Home > Articles > News > English Wine Merchants Convicted of Fraud After Targeting American Investors

English Wine Merchants Convicted of Fraud After Targeting American Investors

Authorities investigating a growing trend of high-pressure sales of collectible wine that never shows up

Jacob Gaffney

Posted: Wednesday, October 15, 2008

Wine collectors, already on the lookout for counterfeit wines, now need to guard against another form of fraud—firms trying to scam them by selling rare wines as an investment opportunity.

A British court sentenced four defendants from a high-priced wine firm to prison terms on Sept. 29. The defendants had been found guilty of fraud for scamming nearly $1.5 million from American doctors and lawyers by offering to import fine wines as high-yield investments. In many cases, the wines never arrived stateside, according to the Serious Fraud Office (SFO), a department of the U.K. criminal justice system, which brought the case.

The Southwark Crown Court sentenced two former directors of Vintage Wines of St Albans Ltd., Stephanie Callebaut and Shameen Suleman, to one year and three and a half years in prison, respectively. The two are also barred from acting as director for any other company for three and 10 years after their jail term ends, respectively.

Two other defendants were sentenced to two and a half years and four and a half years in prison. The pair cannot be named due to the British equivalent of a gag order. A fifth defendant, Donald Thomas, was acquitted.

According to Rojina Roe, a SFO spokeswoman familiar with the case, the two unnamed defendants are also involved in ongoing fraud investigations. According to Roe, employees of Vintage Wines of St Albans telephoned American doctors and lawyers from 2002 to 2005 with sales pitches. Using high-pressure, "must-buy-now," sales techniques, they promised excessively high returns, up to 130 percent, on investments in fine wine and spirits, typically Port, Armagnac or Brandy.

In July 2005, the SFO launched an investigation into the company's practices when these wines failed to arrive or the cases and barrels of Bordeaux and Tuscan wines procured by the American investors were well below promised value. The five suspects were charged with conspiracy to defraud in March 2007. The jury returned its verdicts on Aug. 7, 2008.

At the sentencing, Judge Gregory Stone commended the SFO with its prosecution of a complicated case. Vintage Wines of St Albans initially traded as Global Wine and Spirits Ltd and later became a subsidiary of another bogus company, Vintage Hallmark plc, which is also under SFO investigation. A director for Vintage Hallmark is one of the unnamed defendants.

According to a local paper, the St Albans & Harpenden Review, the court heard that one Florida-based doctor, Michael Rock, remortgaged his home in 2003 in order to invest $458,200 in fine wine. It is believed he was sold an investment package, titled "Old and Rare Vintages." Rock has yet to receive compensation and the SFO is initiating confiscation proceedings against Vintage Wines of St Albans.

Roe added that these types of boiler-room, high-pressure scams are popping up in the drinks industry, with the SFO usually working on five or six cases at any given time. On Oct. 8, police in Hertfordshire raided the offices of International Wine Commodities Ltd (IWC), another company offering wine investments. The raid was investigating suspicions that IWC failed to buy en primeur wines that clients had paid for.

"These high pressure sales, using boiler-room tactics connected to alcohol fraud, first came to our attention eight or nine years ago, and it continues to evolve," Roe said. She added that the SFO is not allowed to offer guidance about avoiding fraud, but said, "potential wine investors should always seek independent financial advice."

Back to top

Currently on Wine Spectator Online:

• Tasting Highlights: California Rhônes
  A dozen exciting reds show that Syrah and Grenache continue to gain in popularity and quality in California
• Unfiltered: Ex-Miss France 2004 Takes Winemaker Title
  Plus, UK thieves rob a Champagne truck, "ladybug taint" solution revealed, and dogs invade restaurants for charity
• Collecting Q&A: 1975 Dom Pérignon's value
• Federal Court Tells Out-of-State Wine Stores to Stay Out of New York
  Appellate decision affirms state's right to ban shipments from stores in other states
• Smiling Through Gritted Teeth
  Vinexpo draws wine producers and buyers from 48 countries, but attendance is down and business is slow