prosecuted because IMO they would implicate others.

Far from being off topic, my comments try to "connect the dots" for people through inductive reasoning. If one studies the indictment in the Kraus case, one would find he is charged with selling off assets of his business that secured an underlying loan commitment. That happens every day in businesses all over the country and the matters are handled civilly not through strong arm tactics such as a raid for paperwork followed by a federal indictment 2 years later because a local bank with major political connections and stockholders feels entitled to special treatment in its collections work.

Ralph J.

LIKE.

Julie R.

LIKE.

Contango

Re: "bilking the government for loans made to his business,"

What's the big deal?

This is small 'potatoes' when in comes to waste, fraud and abuse of govt. programs.

The large sugar cos. regularly default on their USDA loans and the agency just gives 'em MORE money.

"About That 'No Cost' Program: $351 Million In Sugar Loans May Default"

http://sayanythingblog.com/entry...

bigrmachine

What everyone tends to forget here is that without the history of "Cronie" money and the lust the rich and privileged have for the Vacationland area then it would be like Detroit is today with no opportunities for employment and completely barren neighborhoods run by criminal element. Yeah you think that the city is like that now , well go to Detroit and see for yourself what happens when money turns its back on your city and leaves it to wither. As for this guy and the winery it is no different than the various other incidents that have happened in the past .A Fed deal is what it is they just wanna find where it went.

pntbutterandjelly

I hope they squish this guy like a grape. He needs to see a psychiatrist (in prison).
One more time the Hermes name takes a hit. That's unfortunate.

tzu4u

Owner is a local who has moved to NY. Winery has been in the family for years.

pntbutterandjelly

@ tzu4u: I wish the S.R. had brought that up in their article. Thanks for the info.

Ralph J.

I agree with Babo that this should have been a civil case. David's father is also named Ralph who is a very staunch Republican. Babo mentioned McClung. Where were the state charges?
"The U.S. Department of Agriculture (USDA) prohibits discrimination against its customers, employees, and applicants for employment on the bases of race, color, national origin, age, disability, sex, gender identity, religion, reprisal, and where applicable, Political Beliefs,"
http://www.fsa.usda.gov/Internet...

Ralph J.

What Happens if the Loan Becomes Delinquent or the Borrower
Defaults?
The lender must notify FSA when a borrower is 30 days overdue on a payment and is unlikely to bring the account current within 60 days, or if a loan is otherwise a problem. Lenders are encouraged to work with the borrower to resolve any problems.
http://www.fsa.usda.gov/Internet...

keithp

It goes two ways and there is governmental abuse and over regulation of small wineries by the Ohio Department of Agriculture. For information on the unnecessary, superfluous, duplicate (of licensing and sanitation in liquor codes), as well as discriminatory regulation of Ohio wineries by the Ohio Department of Agriculture or to take action on Ohio Senate bill 32, please see: www.FreeTheWineries.com or www.facebook.com/FreeTheWineries

Momma-of-2

• Count No. 5: Kraus made false statements on a loan applications submitted to Citizens Bank on or about July 22, 2010, “for purposes of influencing the bank’s action.

WHAT A JOKE....poor citizens doesn't need anyone to influence their commercial loan approval process....if you can breathe, you can get approved!

Wjones44

Just ask the Perkins school board. Nice loan they took out from Citizens for architectural drawings of a school with fountains that'll never be built.

pigeon farmer

Maybe it is time to hold another prayer session at the gazebo. Self responsibility and no government hand outs is the motto.

lunchtime 175

Everyone should just sit down and have a nice glass of wine and think this whole thing over and come up to a good solution for both government and the winery owner. Maybe slow times forced him to take the action that he did to raise some money to keep going??