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Tequila Investment Called a ‘Sham’

HOUSTON (CN) - A man claims high-end Tequila distiller El Grado Spirits issued phony "royalty projection sheets" to induce him to invest $100,000 in "a sham."

Ken Koepke sued El Grado Spirits LLC in Harris County Court.

"El Grado is an ultra high premium Tequila distiller based in Corpus Christi, Texas with three characteristic labels selling in Texas and surrounding states: Blanco, Reposado and Anejo," Koepke says.

Blanco is white, or clear Tequila. Reposado means "rested," and is aged in oak; anejo is aged longer and is the top grade.

El Grado was founded in 2008, Koepke says, and began raising money from investors in 2009. He says he was approached by El Grado president Ben Gonzales and sales director G. Page Brockman.

"The parties all met and representations were made at the Marriott Hotel in The Woodlands, Texas, the Apache Oil Company offices in Pasadena, Texas, and various restaurants in Houston, Texas over several weeks," Koepke says.

In addition to these "dog and pony show meetings," Brockman issued solicitation letters to investors, which "advertised the addition of management expertise and the establishment of a 'Founder's Club' for potential investors," according to the complaint.

But Koepke says, "There was no mention of the inherent risks involved in the investment in the Premium Tequila industry. Based on representations made by defendant the plaintiff invested One Hundred Thousand ($100,000) Dollars in El Grado. Plaintiff's investments represented an undefined equity interest in El Grado."

Koepke says El Grado promised him regular quarterly royalty payments based on the number of Tequila cases it sold, and went so far as give him a royalty projection sheet.

But Koepke says he "received $231.20 in 2010 for his $25,000 investment," which was "substantially less than the $5,000 advertised in the royalty sheet provided to prospective investors."

Koepke adds: "Repeated attempts to gain information on the status of El Grado or simple communication have been ignored. It has now become evident that an investor opportunity was actually a sham to take money from individuals who lacked the sophistication or status to consider such investments. Defendants' 'offering' did not meet even the most basic requirements for seeking appropriate investors."

Koepke seeks damages for deceptive trade, fraud, breach of contract and state blue sky and securities law violations.

The only defendant is El Grado Spirits LLC.

Koepke is represented by Justin Perryman of Katy, Texas.

Like Champagne in France, Tequila in Mexico is a protected mark, restricted to booze produced in the state of Jalisco.

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