For eight days at the federal courthouse at 500 Pearl St., proceedings were underway in the important and interesting trial of US vs Kurniawan. I attended for three days. Here are some outtakes from my time at the #rudytrial:
* Bill Koch, billionaire, testified that he liked “kiwi wine” as well as Spanish wine and doesn’t drink DRC every night from his 43,000 bottle collection. Alert John Hodgman to alter his billionaire schtick to include the everyday drinking wines of mere mortals!
* Bill Koch said the best wine he’s ever had was a bottle of 1853 Margaux at the chateau. Read more…
The jury has returned a verdict: Rudy Kurniawan has been found guilty of selling counterfeit wine through the mail and engaging in wire fraud. Judge Richard Berman will announce the sentencing on April 24; Kurniawan could spend 40 years in federal prison. Read more…
There was talk about guns from the witness box today, in the fifth day of the Rudy Kurniawan trial. And they might as well have been smoking guns.
Of the four witnesses today that included billionaire Bill Koch, David Parker had the moment of greatest drama. Parker owns two wine business in LA that sold Rudy seven bottles of 1962 Domaine de la Romanée Conti – Romanée Conti Read more…
Rudy Kurniawan sat with his back to the gallery, his Men’s Warehouse suit bunching up below his neck. Some have said he’s lost weight since he’s been in jail; never having seen him before, I can’t confirm that. But he is a slight man with a young face behind his thick-framed, black glasses.
And it was a dour face today at the US District Court in lower Manhattan. In case you haven’t heard, Kurniawan is standing trial this week, with the Department of Justice accusing of selling counterfeit wines. Although one of the auctions in focus, Acker’s “Cellar II” sale in October 2007, grossed almost $25 million, the amount of fake wine he is alleged to have sold is $1.3 million. Read more…
So much is underwater these days, from homes that are below their cost basis to homes stricken by Hurricane Sandy. Given this backdrop, it seems almost trivial to talk about lost wine. But that is our beat and there’s a big case that has bubbled up to page one of the NYT today.
The case involves missing wine and high-profile individuals slinging lawsuits. Sound familiar? Well, this is not a counterfeiting case. In fact, it is the story of WineCare, a wine storage facility that has an estimated 27,000 cases in its facility. The cellars were flooded during Hurricane Sandy and collectors have been denied access to either their wines or even surveillance video to show how much damage has been done. According to the story, Keith McNally who was forced to buy $2 million of wine for his restaurants after his wine stored at WineCare became inaccessible. One collector, the hedge fund manager Donald Drapkin, estimates the value of his wine at the facility was $5.2 million. WineCare has now filed for a bankruptcy reorganization that includes moving the remaining wines to a location in New Jersey.
The WineCare web site, still operation, states, “WineCare Storage LLC is committed to excellence in every way, in our work ethic, in the services we provide, and in our relationships with our clients, vendors, employees, related industries and communities.”
Just out of curiosity, do those who advise wine as an alternative investment ever mention the perils of collecting?
“More than a Flooded Cellar. A Vintage Mystery.” [NYT]
Charlie Trotter has been sued for selling a fake wine. In the complaint, Bekim and Ilir Frrokaj allege that they contacted Trotter about purchasing a magnum of 1945 Domaine de la Romanée Conti from the restaurant’s cellar (the restaurant closed last August). They allege that Trotter told them to book a table at the restaurant and discuss it with him over dinner. On June 15, 2012 they dined at the restaurant. Here’s an excerpt from the complaint:
During dinner, Charlie Trotter and the sommelier explained the rarity and value of the DRC magnum to Benn and Ilir. Charlie Trotter and the sommelier also spoke about wines from the Domaine de la Romanee-Conti estate and how those wines are some of the rarest and most valuable in the world. A Charlie Trotter’s employee negotiated the price – $46,227.40 – with Benn and Ilir. Based on Defendants’ representation of the rarity and value of the DRC magnum, Benn and Ilir agreed to purchase it. Ben and Ilir paid Charlie Trotter’s $40,000 in cash and $6,227.40 by credit card for the DRC magnum.
They continue that their insurance provider required an outside authentication of the bottle, during which they discovered that DRC didn’t bottle any magnums in 1945. They are demanding a refund, damages in excess of $30,000, court fees, and reimbursement of some expenses including travel to Chicago.
Charlie Trotter told the Chicago Tribune: “It was a disgruntled client who probably paid a lot more money (for the bottle) than he’s ever paid before,” Trotter said. “It’s buyer’s remorse.”
A jury in Manhattan sided with Bill Koch in his lawsuit over 24 counterfeit wines. The collector extraordinaire and energy magnate had sued Eric Greenberg, a wine collector who at one point had a cellar of 70,000 bottles, for selling him the counterfeit bottles. The jury awarded Koch $379,000 in damages to cover the fraudulent bottles and will reconvene this morning to see consider punitive damages.
Bloomberg has the full story including some of Koch’s comments after the trial:
“I absolutely can’t stand to be cheated. Now we got one faker so we’re marching down our hit list of fakers. This is just a start.”
“Millions if not tens or hundreds of millions of counterfeit wines are sold every year. The counterfeiters don’t want anyone to know, for $100 they make it and mark it up to $15,000, I myself paid $100,000 for a counterfeit wine. To me the whole industry is corrupt.”
“What Greenberg did was treat me and Zachys the way you treat mushrooms–kept in the dark and fed manure.”
“I’m thirsty, I want a glass of wine,” Koch said before repairing to restaurant Daniel. “And if it’s not a good bottle, I’m going to sue them.”