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mixed case: opinion and advice

Counterfeit Wine Ain't Parcheesi

Rudy Kurniawan's lawyers claim fakes are part of the collecting 'game'; that cheapens all wine
Photo by: Mark Weinberg

Posted: May 8, 2014 11:30am ET

By Mitch Frank

At the end of the month, a federal judge will decide how serious the crime of wine counterfeiting is. Rudy Kurniawan, convicted of selling an estimated $2 million to $7 million worth of fakes (no one is quite sure how many prized bottles he counterfeited), will be sentenced. He faces up to 40 years in prison.

His lawyers have made their plea for leniency, asking the judge to sentence Kurniawan to time served since his arrest—roughly 27 months. Like any good legal team, they have thrown every halfway credible argument they can devise at the judge: Why should Kurniawan serve a long jail term when the bankers who helped trigger the global financial crisis weren't prosecuted? Since most of Kurniawan's victims were wealthy, isn't the impact of his crime minimal?

That argument ignores Kurniawan's other victims—the winegrowers whose credibility was tarnished when people tasted wines that were supposed to be from their vines.

But another suggestion caught my eye. Describing how Kurniawan became part of wine-collector circles, Jerome Mooney and Vincent Verdiramo argued that counterfeit wine is just a game:

"Rudy learned that everybody expected there to be counterfeits. In fact, part of the contest was to see who could figure out what was real and what was fraudulent. The remedies if you got a bad bottle were to drink it, and point out how it was wrong, or just put it up for auction so that it would pass to the next guy down the line. Every auction contained such bottles, and the identification—or speculation—as to the authenticity of wines became the newest parlor game."

Everyone who knows collectible wine knows there are fakes—especially since the market for rare wines went big and went global a decade ago. Some auction house staff downplay the risk: Fakes are rare and easy for experts to spot. Others are grim: Fakes are rampant and increasingly well-crafted.

But none of them call counterfeits a game.

I have a good friend who just doesn't care that much for fine wine. He's got a great palate—he brews his own beer and participates in cooking competitions. But he doesn't see why any bottle of wine should cost more than $30. Above that price, he doesn't taste a difference.

Plenty of people like my friend see fine wine as a game. C'mon, it's just fermented grape juice. Why the thoughtful sipping? Get over your pompous selves.

Most of you love wine, however, because once upon a time you lifted a glass to your lips and a light bulb went on. You tasted the stars, much the way Dom Pérignon never actually did. If you visited a quality winery and walked through a great vineyard, you were undoubtedly hooked for life.

It's easy to dismiss wine collecting as a rich man's parlor game. For some collectors, it is. And they share some of the blame because when they have discovered a fake in their cellars, they have "put it up for auction so that it would pass to the next guy down the line."

The time has come for collectors to admit they got duped. Auction houses and wineries need to call out fakes, even when it means angry customers. The only way to save rare wine's reputation is to root out the bad bottles. Too many of Kurniawan's bottles are still lying in cellars while he lies in jail.

When people who haven't been lucky enough yet to fall in love with wine hear stories like Kurniawan's, they conclude that wine itself is just a game. That it's just fermented grape juice. And that's the real pity. Everyone should get to taste the stars.

Steve Trachsel
poway, CA —  May 8, 2014 2:34pm ET
Well said my friend. Hope Rudy goes away for awhile..
Adam Lee
Sonoma County, CA —  May 9, 2014 7:07am ET
Mitch,

I think that the fraud committed by Rudy (and others) is both criminally and morally wrong - and should be punished strongly.

But I think I have also come to the point of view that much of the outrage over fake wines is as fake as the wines themselves. The small handful of producers who's wines are prized enough to justify counterfeiting have benefited from the stratospheric prices paid for some of these fake bottles. It has allowed them to sell their current release wines for higher and higher prices based on the presumed increase in value of older vintages.

The wine merchants, auction houses, and restaurants that have sold fake bottles have also benefited from their sales, making lots of money on the wines. I think this likely served as a disincentive for them to investigate the history of these wines.

And, I'd even argue that the collectors who have purchased and opened some of these older wines may have benefited. What are the odds that a real 1896 Bordeaux is any good? Slim....but the chances that a fake bottle of the same wine at least tastes good? Much higher. I've not heard of any counterfeiter purposefully filling an older bottle with vinegar to duplicate the real wine. Have you?

So, while I think that the crime is real....I am not certain that thee crime isn't somewhat victim-less.

Adam Lee
Siduri Wines
Ken Heinemann
Singapore —  May 12, 2014 11:03pm ET
On one hand, the rich collectors who buy up the rare and unusual cannot be pitied, they were stupid enough to pay a lot of money for something that, when considered, probably shouldn't exist. (The fabled unicorn wines, maybe). The problem is, that it drives the prices up for a lot of wines, not just the big name collectibles, but a lot of consistently well reviewed wines. I remember buying Phelps Insiginia 1994 for $40, when they made maybe 5000 cases. Now its $175, and they make 25000 cases. Investor and collector greed is driving good wine from the people who will enjoy it to those who profit from it. Rudy's greed and obsession just highlights the problem. Wine, at any price point, is something to enjoy, not something to add to the portfolio.

Track its development, not its yield curve.
Tone Kelly
Rochester NY USA —  May 15, 2014 10:43am ET
I am waiting for an auction house to take the high road and institute a policy that is very rigorous and proper for checking authenticity and provenance.

This might not fly with "collectors" who want to move a suspect wine but it will be a real plus for buyers. Buyers would pay more for a lower risk of fraud. I don't know if this will ever happen but it is nice to dream.

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