Caveat Emptor: “Mondo Cellars selling ownership shares to its club members”

Thanks to the Great Recession, wineries and everyone else for that matter have been scrambling for financing.

Crushpad’s innovative crowdsourcing syndication back in June spurred imaginations of all sorts, including many who raised their concerns about crowdsourcing and securities laws. A closer look at Crushpad showed a helluva lot of lawyering and attention being paid to securities laws — including SEC Schedule D filings, private offerings, and limited solicitations reserved for qualified investors.

Than, out of the blue this afternoon, comes a news release from Mondo Cellars — printed entirely below — that raises the hair on the back of my neck.

The content of that news release led me to send back the following questions and concerns. So far I have not heard back.

MY QUESTIONS & CONCERNS

I’d be very interested in knowing about the structure … LLC, limited partnership? and what sort of securities due diligence has been done?

Is this registered anywhere? Schedule D?

Thanks to the Great Recession, wineries are looking for money everywhere they can get it.

What defines the qualified investors?

And where is an email address to contact Doug Mondo? Nothing here and nothing on the web site.

And you quote “Mondo wine club member and local legal expert Robert Snyder” … the California Bar association has four Robert Snyders and none of them is local to you. Is he an attorney? Is he a specialist in securities?

The devil is in the details and the details can cause holy hell if they’re not all in line. I’m sorry to say so but the statements in the news release below look like the sort that can get people into trouble.

I have been the CEO of a public company and I can tell you that the sort of glowing admonitions to buy into this deal — in the absence of any other cautionary language — rings alarm bells. Loudly. Really Loudly.

This news release is easily defined by regulators as a solicitation to buy … and you are soliciting more than qualified investors.

————————- NEWS RELEASE ————————————

For immediate release: September 7, 2011

Notes for editor: Please call 805-226-2925 or reply to this email to schedule an interview with Doug Mondo or an early investor. Complete financial prospectus and higher resolution photos are available.

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Winery looks to creative financing

Mondo Cellars selling ownership shares to its club members

PASO ROBLES, CALIF—Mondo Cellars is looking in a new direction for financing to ramp up production and upgrade its operation—It’s offering its wine club members a business opportunity.

The winery sold out of its current releases ahead of schedule and found itself short on funds for the next bottling of its next seven new wines.

With banks and other lenders tightening the flow of capital, owners Mitch and Doug Mondo came up with a creative solution to the problem.

The Mondo brothers are offering an investment opportunity to their wine club members in the form of fractional ownership interests. They already have attracted investors.

The members will receive a share of Mondo’s acreage, its buildings, winery and B&B business. The property includes 82 acres, a well-appointed 4,400-sq.ft., three-room bed & breakfast, winery tasting room, a 3,200-sq.ft.-winery and barrel room and large landscaped wedding and special events area.

“It’s a little bit like a country club membership, except with Mondo Cellars plan, it would be like you owning part of the golf course too. Mondo Cellars is providing you with the ownership in the winery, and the land plus discounts on wine and fun events. This plan also has real tax and income benefits,” says Doug Mondo.

Mondo Cellars is selling stakes in 50 percent of the land and 30 percent of the winery to raise $2.68 million to reinvest in the facility improvements and marketing efforts. They also plan to improve the event plaza for receptions, weddings, and private parties. The minimum investment is $11,000.

“We’ve sold over $150,000 in shares to investors in the last 30 days alone,” Doug Mondo says. “The stock market is very volatile and real estate is trading at record lows. Real estate investments, like this one, are a great option for those concerned about inflation, as well as protecting their money by investment in a working operation.”

Mondo wine club member and local legal expert Robert Snyder has recently invested. “Diversification of income is a smart move in this economic climate and when you can get a preferred payout position in a real estate investment for $11,000 and throw in the added lifestyle benefits of owning part of a growing Paso Robles winery, well it not only makes sense, but it looked to me like a safe bet, and an irresistible opportunity” says Snyder who heads up the legal teams for companies like Dallas based DNA Next, and publicly traded Virtual Medical International, Inc.

Mondo has prepared investor packets with detailed descriptions of how the money will be used to help grow the sales and profits of the company and how much stakeholders will get in return.

Owner benefits

• A real estate investment with tax loss/gain pass through and annual K1 filings.
• No annual dues or fees.
• Tax benefits of depreciation during ownership.
• A solid inflationary hedge.
• Liability limited to capital invested.
• All sale, refinance proceeds, and profits from the winery operation will be distributed to Class A members first until they have received their original contributions, plus 8% percent annually from the date of contribution, less any disbursements already received.

• Access to the Villa nel Mondo private club facility.

• Free wine tasting for members and guests.

• Distributor pricing on all wines.

• Bed & breakfast stays at 20% off

The winery is located at 3260 Nacimiento Lake Drive just outside of Paso Robles. For more information, visit their mondocellars.com or call (805) 226-2925. The tasting room is open daily from 11 a.m. to 6 p.m. in the spring and summer, with extended hours on Fridays and from 11 a.m. to 5 p.m. in the fall and winter.