Felonies Dropped Against Ocean Fathoms, but Bottles Being Destroyed

Unlike the bottles that the company aged under the sea, the team behind Ocean Fathoms is refusing to be sunk, despite multiple controversies surrounding a business model that claims underwater storage improves wine. 

On Monday, cofounders Emanuele Azzaretto and Todd Hahn pled no contest to a series of misdemeanors in exchange for the dropping of multiple felony charges, which were filed following a March 2022 raid of the company’s Quarantina Street offices. The Santa Barbara County District Attorney’s office also forced the company to pay $50,000 back to a disgruntled investor and will be destroying the underwater-aged wine that remains, possibly as soon as next week. 

Hahn was excited to share the news on Tuesday afternoon, the first time he’s been able to talk about the company since the raid. “The handcuffs have been taken off,” said Hahn, calling the charges “ridiculous” and laughing that all he was left with was a $145 fine. “The amount of money and public resources they spent on this case is just a joke.”

The District Attorney’s office had a different take. “The charges that they pled to were partially because of the fact that they had to pay $50,000 back to the investor, which is a large sum of money particularly given that the company did not have much money,” said Morgan Lucas, a deputy DA in the environmental and consumer affairs division. “We are also going to be destroying hundreds of thousands of dollars of inventory. These two components alone are very significant penalties, when compared to normal criminal cases.” 

Lucas further explained that there was an immigration consideration at play — Azzaretto would have been deported back to Italy with a felony — and the misdemeanors they accepted “are still serious charges” that require a year of probation. One was an environmentally minded water code violation that is priorable, meaning that any future violation of the same code results in an automatic felony. The other two were selling alcohol without a license and abetting investor fraud. 

“The terms span a pretty broad gamut,” said Lucas, who said that Ocean Fathoms can no longer proceed without acquiring the proper permits from a plethora of state and federal agencies. “This really prevents them from doing anything along the lines of what they were doing in the past. They can’t engage in this business at all and all of the inventory that they did that is still around is being destroyed.”

The raid and subsequent charges came after the California Coastal Commission learned that Ocean Fathoms was storing wine bottles in the waters off of Montecito in February 2021, prior to obtaining a permit for doing so. The commission demanded that the bottles be immediately removed, but granted an extension for the removal to March 15, 2021, which is when Ocean Fathoms said the equipment would be available. The company turned that retrieval into a marketing event, with $1,000 tickets, further angering the commission and attracting the attention of the Los Angeles Times, which later hosted a comparative tasting. 

A complaint from the Coastal Commission triggered the DA’s Office’s investigation, which grew to include a number of state and federal agencies, even employing an undercover agent to purchase a bottle. “The more we looked at it, the more we realized that there wasn’t anything in order,” said Lucas, which is why so many agencies were enlisted in the investigation. Many of the agencies involved believed that the company was a much larger and better funded enterprise, only to subsequently realize that much of that was marketing hype.  

Hahn, meanwhile, believes that outside forces may be at play, possibly lobbyists from large alcohol companies seeking to do something similar. “This felt like we were being targeted,” said Hahn. “It didn’t make sense how venomous they were coming at us.” 

Oceans Fathoms worked with the FDA for years to get the underwater aging process approved as safe, and finally achieved that in July 2022, but Hanh couldn’t share that news then due to the criminal case. “This is completely innovative stuff. There was no roadmap to what we were doing,” said Hahn, who sees the company caught in a bit of a chicken-and-egg scenario when it comes to permitting. “This is a disrupter and we can really fuck with the market in a certain way. We’re somewhat of a threat.” The company is now pursuing patents for their closure and sealant technologies. 

Hahn was disappointed that they could not direct the sales of the remaining wine to a charity. “That wine could be used for good, and just to destroy it doesn’t make any sense,” said Hahn, who was told that the bottle-bashing could happen as soon as July 24. 

The DA’s Office, which is awaiting final sign-off on the destruction, sees the law as straightforward. “The product itself is illegal,” said Lucas, explaining that the FDA considered the wine bottles adulterated at the time of their creation and that the bottles are lacking labels, which is a TTB violation, among other regulatory loose ends.  

“FDA approval isn’t the end of the story,” she said. “That’s not the only thing required for alcohol to be considered legal. They hadn’t done any of that. This alcohol didn’t have approval from any of the required agencies, so there’s nothing to prove that it’s actually safe for human consumption.”  

Despite the hurdles, the Ocean Fathoms team plans to keep moving forward. They’re inspired both by the resolution of this case and a recent social media post by CBS on May 26, which is National Wine Day, that replayed the station’s original news 2021 report on the company. That 2023 repost attracted more than 20 million views on Instagram and TikTok and has led to thousands of emails from potential investors, customers, and other media, which Hahn is finally able to respond to. 

“The demand has never been higher,” said Hahn, who looks forward to re-submitting the Coastal Commission application and would like to keep the operation based in Santa Barbara. “The environment is perfect, and it’s a nice day trip,” said Hanh, who sees pickup cruises like the one in March 2021 as part of the customer experience down the road. “It would be silly to move unless it’s an absolute no.”

Lucas did not entirely rule out a future for Ocean Fathoms. “If they manage to do everything by the book, good for them,” said Lucas. “But they’ve got to do a lot before it gets to that point.”