SAN FRANCISCO (CBS SF) — The former owner of a now-bankrupt Napa Valley wine company is due in federal court in San Francisco later this month on fraud charges stemming from the alleged mislabeling of supposedly premium wine.

A grand jury indictment unsealed on Wednesday alleges that customers of Jeffrey Hill, 38, paid $1.5 million for expensive wine and bulk grape juice that had in fact been mixed with cheaper products.

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Hill formerly owned the Hill Wine Co. on the Silverado Trail in St. Helena. The company declared bankruptcy in 2014. Formerly of Napa, Hill was arrested Wednesday in Clovis, where he now lives. The indictment was issued under seal Tuesday and unsealed after his arrest.

Hill appeared before a federal magistrate in Fresno on Wednesday and was released on bail, according to Abraham Simmons, a spokesman for U.S. Attorney Brian Stretch of San Francisco.

His next court date on Nov. 16 is an initial appearance before U.S. Magistrate Laurel Beeler of San Francisco for a reading of charges and identification of his defense lawyer.

The alleged fraud included labeling wine from outside the region as coming from Napa Valley and mixing cabernet sauvignon with greater than allowed amounts of cheaper wine, according to the indictment.

“The Napa Valley was considered one of the premier winemaking regions of California” and thus wine from the area carried a price premium, the indictment said. Wine made from cabernet sauvignon grapes is generally more expensive than most types of California red wines.

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Hill was charged in the indictment of four counts of mail fraud and four counts of wire fraud in connection with payments he received in 2012 and 2013 from sales of his allegedly mislabeled products.

He is alleged to have violated federal regulations requiring that 85 percent of wine labeled as coming from Napa Valley must originate in that area and 75 percent of wine labeled as cabernet sauvignon must be made from grapes of that name.

The indictment alleges that he created false records to conceal the origin of grapes processed at Hill Wine Co. facilities.

In a separate case in Napa County Superior Court, Hill was accused by the Napa County district attorney in 2014 of two counts of grand theft by diverting truckloads of grapes intended for another winery to his own company in October 2013.

He pleaded no contest to one count of grand theft and was sentenced in 2015 to one year in jail.

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