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Friday, May 15, 2015

Counterfeiting of Iconic Wines

 The last few years have been wrought with scandal after scandal of fraud in the wine world.   It stands to reason that if one is going to swindle someone  that one would follow the money---steal from those who are buying the globe’s priciest wines.  That is exactly what happened.  The world’s most expensive maker of Burgundy was duped when fakes of the winery’s old vintages were sold at auction; a winery in Tuscany attempted to substitute table wine for its posh Brunello di Montalcino; and, one of the world’s richest men was duped when he bought the supposed historical bottles of Thomas Jefferson’s at auction.

An investigation involving suspicious bottles of Burgundy’s Domaine de la Romanee-Conti (DRC) at auction uncovered a counterfeiting ring.  DRC’s average price per bottle is $13,000 although there are bottles that have sold for nearly $39,000, creating a perfect storm for counterfeiting.  Investigators discovered a ring that was something out of a spy novel with conspirators in Italy, Hong Kong, Russia, Belize and even Switzerland.  The two central figures were both involved in the wine merchant business.

Another scandal involving fakes of DRC wine involved a young Indonesian living in Los Angeles.   The first person tried and convicted for selling false collectible wines in the US, he had been dubbed by collectors as “Dr. Conti” for his love of DRC.  But this counterfeiter did not just target DRC.  At trial, three of Burgundy’s top winemakers testified that bottles of their wine that had been sold by the defendant bearing their winery’s labels were fake.  Investigators, who had seized >1,000 bottles from the criminal, found all of these to be bogus.   Sentenced to 10 years in federal prison, the crook was ordered to pay > $28 million in restitution to his victims, and to forfeit $20 million in property.

Billionaire William Koch was caught in the above web of deception.  Koch, who considers himself somewhat of a counterfeit crusader, has invested >$25M in lawyers and investigators.  He sued not only the young man above, but the auction house that bought the phony wine and resold it to him.  He won on both accounts and this win has forced auction houses to change their policies from “buyer beware” to  more liberal policies where returns could be made if the wine as “suspect or counterfeit.”

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