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Jury Awards Bill Koch $12 Million in Counterfeit Wine Lawsuit

Court finds that collector Eric Greenberg defrauded Florida billionaire at wine auction

Peter Hellman, Mitch Frank
Posted: April 12, 2013

Updated April 12, 2013

Seven years into his unrelenting, cost-be-damned campaign to clean up the rare wine business, Bill Koch scored a big victory—a $12 million victory. A jury has found in the Florida energy executive's favor on all counts in his lawsuit against fellow wine collector Eric Greenberg. Koch accused California Internet entrepreneur Greenberg of fraud, making materially misleading representations and false advertising. Koch spent $3.7 million at a Zachys auction of 17,000 bottles from Greenberg's cellar in October 2005, and alleged that 24 of the bottles he bought were fakes and that Greenberg knew it.

The trial lasted two and a half weeks, but it took the eight-person jury just two hours to reach their verdict April 11. Koch was initially awarded compensatory damages of $379,000 to cover the cost of his purchases plus $1,000 per bottle. The following day, after a further hour of deliberations, the jury decided to award Koch $12 million in punitive damages.

After the verdict, Greenberg left the courtroom silently and did not offer any comment—one of his attorneys said they would appeal the decision. Koch, on the other hand, was ebullient. "There was a code of silence in this bloody wine business, and now it's been broken." He pledged he would use the money to set up a fund to educate on counterfeit wines, allowing other collectors to avoid his mistakes.

The decision is Koch's biggest win yet in his campaign to expose counterfeit wine sales by collectors, auction houses and retailers. Koch has filed suits against multiple parties, but this is the first major verdict in his favor. (A judge did rule in Koch's favor in a lawsuit against German wine dealer Hardy Rodenstock, but Rodenstock refused to come to America to contest the allegations.)

The damages should help pay for Koch's extensive expenditures. Sources close to the case say Koch has spent more than $10 million on this suit alone, though money does not appear to have been his concern. "Collectors and individual sellers don't want anyone to know they have fake wine," he told Wine Spectator just before the trial began. "They want to dump it on others. I'm the only guy who's blowing the whistle on it."

Greenberg has maintained all along that he did not know any wines sold were fake and that it was Zachys’ responsibility to uncover any problem bottles. But Koch presented witnesses that said Greenberg was aware since 2002 that his cellar contained counterfeit wines. A former house manager testified that Greenberg told him he planned to resell them.

Photograph by Gregory P. Mango

Eric Greenberg leaves the federal courthouse.

Greenberg also complained that he offered Koch a full refund several years ago, but the energy executive refused to accept it. “I think this is a horrible waste of taxpayer money," he said when asked on the stand if he was upset at Koch. "It is a pathetic thing that two wealthy people are sitting in court wasting taxpayer resources.”

Koch's campaign in the courts is not over. A lawsuit against alleged counterfeiter Rudy Kurniawan is on hold while the Indonesian national faces federal fraud charges. On April 10, a judge set Kurniawan's trial date for Sept. 9.

Louis Robichaux
Highland Village, Texas —  April 12, 2013 11:24am ET
That's the correct verdict, in my personal opinion. Only hope that Koch recovers a meaningful amount in punitive damages. Greenberg's defenses of "I tried to give him his money back" and "it was Zachys responsibility to ID the fake stuff that I pretty much knew was there" are BS excuses.
Adam Aldrich
Denver —  April 12, 2013 8:13pm ET
Jury verdicts are hard to overturn. There will have to be a significant issue for the appeal be successful. They will probably use the appeal to negotiate a settlement, but given Koch's position throughout this lawsuit, that may not work.
Bruce Nichols
Naples, Florida —  April 13, 2013 12:58pm ET
Next up... the Auction Houses? After Rudy (or because of)!
John Eagan
Beverly Hills  —  April 14, 2013 10:58am ET
This issue punctuates the the advantage, for most of us, in buying, storing and aging wines on release. I have been with friends that have bought counterfeit bottles that were under $500 - the market has plenty of risks - not to mention corked wines.
Eindhoven, Netherlands —  April 15, 2013 5:20am ET
In the trade business we all know what is going on and nobody can deny that the conviction of a counterfeiter is a good thing.

However ...

What is the use of letting a billionair pay some money??
In Europe you just go to prison, no matter how much money you have (!)
Tone Kelly
Rochester NY USA —  April 16, 2013 4:08pm ET
The counterfeit issue could be reduced in a meaningful way if the auction houses did a better job of verifying the authenticity of the wines being offered. The problem is centered primarily on older Bordeaux and Burgundy wines.
If one goes back to the late 1970s the number of older wines was declining at auction. Now we have many double magnums and magnums of 1928 this and 1937 that being offered. These bottles should be checked for provenance in a rigorous way.
Rich Mora
East Setauket NY, USA —  April 17, 2013 7:27am ET
This is an extreme example involving authenticity, but "provenance" is the whole history of the wine including how it has been shipped, stored and handled. So you should all care about the provenance of your wine whether it is the quotidian pour or the centerpiece of your cellar. When the stakes are high end collectible wines with significant bottle age the crushing disappointment of opening a cooked wine is great but we die a thousand deaths when we put up with wines that are not in prime condition because the local retailer is cheap with the AC in the summer or a wholesaler leaves loaded trucks in the loading docks or an importer doesn't want to pay for reefer containers. As a retailer I find consumers don't complain enough about the right things, though they are great at complaining about BS. Ask about your shop's storage conditions, if they care about it they will be proud to tell you about it. Mention the bottle of young white that was a little oxidized even if it was drinkable, not just the corked bottle. My guys wear fleece jackets year round at my shop because I keep it cold and the customers appreciate it. Care about the provenance of your wine. No matter how cheap it is, bad wine is never a bargain.
Ted Hudgins
Naples, FL —  April 17, 2013 9:05am ET
This will undoubtedly be reduced on appeal. The Supreme Court has held where punitive damages bear little or no relation to the actual damages ow=r where the punies are so out of proportion to the acutal damges they will be reduced. Shame on Greenberg's lawyers for not making an offer of judgment immediately which would have almost negated this whole fiasco.
Tone Kelly
Rochester NY USA —  April 17, 2013 4:25pm ET
The counterfeit issue could be reduced in a meaningful way if the auction houses did a better job of verifying the authenticity of the wines being offered. The problem is centered primarily on older Bordeaux and Burgundy wines.
If one goes back to the late 1970s the number of older wines was declining at auction. Now we have many double magnums and magnums of 1928 this and 1937 that being offered. These bottles should be checked for provenance in a rigorous way.
Christian Wyser-pratte
Ossining, NY —  April 18, 2013 1:46am ET
I won't buy wines at auction. I used to do so back in the 1980's as I was buying a supply of wines that could be drunk fairly soon, but prices were reasonable, the incentive to cheat was not that great, and nearly all that wine has been drunk. Since then I have bought at retailers, typically upon release, and the wines go into my temperature controlled storage site at home or at Vintage Wine Warehouse, which is affiliated with Peter Morrell. My only exception in years was the Charlie Trotter auction at Christie's. I felt comfortable with the provenance and so bought a fair amount. Anybody who has bought at auction since Hurricane Katrina has no clue what he's getting, never mind worrying about counterfeiting.

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