The Crusade Against Counterfeits

Collectors and vintners try to rid the auction market of fake wines. How big is the problem?
Peter Hellman, Mitch Frank
Issue: December 15, 2009

It was one of the wine auction market's last big bashes for a while and, fittingly, everyone was drinking Champagne. In April 2008, Acker Merrall & Condit, the most successful U.S. auction house for two years running, sold almost $6.29 million worth of wine in one night. The highlight of the sale was an incredible array of Champagne from the cellar of Robert Rosania, a young New York real estate investor and possibly the biggest bubbly collector in the world. Rosania's consignment of 294 lots of Champagne fetched $2.2 million alone.

Some of the country's biggest wine collectors filled the dining room at Cru, a Wine Spectator Grand Award-winning restaurant just north of Manhattan's Washington Square. Many of them were wealthy young men who had started collecting wine in the preceding 10 years, bidding against each other at auctions and tasting together at lavish wine dinners where each tried to outdo the others in serving spectacular rarities. A fierce bidding battle broke out over two bottles of Moët & Chandon Dom Pérignon Rosé 1959, originally estimated at between $5,000 to $7,000. The pair eventually sold for $84,700. The sale raged into the late hours of the night. At one point Rosania, 39, known to fellow collectors as "Big Boy," sabered open a jeroboam of Bollinger 1945 for all to try.

The sale took place at a critical juncture for the collectible wine market. Wine auctions sat atop an impressive peak after three and a half years of frenzied growth. From 2004 to the end of 2007, the Wine Spectator Auction Index had risen 90 percent (try to imagine the Dow Jones nearly doubling in less than four years). But it would begin to slow in that first half of 2008, as the real estate bubble burst, the financial markets headed toward a hard landing, and the world entered the great recession. By the middle of 2009, the index was down 24 percent from its all-time high. Collectible wine suddenly looked like another overvalued asset.

For three people at the Acker auction that night, it was proving to be a toxic asset. Laurent Ponsot, John Kapon and Rudy Kurniawan were suffering from a side effect of the good times-renewed concern about counterfeit wines.

Ponsot, the fourth-generation proprietor of Domaine Ponsot in Morey-St.-Denis, Burgundy, had flown to New York for the sale, to make sure 22 lots of wine supposedly from his domaine were withdrawn. An Acker client had seen the wines in the auction catalog, found them suspicious and contacted Ponsot, who then alerted Kapon, Acker's president, that several of the wines had never been produced by his winery. The night of the auction, Kapon announced that the lots, estimated to sell for a combined $400,000 to $600,000, were being withdrawn. "I guess there were a couple of inconsistencies there, so we had to pull them," Kapon told the crowd, which loudly expressed its disappointment.

The third person in the room suffering from a counterfeit-induced migraine was Kurniawan, the young collector nicknamed "Mr. 47" among fellow collectors for his love of 1947 Cheval-Blanc. Kurniawan had consigned the suspect Ponsot wines for auction. Now, more than a year later, he has dropped from sight. He failed to respond to nine interview requests, by phone, e-mail and through associates, for this report. But he is still selling wine-Christie's auctioned off 60 lots of Burgundy and Bordeaux from Kurniawan's cellar in September.

And despite repeated pleas from Ponsot, Kurniawan still has not revealed where he got the suspect wine. Now he is being sued by another collector for fraud. To some people, he is a victim-a generous man with a great taste for fantastic wine who got duped.

To others, he is a con man, a symbol of the excesses of the wine auction boom.

Since that Acker sale, the pain has spread. High-profile lawsuits over counterfeiting have shaken the auction world. Collectors have sued auction houses, an auction house has sued a client, and collectors have sued each other. The FBI is investigating possible fraud and has issued subpoenas to several auction houses.

One collector, Florida energy executive William Koch (pronounced "coke"), has launched an organized campaign of litigation, hoping to force auction houses to change their behavior. He has filed suits against a wine broker, three auction houses and two collectors who consigned wines he purchased. "I plan to put people in jail," says Koch. "I plan to get my money back, and I plan to force the auction houses and retailers to make serious changes."

In France, Ponsot continues his detective work to find out who exactly produced as many as 91 counterfeit bottles with his family name on them. He has sworn to find whoever is responsible for faking his wines and has urged his fellow producers to work together to stamp out the problem.

All these parties have come face to face with a single inconvenient truth: The apex of the wine market, where a case of Domaine de la Romanée-Conti 1990 can sell for $160,000, and one jeroboam of Mouton-Rothschild 1945 fetched more than $300,000, is infiltrated with counterfeits. The burning question is: How deep does the problem go?

I'VE BEEN ROBBED ...
As CEO of the Guess fashion empire, Paul Marciano knows a thing or two about fake merchandise-counterfeit couture costs the fashion industry an estimated $9.2 billion annually, according to the World Customs Organization. But he didn't know until last spring that there were fakes lurking in his own wine cellar.

In 1991, Marciano purchased eight cases of Château Pétrus 1982 from New York retailer Zachys. In May of that year he bought six cases at $6,640 per case and in October he bought two more at $5,940 each. Total cost with shipping and insurance? More than $52,000. And he kept buying various vintages of Pétrus, accumulating 400 bottles by January of this year. The Bordeaux lover hoped that the wine would appreciate in value.

He wasn't disappointed. In January 2009, when he decided to sell a few dozen cases of Pétrus, ranging from 1961 through 1990, Zachys' auction division estimated that the '82 Pétrus alone could sell for an estimated $24,000 to $36,000 per case. But after holding the wines for five weeks, the auctioneer told Marciano that, he says, "Eighty bottles of my ['82] wines were not fit for auction." In other words, they were likely fakes.

According to Marciano, Zachys Wine Auctions at first denied that its retail arm had sold the wine to Marciano. But he claims he has the original invoices to prove it, some with notations by Zachys Wine Auctions president Jeff Zacharia. Last May, Marciano filed a lawsuit against Zachys in a Los Angeles court, charging that he had been sold fake wine in 1991 and asking for damages. The judge stayed the case for now, saying that under contract terms, Marciano must seek arbitration in New York first. Only if he is dissatisfied with the outcome can he sue. The matter is pending.

Zacharia, 48, calls the case without merit. Marciano claims that his 1982 Pétrus was always stored in "secure cellars." But Zacharia says, "Where has this wine been for the last 18 years? It's been in more than one cellar. It makes no sense that we'd have actively pursued getting his wine for consignment if we knew it was fake." Zacharia also says that among the more than 40 cases of wine Marciano wanted to consign, not all was bought from Zachys. "We know he bought some from us," says Zacharia. "He bought '82 Pétrus from others as well. There are a lot of unanswered questions. Were these the same wines he bought from us?"

Of such disputes, wine-fueled lawsuits are made. Regardless of what the arbitrators decide, Marciano feels betrayed. "I feel like I've been robbed of my hobby, my passion, my love."

Counterfeiting worldwide is a $200 billion a year industry, according to the Organization for Economic Cooperation and Development (OECD). That's larger than the GDP of 150 countries-and the organization says it's a conservative estimate.

As globalization renders borders increasingly meaningless, the problem is growing. Old favorites, such as luxury watches and high-end clothes and handbags, remain prime targets. But counterfeiters today fake everything from T-shirts to car parts, DVDs to prescription drugs, and even baby food. Millions of Chinese apples showed up on Taiwan streets a few years ago with "Washington State" stickers on them.

Certain tricks of the counterfeit wine trade are timeless. One tactic is to buy a cheaper vintage of a great wine and alter the label and cork. Digital imaging has made faking labels far easier. Sometimes empty bottles of great wine are lifted from trash cans and get refilled. (See "Sniffing Out a Fake," page 49.)

Because few people have tasted truly old wines, and because counterfeiters often substitute good young wine or put bogus labels on bottles of less-valuable wine from the same time period, spotting a fake is more art than science. "Everyone's an expert. I've had so many people taste something and say, 'This can't be '50 Lafleur,'" says one collector. "Really? Have you ever had a Right Bank Bordeaux from the '50s?"

But every collector has tasted plenty of suspicious bottles. "The worst was an '82 Haut-Brion in magnum at a tasting sponsored by an auction house," says Tom Black, a Nashville businessman and collector who has 20,000 bottles at home and 9,000 on consignment to Grand Award-winning Alto restaurant in New York.

"It must have been South American wine."

While high-priced collectibles garner the lion's share of attention, fake everyday wine is a growing problem too. In 2007, German and Italian police uncovered an international crime ring bringing unlabeled Puglian table wine into Germany, labeling it Brunello di Montalcino or Barolo and selling it to Hamburg restaurants.

Thirst for wine in developing countries has exacerbated the problem. Don St. Pierre Jr., managing partner of Shanghai-based wine importer ASC Wines, says wine counterfeiting in China functions on both high and low price tiers. "One target is Lafite Rothschild, which is very popular and consumers pay a very high price for," he says. "The second type is not specific to a brand-cheap table wine is being imported and relabeled as Bordeaux AOC or Italian DOCG."

Collectible wine, however, garners more attention, for several reasons. The profit margins for counterfeiters are much higher for rare, old collectibles-after all, it costs little more to "produce" Le Pin than it does Le Plonk. And older wines are more difficult to authenticate, especially anything from before the 1970s. But a big reason is that the auction market is reliant on trust-collectors depend on auction houses to determine the provenance of the wine. Tasting a rare, old wine is a rich experience, and nagging doubts over authenticity can ruin that. Is it real, you wonder?

Decades ago, many of what are now the most collectible wines in the world were bottled by négociants and retailers, leading to plenty of packaging variation. Records at top Bordeaux châteaus and Burgundy domaines, which are now multimillion-dollar businesses but were glorified family farms as recently as a few decades ago, are notoriously incomplete. No one can accurately say, for example, how many magnums of Pétrus 1945 were produced. Some will say Pétrus produced no magnums before World War II. Others say, who knows what négociants and retailers did with wines back then? As a result, there is no reliable estimate for how much collectible wine on the market is fake.

There is certainly a problem, however. In the case of Pétrus 1982, Richard Brierley, who headed Christie's New York wine department until recently, says any consignment of that wine is, "Guilty until proven innocent." Christian Moueix, whose family owns Pétrus, says, "Nobody knows precisely how serious counterfeiting is for collectible wines. Of course, I have seen examples of fake bottles of Château Pétrus."

While counterfeit wines have been around for centuries, the stakes grew higher as prices kept rising as the auction market boomed. Since 1993, when New York State legalized wine auctions by retailers, the United States has been the dominant market. The atmosphere and clientele at auctions changed as well. They were once staid, daytime affairs frequented by brokers and sommeliers. As new auctions houses such as Zachys and Acker entered the game and then began to compete with Christie's and Sotheby's, they held the events at fine restaurants like Daniel and Cru. Evening sales were held, often accompanied by gala dinners where fabulous wines were poured. New, younger collectors began to show up more, with a passion for wine and with plenty of cash.

No one capitalized on that enthusiasm better than Kapon, 37, who turned his small Manhattan wine store, which his father and grandfather had both managed, into the leading U.S. auction player, selling almost $60 million of wine through auctions and online bidding in 2008. Kapon attended and sometimes hosted marathon collector wine dinners where thousands of dollars worth of wine were opened. His tasting notes, posted online, described incredible evenings and wines that tasted like "Rock 'n' Roll" and "T 'n' A" ("Tannin and Acidity").

But as the market rose and all these fantastic collectibles went on the block, some people began to ask questions. "You started to worry in the 1980s, but it was minute," says Serena Sutcliffe, who heads Sotheby's wine department. "The explosion started in the second half of the 1990s and this century. It was an absolute explosion."

Where were all these fabulous wines, many never seen previously at auction, coming from? Were they too good to be true? One collector decided to force the issue.

MONEY BE DAMNED
Bill Koch will never win a Mr. Congeniality award. The founder and president of Oxbow Group, a Florida-based energy conglomerate, is ambitious, passionate and tireless. He also knows his way around a courtroom. He and his two brothers fought an on-and-off, 20-year-long legal battle over his share of the company his father created. Koch subpoenaed his own mother. He walked away with a settlement of $470 million.

In addition to business, sailing, antique firearms and art, Koch, 69, has a great passion for wine, and in the late 1980s he began collecting. As with many of his hobbies, he threw himself completely into it, buying thousands of bottles a year of collectible Bordeaux. He bought four of the famous "Jefferson Bordeaux," the bottles unearthed in 1985 by German wine dealer Hardy Rodenstock that he claimed were from the late 18th century and may have been ordered for the sage of Monticello. (See "The Mysterious Mr. Rodenstock," page 56.) By the end of 2005, Koch had spent more than $12 million on a 40,000-bottle cellar, including extensive verticals of Pétrus, Mouton-Rothschild, Latour and Lafite.

Koch has now switched hobbies, however, from collecting to vengeance. He has launched a money-be-damned campaign to reform the wine auction market. Based on reports from experts who combed through his cellars, he estimates that several hundred bottles, for which he paid almost $4 million, are fakes. His 2006 lawsuit against Rodenstock over the authenticity of the Jefferson bottles is ongoing in a New York court. Rodenstock denies the court's jurisdiction. But that suit was just a warm-up for a broader crusade. Over the last four years, Koch has spent more than $5 million investigating and suing at least seven parties he claims sold him fake wine.

In several of the suits, the auction houses responded by offering his money back. But he has rejected all offers to settle. To Koch, the auction houses either knowingly or negligently sold fakes. He wants punitive damages. He has yet to win a case and he has yet to put forward his experts' evidence that his wines are fakes. But he's patient and he undoubtedly knows that a long legal battle will draw attention to his cause.

While he's become a gadfly of the auction community, he insists his efforts are all about his love for wine. "What separates artistic wines from mass produced wines is that you can taste the love that went into making them," Koch says. "I'm highly offended by the way these sellers of fakes are making a mockery of that love."

Koch's buying habits suggest he was asking for trouble-buying wine in great volume, focusing on properties that are especially appealing to counterfeiters and often failing to inspect the wines before the sales. And it's worth noting that if he has found "several hundred" fakes, that's only 1 percent to 2 percent of his 40,000 bottle collection. But he argues that it's the auction houses' responsibility to prevent any fakes from going on the block.

"I buy a lot of art and a lot of wine and I want people to know that if they're cheating me, man, I'm coming after them," says Koch. "[The auction houses] put out these slick catalogs that describe lots glowingly. If an auction house were to say this was Jesus' bottle, we've inspected it, and you come back to them and say it's fake, they say, oh, look at the fine print in the back of the catalog. It says that you can't rely on anything we say. Everything is sold 'as is.' I find that extremely offensive." Two judges, however, have accepted that argument, dismissing some of Koch's claims, ruling that by bidding he agreed to the auctioneers' rules.

In 2004 and 2005, Koch spent $370,000 at Zachys auctions on 19 bottles that he now alleges are fake or possibly fake, and he's filed a suit against the auctioneer for knowingly selling him fake wine. Jeff Zacharia denies any wrongdoing. "We offered him a refund. Bill has said he is trying to single-handedly change the industry through the courts," he says. "In any industry, there are ­issues. I never find going through the legal system an efficient and productive way to solve problems."

Many of the wines Koch bought at the Zachys auction had been consigned by one-time Silicon Valley entrepreneur and collector Eric Greenberg. Koch is suing Greenberg as well. According to Koch, the wines never should have been offered for sale because both Sotheby's and Christie's, as well as an independent expert hired by Greenberg, had inspected the wines for possible auction and identified some as counterfeit. The independent expert, wine appraiser William Edgerton, had affixed a numbered and signed tape to each bottle he inspected in Greenberg's cellar, corresponding to his notes on that wine.

Koch later hired Edgerton to inspect wines that he had purchased from the Zachys auctions. Descending into Koch's Palm Beach cellar, Edgerton says, "I immediately saw two wines that still had my tapes on them."

Greenberg offered to reimburse Koch for the rejected wine, adding $45,000 in interest and other fees. "I even offered to do an auction of the wines to benefit a children's charity," says Greenberg. But that didn't satisfy Koch, who wants to go to trial to obtain punitive damages. Last October, Greenberg's motion to have the charges dismissed was denied. Federal District Judge Barbara Jones of New York's Southern District wrote in her opinion, "the particularly egregious nature of Greenberg's alleged conduct is demonstrated by his decision to sell wine at auction that he knew two experts had determined to be counterfeit."

"Out of 17,000 bottles I consigned," Greenberg says, "he found a couple of fakes. That's not fraud, that's a mistake. I did not knowingly put fake wine out there. And who do you think recommended Edgerton to him? It was me."

"There's a chain of collectors who don't cry foul," says Koch. "They sell the wine back to the auction houses, who gladly sell it to someone else."

Two days before the Ponsot bottles were scheduled to be auctioned at Cru, Koch filed a suit against Acker, alleging that five bottles he bought at auctions and private sales in 2005 and 2006 for $77,925 are counterfeit. The wines include a 1949 Château Lafleur, auctioned for $10,575, a 1947 Pétrus purchased directly from Acker for $30,000, a 1945 Comte Georges de Vogüé Musigny Cuvée Vieilles Vignes and two bottles of Domaine de la Romanée-Conti Romanée-Conti 1937.

Acker offered to refund Koch's money upon return of the disputed wine, but Koch rejected the offer. Acker's lawyers have countered that the house's catalog states that it sells goods "as is" and that any statement therein "is opinion only and shall not be relied on by any bidder." Acker also pointed out that Koch had been entitled to inspect the wine prior to bidding, but had failed to do so. New York Supreme Court judge Martin Shulman threw out the fraud allegation, but is allowing Koch to sue Acker for breach of contract and violation of state consumer protection statutes. The case is ongoing.

MR. 47
After the Acker sale in April 2008, Koch's next target was not a surprise. In September 2009, he filed a lawsuit in a Los Angeles court against Mr. 47-Rudy Kurniawan, 33, the collector who had consigned the rejected Ponsot wines. Koch says his investigators have discovered that Kurniawan was the source of the five alleged counterfeits he bought from Acker. At press time, Kurniawan had yet to respond to the suit.

Facts about Kurniawan are hard to come by. He has told several people that he was born in Indonesia to Chinese parents, the son of a successful businessman. He has also said he came to the States to attend college in California. According to an investigation conducted for Koch by a team that includes several former FBI agents, his given name is Zhen Wang Huang. According to an interview by Corie Brown in the Los Angeles Times in 2006, Kurniawan first tasted wine at a birthday party for his father at a restaurant in San Francisco when he was in his mid-20s.

The wine was Opus One 1995. Kurniawan said the wine bug bit him instantly and he was soon buying the most rarified California labels. He met Kapon, who helped introduce him to rare Bordeaux and Burgundy. Before he was 30, Kurniawan was spending "$1 million per month on wine," according to the Brown article. He held lavish wine dinners attended by Kapon and other collectors. One longtime collector says, "He's got a phenomenal palate and he's a generous person." Another recalled a blowout dinner at Cru a few years ago that the table was supposed to split. "Rudy picked up the entire tab for $80,000," he says. A third says Kurniawan had more money than knowledge.

For Acker, Kurniawan was also a mega-client. In 2006, Acker held two auctions centered on consignments from Kurniawan's cellar. Mr. 47 wasn't identified by name in the catalogs, which simply referred to "THE Cellar," but collectors knew. Kurniawan was on hand to work the room. The first sale, in January, raised $10.6 million. The second, "THE Cellar II," in October, grossed $24.7 million, a single-sale record that still stands.

But while Kapon was promoting Kurniawan in the auction catalog as "mega-collector of this century," trouble was afoot. It surfaced when Ponsot called Kapon to alert him to the suspected fakes at the 2008 sale. Experts can differ on whether an old wine is real, but Ponsot was adamant. Six lots of Ponsot's Clos-St.-Denis, for example, were offered, in vintages 1929 through 1978, including a case of 1971 estimated at $30,000 to $50,000. Yet, Ponsot did not produce Clos-St.-Denis until 1982. Another glaring inconsistency was a single bottle lot of Ponsot Clos de la Roche 1929 (estimated at $14,000 to $19,000), labeled as domaine-bottled. "My grandfather, Hippolyte, would have made that wine," Ponsot says. "But he didn't start domaine bottling until 1934."

Questioned about those suspect Ponsots, Kapon says he did not ask Kurniawan to provide invoices or other evidence of where he got the wines that Acker would offer at auction. "It's tough, because as the biggest wine buyer in this century, he has many sources," Kapon says, "and he's just not organized by nature." As for how Kurniawan was able to source wines other collectors could not, Kapon says, "There are incredible caches that keep popping up, and people who buy the most wines get the most offers."

The small but fanatical Burgundy-collecting community was shaken by the last-minute withdrawal of the lots disclaimed by Ponsot. They'd been offered by an auctioneer and consignor with broad experience in tasting such wines, often at the same table. "I've seen Rudy nail 10 out of 12 old Burgundies tasted blind," says Kapon, who says he was blindsided by the withdrawn offerings. He calls them "fakes at the highest level."

Even Ponsot agrees that the wines may well be real old Burgundy dressed up with his labels. Kurniawan, looking shell-shocked at the end of the auction, told Wine Spectator that night, "It's Burgundy. Shit happens."

An investigation by Wine Spectator raises questions about wines of the two other famed Burgundian producers Kurniawan consigned at the April 2008 auction: Domaine Armand Rousseau and Domaine Georges Roumier. Some of those bottles bore the labels and stampings of two long-established overseas retailers, conferring a level of trust that they had been impeccably sourced. But neither Berry Bros. & Rudd, the London wine dealer founded in 1698, nor Nicolas, the French wine chain founded in 1822, have any record of selling some of the wines emblazoned with their logos. Alun Griffiths, wine director at Berry Bros., says that while it's possible a case of 1949 Rousseau Chambertin is authentic, "from all the evidence I can gather, it does not appear that these wines have been through our hands."

Rather than rely on a paper trail, Kapon says that he relied on tastings to ascertain the authenticity of Kurniawan's wines. "He did an amazing series of dinners with the biggest collectors on the planet, and everyone was blown away by these wines. If they tasted so good, and the corks were branded as they should be-the old Rousseau's and DRC's are always branded-what more did we have to do?"

What most of the auction-goers did not know that day as Kapon took bids for the Rousseau and Roumier wines, was that Kurniawan, who had been freely buying art as well as wine, was deep in debt to Acker. In January 2007, soon after the $24.7 million auction of "THE Cellar II," Acker loaned him $1 million. It was one of 19 loans from the auctioneer over the next year and a half. Before interest, the total reached $8.84 million.

It's not unheard of for auction houses to make loans to regular consigners. Sometimes they offer money in advance for eventual consignments. But Kurniawan appeared to be in financial trouble-the proceeds of Kurniawan's lots at the April 2008 auction, including the withdrawn Ponsots, were intended to partially pay down his debt, according to several collectors close to Kapon.
Just three weeks after the Ponsot auction, Acker took legal action against Kurniawan. In a debtor's proceeding, it moved to impound 18 artworks owned by Kurniawan, including works by Andy Warhol, Damien Hirst, Richard Prince, Gene Davis, and Ed Ruschka.

Kapon was apparently unaware that in January 2008, four months before Acker took them as loan collateral, Kurniawan had already used those same 18 artworks, along with seven others, as collateral for a $3 million loan from Emigrant Bank Fine Art, a New York lender. A source at Emigrant told Wine Spectator, "We weren't worried about the loan because we felt the collateral way outweighed the loan's value."

On Nov. 5, 2008, shortly after discovering Kurniawan's "unpermitted lien" to Acker, Emigrant declared its own loan to Kurniawan to be in default. When Kurniawan failed to pay off the debt of $2.23 million plus interest and fees, Emigrant sold most of the art, bringing in more than the outstanding debt at a Christie's art auction. A Warhol sold for $464,000 while a Ruschka sold for $1.25 million.

Acker did not fare so well. In a Confession of Judgment (a legally binding acknowledgment of debt) dated Nov. 23, 2008, Kurniawan agreed that he owed Acker $10.4 million. That sum included outstanding loans, unpaid wine invoices and attorney's fees. "There is some unfinished business, and we decided we wouldn't sell any more of his wines until we got some answers as to the source of the Ponsot wines and such," says Kapon.

But Kapon insists there was nothing out of the ordinary about the loans. "I have been surprised by the attempts Koch and others have made to try to create something nefarious out of these bridge loans that Rudy obtained from Acker and from collectors," he says. "Rudy had already paid off several million [dollars] of loans before THE Cellar II [sale]. Auction houses sometimes give consignors advance payments. [Acker] has a perfected first lien, and we are continuing to liquidate collateral to pay down the debt, and we are in regular communication with Rudy to ensure that he is cooperating fully to pay off the judgment, which he has been. While I don't have the exact figures in front of me, I would guess that over 40 percent of the debt has already been paid down."

Kurniawan is also still selling wine. On Sept. 12 in New York, Christie's sold 60 lots from his cellar, including three magnums of his old favorite, 1947 Cheval-Blanc. There were also 25 lots of DRC-highlights included two magnums of 1962 La Tâche and a methuselah of 1985 La Tâche. Kapon approved the sale and all the proceeds went to paying down Kurniawan's debt. Asked whether Christie's hesitated to accept Kurniawan's wines or considered identifying him in the catalog text, Charles Curtis, head of Christie's New York wine department, said, "We don't vet wines in our consignments predicated on the consignor. All wines are subject to careful scrutiny by our specialists. It is our policy not to identify consignors, revealing information only when explicitly requested by them to do so."

PROTECTING TERROIR
Many producers don't want to discuss the counterfeiting issue. (Several refused to speak on the record for this story.) Others choose to focus on safeguarding their newer wines. (See "The Fight Against Fakes," page 66.).

But in the year and a half since he went to the Acker auction, Ponsot has been relentlessly outspoken on the subject. He feels that wines made from the best parcels in Burgundy are too great a thing to tolerate fakes. "We have a universe of terroirs in Burgundy," he says. "I won't see them abused."

Over lunch at New York's Jean-Georges restaurant on the day after the Ponsot lots were withdrawn, Kurniawan pledged to help Ponsot find the source of the fakes. But so far, according to Ponsot, all Kurniawan has given him is the name and two telephone numbers of a person in Jakarta, Indonesia, whom Kurniawan identified as the source of the wines. In Jakarta, that name is as common as "John Smith" would be in London, Ponsot says. Calling the phone numbers proved fruitless-no surprise to Ponsot. "I've traveled in the Far East since I was a teenager," he says. "I'm familiar with all the collectors of my wine in the region. They'd have known of any available old Ponsots. A friend in Singapore told me, 'Any bottle of yours circulating within a thousand miles of here, I'll buy it.'"

Ponsot's own sleuthing has led him much closer to his hillside home in Morey-St-Denis. Burgundian cellars commonly hold library inventories of bottled wine, which remain unlabeled until sold. Ponsot suspects that a forgotten cache of dusty bottles may have been retrieved from one of his neighbor's cellars and labeled as his wine by counterfeiters. He is currently investigating the whereabouts of a large batch of négociant wines that disappeared.

Ponsot tried to enlist the French government's anti-fraud agency, which defends trademarks such as Chanel, Hermès, and Louis Vuitton, in tracking the counterfeiters, but to no avail. "They're more interested in catching fraud in the wineries than in tracing old bottles," he says.

He's also tried to interest his fellow producers in forming a panel that could render expert opinions on questionable wines. That effort stalled because "Burgundians are very cautious about sharing confidential information," he says. For now, Ponsot has moved to head off future fakes. Starting with the 2008 vintage, his signature will be molded into his bottles. Neck capsules will be tamper-proof. A third level of security will be invisible to the naked eye.

As for the discredited Ponsot wines, they remain in limbo, stored away in Acker's New Jersey warehouse. Ponsot had hoped to be filing suit or seeking criminal charges against the counterfeiters by now. That hasn't happened, but, with a smile, he compares himself to Don Quixote, "who never gave up."

But then he turns serious. "I'd like to tell you what I'm truly feeling. I want so much to respect the authenticity of each appellation and vintage. I want to be faithful to what nature gave. When I see these old bottles supposedly made by my grandfather, who worked so fanatically, it's not only me, but him, that's being disrespected."

THE CRUSADE CONTINUES
The thirst for collectible wine often mirrors financial markets. As the economy showed the first faint signs of recovery this fall, wine auctions came back to life. Kapon presided over a sale on Sept. 9 in New York that was 100 percent sold and raised $2.52 million, exceeding the pre-sale estimate. A case of Screaming Eagle 2001 went for $24,200. Christie's New York division held its own successful sale a few days later, raising $2.65 million. Kapon then flew to Hong Kong, New York's new challenger in the auction market, and sold $6.4 million worth of wine at a Sept. 19 auction at the Shangri-La Hotel.

As the good times revive, many in the wine market worry that the focus on counterfeits will scare away bidders. Some argue that the problem is being exaggerated. "Twenty years ago nobody was screaming fakes," says David Elswood, who heads Christie's London-based wine department. "But now we have put this idea that there are fakes out there and I am sure that in the course of that a lot of genuine bottles have been called into question."

Many longtime collectors say that counterfeits are simply a risk of collecting-that any wine lover with an impressive cellar has some fakes hidden among the gems. "If you own one bottle, chances are it's not fake," says Rosania. "If you have 50,000 bottles in your cellar, you have 50,000 chances that you have a fake." These collectors argue that the only solution is to be careful, do your homework and ask for a refund from the auction house if you have any doubts.

Kapon says the Ponsot episode "has made us more attentive and careful with older wines, and no longer just relying on tasting them. We're now consulting with third-party experts on mega-cellars. Based on the business we've done in the last year, our clients are confident. They realize that what happened was the exception, not the rule."

Zacharia insists that fakes are a small portion of the market and that Zachys is constantly working on improving its inspections of consignments. He also says the impressive sales this fall show that people do not believe the market is littered with counterfeits.

Each new lawsuit raises questions about whether enough is being done to keep counterfeits out of the market. Some think the attention is good. "Koch is helping-he has everyone awake," says collector Black. "The auction houses have gotten better. Some are weak on due diligence but give 100 percent money back guarantees."

Asked whether auction houses need to improve their inspection process, Rosania says, "There is no perfect litmus test. It's not realistic. Either we're going to recognize that old wine has inherent risk or we're only going to drink young wine."

But he also admits, "Every time I open a great old bottle now, I find myself wondering. This has besmirched the thrill you get from beautiful old wine."

None of Koch's array of suits has come to trial yet, but Koch has not tired of the chase. "The wheels of justice move at a snail's pace," he says. "I would have liked, through discovery, to have found the source of these [fakes in my cellar] by now." But he warns that he won't give up. "I sued my [twin] brother David for 20 years. And as a sailor, I lost more races than I won. But what's important is that I won the last one." Koch skippered the America3, the boat that won the America's Cup in 1992. He financed the $65 million expedition himself.

He sees his suits against the auction houses as just a step. He wants to find out who made these fakes. And he wants the market changed. To Koch, it's all about trust.

"I cannot stand these experts who stand up and say, 'This is authentic.' They are selling something over and over again that is fake. They're abusing trust. There is a conspiracy of silence in this industry," says Koch. "And I mean to solve the problem."

Peter Hellman is a freelance writer based in New York.

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