Collectors Battle Fraudulent Wines
Will court cases on counterfeit wines scare collectors away from fall auctions?
Mitch Frank
Posted: August 29, 2007
Some bottles of wine are drunk a few months after harvest, while others are aged for decades prior to consumption. And some bottles never seem to go away. A collection of 18th century first-growth Bordeaux, supposedly once owned by President Thomas Jefferson and discovered 20 years ago, was back in the headlines this month. On Aug. 14, a U.S. federal magistrate entered a default judgment in a lawsuit alleging fraud against Hardy Rodenstock, the German wine dealer who claimed the bottles had been discovered in a walled-up Paris cellar.
Rodenstock is being sued by William Koch, a billionaire wine collector who bought four of the bottles in 1988 from retailers in London and Chicago. Rodenstock, who built his reputation by discovering rare pre-phylloxera wines, had sold several of the Jefferson bottles to individuals through retailers and auction houses. The first, a 1787 Château Lafite, was auctioned off in 1985 by Christie's, whose wine expert, Michael Broadbent, signed off on its authenticity, to publisher Christopher Forbes. (Christie's auctioned another bottle, of 1784 Château Margaux, to Wine Spectator publisher Marvin R. Shanken in 1987.)
Two years ago, Koch began a private investigation into the authenticity of the bottles. Monticello curators told him that Jefferson's detailed records could not verify whether the founding father owned the bottles. An engraving expert claimed the initials "Th.J." carved into the bottle were probably made with modern tools. So Koch took the German dealer to federal court. Rodenstock, whose real name is apparently Meinhard Goerke, disputed the charges and then, once discovery proceedings began, refused to recognize the court's jurisdiction. When he declined to answer the courts' summons, the magistrate entered the judgment.
In response to Koch's allegations that many of the wines Rodenstock sold may have been counterfeit, Rodenstock responded "Nonsense!" in a fax to Wine Spectator. He also pointed out that many of those wines had been highly rated by some of the world's leading wine critics.
While the Jefferson Bordeaux is the most infamous case in the headlines, it's not the only suspicious wine being investigated. Massachusetts collector Russell Frye is suing a retailer—the Wine Library in Petaluma, Calif.—claiming the retailer sold him counterfeit bottles, some of which Frye claims originally came from Rodenstock. And in March, agents from the FBI's art fraud squad sent subpoenas to Christie's, Zachy's and Sotheby's, asking for data on rare wine sales. An FBI spokesman said he could not comment on any possible investigation, but said, "When you attempt to sell it as the genuine article, you are committing a crime. It's a violation we take more seriously than people realize. Fraud [of collectibles such as art, antiquities and wine] is a $6 billion a year problem."
With all the attention these cases are drawing, are auction houses worried collectors will grow skittish just as the fall slate of auctions begins?
Auction houses admit that the volume of fraudulent wines they see has grown in recent years, especially high-end trophy wines that sell for six figures. But most say they are more concerned with the Dow Jones than fears about fraud.
"There are fraudulent wines in the marketplace," said Jamie Ritchie, North American wine director for Sotheby's. "The fact that there's press about them is a positive because collectors are aware of them and aware that we inspect every bottle."
Auction houses insist that their methods of confirming authenticity are sound. Shortly before its April 2007 sale in Los Angeles, Christie's pulled the lot on the cover of its catalog, six magnums of Le Pin 1982, from the sale. "We're being as vigilant as we always have been—more stringent in light of recent news," said Richard Brierley, Christie's North American wine director.
Veteran collectors are well aware of how important provenance is, which explains the high prices paid for wines straight from the cellars of châteaus and négociants. "People are anxious about fraud," said Rob Rosania, a major New York collector. "Two or three years ago an auction house might have taken back a questionable bottle. Now they'll take everything back because they don't want negative publicity. The wine market has changed for the better because of fakes. Iffy bottles are totally suspect."
But the headlines are not going to stop soon. The FBI investigation could continue for some time. Rodenstock refuses to recognize the U.S. federal court's jurisdiction, which could mean years of appeals. And Koch says he's not done. He's had experts analyzing the 35,000 bottles in his cellar. They're halfway done and have already found $3 million worth of wine they suspect is fake.
"Rodenstock is just the tip of the iceberg," said Koch. "I plan to put people in jail, I plan to get my money back, and I plan to force the auction houses and retailers to make serious changes."
Ironically, Thomas Jefferson was a smart collector. He knew where his wines were coming from, often ordering directly from the châteaus, kept meticulous records and receipts of all purchases and cellared the bottles properly—or as properly as 18th century technology allowed. With high-end trophy wines selling for bigger prices than ever, collectors would be well advised to follow his example.
—With reporting by Eric Arnold, James Suckling and Peter D. Meltzer
