WSJ on Fake Wines

[AKR]

By
Lettie Teague











April 12, 2018 11:51 a.m. ET

5 COMMENTS
















































































The second in a two-part series on wine fraud.


“I’VE NEVER DONE this before. I don’t think anyone has done this before,” said Bill Koch as we sat down to taste 10 Burgundies and Bordeaux pulled from his cellar. Mr. Koch is certainly accustomed to tasting rare wines, but in this case, five bottles were authentic, five were counterfeit. He’d paid a total of $56,351.85 for them, though the collective amount would be much greater today. In the end, however, the fakes cost him even more dearly.

Mr. Koch is the Palm Beach, Fla., billionaire and brother of the political activists Charles and David Koch of Koch Industries (of which Bill Koch has no part today). He famously spent some $40 million on legal fees and multi-year investigations into the problem of wine fraud. According to Brad Goldstein, an investigative consultant who led Mr. Koch’s wine-fraud investigation team, Mr. Koch has won multiple civil suits and settlements from wine counterfeiters as well as auction houses and other collectors from whom he unwittingly purchased counterfeit wines.

It took a large team of experts that included former FBI, CIA and MI6 agents, chemists, forensic scientists and an inspector from Scotland Yard to uncover the breadth and depth of the fraud. Mr. Koch spent far more than he’s received in judgments and settlements, but for him, it’s the principle that matters. “I hate to be cheated,” he said.

We ended up tasting wine together thanks to a conversation I’d had with Mr. Goldstein. When I mentioned, half joking, that I’d love to know what a counterfeit Pétrus tastes like, Mr. Goldstein replied, “I’ll ask Bill.” A few days later, I was on a plane to Palm Beach.

Mr. Koch met me in the foyer of his house. “Palatial” doesn’t capture the scope of the 45,000-square-foot dwelling, just as “extraordinary” doesn’t begin to describe his art collection, which includes works by Picasso and Monet. We repaired to his cellar, which held around 44,000 bottles until Mr. Koch sold half at auction at Sotheby’s two years ago for $21.9 million. It was one of the biggest wine-auction totals in history, and all the wines had been carefully vetted by Mr. Koch’s investigative team beforehand.

Two employees rushed around, consulting lists, climbing ladders, pulling bottles with world-famous names: Domaine de la Romanée-Conti, Château Pétrus, Château La Mission Haut-Brion and even a 1787 Château Lafitte said to be signed by Thomas Jefferson. “It’s fake, of course,” said Mr. Koch in a tone of remarkable nonchalance. (A 2008 book, “The Billionaire’s Vinegar” by Benjamin Wallace, offers a fascinating account of the investigation of this wine.) Half the bottles on the table were counterfeits—though they fetched top dollar at auction before Mr. Koch found this out.

We walked through the cellar to a basement room where he stored many of his fake wines. There were boxes labeled “ Rudy Kurniawan Investigation Wines” or simply “Investigation Wines.” Some of these were evidence Mr. Koch presented in court in New York when Mr. Kurniawan was convicted of wine counterfeiting in 2014.





Mr. Koch has discovered around 440 counterfeit bottles in his collection to date, and he allowed that there “might be even more.” He recalled one of his earliest fake-wine encounters: a 1921 Château Pétrus. “ Robert Parker gave the wine 100 out of 100 points,” he said, referring to wine critic Robert M. Parker, Jr. Mr. Koch had to have the wine. He paid $33,150.63 for a magnum. When he opened the magnum at a dinner with friends, he found it did not match Mr. Parker’s description. “It tasted like the cheapest wine from California,” he said. “It tasted like moose piss.” (That’s a favorite Koch term for a really bad wine.) He made it his mission to find out if his bottle was, in fact, a fake, and how many other fakes might be lurking in his collection.

Craig Stapleton, a friend of Mr. Koch’s and the former American ambassador to France, appeared in the cellar. “I’m here to taste fake wines,” he declared. After all, Mr. Stapleton reasoned, he’d had a lot of great real wine thanks to Mr. Koch—a famously generous host. Like me, he was curious to see how the fakes measured up.

Since Mr. Stapleton had only a short time before he had to leave for New York, Mr. Koch winnowed the wines we would taste to 10—five superstars and five counterfeits thereof: 1950 Château Pétrus, 1971 Domaine de la Romanée-Conti Romanée-Conti, 1945 Château Lafite Rothschild, 1959 Château La Mission Haut-Brion and 1978 Domaine de la Romanée-Conti La Tâche.




‘He paid $33,150.63 for a magnum. “It tasted like moose piss,” he said.’
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We carried the bottles upstairs and onto the terrace, where glasses and a Coravin wine opener waited on a table. “I’m an investor in Coravin,” said Mr. Stapleton with obvious pleasure. The device allows drinkers to access wine by means of a hollow needle inserted into the cork. Once the needle’s removed, the cork closes up, so a bottle that has been “Coravin-ed” (yes, that’s a verb) remains protected from oxidation for days, weeks, even months. Mr. Koch affixed blue tape to each of the fakes and Coravin-ed the first pair of wines, the real and the fake 1971 Domaine de la Romanée-Conti Romanée-Conti.

The faked DRC was a “Rudy” wine, Mr. Goldstein observed, referring to the counterfeiter Mr. Kurniawan. It was markedly cloudier than its real counterpart and smelled and tasted like dirt. The real wine, on the other hand, had a lovely, earthy nose and surprisingly fresh acidity. “All the crooks said, ‘You can’t tell if it’s real until you taste it.’ We said, ‘If the cork is fake and the label is fake and the bottle is fake, it’s fake,’ ” Mr. Koch recalled with a small flash of anger.

The counterfeit 1959 Château La Mission Haut-Brion, we discovered, was corked. Mr. Goldstein explained that counterfeiters often insert corked wines into old bottles, wagering that this subterfuge will prevent purchasers from considering whether the wine might also be fake—they might simply presume they’d had the bad luck to buy a bottle that turned out to be corked and leave it at that. The real 1959 was in pretty good shape. Both the real and the fake 1978 DRC La Tâche wines showed well; the latter was actually credible, we all agreed. In fact, the nose of the fake was even fresher than that of the real wine. “Maybe they put in a newer wine?” posited Mr. Goldstein.





The fake 1945 Lafite Rothschild, meanwhile, was terrible, bitter and astringent. It smelled like varnish, not wine. Its authentic counterpart was a bit of a faded rose, but it was clearly a noble old Bordeaux. The 1950 Château Pétrus wines, real and fake, were the big surprise. Both were quite good, earthy and rich with surprisingly lively acidity. “This [fake] was made by Hardy,” said Mr. Goldstein. He was referring to Hardy Rodenstock, against whom Mr. Koch won a default judgment in a federal court in New York in 2012 for the sale of counterfeit wine. “From a mixology perspective he was really good. His handicraft was much better than Rudy’s,” Mr. Goldstein added. In fact, it was hard to tell the two wines apart.

With fakes this good in circulation, clearly additional precautions and coordinated documentation efforts are called for. For those who suspect that they, too, might have counterfeit wines in their cellars, Mr. Koch is considering the creation of a database, available free to the public, of information on counterfeit wines. It would be the first of its kind, said Mr. Goldstein.

After my return from Palm Beach, I couldn’t stop thinking about the highly competent counterfeit Pétrus. Was it good or bad news for collectors who might own fake wines? I wasn’t sure. Of course, one can’t count on just any fake being so drinkable. And most importantly, as Mr. Koch pointed out, nobody likes to be cheated—even with a good fake Pétrus.

[AKR]

What It Takes to Out-Sleuth Wine Fraud

Our wine columnist joined serious collectors at a wine authentication seminar to learn the secrets of sniffing out fakes and outsmarting counterfeiters










What It Takes to Out-Sleuth Wine Fraud
Illustration: KEVIN WHIPPLE
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By
Lettie Teague











April 6, 2018 11:10 a.m. ET

25 COMMENTS
















































































The first in a two-part series on wine fraud.

A FEW WEEKS AGO the French police discovered a cache of fake Côtes du Rhône wine so large it would have equaled 15% of the output of the entire appellation over almost two and a half years—had it been real. It was bulk stuff of no particular distinction, and the CEO of the company was charged with fraud. This was just the latest in a long series of such discoveries in recent years, and further proof that counterfeiters target cheap wines just as readily as grand crus. As Maureen Downey, a San Francisco-based expert on wine fraud, observed, “Fake wine hits the entire gamut of wine.”


Eager to know what a wine drinker can do to protect herself and avoid possibly lining the pockets of counterfeiters, I attended a wine fraud and authentication seminar last month run by Ms. Downey at the Four Seasons Hotel San Francisco. Attended by wine professionals and passionate amateurs, the two-day session cost $5,000 per person. It was the first such seminar Ms. Downey, proprietor of Chai Consulting, a wine collection management company, has held in the U.S. (She has held several such seminars in Hong Kong and London.)

Some participants brought along bottles of their own for authentication. Susan Lin, a Master of Wine candidate and business development manager of the Belmont Wine Exchange in Hayward, Calif., presented bottles from great producers: Chave Hermitage and Domaine Ponsot Chapelle-Chambertin. She thought the wines were real, but she wanted to be certain.

The name Domaine Ponsot will ring a bell with those who follow wine-fraud news. In a story made famous by the documentary “Sour Grapes” and the book “In Vino Duplicitas,” the domaine’s proprietor, Laurent Ponsot, attended a 2008 wine auction in New York where fake bottles of Ponsot wines were offered for sale. The consignor was Rudy Kurniawan, a high-profile collector from California.

An investigation into Mr. Kurniawan’s dealings culminated in a search of his Arcadia, Calif., home, which turned out to be filled with tools of wine fakery: counterfeit labels, blank corks and empty bottles to be filled. Mr. Kurniawan went on trial in New York for counterfeiting and was convicted in 2014. He was ordered to pay $28.4 million in restitution to seven of his victims and to forfeit $20 million in property, and is serving a 10-year sentence in a federal prison.

On the day of our seminar, Ms. Downey noted that though hundreds of “Rudy” bottles were ultimately destroyed, many more of his creations are still in circulation; she estimated that they could sell for at least $550 million. Mr. Ponsot also believes Rudy fakes are still out there. “I think that people will try to sell them,” he said in a recent phone call. For his part, Mr. Ponsot—whose new winery, called Laurent Ponsot, will debut its first wines in the fall—added that he’s made sure his wines are “protected” from counterfeiting.

Los Angeles-based attorney Don Cornwell has been keeping track of counterfeiters and counterfeit wines for over a decade—a hobby sparked by his outrage over all the fakes he found in the market. Mr. Cornwell teamed up with Ms. Downey and New York wine merchant Geoffrey Troy to investigate the bottles he suspected were fake and began posting his findings on Wineberserkers, a chat forum favored by passionate oenophiles and serious collectors.

The forum topic Mr. Cornwell created in February 2012, titled “Rudy Kurniawan & the Global Wine Auction Fraud,” remains active to this day. A staggering 169 pages long as of this writing, it features photographs of fake bottles and auction results posted by Mr. Cornwell and others, as well as general wine-counterfeiting news.





Mr. Cornwell believes the wine auction houses have largely “cleaned up their act” in the decade since he began his crusade. Jamie Ritchie, worldwide head of Sotheby’s Wine, agreed that the origin of wines offered at auction today receives far greater scrutiny. “People are willing to pay much higher prices for collections with great provenance,” he said.

Counterfeit wines are sold at many other places besides auction houses, Ms. Downey cautioned. “ eBay has had a huge problem with people selling fakes,” she said, citing some “very obvious” bottles of fake Château Pétrus she found on the site. ( Ryan Moore, eBay’s director of global corporate affairs and communications, said that the company conducted an initial review of Château Pétrus bottles purchased on eBay and did not come across any counterfeit claims. Mr. Moore also noted that buyers may notify the company if they believe they bought counterfeit wine.)

Ms. Downey believes much more fake wine is made in Europe than in the U.S. “There are at least five counterfeit wine rings in Europe,” she said. Though quite a few high-profile seizures of counterfeit Château Pétrus and Domaine de la Romanée-Conti (DRC) have been made in France in recent years, the sentences have been so light they hardly seem like a deterrent at all. A Russian counterfeiter got a mere two-year jail term in France in 2017 for selling 400 bottles of fake DRC, but the sentence was suspended and he went free.




‘Authenticating a wine is like authenticating a work of art.’
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Ms. Downey pointed out that some European wineries, including Domaine de la Romanée-Conti, are working to combat fraud. She outlined a few of the methods some of them have adopted, including invisible ink, holograms and serial numbers on labels, as well as embossing directly on the bottles and proof tags hung around the necks. “I don’t believe in a single-solution answer to fraud,” she said. Her favored form of protection: a registry where collectors could provide information about wines and their histories, which could then be accessed by other collectors. A similar system is used in the diamond trade, but the wine world has yet to embrace such a safeguard.

For the meantime, Ms. Downey offered advice and provided counterfeit-detection tools for seminar participants, including a jeweler’s loupe, a measuring tape, a UV light and UV-visible pens. She outlined her authentication process, which begins with careful scrutiny of the wine bottle—the loupe proved handy here—notably the label, the paper it’s printed on and the printing method and ink, as well as other components such as the capsule and the cork. Ultra-white paper, detectable under UV light, wasn’t in commercial use until the 1960s. With the aid of a microscope, one could detect if the paper was recycled, which would mean the wine couldn’t have been produced before the 1980s, when recycled paper was introduced for labels.





“Authenticating a wine is like authenticating a work of art,” said Ms. Downey. She instructed participants to go slowly and to “look at the whole thing” first before zooming in on details. We split into groups and pored over the fake bottles Ms. Downey had assembled, as well as the bottles participants had brought along.

We checked the labels’ paper with pens to ensure it wasn’t the modern recycled stuff not in use at the time of the purported vintage. We also checked the printing and saw that some letters were slightly off—a possible counterfeit clue. After close scrutiny of her bottles of Chave Hermitage and Domaine Ponsot Chapelle-Chambertin, Ms. Lin was relieved to receive confirmation that they were indeed real.

As I was writing this column, news of another large-scale wine-fraud story broke. The Bordeaux négociant Grands Vins de Gironde was accused of faking the equivalent of almost 70,000 cases of wine over several years, “recreating” cheap wines as Bordeaux; just this week the company was fined 200,000 euros by a criminal court in Bordeaux. When I mentioned the case to Ms. Downey, she praised the French police and said she believed the increased attention to counterfeit fine wine had resulted in an increased number of arrests related to the counterfeiting of all kinds of wines.

Above all, she emphasized that wine fraud isn’t a victimless crime. “It affects people who work very hard to make good wine, who are proud of their wines and their appellation,” she said. “It ruins their reputation and it destroys all their hard work.” With the right tools and a gimlet eye, she believes, we can all play a part in protecting that work.

[DavidG]

Fun to read about the real vs. fake tasting. I give Koch credit for being willing to do it.

[stefan]

We should recruit Bill Koch for BWE.

>>
Mr. Cornwell believes the wine auction houses have largely “cleaned up their act” in the decade since he began his crusade. Jamie Ritchie, worldwide head of Sotheby’s Wine, agreed that the origin of wines offered at auction today receives far greater scrutiny. “People are willing to pay much higher prices for collections with great provenance,” he said.
>>

Isn't there at least one big name exception? Why did it go unmentioned?

[marcs]

it wouldn't surprise me at all if fake wines beat the real thing for older wines. Plenty of older wines are shot or past their primes. Especially if you were willing to shell out a few bucks for the ingredients of your fake wine. You could get a quite good recent St. Emilion or Pomerol for $75-100 to mix in with some old wine to fake your $3000 Cheval Blanc or whatever.

[DavidG]

"We’ve cleaned up our act, so prices should be higher."

Riiiiiiight.

[sdr]

I recently bought a fake bottle of ‘61 Latour for a reduced price. The merchant warned me it might have been Rudi-ized but I bought it anyway in the name of science. Later this year I will pretend I am Bill Koch and compare it to a (presumably) genuine example I bought decades ago.

Stu

[JimHow]

I'm optimistic that my "ancient" bottles of 1918 Haut Brion and 1958 Lynch Bages are not fakes.
Whether they are anything other than undrinkable swill remains to be seen.
Both will be uncorked this year, the Haut Brion in celebration of its 100th year birthday, the Lynch in celebration of my 60th birthday!