Don,
I think it’s hysterical that JK keeps you on the AM mailing list.
Keep up the good work.
Sentencing adjourned again.
Now set for Thursday, July 24th at 11:30am.
Just maybe, people can say what they want about Acker here with (justification &) impunity.
After-all, Acker wouldn’t want to tempt opening that very big can of worms if they chose legal redress, now would they…
Koch just settled his suit with Acker. Terms not disclosed, but
a spokesman for Koch said the figure was “substantial.”
“Acker is extremely pleased that its litigation with Mr. Koch has been settled and discontinued,” the company said in a statement.
I received a copy of the following press release from Mr. Koch’s company yesterday afternoon –
Noted collector Bill Koch settles wine litigation with Acker, Merrall & Condit
WEST PALM BEACH – After six years of litigation, William I. “Bill” Koch has settled his claims against Acker, Merrall & Condit for selling more than 200 counterfeit bottles of wine at auction. The settlement includes a significant payment from Acker, Acker’s agreement to change it business practices to prevent further counterfeit wine from entering the marketplace, and Acker’s cooperation.
In the period from 2005 to 2010, Mr. Koch discovered that he was the victim of unscrupulous wine dealers, auction houses and collectors. He vowed to clean up the vintage wine industry, which, according to trade publications, generated more than $250 million in sales annually. Mr. Koch won a legal victory against noted wine dealer Hardy Rodenstock, who sold Mr. Koch four bottles that he claimed belonged to former President Thomas Jefferson, the author of the Declaration of Independence and one of the country’s first great wine collectors. None of the bottles turned out to be authentic. Indeed, Mr. Koch found two men from Mr. Rodenstock’s town who had been consigned to engrave President Jefferson’s initials on the bottles.
Subsequent litigation brought against collectors and auction houses resulted in greater protection for consumers. As a result of Mr. Koch’s litigation, consumers may now return wine they suspect to be fraudulent. In the past, most auction houses refused to stand behind the descriptions in their glossy catalogs. After today’s settlement, Acker, Merrall & Condit, will follow Zachy’s and Chicago Wine Company, and must permit returns of suspect or counterfeit wines notwithstanding the disclaimers in their catalogs. Acker will also subject to expert authentication all of its wines of a 1969 or earlier vintage.
“This is a big victory for consumers,” said Bill Koch. “I am pleased that the auction industry is changing the way business is conducted. Acker, Merrill & Condit was by its own account the largest reseller of vintage wines. Consumers will now have more protection from unscrupulous collectors as a result of this settlement. We have cast a bright light on a dark industry. No one likes to be deceived. It doesn’t matter if you are selling a car or a vintage bottle of wine. Buyers should be afforded protection.”
In addition to the victory against Rodenstock, Mr. Koch prevailed against Eric Greenberg, and sued and testified against Rudy Kurniawan, who was found guilty of fraud and currently awaits sentencing. Mr. Koch also sued and recently settled with Royal Wine Merchants. As part of that settlement, Royal Wine Merchants is permanently barred from selling any wine that is of a 1975 vintage or earlier.
Brad Goldstein
Director Corporate Affairs
Oxbow Carbon LLC
Can anyone suggest what this means for those with suspect bottles from the cellar II auction ?
Anthony:
It would probably depend on the exact language that Acker agreed to in the settlement. Sounds hopeful though.
Does this mean that John Kapon will not be subject to a disposition? I vaguely recall that such a potentially uncomfortable situation for Kapon was upcoming.
…Subsequent litigation brought against collectors and auction houses resulted in greater protection for consumers. As a result of Mr. Koch’s litigation, consumers may now return wine they suspect to be fraudulent. In the past, most auction houses refused to stand behind the descriptions in their glossy catalogs. After today’s settlement, Acker, Merrall & Condit, will follow Zachy’s and Chicago Wine Company, and must permit returns of suspect or counterfeit wines notwithstanding the disclaimers in their catalogs. Acker will also subject to expert authentication all of its wines of a 1969 or earlier vintage.
“This is a big victory for consumers,” said Bill Koch. “I am pleased that the auction industry is changing the way business is conducted. Acker, Merrill & Condit was by its own account the largest reseller of vintage wines. Consumers will now have more protection from unscrupulous collectors as a result of this settlement. We have cast a bright light on a dark industry. No one likes to be deceived. It doesn’t matter if you are selling a car or a vintage bottle of wine. Buyers should be afforded protection.”…
So in a way…it is a good for everyone in the auction trade ![[cheers.gif]](/uploads/db3686/original/2X/0/0ff9bfcdb0964982cd3240b6159868fbdf215b1a.gif "cheers"){kind=small}
*****the auction industry is changing the way business is conducted. ****
Looks like a few more victim names:
http://www.wine-searcher.com/m/2014/07/prosecutors-name-more-kurniawan-victims
According to the article, “With the latest victims’ totals, losses now top $30.5m”. Is collecting this information solely for the purpose of sentencing and length of jail time? Or is it also needed to order a judgement on compensation owed to victims?
John:
Maybe, or maybe not. Mr. Koch still has one more lawsuit pending – the one in Los Angeles Superior Court against Rudy Kurniawan. As you may recall, Mr. Koch issued subpoenas to depose John Kapon and Justin Christoph of Acker in connection with the California litigation. Acker moved to quash those subpoenas in New York, went all the way to the New York Court of Appeal (New York’s highest level appellate court) and lost. (Acker is 0-3 before the NY Court of Appeals with Mr. Koch). So Koch obtained an order which permits him to take the depositions of Kapon and Christoph in connection with the Koch v. Kurniawan litigation in California. I do not know whether or not those depositions have taken place or not.
According to the computerized docket in Koch v. Kurniawan the case is still active. There is nothing in the docket entries which would suggest that Messrs. Kapon and Christoph have been deposed in the Koch v Kurniawan case. So unless there is some agreement with Mr. Kapon in conjunction with the settlement of the Koch v. Acker Merrall lawsuit not to take his deposition in the California action, yes that deposition can still occur.
The parties filed a stipulation of dismissal with prejudice in the Koch v. Acker Merrall action in New York on the 15th. The document does not recite any terms of the settlement. Aside from a letter to the court where both sides agreed to a one week continuance of a Status Conference, there have been no documents filed in the case since February after the New York Court of Appeals reversed the trial court’s decision limiting the scope of Mr. Koch’s amended complaint. As you may recall, the New York Court of Appeal ruled on February 25 that Koch’s Amended Complaint seeking to add an additional 211 counterfeit bottles purchased from Acker was proper. The Amended Complaint alleged that Koch had paid $2,121,583 to Acker for counterfeit wines Ackier sold to Koch that originated from Rudy Kurniawan. Acker was thus facing significant monetary liablity in the New York lawsuit. I have no information about whether Mr. Kapon was deposed in the Koch v. Acker Merrall lawsuit prior to the settlement, but if I had to guess, I would say it did not occur.
There are some aspects of the settlement in Koch v. Acker Merrall that I find troubling. Mr. Koch had stated many times previously that he had no intention of setting with Acker Merrall. While Kapon and Acker fought over every square inch of ground and went to the New York Court of Appeal three times, Kapon and Acker ultimately lost every battle. After the appellate victories earlier this year, everything now appeared to be lined up for a complete victory by Mr. Koch and a very public trial that would tell the world what Mr. Kapon and Acker knew about Mr. Kurniawan’s counterfeiting activities and when they knew it. Given the amount of time and money that Bill Koch has devoted to exposing Acker’s activities, to now settle the case seems almost incomprehensble
It seems like there must be some undisclosed reason which prompted this settlement. Perhaps personal illness? Or some other personal reason that might force Mr. Koch to abandon his quest to expose the wine auction industry’s dirty laundry and force changes in how the industry operates? The fact that the settlement terms have not been made public is also a concern.
Company press releases touting the Company make sense. This is a personal press release touting himself.
Odd.
Don, I too was surprised at the settling. I’m sure Maureen will chime in herself, but in a posting she did a couple of days ago on Facebook, I posed the same question. Her thought was that the proposed settlement by AMC to Koch may have been so rich that the trial judge would have put extreme pressure on Koch or somehow otherwise forced Koch to settle. If the actual monetary damages are the $2M+ noted in the suit and ACM offers, say $5M, to settle, I can see a judge forcing Koch’s hand as a way to clear the court calendar.
Your thoughts?
The settlement doesn’t surprise me. Every plaintiff says they’ll never settle. And Koch settle with Royal and (if I recall) Zachy’s. Has he gone to trial in any case other than Greenberg’s?
John:
I suppose that if Acker basically offered to pay the full amount of the alleged damages plus Koch’s attorney’s fees incurred on the case so far (a total that might very well match or even exceed your hypothetical $5 million settlment figure), that would make it difficult for Koch to say no. Unlike the Greenberg case, Koch didn’t have a common law fraud claim pending, which would have held out the possiblity of punitive damages. Instead, by virtue of the dismissal of the common law fraud claims that took place in connection with Koch’s initial appeal of the dismissal of his claims under Sections 349 an 350 of the New York General Business laws, Koch was going to be limited to recovering his out of pocket losses and prejudgment interest thereon, plus the potential statutory penalties per violation permitted by those statutes, and potential recovery of attorney’s fees.
On the other hand, since Koch was adamant that he wanted injunctive relief to prevent this from happening in the futue, it’s really hard to explain this settlement. The terms haven’t been disclosed or filed with the court, and, unlike the Royal settlement, there is no stipulated injunction that was filed with the court. There’s simply a dismissal with prejudice. We don’t know what Acker really agreed to do going forward or whether it’s legally enforceable. In my opinion, the cryptic press release leaves too many questions unanswered.
Don – I can’t recall – has Koch gone to trial against anyone but Greenberg?
Just Greenberg. They were literally a few days from starting trial in the Royal Wine Merchants case, and had already held the Pretrial Conference, submitted jury instructions, etc and the Judge had postponed the trial on his own motion while he considered how to handle the motion for evidentiary sanctions based on spoliation of evidence. Then the case settled.
As they so often do at that point.
With Rudy’s sentencing scheduled to occur later today, I thought I should try to marshal some of the evidence and arguments put forth by the government and the defense, as well as to tell you about a lot of other “victims” and some of the enablers that the court likely won’t be hearing about.
The $30.5 million in quantified losses in the government’s latest filing covers only seven individuals who suffered verified counterfeiting losses: They are:
David Doyle - $15.111 million (based on actual purchase costs – not current value)
Michael Fascetelli - $5.5 million
Andrew Hobson - $3,118,856
Mission Fine Wines - $3 million
William Koch - $2.1 million
Brian Devine - $1.5 million
Reid Buerger - $247,678
Virtually all of the $30.5 million of wines listed above was purchased directly from Rudy Kurniawan. (The notable exceptions are William Koch and Reid Buerger).
MISSING (OR UNCOOPERATIVE) VICTIMS
The government’s list excludes scores of other victims who purchased millions upon millions of dollars worth of counterfeit wines that were sold at auction through Acker, Christie’s, Zachy’s, Spectrum and, in one instance Greg Martin/Heritage. It also excludes many buyers who bought wines from Rudy Kurniawan that were brokered or sold by Antonio Castanos (Bacchus Wines), Richard Brierley (Vanquish Wines), and Marc Lazar (Cellar Advisors).
In many instances (but not all), the government’s failure to include names on the list is because the individuals who bought wines from Rudy declined to cooperate with the government. It also appears that the government excluded those who were defrauded but managed to obtain refunds either from Rudy, the auction houses or the resellers. The government’s list excludes the following additional known victims:
Andrew “Andy” Gordon. Mr. Gordon had $2,282,000 in losses from counterfeit wines purchased from Rudy, but was repaid from the proceeds of sales of Rudy Kurniawan’s wines sold through Christies auctions held in the US, UK and Hong Kong in 2009 and 2010. Mr. Gordon’s story was featured very prominently in the initial criminal complaint filed by the Government, but he was not called to testify at the trial.
Eric Greenberg. Eric Greenberg admitted in emails sent to the wine buyer of Wynn Hotels in April 2005 that he had bought $1.5 million of Rudy Kurniawan Nicolas bottlings to that point and was planning on buying more. Greenberg also purchased multiple fake bottles of Kurniawan wine from Winebid in 2002 and then settled with Rudy. Mr. Greenberg did not cooperate with the government on the Kurniawan prosecution
Roy Welland. Mr. Welland is the former principal owner of Cru, where many of the well-publicized tastings involving Mr. Kurniawan and John Kapon were held. Mr. Welland (often acting through Robert Bohr, the sommelier at Cru) was allegedly one of the largest purchasers of Kurniawan wines at the Acker auctions in 2005 and 2006. Mr. Welland loaned Rudy $1 million (part of the advances extended by Acker on Cellar I.) Mr. Welland is currently planning a sale of $15 million worth of wines at Wally’s Auctions this fall.
Rob Rosania. Mr. Rosania admittedly purchased several million dollars worth of wine from Rudy Kurniawan both directly and through multiple Acker auctions. Mr. Rosania admitted in posts on the E Robert Parker bulletin board back in 2008 that he resold many of the wines he had purchased from Rudy Kurniawan through Acker, including wines offered at the same April 25, 2008 sale by Acker in New York where the fake Ponsot wines were offered. That sale was actually a named seller sale – the Robert Rosania collection – and the Roumier, Rousseau and Ponsot wines offered in that sale from “The Cellar” were merely an interlude in the middle of the Robert Rosania sale. Rosania made at least $250,000 in known loans to Rudy Kurniawan via Acker.
Ed Milstein. Mr. Milstein apparently purchased at least $393,500 in wine directly from Rudy Kurniawan. While Mr. Milstein and his brother cooperated with the government with respect to the loan made to Rudy Kurniawan by Fine Art Capital, he declined to file a criminal restitution claim and apparently did not cooperate as an alleged victim. The trial testimony indicated that some of the counterfeit bottles introduced as evidence in the trial (i.e. 1962 Romanée Conti purchased from Cellar II) were returned to Acker by Ed Milstein on the grounds that they were counterfeit…
Joe Wender. Mr. Wender apparently purchased at least $260,000 in wine from Rudy. Like Brian Devine, Mr. Wender was participant in a Los Angeles based wine group called Royal Order of the Purple Palate with Rudy Kurniawan. Mr. Wender also lent money to Rudy Kurniawan through Acker in 2006.
Weinart in Denmark . Kristoffer Meier-Axel purchased huge amounts of wine directly from Rudy Kurniawan, including $456,000 of wine in a single month. Many of these bottles were likely resold.
Ray Tuppatsch, a member of the 12 Angry Men in New York, who apparently purchased at least $75,000 worth of wine from Rudy.
Wendy & Jim Agah. Wendy works for Acker and her husband Jim was a participant in many of the “12 Angry Men” tastings in New York. They are known to have purchased wines from Rudy Kurniawan and are believed to have resold a number of bottles purchased from Kurniawan through Acker Merrall.
Robert Bishop. Mr. Bishiop, (who is referred to as “Bob” in the Acker documents introduced at trial), operates large hedge funds. He was listed as a purchaser of counterfeit wines from Rudy Kurniawan in the Acker Judgment against Kurniawan. He loaned $2 million to Rudy Kurniawan through Acker as advances on the 2006 Cellar I auction. That loan was repaid after the wines were sold. Mr. Bishop appears to have loaned Rudy at least $5.6 million more through Acker in 2007, when Acker was regularly extending “loans/advances” to Rudy. (I have to wonder what Mr. Bishop’s hedge fund clients feel about his judgment in dealing with Rudy.)
William Ingram. Bill Ingram was also listed as a purchaser of counterfeit wines from Kurniawan in the Acker Judgment against Kurniawan. Government Exhibit 13-4 introduced at the trial suggested that there was a $3.5 million “Bill/Bob deal” with Rudy Kurniawan with various counterfeit bottles that were returned.
William J Curtis. Based on records introduced at the trial he appears to have paid Rudy $200,000 for apparent wine purchases in 2007.
HC Parmar, Jr. The same exhibits show he paid $105,000 to Rudy in 2007 for apparent wine purchases.
Anthony Hall. Wine Berserker Anthony Hall, a frequent poster on this thread, paid more than $140,000 to Acker for a variety of old Bordeaux and burgundy purchased from the Cellar II auction, much of which Mr. Hall suspects to be fake. Mr. Hall provided this information to the government.
Don Stott. Mr. Stott purchased millions of dollars worth of wines from Rudy Kurniawan in Cellar I and Cellar II auctions and received at least $1 million in refunds from Acker. Mr. Stott also provided bottles that were introduced as evidence at the trial and was prepared to testify on behalf of the government and present in New York for that purpose, but was not called by the government.
Patrick Albright, wine broker. Purchased an alleged OWC case of counterfeit 1966 DRC Romanée Conti from Greg Martin/Heritage Wine Auctions for $101,575 in June 2011. The wine was determined to be counterfeit after the auction sale and the sale was cancelled by Heritage. This was one of the most obviously counterfeit lots of wine ever offered at auction – complete with different bottle heights, differently colored glass, and five different capsule colors on what purported to be 12 consecutively numbered bottles, along with a host of labeling and OWC discrepancies. This case of wine was originally sold by Rudy Kurniawan through Marc Lazar (Cellar Advisors). The wine was returned to Marc Lazar following the cancellation of the Heritage auction sale. After Mr. Lazar returned the wine to the “owner,” the same numbered bottles from this lot were subsequently consigned by Antonio Castanos, admittedly on behalf of Rudy Kurniawan, in two separate auctions (to conceal the different bottle heights and glass colors): (1) at the December 2011 Spectrum sale in Hong Kong and (2) at the February 2012 Spectrum/Vanquish sale in London. The bottles at the London sale were pulled from the auction in response to the evidence that my colleagues and I submitted that they were counterfeit.
William Gladstone Imports. Purchased an alleged OWC case of counterfeit 1945 Mouton Rothschild produced by Rudy Kurniawan and initially sold by Antonio Castanos to Cult Wines. The wine was determined to be counterfeit by William Edgerton. After a one year delay, the purchaser eventually received a refund of the $145,000 purchase price.
THE LAWYERS’ ANALYSIS SEEMS TO MISS THE POINT
The arguments from the two sides about sentencing seem like two 18th Century warships passing by each other in the middle of the night. The government argues that Rudy sold $30.5 million worth of counterfeit wines to seven individuals. (To say that’s the tip of the proverbial iceberg seems somehow too small in scale.) The defense questions a few of the numbers and points to evidence that between 2000 and 2011 Rudy bought $40 million worth of wine. The defense presumes that all of this wine was legitimate. But they ignore the fact that there was testimony at the trial about Rudy buying up bottles of DRC wines with huge fill problems and then refilling them himself. It’s also well established that Rudy bought large quantities of off vintages of major wines and made at least two very large purchases of old Patriarche burgundies which were apparently used for the glass and possibly as blending wines in Rudy’s concoctions.
What the government has failed to do is to put this all of this in perspective for the judge. Rudy sold more than $100 million worth of wine (and likely well over $100 million) either through private sales, auctions, or sales brokered through others such as Antonio Castanos, Richard Brierley or Marc Lazar (and likely others I don’t know about.). I can quantify more then $90 million in sales and I’m missing data on a large number of sales, particularly those before 2006.
If we take these numbers at face value, there’s something hard to explain. Rudy bought $40 million worth of wine, sold $100+ million worth of wine in the same period, and he still had huge quantities of wine in storage at the time he was arrested. (And, no, Rudy didn’t buy it all early and sell it all late at huge profits.)
Several of Rudy’s wealthy victims come across as markedly unsympathetic. Many were gullible in the extreme, believing that one young man in his 20’s or early 30’s (regardless of real or feigned wealth) could accumulate the world’s most comprehensive cellar of the world’s rarest wines, in every good vintage back to 1899 – and not only acquire such a collection in five years, but to own each and every wine in sufficient quantities that he was willing to sell bottles from every such vintage to other collectors. (For those of you who have Pacer Accounts, take a look at the list of the counterfeit wines in the Declaration of Susan Twellman, itemizing the $15.1 million worth of counterfeit wines purchased by David Doyle. SDNY CM/ECF NextGen Version 1.6-Confirm Request) You will wonder how anyone could be that stupid.)
However savvy these individuals may have been in the business activities that generated their wealth, they seemed to have abandoned all of their intellectual capabilities and all common sense when Rudy offered them wines that hadn’t been sold on the market in 30 or more years or, in some cases, like Ponsot Clos St. Denis, had never been sold anywhere. Rudy invariably told his customers that there was more where that came from and it appears most believed him. The biggest “victims” from the private sales chose to believe because they desperately wanted to believe it could be true. (It’s the equivalent of a 13 year old child who still believes in Santa Clause and the Easter Bunny.)
Rudy Kurniawan’s biggest victim the market for old and rare wine. It is the sheer volume of fake wines that Rudy produced and pumped into the market. While Rudy obviously was looking for “big fish” (or “whales” as they are known to con artists) to buy his fake wines, the reality is that there are a lot of small collectors out there who got burned by Rudy Kurniawan. While we know about many individuals who bought counterfeit wines from Rudy or his resellers in amounts in excess of $100,000, we don’t know about, and will likely never hear about, the scores of people who bought single bottles or a few bottles of wine that they thought were legitimate from any of the auction houses, retailers and brokers listed above who sold Rudy’s wines. Nor will we likely hear about many more people who bought Rudy’s fakes from people who had purchased those bottles from the likes of Antonio Castanos, Richard Brierley or Marc Lazar. Or the people who bought Rudy’s fake wines tin restaurants that purchased from the sources above. (E.g. David Doyle offered 1945 DRC Romanee Conti that he purchased from Rudy on the Rockpool restaurants wine list for several years.)
The sheer volume of Rudy’s wine sales also makes many very knowledgeable people in industry question whether Rudy had assistance in producing fakes from sources that the public hasn’t heard about to date. For example, we now know that Rudy used a commercial printer in Indonesia (Concord) and that he purchased some of the fake labels from a Japanese firm whose logos were on the bags of labels introduced at the trial. What other activities took place in Asia? Doesn’t it seem plausible that if Rudy managed to make arrangements for printers in Asia to produce his fake labels without ever leaving the US, that he could also have made arrangements with someone else in Asia to produce counterfeit wines for sale in Asia using those same labels?
Rudy’s prolific counterfeiting means that the market for old and rare wines is likely to remain polluted with Rudy fakes for many years to come. So in that sense, eveyone interested in old and rare wines is a victim. One other sad reality here is that several of Rudy’s direct “victims,” including some I have named above, have either sold or attempted to resell bottles that they purchased from Rudy. Many of those bottles have already passed through the auction industry without question at least once. While Rudy’s arrest and the ensuing questions have forced most auction houses to pay more attention to vetting the wines before the sale, those who have suspect wines they wish to sell will still be able to find brokers and wine merchants who will be willing to sell such purported wine rarities without asking too many questions.
So the battle is sadly far from over.
Don,
That’s a fantastic post with which to put everything in the proper context. The only rational thing to do at this point is buy EP. I certainly will never buy from any auction house again.
Dan