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i'm not wrong. you're not paying attention. despite regulation and legalization people are still buying and selling fake wines, some that are worse than bathtub moonshine.
http://www.huffingtonpost.com/entry/black-market-wine-industry-means-you-could-be-drinking-poison_563a47a6e4b0307f2cab8ade
http://www.foodrepublic.com/2015/11/03/wine-fraud-enters-its-golden-age/
FOOD CRIMES
Wine Fraud Enters Its Golden Age
Christine Haughney, Sr. Investigations Editor, Zero Point Zero
November 3, 2015
It was perhaps the biggest victory in the global struggle against wine fraud: In August 2014, Rudy Kurniawan, the world’s most well-connected wine fraudster, was sentenced to 10 years in prison and ordered to pay $29 million in restitution for his role in a massive counterfeit-wine scheme that victimized some of the world’s most respected wine collectors.
But the story does not end there. In the 15 months since Kurniawan went to prison, industry experts say that wine fraud has become more prevalent and expanded to all price points, even more-affordable wines enjoyed by average consumers worldwide.
“People that think because Rudy is in jail this is over are really fooling themselves,” says noted wine-fraud expert Maureen Downey, who advised prosecutors during the sentencing phase of Kurniawan’s trial.
An untold number of Kurniawan’s fake wines are still in circulation, Downey says. And given what investigators know about the scope of his counterfeiting operation, the kinds of wines he claimed to be selling, the prices he was selling them for and adjusting those numbers for inflation, the amount of bogus bottles could add up to more than $500 million in further fraudulent sales.
Such is the viral nature of wine fraud: Once a counterfeit wine passes muster on the luxury wine market, it often disappears into some secluded cellar for years before being passed on to the next collector. In fact, Downey says, there are still probably fakes floating around from the last major scandal-scarred wine dealer: Hardy Rodenstock, the guy behind the infamous Thomas Jefferson bottles, which were exposed as probable fakes nearly a decade ago.
And these are just the high-profile cases. Downey points to burgeoning criminal cells across Europe that are now manufacturing fake wines, and a massive barge roaming through international waters around Asia where wine counterfeiters operate freely out of sight and largely out of reach of authorities, she says.
The problem isn’t limited to ultra-high-end bottles. Even lower-priced wines are targets for enterprising fraudsters. Downey notes that knockoffs of Hollywood power couple Angelina Jolie and Brad Pitt’s Miraval rosé, which sells for around $20, have turned up in Europe and Asia.
For aspiring criminals, it seems, wine remains a very lucrative field. This is Kurniawan’s legacy. “Unfortunately, Rudy taught people this is a way to make money,” Downey says.
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Convicted fraudster Rudy Kurniawan arrived on the fine-wine scene during a heady time of big spending and little due diligence. (Photo courtesy of Wine Spectator.)
Wine fraud is an especially thorny issue in France, the world’s leading wine producer. In 2011, the French government commissioned a study on the prevalence of counterfeit wine in China, where demand for brand-name high-end wines, especially French wines, is huge. The results of that two-year study turned out to be so damning (the most glaring statistic: one of every two bottles of French wine in China is probably fake) that the French government suppressed its own findings for the next two years.
And the man appointed to spearhead that study, James de Roany, former president of the CNCCEF Wine & Spirits Commission, was dismissed from his position in November 2013 for even mentioning these results during a wine industry conference in London. In an interview, de Roany tells Food Crimes that updated findings suggest that China’s counterfeit wine problem has only gotten worse since the initial 2013 report. “Everyone think it concerns top grands crus. But it is much broader than that,” says de Roany. “French wines are in decline in China, and one of the reasons is counterfeiting.”
It is a common problem faced by manufacturers of all kinds of luxury items. But unlike the usual imitators of designer handbags and gold watches, fraudsters in the wine industry are getting so good at what they do that they’re beginning to pose real threats to legitimate top-brand winemakers.
“What we’ve learned from the last few years is that wine fraud is lucrative, it’s fun and it’s also something that really doesn’t get punished.”
Just ask David Pearson, chief executive of California’s Opus One Winery, which has been proactive in fighting knockoffs made of its wine. In other luxury industries, Pearson says, manufacturers may actually feel flattered when their products are copied because most people know the difference between, say, a fake Rolex watch and a real Rolex. But the level of fakery in wine has reached the point where it’s getting really hard to distinguish between the real and the fake. Pearson says he spoke with one wine shop owner in Shanghai who stopped selling wines from a certain prominent French château altogether because nobody seemed to trust whether it’s legit or not. “People could no longer be sure that they were getting a real bottle versus a counterfeit bottle,” says Pearson. “That undermined consumers’ confidence in buying the wine.”
To be sure, plenty of consumers still thirst for fine wine. Data tracked by Wine Spectator shows that global sales for fine wine jumped to $352 million in 2014 from $337 million in 2013. In September, Sotheby’s reported its first “white glove” wine sale in London, meaning it sold all of the lots it placed up for auction.
That’s helpful news for criminals who know there will be an audience for their bogus goods and, very likely, little prison time if they are caught. Wine fraud expert Downey notes that while Kurniawan will spend a decade behind bars for his counterfeiting activities, the rest of his accomplices, including the auction houses that sold his wines, have been spared from prosecution.
“What we’ve learned from the last few years is that wine fraud is lucrative, it’s fun and it’s also something that really doesn’t get punished,” says Downey. “Rudy got ten years, and that’s a long time. But none of the other people involved in Rudy’s crime got even a slap on the wrist.”
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California’s Opus One Winery has been among the most active companies in taking on counterfeiters. (Photo: Kate Guhl.)
The history of wine fraud may be as old as winemaking itself. Michael Madrigale, the wine director for Bar Boulud and Boulud Sud in New York City, who tasted many of Kurniawan’s wines while working on behalf of private collectors, notes that even ancient Greeks wrangled with the issue. “People have always been trying to get in on something that was good,” he says.
Perhaps the most famous wine-fraud case before Kurniawan came with layers of historic intrigue. In 2006, U.S. billionaire Bill Koch sued fellow rare-wine collector Hardy Rodenstock in civil court over the $500,000 sale of four bottles of wine that Rodenstock claimed once belonged to former U.S. president Thomas Jefferson, bottles that Koch later came to suspect were fakes. The case ultimately resulted in a default judgement against Rodenstock, though the accused fraudster never served any jail time.
After the Rodenstock scandal, a new posterboy for wine fraud soon emerged: Rudy Kurniawan. He appeared at a time that lent itself even more to big spending and less due diligence, according to Benjamin Wallace, a journalist and author of The Billionaire’s Vinegar, which chronicles the case against Rodenstock. “It’s the mid 2000s. You’ve got this boom going on. It’s America,” says Wallace. “There was this group, the 12 angry men, a tasting group in New York that consisted of these real estate and other entrepreneurial guys, and Kurniawan sort of fell in with them.”
Looking back, many people in the wine industry say they sensed early on that Kurniawan was a fake. Yet for years, many of them stood by while the charade continued. Their reluctance to speak up highlights a systematic vulnerability in the ultra-high-end fine-wine market: Nobody, especially not the rich and powerful, likes to admit when they’ve been duped. In a crowded auction house full of these power-broker types, you can imagine how the cycle of denial simply perpetuates itself.
“It wasn’t like three people buying Rudy’s fake wine,” says Joshua Nadel, a former sommelier at wine destinations Veritas and Cru, who spent many hours pouring wines in the presence of Kurniawan and many of his victims. “It was the global collecting community buying fake wines.”
“The passionate wine collectors with the means to chase down the best wines ever made are embarrassed to let you know that they got taken because they are heads of industry.”
Even today, with Rodenstock exposed and Kurniawan locked away, many collectors are still too embarrassed to admit just how much money they lost from wine fraud. Food Crimes contacted Kurniawan’s victims who were listed in court filings. Their names are a roster of captains of industry. Former Vornado Realty Trust chief Michael Facitelli lost $3.6 million. Quest software founder David Doyle lost $15.1 million. Film producer Brian Devine lost $5.3 million, and Andrew Hobson, former chief financial officer at Univision, lost $3.1 million. They all declined to be interviewed.
“The passionate wine collectors with the means to chase down the best wines ever made are embarrassed to let you know that they got taken because they are heads of industry,” says Madrigale. “They are very wealthy. They are well respected, personally and professionally, in their lives and they don’t want their peers or their friends in the press, they don’t want them to know they got suckered and taken because it’s embarrassing.”
Criminals also know that overburdened prosecutors don’t have the time or resources to devote to white-collar crimes like wine fraud, and there are few government agencies really charged with addressing the problem, meaning that collectors have to pursue other legal avenues, like costly civil litigation, in order to make sure that perpetrators are punished.
“The Treasury Department does a very good job in protecting the integrity of our currency; unfortunately, we do not have a police department to protect the integrity of rare wine,” says Geoffrey Troy, president of the New York Wine Warehouse, who warned Christie’s, the esteemed London-based auction house, that it was selling fake wines from Kurniawan before a 2009 sale, which nonetheless moved forward.
If the past three decades are any indicator, generations of new collectors aren’t going to rely on the lessons of the past to fix the current problem.
Says Nadel, “People have a pretty short memory when it comes to this kind of thing.”
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