Wine Fraud: A Vintage Crime

Collecting vintage Burgundies, Rudy Kurniawan drove the rare-wine market to new heights, then began selling his treasures. Or so it seemed. Michael Steinberger uncorks what may be the largest case of fine-wine fraud in history

In the evening of April 25, 2008, the wine auction house Acker Merrall & Condit held a sale at a New York restaurant called Cru. In contrast to the tedium of most wine auctions, Acker sales were bacchanals. They were normally held in restaurants, and many extravagant wines would be uncorked and consumed during the course of the auctions. Acker’s 36-year-old president, John Kapon, who was known to be the hardest-working and hardest-drinking man in the wine business, would join in the revelry while wielding the hammer. He would often have multiple glasses of wine arrayed on the lectern, and the effect as the night wore on was to simultaneously ratchet up his use of expletives and accentuate his tendency to butcher French pronunciation.

Wine helped lubricate the flow of money: early in the auction at Cru, two bottles of 1959 Dom Pérignon rosé that had once belonged to the Shah of Iran sold for $42,350 apiece, setting a new rec­ord price for champagne.

Later that night, Kapon was to sell a collection of wines consigned by a friend of his, Rudy Kurniawan, a 31-year-old Indonesian who lived in Los Angeles. Nicknamed “Dr. Conti” because of his affinity for Domaine de la Romanée-Conti, Burgundy’s most famous estate, Kurniawan had started buying massive quantities of wines around 2003; at one point, he was reportedly spending $1 million a month. Kurniawan also sold lots of wine: at two Acker auctions in 2006, he had unloaded wines worth an astonishing $35 million. For the auction at Cru, which he had flown in to attend, he was putting up 268 bottles from three esteemed Burgundy producers: Domaine Armand Rousseau, Domaine Georges Roumier, and Domaine Ponsot.

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The 16 Most Counterfeited Wines
Opus One; Château Lafite Rothschild; Jaboulet | You are far less likely to find a fake of Opus One

Reassuringly, Downey says the list of fine wines that counterfeiters like to make is very short. She said has seen counterfeit Screaming Eagle, and Opus One. CEO David Pearson said Wednesday he has seen one counterfeit bottle of Opus One. But the Top 16 Counterfeit Wines are all European.

Here is the list, according to Downey:
  • Domaine de la Romanée-Conti 
  • Henri Jayer
  • Domaine Dujac
  • Château Cheval Blanc
  • Château Petrus
  • Château Lafite Rothschild
  • Château Latour
  • Château Mouton Rothschild
  • Château Lafleur
  • Château Le Pin
  • Château Latour à Pomerol
  • Château Rayas
  • Jaboulet La Chapelle Hermitage
  • Sassicaia
  • Soldera Brunello di Montalcino
  • Bruno Giacosa Barolo
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Vintage Fraud: How To Spot A Counterfeit Wine

How can you protect yourself?  Below you’ll find Edgerton’s advice on spotting fakes:
  • Edgerton’s first line of defense is a good offense. Never buy from a suspicious source. If you buy from suspicious source there is always more risk than a known source. Reliable sources include Sotheby’s and Hart Davis Hart, as Edgerton observes, these two auction houses have not been implicated in any wine fraud to date.
  • Beware The Famous Vintage. Almost always the counterfeits are Bordeaux wines from excellent vintages. If the wine is from a famous vintage: 1900, ’28,’ 45, ‘61 ‘82, ’90, be especially wary.
  • Look at capsule (the foil over the cork) and label critically; compare the capsule and label to known genuine bottle.
  • Glue Clue. Is the label on crooked? You rarely see a crooked label on a genuine bottle. Counterfeiters like Elmer’s glue because they can slap it on and then straighten the label. In the process of straightening they leave a perimeter edge of glue residue around the label that can never fully be removed.
  • Carefully consider buying any wine older than 1980 vintage. Most fakes are for vintages prior to that date.
At the end of the day Edgerton notes that there is a lot of really marvelous wine in the world that doesn’t get counterfeited. “There are wines like an 1811 Chateau Y’qeum, from the year of the comet, that sell for $80,000. It’s certainly historical and it is drinkable, but is it going to provide a pleasurable experience? Not for the people who enjoy wine. It’s a historic wine, but not necessarily pleasureable to drink.”

Buy wine for pleasure rather than prestige and you’ll be in safer waters.

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Counterfeit wine is often made by pasting a fake label onto a bottle. Wine labels use particular fonts and paper stock depending on the historical era, and one of the easiest ways to spot a fake is if the paper and font don’t match the common practices of the period. Authentic bottle labels will feature wear marks, but counterfeiters print these marks in ink. You can also spot a fake wine if the symbol on the cork doesn’t match the symbol on the label.

For years, the luxury wine industry has had to rely on expert tasting opinion and label & material analysis to spot fakes. But now, an Italian technology company is bringing the fight against wine fraud into the 21st century. Selinko is a tech company that uses microchips to track when wine bottles are opened – so if a counterfeiter is trying to refill an old bottle with new wine, the microchip will register the bottle as previously opened and therefore fake. In addition to this “smart” wine bottle, professional wine fraud consultant Maureen Downey is now building WineFraud.com, a website where consumers can look up information on wines at every price point.

Counterfeit wine is a growing problem in the wine industry, and experts like Maureen Downey say that fraud is happening at every price point. Now, the wine industry is fighting back – and using every tool at their disposal to do it.

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Fifth of wine sold worldwide is 'fake'
Wine producers are using holograms and QR codes in an attempt to defeat counterfeiters

Counterfeit wine accounts for some 20 per cent of international sales, according to unofficial wine industry estimates published in yesterday’s regional French newspaper, Sud Ouest.

The astonishing figure came as judges in Bordeaux’s criminal court sentenced a French conman to four months in prison for selling fake labels to a Saint Emilion winemaker in 2010.

The fraudster, Armand Aramian, was found guilty of selling counterfeit labels of Mouton Rothschild wine on eBay, the internet auction site. Since 1945, the prestigious Grand Cru has commissioned renowned artists to illustrate the labels for its vintages, which are highly popular with collectors.

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The must sought-after Roman̩e-Conti Рbut do the bottle contents match the label?

One of the world’s counterfeit wine experts, David Wainwright has warned that insistence among Asian buyers for rare wine has boosted the circulation of fakes.

“I see more 1966 Henri Jayer today than I used to,” said Wainright. “Old, classic vintages of Henri Jayer and 1971 Romanée-Conti are the most counterfeited wine in the world and it’s the cavalier attitude wine consumers have adopted in Hong Kong has helped to drive it.

“A few years ago, some would have even bought a bottle with ‘Laffite’ on the label and not have cared but fraudsters are becoming cleverer now and spotting fakes is getting increasingly more difficult.”

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Wine fraud: How easy is it to fake a 50-year-old bottle?
With vintage wines fetching prices in excess of $200,000, wine fraud has become a lucrative business. Rudy Kurniawan was sentenced to 10 years in jail for committing wine fraud

Wine fraud was a problem in classical Rome and it continues to be one now. Some estimate that over 5% of wine consigned and sold at auction is fake.

But even though it is a very big problem, it is a very difficult thing to do.

"There is a distinctive taste in aged wine," says wine chemist Andrew Waterhouse, of the University of California, Davis.
That taste?

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Wine fraud
Expensive and highly collectable wines such as the French Bordeaux wine from Château Pétrus are often the target of wine fraud

Wine fraud may come in several forms. In all cases the fraud relates to the commercial aspects of wine. The most prevalent type of fraud is one where wines are adulterated, usually with the addition of cheaper products (e.g. juices) and sometimes with harmful chemicals and sweeteners (compensating for colour or flavour). Counterfeiting and the relabelling of inferior and cheaper wines to more expensive brands is another common type of wine fraud. A third category of wine fraud relates to the wine investment industry. This often works by offering wines to investors at excessively high prices. In some cases the wine is never bought for the investor. Losses in the UK have been high, prompting the DTI and Police to act. In the US, investors have been duped by fraudulent wine investment firms too. Independent guidelines to potential wine investors are now available.

In wine production, as wine is technically defined as fermented grape juice, the term "wine fraud" can be used to describe the adulteration of wine by substances that are not related to grapes. In the retailing of wine, as wine is comparable with any other commodity, the term "wine fraud" can be used to describe the mis-selling of wine (either as an investment or in its deceitful misrepresentation) in general.

Fraud in wine production refers to the use of additives in order to deceive. This may include colouring agents such as elderberry juice, and flavourings such as cinnamon at best, or less desirable additives at worst. Some varieties of wine have sought after characteristics. For example some wines have a deep, dark color and flavor notes of spices due to the presence of various phenolic compounds found in the skin of the grapes. Fraudsters will use additives to artificially create these characteristics when they are lacking. Fraud in the selling of wine, has seen much attention focused on label fraud and the investment wine market. Counterfeit labelling of rare, expensive and cult wines, and unregulated wine investment firms characterise this type of fraud. Wine Spectator noted as much as 5% of the wine sold in secondary markets could be counterfeit and the DTI (UK) believes losses (by investors) to rogue wine investment firms amount to hundreds of millions of pounds.

related: Rudy Kurniawan

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The best piece of advice anyone can give on how to avoid an investment scam is never to accept a cold call and never deal with a company that cold calls. Deceptively simple but almost all of the many victims of wine investment and other alternative investment scams that I have come across have been initially suckered by a hard selling cold call.

Investments that are regulated in the UK by the Financial Conduct Authority (FCA) are forbidden to cold call and only make calls under certain conditions. Unfortunately few alternative investments, unless they are judged to be collective investments, come under the remit of the FCA. Companies selling cases of wine are not regulated, whereas wine funds, which operate like a unit trust, are subject to the control and rules of the FCA as they are collective investments.

Not surprisingly the vast majority of wine investment frauds involve companies, who sell cases of wine, so they are not regulated.

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Firm Alleges Rudy Kurniawan Sold It $2.45 Million in Fake Burgundy, and Wine Merchants Helped
Domaine de la Romanée-Conti's wines are some of the world's most valuable; these are authentic examples

More than four years after Rudy Kurniawan was put behind bars, the aftershocks of his wine-counterfeiting activities are still being felt. An investment firm based in Singapore filed a lawsuit in a New York state court on May 19, charging that 132 bottles of Domaine de la Romanée-Conti (DRC) wines it purchased for $2.45 million in 2011 were not authentic. Rather, they were fakes made by Kurniawan, aka Dr. Conti, who is now serving 10 years in federal prison.

But the suit doesn’t stop with Kurniawan. It accuses some prominent names in the collectible wine business of being Kurniawan’s co-conspirators, including Richard Brierley, former head of Christie’s North American wine department and head of Vanquish wine auctions at the time in question; Xavier Nebout, CEO of a Bordeaux wine firm called Cep’Age; and Marc Lazar, a Missouri-based wine dealer and wine-storage facility owner. The lawsuit alleges fraud and negligent misrepresentation and asks for $2.45 million plus punitive damages.

“The defendants were fully aware that the bottles of wine they were selling were fakes that had been specifically engineered by a notorious counterfeiter, Rudy Kurniawan, to create the appearance of having the characteristics of real DRC wine, but which were actually forged bottles containing concoctions of lower quality wine,” states the complaint.

related: Wine Fraud

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Auction of world's most expensive wine thrown into chaos after claims they're fake
Romanée-Conti has been a favourite target for fraudsters AFP/Getty

An American wine fraud expert has called into question the authenticity of a treasure trove of the world’s most expensive wine after it went under the auctioneer’s hammer in Geneva.

Six lots of vintage bottles from the mythical Romanée Conti Domain in Burgundy were withdrawn from the multi-million pound auction at the last minute. The rest of the sale of 1,407 bottles – worth up to £11,000 each – proceeded as planned.

The auction house, Bagheera Wines, told The Independent that it would “urgently” verify the authenticity of all bottles in the sale. If any proved to be suspect, their sales would be cancelled.

The most expensive wine in the world is about to go on sale

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How Wine Fraud Works

Corks, foil capsules and wine labels used as evidence in 2013 the trial of wine dealer Rudy Kurniawan. He was found guilty of masterminding a lucrative scheme to sell fake vintage wine.

It's hard to feel sorry for Bill Koch. The billionaire brother of conservative political donors Charles and David Koch sold his share in the family energy business years ago and dedicated his enviable nest egg — how big of a nest do you need for $4 billion — to the aristocratic hobby of collecting rare and absurdly expensive things [source: Forbes]. His less-than-modest Florida home features original works of art by Picasso and Monet and a wine cellar containing some of the most expensive and scarce vintages in the world. It also contains several hundred bottles of "moose piss" [source: Stephens].

That's how Koch described the dubious contents of 421 bottles of counterfeit wine that he unwittingly purchased for $4.5 million over the past 25 years. The phony bottles of Chateau Lafite-Rothschild from 1961 and handblown relics reportedly owned by Thomas Jefferson were forged by enterprising wine dealers-turned-fraudsters who "aged" fake labels with coffee grounds, tampered with corks and passed off grocery-store hooch for the finest of fine wines.

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The Wine fraud of the Century - how to fake wines and make millions?

Rudy Kurniawan, who for years was active in wine circles as one of the world’s wealthiest, collectors and dealers was arrested by the FBI in Los Angeles. Kurniawan, a resident of Los Angeles was taken into custody on 3 counts of wire fraud and 3 counts of mail fraud charges. The charges were filed in New York. It is expected that the United States attorney in Manhattan, New York, would seek to extradite him to New York to face charges.

Rumored to live in the expensive, Los Angeles community of Bel Air, Kurniawan moved to California to attend Cal State Northridge in 1995. At the time, he was a resident of Arcadia, a Chinese language speaking area of Los Angeles. Chinese by birth, Kurniawan, the youngest son in the family was born in Jakarta, Indonesia. Kurniawan claimed his father gave him an Indonesian surname that is different from the family’s Chinese name in order to let Kurniawan keep his autonomy and privacy. The boyish looking Rudy Kurniawan is said to be close to 35 years old.

People familiar with Kurniawan, who at one time posted on web sites under the assumed name of “Dr. Conti” said that at his peak, Kurniawan was spending as much one million dollars a month on wine. Most of that money went to buying the most expensive and sought after wines from Bordeaux and Burgundy. He could drop $250,000 for a single night of wine and dinner and treat everyone at his table. At one point in time, he might have owned as many as 50,000 bottles of very, expensive wine. At the time, he was the world’s most active wine buyer. His purchases drove the collectible wine market! In an article published by the Los Angeles Times, Kurniawan told reporters, “I’m not a collector. I’m a drinker.” Based on the charges and rumors, this looks like Kurniawan could add master, wine forger to his list of accomplishments.

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Hundreds of Rudy Kurniawan counterfeit wines destroyed
Rudy Kurniawan counterfeit wines at a landfill site in Texas. Credit: Lynzey Donahue / US Marshals

A Container of smashed bottles bearing some of the wine world’s most renowned names, including Domaine de la Romanée-Conti and Château Pétrus, was all that remained of more than 500 of the Rudy Kurniawan counterfeit wines destroyed by US Marshals late last week.

It is almost two years to the day since Kurniawan was convicted of making and selling copycat versions of fine and rare wines, as well as of fraudulently attempting to obtain a $3m loan.

He produced counterfeit wines at his Los Angeles for several years in an elaborate operation that involved concocting blends in his kitchen sink and printing off fake labels on his computer.

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Durian Fraud: 10 Tricks That May Deceive You
Wine Fraud: A Vintage Crime