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DFR Orders Zafa Wines to Cease Seeking Investment for Failing to Disclose it Lacked Proper Liquor Licenses

November 23, 2020

Montpelier, VT – Commissioner Michael Pieciak announced today that the Department of Financial Regulation issued an order requiring Krista Scruggs and Zafa Wines LLC (Zafa), of Burlington, Vermont, to cease and desist from offering or selling securities.

The Department’s investigation thus far has found that Scruggs marketed Zafa in investment materials without disclosing certain material risks as required by Vermont law.

Specifically, because Zafa was openly manufacturing, bottling, selling and distributing wine, a reasonable investor would have justifiably assumed the company had all necessary state and federal liquor licensees to do so.

In fact, although Zafa did not have the necessary licenses, it informed prospective investors in a risk disclosure document that it did not expect compliance with government regulation to have a material adverse effect on its operating results. The offerings materials failed to disclose Zafa’s lack of multiple liquor licenses that are necessary to legally manufacture, bottle, sell and distribute wine, either within Vermont or to neighboring states.

Commissioner Pieciak ordered Scruggs to cease and desist from offering or selling securities in Zafa in Vermont to protect the financial health and welfare of additional Vermont residents.

If you have invested in Zafa Wines or have other concerns about this securities offering, please contact the Securities Division at 802-828-3420 or dfr.securitiesinfo@vermont.gov.

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