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Counterfeit Crusader and Zachys Settle Suit

Bill Koch ends his lawsuit against auction house after it agrees to change its catalog language

Mitch Frank
Posted: January 25, 2011

Wealthy wine collector Bill Koch and one of the targets of his five-year campaign against counterfeit wines have settled out of court. Zachys Wine Auctions and Koch issued a joint announcement Monday that they had agreed on a settlement of Koch’s pending lawsuit from 2007. No financial terms were announced, and Zachys’ executives did not say whether any of the wines at question in the suit are counterfeit, but the New York auction house has agreed to amend the language of its auction catalogs.

Koch, a Florida energy executive who spent more than $12 million amassing a 40,000-bottle cellar beginning in the late 1980s, has spent several million dollars suing wine merchants and auction houses over alleged counterfeits. None of the cases have yet been decided in court. In 2004 and 2005, Koch spent $370,000 at Zachys auctions on 19 bottles that he now alleges are fake or possibly fake. In a 2007 interview with Wine Spectator, Zachys president Jeff Zacharia denied any wrongdoing. "We offered him a refund. Bill has said he is trying to single-handedly change the industry through the courts," he said. "In any industry, there are issues. I never find going through the legal system an efficient and productive way to solve problems."

Koch has repeatedly objected to disclaimer language in auction-house catalogs. "[The auction houses] put out these slick catalogs that describe lots glowingly,” Koch told Wine Spectator in 2009. “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 in other cases, ruling that by bidding he agreed to the auctioneers' rules.

Now Zachys has agreed to change that language. “I am pleased that Zachys has agreed to amend the Conditions of Sale set forth in its auction catalogues and other materials to indicate that it will provide refunds for wine that is counterfeit, or wine that has indicia that it is not authentic, notwithstanding ‘as is’ clauses or other disclaimers,” Koch said in a statement.

Zacharia echoed that sentiment in the statement. “Zachys was founded as a family business in 1944 and remains a family business today. We are committed to preventing the sale or auction of counterfeit wine. Furthermore, we support Bill Koch’s extensive efforts to rid the fine-wine market of counterfeiters.”

Many of the wines Koch bought at the Zachys auction were consigned by Silicon Valley entrepreneur and collector Eric Greenberg. Koch is still suing Greenberg, despite today’s settlement. Lawyers have been deposing witnesses on both sides of the case for several months. A trial may begin soon if a settlement is not reached.

Troy Peterson
Burbank, CA —  January 25, 2011 12:03pm ET
From my limited phone/email interactions with him, I've found Jeff Zacharia to be a respectable businessman and a genuinely nice guy. I'm glad Mr. Koch seems to have become more reasonable in his approach/expectations and that at least a portion of this matter is now resolved.
Rick Wrightson
Jupiter, FL —  January 25, 2011 1:22pm ET
If you know Bill Koch, you know that he is motivated by principle and that has to be his driving motivation with these lawsuits. For him to spend multiples far beyond his original purchase price for these fake vintages simply for the sake of 'cleaning up' the wine auction industry speaks volumes about his ethics and principle values. Everyone else (who has ever bought a wine at auction) is a winner because of his actions. We should all be thanking him.
David A Zajac
Akron, OH —  January 25, 2011 10:44pm ET
Maybe we should be thanking him, but my feeling is that it has always been more about Bill Koch than cleaning up the auction houses problems. I have been a long time purchaser at auction and whenever I have had an issue at auction, they have accepted the wine back without question. Maybe my $1,000 spent didn't warrant their time to fight it, but then again they seemingly could tell someone like me to take a hike long before they would someone of Mr. Koch's wealth. Either way, as an astute business man that he apparently is, surely he would understand when a dog nips at your hand that you don't have to take a baseball bat and bash it to death. Did he accomplish what he set out for? Probably yes, and was that self serving and ego centric, again, probably yes.
Ben Helgeson
Yakima, WA —  January 28, 2011 11:55pm ET
I am a small time collector without the funds someone like Bill Koch has. I absolutely hate dishonesty and Bill Koch is doing something I wish I could do. I want to have confidence that when I spend a good percentage of my disposable income on a special bottle of wine, it would be the real thing. I applaud Mr. Koch and if I ever meet him, I will shake his hand. Keep up the fight, you're doing the right thing.

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