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Feds Auction Off Top Wines -- From Top Counterfeiter

Feds Auction Off Top Wines -- From Top Counterfeiter

Postby smix » Wed Dec 09, 2015 11:43 pm

Feds Auction Off Top Wines -- From Top Counterfeiter
Bloomberg Business

URL: http://www.bloomberg.com/news/articles/ ... guaranteed
Category: Business
Published: December 8, 2015

Description: For sale: 1945 Chateau Mouton-Rothschild. Starting bid: $6,375. Previous owner: convicted wine counterfeiter. U.S. federal marshals are facing one of the toughest sales jobs they’ve ever had. Better known for auctioning off stolen cars and drug dealers’ yachts, they’re now bringing down the gavel on more than 4,700 bottles of wine from the private cache of Rudy Kurniawan, convicted of fraud in late 2013 and sentenced to 10 years in prison. He gained widespread fame for snookering luminaries of the wine world into spending millions of dollars on fake bottles of Chateau Petrus and Domaine de la Romanee-Conti. Kurniawan was stripped of his art collection and his Lamborghini. That left the sticky question of what to do with his wine, which boasts some of France’s finest, or most bogus, vintages from Burgundy and Bordeaux. It would be easy if they were all fake: nuke ’em. But among the impostors are authentic fine wines Kurniawan bought to train his palate and refine his counterfeiting, and to enjoy a genuine Chateau Latour when the mood took him. It has fallen to the U.S. Marshals Service to weed out the fakes for the auction, a rocky, almost yearlong process. It included scrambling for a new wine authenticator after oenophiles howled that its ace lacked the expertise to spot a sham by the grand con man of Grand Cru. On Thursday, federal marshals will use a front loader to smash 548 bottles -- more than a hundred gallons of wine -- they believe have been faked and, of course, recycle the glass. The rest, about 90 percent of Kurniawan’s collection, is being sold in two online auctions (Nov. 24 - Dec. 8 and Dec. 1 - 15) at http://www.txauction.com , A number of prominent wine experts, winemakers, collectors and victims of the fraud fear that the U.S. is extending Kurniawan’s legacy by putting phony bottles on the market. That would further taint the labels Kurniawan counterfeited and mean his knockoffs could be sold again for decades to come. The marshals expect to net $900,000 to $1.2 million for the victims, compared to the $29.4 million Kurniawan owes them. “If Rudy Kurniawan had been caught making fake currency, the U.S. government would destroy his work product,” said billionaire businessman Bill Koch, brother of the oil barons and conservative activists Charles and David. Bidders are advised of the wines’ source, said Jason Martinez, of the marshals’ Asset Forfeiture Division. “There’s no guarantee with 100 percent certainty, but to the best of our knowledge all of these wines (being sold) are genuine.” He noted that they are from Kurniawan’s private collection, “so we have to assume that there was a range of low and high-end wines that are authentic.” Koch alone lost about $2.1 million on fakes that Kurniawan passed off as Chateau Petrus and Domaine de la Romanee-Conti, he testified at Kurniawan’s trial. He said he understands the auction is meant to help repay victims like him but argues the U.S. is selling “questionable Burgundies and Bordeaux to unsuspecting consumers.” Koch said the only way to authenticate these wines is to ask the vintners to vet them, and that, at the very least, the marshals should slap a label on each bottle warning buyers down the line of the Kurniawan connection. He testified at the trial that he had more than 200 bottles he bought from Kurniawan tested for cesium-137, an isotope of the nuclear fallout from the atomic bombs detonated in 1945. He said the tests showed that bottles bearing dates around 1933 or even 1858 carried the isotope, marking them as shams.
Jeweler’s Loupe
To winnow out the impostors from the Kurniawan wines, Michael Egan, an expert who twice helped the government vet them, took a jeweler’s loupe to the oldest and rarest bottles and scrutinized labels to see if they were photocopied fakes, he said. He also evaluated the corks and lead capsules, all marks of Kurniawan’s tradecraft. Kurniawan mixed Napa Valley pinot noirs with older French wines to make the fakes. In reviewing the stash, Egan discovered a real 1945 Chateau Mouton-Rothschild alongside another that carried a phony label. He believes Kurniawan kept the real bottle to use as a template for his knockoffs. Interest is strong in the auction’s lower-end bottles, like the case of 2002 Liberty Bay Merlot from Columbia Valley, Washington. Perhaps buyers are betting they’ll enjoy drinking the bargains even if they’re fake -- and maybe never know the difference. Demand for the higher-end wines Kurniawan liked to fake appeared tepid at first. For days there were no bidders for the ’45 Chateau Mouton-Rothschild, a 750-ml. bottle that bears a “V” for the Allied victory in World War II. Considered one of the greatest wines of the 20th century, it is a centerpiece at high-end auctions. Depending on condition, bottles of this size go from $12,000 to $20,000. This one, marked “faded vintage on cork” and including a nicked label, eventually drew an opening bid of $6,375, the minimum, and later sold for $7,650 after a flurry of nine bids. “I wouldn’t give you more than $500 if it came from Rudy,” said Joe Palmiotti, co-owner of New York-based Mission Fine Wines, which lost $2 million buying Kurniawan’s faked bottles of the Romanee-Conti. Palmiotti is concerned that buyers are “going to put it right back on the market and likely lie about where it came from.” There was some heavy, last-minute bidding for two bottles of Domaine de la Romanee-Conti. One of them, a 2003 magnum, sold for $20,200 after 20 bids. On the other hand, there were no bidders for a 1976 Domaine George Roumier Chambolle-Musigny, a Burgundy that Kurniawan loved to create. In all, the marshals are selling off 4,711 bottles of his original collection of 5,259.
Road to Auction
The long road to the auction started with a pothole. After holding several rounds of bidding for a wine authenticator, the marshals jettisoned their choice after the wine crowd scorned the person’s lack of expertise. This was new territory for the service, which handles about $4 billion a year of assets seized by the government, including art, jewelry and cars, but had never attempted a wine auction on such a grand scale. Then the marshals had to get the 5,259 bottles shrink-wrapped and shipped in refrigerated trucks from a California warehouse where they had been stored to Pflugerville, Texas, for auctioneers Gaston & Sheehan. Since March, the wine has been stored in a vault at 55 degrees Fahrenheit for the auction house, which has also sold off Bernard Madoff’s vintage watches and Steinway piano. Egan, who worked at Sotheby’s for more than 20 years, said it took him five days in Texas this summer to review about 770 of the wines and “give a final say on questionable bottles which were not out-and-out fakes.” In the end, 548 bottles -- about 10 percent of the collection -- were deemed counterfeit or unfit for sale. “I looked at wines such as Petrus, Roumier, Ponsot, a handful of wines where the value was very high,” Egan said in an interview from his home in Bordeaux. Most of the wines were too inexpensive for Kurniawan to have bothered counterfeiting and may have been for private consumption, he said.
‘Bit Grotesque’
“I know Rudy wasn’t a murderer, but this wine is his crime,” said Maureen Downey, a wine authenticator who helped prosecutors vet the wine for trial and assessed collections for several victims. “It’s almost like the government is selling the utensils which Jeffrey Dahmer used. There’s something a little bit grotesque.” Egan is a little wistful about the bottles that are to be destroyed. “I think it would be good to have a cache of this, because it is good, so people would know what these fakes looked like,” he said. Kurniawan was devious but not always painstaking. Laurent Ponsot, who heads Domaine Ponsot, testified at Kurniawan’s trial that in 2008 he was alerted to an auction of Domaine Ponsot wines about to take place in New York City, consigned by Kurniawan. Ponsot flew to New York and arrived in time to stop the auction, saying there were more than 80 bottles dating from the 1940s to the 1970s, for a label he said didn’t exist until 1982. At a later meal, according to Ponsot’s testimony, he asked Kurniawan where he’d gotten them from. “I don’t know,” he replied. Aubert de Villaine, whose family owns half of the Domaine de la Romanée-Conti, said he was satisfied with the steps the U.S. had taken to authenticate the wines. “I would of course be careful,” he said in an e-mail. “But we know that Mr. Kurniawan had a cellar of good bottles besides the fakes he was producing.” Kurniawan’s lawyer, Jerome Mooney, noted the evidence showed that his client spent at least $40.6 million in wine from dozens of auctioneers, dealers and private collectors in the U.S. and Europe. “As far as I know, it’s all legit,” Mooney said. “It’s not like Rudy was buying Two Buck Chuck.”
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