The monetary loss caused by Mr. Holder was $2.33 million according to the indictment.
The DOJ press release says Holder is getting an 18 month sentence but that doesn’t make a lot of sense given the sentencing guidelines (referenced in Jay Hack’s post above), or after looking at the records for other similar cases (see below). It does in fact make me wonder whether there is some other plea deal between Holder and the DOJ that hasn’t been announced. I had reported to the FBI back in 2016 that a person well known to the FBI as a fence for stolen wines was allegedly buying stolen wines from a wine storage facility in Maryland.
Unfortunately, alleged theft by wine storage operations has happened a lot more often than most wine collectors might think.
In February of 2012 Mark Anderson of Sausalito Cellars in Vallejo, CA pled guilty in Federal District Court in Sacramento to 19 felony counts, including embezzlement, mail fraud, tax evasion and arson. He sold several million dollars’ worth of customer wines that were in his storage facility and then burned the storage facility containing 4.5 million bottles of wine in order to cover his embezzlement. He was ordered to pay $70.3 million in criminal restitution and was sentenced to 27 years imprisonment.
In August of 2013, George Osumi of Legend Cellars in Newport Beach California pled guilty in Federal District Court in Orange County to 71 counts including grand theft, insurance fraud, identity theft and perjury. He stole $2.7 million worth of customer wines in his wine storage facility, and in many cases substituted inexpensive bottles for the bottle taken. He was sentenced to six years in prison plus ordered to make criminal restitution of the $2.7 million.
In August of 2016, Marc Lazar of Domaine Wine Storage (St. Louis, Washington DC, New York, Napa, Chicago) was sued in Montgomery County Pennsylvania by Great Northern Insurance Company who had paid out $1.97 million to a client of Lazar’s named Reid Buerger. Buerger claimed that Lazar had either converted or failed to account for more than 1,300 bottles of wine that Lazar had purchased for Buerger and his wife (through Lazar’s company Cellar Advisors) which was then stored at the Domaine St. Louis and Domaine New York storage facilities. In 2014 Buerger terminated the relationships with Lazar and his entities and after receiving the wines discovered that he was allegedly missing 1,300 bottles. After Buerger’s insurance company paid out $1.97 million on the loss, they sued Marc Lazar, Cellar Advisors, Domaine St. Louis and Domaine New York in state court in Montgomery County Pennsylvania (where Buerger lives.) Meanwhile, Lazar tendered that lawsuit to his insurance carriers and his insurers all denied coverage and filed lawsuits in Federal Court in St. Louis seeking a declaratory relief that there was no coverage under the insurance policies. The lawsuit in Pennsylvania was stayed (Lazar and his entities claimed the Pennsylvania forum was not convenient or appropriate). All of the litigation was thereafter conducted in the Federal Court for the Eastern District of Missouri in St. Louis.
Lazar and his companies eventually moved to dismiss all of the claims brought by Great Northern Insurance. On January 23, 2019 the Federal Court issued an order, which, with the exception of one claim for gross negligence (which Missouri law does not recognize) denied Lazar’s motion to dismiss the claims by Great Northern Insurance. The case was sent to mediation and the case settled in April 2019. I do not know any of the details at this point, but it seems likely that Mr. Lazar and his companies paid off the alleged $2 million loss – either directly or with the benefit of some insurance proceeds.
There is yet another bizarre case involving alleged theft by a wine storage company. A New York wine collector named Michael Moriarty filed suit against Chelsea Wine & Storage, Inc. in New York in December 2018. Moriarty stored wines with Chelsea since 2006 and for many years Chelsea apparently automatically charged Moriarty’s credit card on a monthly basis for his storage charges. Chelsea stopped charging the credit card in September 2017, apparently because the credit card number on file had expired. In June of 2018 Chelsea sent a notice to Moriarty by mail and email telling him that if he didn’t pay $6,300 worth of accrued storage charges within 10 days his wines would be disposed of by Chelsea. On July 30, 2018 they sent another letter telling Moriarty the contents of his wine locker were being destroyed allegedly pursuant to the terms of his contract. Moriarity alleges that he had 1200 bottles in storage with Chelsea which had a market value of between $100,000 and $200,000.
In late October of 2018 Moriarty attempted to obtain the delivery of all of his wine which Chelsea refused. Moriarty then discovered that many of his bottles that had been in storage were for sale in the Chelsea wine store. Moriarty demanded that Chelsea cease and desist and return the remaining wines and when Chelsea refused, he filed a lawsuit in New York State Court. On May 1, 2019 the Court issued a written decision granting a preliminary injunction against Chelsea. As the Court stated: “neither agreement allows Defendant to ‘dispose’ of Plaintiffs Wine to itself and then sell the Wine at Defendant’s second location without accounting to Plaintiff and remitting to Plaintiff any amounts obtained by such sale in excess of the amounts owed by Plaintiff to Defendant for unpaid fees. Accordingly, the court finds that, upon a review of the proofs before it, Plaintiff is likely to succeed on the merits of the Complaint.” You can find a complete copy of the Court’s decision here: https://law.justia.com/cases/new-york/other-courts/2019/2019-ny-slip-op-31215-u.html