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Carl Kanowsky: Wine, scams and millionaires — a lesson to be learned

It's the Law

Posted: March 16, 2012 1:55 a.m.
Updated: March 16, 2012 1:55 a.m.
 

ast week, I wrote about how college students could be easily duped into being victims of a scam. In that column, I delivered the sage advice, “If it seems too good to be true, it likely is.”

Well, I didn’t want our collegiate readers to feel singled out. A bit of research discloses that even billionaires are susceptible to the con.

During the truly horrid days of the recession, one commodity remained a good investment, namely, wine. No, not Two-Buck Chuck, but collectible wine, such as Chateau Lafite Rothschild or Domaine de la Romanee-Conti.

What, you’ve never heard of them, or you heard of them but have never even dreamed of drinking anything like them because of the expense?

In the past five to eight years, wines from these estates have skyrocketed in value. Now, it’s not unusual to see individual bottles from either chateau going for $5,000 to $15,000. That’s right, $15,000 for something you can’t return even if it has gone bad.

But for the most wealthy among us (well, frankly I don’t know anyone that rich, but they apparently exist), it became a matter of status to be able to parade a bottle of ’45 Lafite or a 2005 Domaine de la Romanee-Conti Romanee Conti (available online for a mere $20,000 — of course, that doesn’t include tax and shipping).

As the Chinese economy began creating more and more millionaires, their desire to possess such prizes caused the wine prices to escalate, from the merely unreachable to otherworldly. The Chinese consumers, along with their American and European fellow collectors, often engaged in furious bidding wars at wine auctions.

Those with a criminal mindset, however, saw a tremendous opportunity to some quick riches. One such person, apparently, was Rudy Kurniawan.

Now, let me preface what I’m going to say — Kurniawan has been arrested but not convicted of anything. So, what follows is what the FBI and the media are saying. Nothing has been proven yet. But, if true, it’s an amazing case of the rich getting hosed.

Rudy was arrested last week in Arcadia for selling some fake wine. According to Decanter Magazine, “The case against Kurniawan is that in 2008 he consigned some 84 bottles purporting to be from Domaine Ponsot in Burgundy, including one from 1929, which was impossible as the estate did not begin bottling until 1934. Other bottles were labeled 1945-1971 from the Clos St-Denis vineyard by Dme Ponsot, but the domaine did not make wine from that vineyard until 1982.”

He was going to sell this wine via an auction at Acker, Merrall and Condit. Kurniawan and Acker share a mutually advantageous relationship. According to Wine Spectator magazine, “In 2006, New York-based auction house Acker, Merrall & Condit sold about $38 million of wine at two auctions, all of it consigned by Kurniawan.” Now, the obvious question: Was some or all of this wine phony?

Billionaire William Koch smelled a rat a few years ago. He bought several bottles at these 2006 auctions. He has sued both Kurniawan and Acker, claiming that at least five of the most expensive were fakes. Bill paid almost $80,000 for the five bottles.

But Koch should feel lucky that he was taken for only 80 grand. It seems that Acker also was on the short end of the deal with Kurniawan. In 2008, he signed a confession of judgment, essentially an acknowledgement that he agreed he owed the creditor money, affirming that he owed Acker almost $11 million.

The FBI apparently believes Rudy had turned making fake grape juice into a major industry. When they raided his home, they found what they said was a laboratory used to manufacture counterfeit wines. According to the New York Times, “The photos showed reams of printed labels for some of the most expensive wines in the world … as well as corks, foils, rubber stamps with vintage dates and bottles that prosecutors said were being prepared as counterfeits.”

So, don’t feel bad if you’ve fallen for a scam. As you can see, even the wealthy are not immune to such fraud.

In the future, take your time, thoroughly investigate what’s being offered for sale, do your due diligence, and remember, “If it’s too good to be true, it probably is.”

Carl Kanowsky of Kanowsky & Associates is an attorney in the Santa Clarita Valley. He may be reached by email at cjk@kanowskylaw.com. Kanowsky’s column represents his own views, and not necessarily those of The Signal. Nothing contained herein shall be or is intended to be construed as providing legal advice.

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