After years of investigation the FBI has just made the first arrest of a person accused of wine fraud. (A copy of the press release from the New York Attorney General’s office appears at the end of this article) That person is none other than Rudy Kurniawan who has long been suspected of being responsible for many bogus bottles. The arrest is based on several things two relate to the sale of fradulent bottles and one relates to loan fraud. The attempted sale of many fraudulent of old Romanée-Conti bottles at a London article this year is the latest. (To read the article click here ) The other involves the sale of many old Domaine Ponsot Burgundies a few years ago. One small problem – neither Rudy or the auction house (Acker Merral & Condit) who was attempting to sell the bottles – had apparently ever checked to see if the bottles had ever existed. (Is this great due diligence by supposed “experts” or not? After all, this is what I said about buying old bottles and it is something I have known for 30 years: “… So always remember when buying older wine, it is important to know how the wine was stored. And, while appearance may tell you something, it does not tell you nearly as much as knowing the provenance. Some people obsess about “fills” and “perfect” labels, but given a choice, I’d take a lower fill bottle with a less than perfect label from a known cellar with ideal conditions, over a higher fill bottle with a perfect label from unknown provenance. If you are going to pay increasingly large sums of money for old bottles, you need to know their history to know whether they are likely to be what they should be and whether or not they are authentic. Avoid “perfect” bottles of very old, well known, expensive bottles of wine unless you know their history. These are likely to be fakes.”) (To read the articleclick here ) The fact is that they probably had not checked. Or possibly they did check and decided to move forward anyway? Who knows? But, that is up to the courts to decide. The fact is, that the wines that were attempted to be sold were bottles of wine that dated back to the 1940s and into the early 1970s, but Domaine Ponsot did not make wine from this vineyard until 1982! Also, there was a bottle of Domaine bottled 1929 which was obviously fake since the Domaine did not start bottling its own wines until 1934. The interesting thing about this is that it is likely that some of these wines may have been offered to wine experts and critics to taste evaluate their authenticity. If that was the case, I certainly would not be surprised. I, and many of my friends and contributing editors to the Underground, have participated in many tastings where wines we felt were clearly fakes were acknowledged as authentic and great by some so called “experts”. In fact, a number of those “experts” are on record as saying if they are fakes they are really good. What kind of nonsense it that? Either you know or you don’t know. And, if you don’t know why would you condone something that was fake? Could it be money? Or ??
At any rate, the administrator of Domaine Ponsot, Laurent Ponsot, upon learning of the sale of the bogus wines mentioned earlier, personally went to the auction and demanded that the wines be pulled. They were, but the consignor, Rudy Kurniawan, when asked to provide proof of the wine’s provenance, was unable to do so. This is simply déjà vu all over again since a similar trick was pulled in the late 1970s with fake 1947 Romanée-Conti. This wine never existed because all the vines were pulled up after the 1945 vintage and the vineyard replanted. The next vintage was 1952! The Underground has long known that there was wine fraud and very early on was the first and, I believe, the only publication to report on the fake 1947 Romanée-Conti. (To see the Underground article on wine fraud going back to 1979 click here ) But, the real question was to prove who was responsible. In this early case that was never determined. However, after all these years, this arrest is the first real step in an investigation to stop wine fraud. If Mr. Kurniawan is convicted, this will hopefully lead to the arrest and conviction of others involved in wine fraud. And, thankfully, it has happened as I predicted at the end of last year. Here is what I said then:
- The wine fraud issue will surface again driven by the disclosure of evidence from the ongoing lawsuits alleging wine fraud. The Underground was the first publication to speak to this subject and we will have more to say later.
- While there will) probably be more evidence of the existence of wine fraud, proving it may be another question. (To read the entire article click here )
Ultimately, the combination of diligent efforts by law enforcement and stringent examination and publicity about possible fraudulent bottles being offered for sale should result in a greatly reduced incidence of wine fraud. For this to happen, I believe there will also need to be revised conditions of sale agreements between third parties offering wines for sale and the wine buyers. This was set forth brilliantly in a seminar paper prepared by Whitney Fogg for a law school class at Stanford .(To see that article on a possible solution click here ) I am certainly not an attorney. But, as a lover of fine wine, and a fierce defendant against wine fraud, I am hopeful that some of the ideas presented in this paper will receive some attention by the powers that be to correct the defects in our system that make it easier to commit fraud.
A statement from Janice K. Fedarcyk, the FBI’s assistant director in charge of the New York office, in the news release offers great hope that wine fraud will not be taken lightly going forward and that all possible efforts will be made to eradicate it. Here is the statement: “The bad-faith sale of any commodity you know to be a counterfeit, fake or forgery is a felony. Whether you are peddling a Picasso or a Petrus, a Botticelli or a Burgundy, unless it is what you say it is, the sale is a fraud.”
In Vino Veritas,
UNITED STATES ATTORNEY’S OFFICE
Southern District of New York
U.S. ATTORNEY PREET BHARARA
FOR IMMEDIATE RELEASE CONTACT: U.S. ATTORNEY’S OFFICE
Thursday, March 8, 2012 Ellen Davis, Carly Sullivan, http://www.justice.gov/usao/nys Jerika Richardson (212) 637-2600 FBI Tim Flannelly, Jim Margolin (212) 384-2100
MANHATTAN U.S. ATTORNEY AND FBI ASSISTANT DIRECTOR-INCHARGE ANNOUNCE CHARGES AGAINST WINE DEALER FOR MULTI-MILLION DOLLAR FRAUD SCHEMES
Defendant Allegedly Attempted to Sell More than $1 Million Worth of Counterfeit Wine
Preet Bharara, the United States Attorney for the Southern District of New York, and
Janice K. Fedarcyk, the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), today announced fraud charges against wine dealer RUDY KURNIAWAN. Between 2007 and 2012, KURNIAWAN allegedly engaged in multiple fraudulent schemes relating to his wine business, including attempting to sell counterfeit wine that, if genuine, would have been worth over $1.3 million. He is also charged with fraudulently obtaining millions of dollars in loans. KURNIAWAN was arrested this morning in Los Angeles, California, and is expected to be presented in federal court in the Central District of California at 2:00 p.m. PST.
Manhattan U.S. Attorney Preet Bharara said: “Mr. Kurniawan’s days of wine and wealthare over, if the allegations in this case are proven. As alleged, Rudy Kurniawan held himself out to be a wine aficionado with a nose for a counterfeit bottle, but he was the counterfeit, pawning off prodigious quantities of fraudulent wine himself to unsuspecting auction houses and collectors. But his alleged scheme did not end there – he also secured millions in fraudulent loans to fund a high-end lifestyle. He will now have to answer for his alleged crimes.”
FBI Assistant Director-in-Charge Janice K. Fedarcyk said: “The bad-faith sale of anycommodity you know to be a counterfeit, fake or forgery is a felony. Whether you are peddling a Picasso or a Petrus, a Botticelli or a Burgundy, unless it is what you say it is, the sale is a fraud.”
The following allegations are based on the Complaint which was unsealed today inManhattan federal court: KURNIAWAN has long been a collector of fine and rare wines. He has sold millions of dollars of wines in recent years, including approximately $35 million worth in 2006 alone. Since that time, KURNIAWAN has also held himself out to be a wine expert who was particularly skilled at identifying and detecting counterfeit bottles of rare and expensive wine. In an interview, KURNIAWAN told a major publication that he could spot the tell-tale signs of counterfeit bottles of wine, such as counterfeit labels, corks that had been tampered with, and improper bottle markings.
Kurniawan’s Attempts to Sell Counterfeit Wine
KURNIAWAN attempted to sell counterfeit wine on at least two occasions:First, in 2008, KURNIAWAN consigned for auction at least 84 bottles of counterfeitwine purporting to be from Domaine Ponsot in Burgundy, France, which were expected to sell for approximately $600,000. Although KURNIAWAN represented that the wine was authentic, it was not. He attempted to sell one bottle that he said was a 1929 bottle from Domaine Ponsot, but that was not possible because Domaine Ponsot did not begin estate bottling until 1934. He also consigned bottles of wine that had purportedly been bottled between 1945 and 1971 from the Clos. St. Denis vineyard of Domaine Ponsot. However, Domaine Ponsot did not make wine from that vineyard until 1982. Ultimately, the wines were withdrawn from the auction at the request of Domaine Ponsot’s Administrator. When questioned by the Administrator about the source of the counterfeit wines, KURNIAWAN said that he acquired the bottles from a certain person in Asia and provided the Administrator with two telephone contact numbers. However, neither telephone number led to that person or anyone else who sold wine. One number was thecontact for a regional Indonesian airline, and the other was associated with a shopping mall in Jakarta.
Second, KURNIAWAN attempted to sell some of his wine using a straw seller after hiswine-dealing came under increased scrutiny, and major auction houses became reluctant to accept his wines for auction. In February 2012, in exchange for a fee, the straw seller agreed to pretend that KURNIAWAN’s wine was really his own and then further agreed to consign wine for sale at an auction in London under his own name, rather than KURNIAWAN’s. Through this straw seller, KURNIAWAN consigned approximately 78 bottles of Burgundy wine that purported to be from Domaine de la Romanée-Conti. If authentic, the 78 bottles were expected to sell for approximately $736,500 at auction. Ultimately, however, the wine was withdrawn from the auction after people began suggesting it was counterfeit. For example, on a prominent wine-appreciation bulletin board, one individual detailed a series of concerns about the authenticity of the wine, noting, among other things, that some of the bottles included four digit serial numbers when genuine bottles would have had five- or six-digit serial numbers; that the foil around the cork was not like the foil that covered the corks of genuine bottles; and that the labels on bottles of wine purporting to be from 1959 to 1971 included an accent mark that did not appear on bottles until 1976.
Kurniawan’s Other Fraud Schemes
KURNIAWAN also engaged in multiple fraudulent schemes to obtain millions of dollarsin loans, at the same time he was spending millions on wine, clothing, jewelry, and travel. In one scheme, in late 2007 and early 2008, KURNIAWAN lied in order to procure a $3 million loan from a Finance Company. He made false representations concerning his liabilities, specifically, by understating his personal debts by over $11 million. In another scheme, in May 2008, KURNIAWAN pledged certain artwork as collateral for millions of dollars of loans he obtained from a New York auction house when he had already pledged the artwork as collateral in connection with the $3 million loan from the Finance Company. KURNIAWAN failed to disclose to either the New York auction house or the Finance Company that he had doublepledged this collateral. In a third scheme, in 2009, KURNIAWAN attempted to defraud the New York auction house by selling a portion of his wine collection at auction without the New York auction house’s consent. The wine he was attempting to sell had also been pledged as collateral to secure the millions of dollars of loans he had received from the auction house.
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KURNIAWAN, 35, of Arcadia, California, is charged with three counts of wire fraud andtwo counts of mail fraud. Each count carries a maximum sentence of 20 years in prison.Mr. Bharara praised the work of the FBI’s Art Crime Team and its New York and LosAngeles field offices. He added that the investigation is ongoing. The charges and allegations contained in the Complaint are merely accusations, and thedefendant is presumed innocent unless and until proven guilty. This case is being handled by the Office’s Complex Frauds Unit. Assistant U.S. Attorneys Jason P. Hernandez and Stanley J. Okula, Jr. are in charge of the prosecution.