Long Island Retailer Charged With Futures Fraud

Silver Spirits owner allegedly cheated customers out of $500,000
Dec 21, 2004

A Long Island wine merchant has been charged with scamming customers out of more than $500,000 worth of wine, including highly sought-after 2000 Bordeaux futures.

A complaint filed in federal court in Brooklyn, N.Y., last week alleges that Barry Silver, who ran two wine stores and a wine storage facility, operated a scam in which he collected money for 2000 Bordeaux futures and then failed to fulfill those orders, even after he received the wines.

Instead, the complaint says, Silver sold the wine online and through his retail stores--Silver Spirits in St. James, N.Y., and The Perfect Grape in East Setauket, N.Y.--at prices substantially higher than those he had charged for the futures. (Futures are offerings of wines before they have been bottled and released; they are basically a guarantee of delivery, often sold at a discount from the retail price.)

Neither Silver nor his attorney could be reached for comment.

The charges against Silver resemble those against Ron Wallace, a Colorado wine merchant who was indicted for fraud in September, after allegedly bilking customers for approximately $10 million. Wallace's trial is scheduled to begin on Jan. 4 in a Los Angeles federal court.

The complaint against Silver, 52, lists several unnamed customers who paid for futures of wines that were never delivered; one group of eight people jointly purchased almost $160,000 worth of 2000 Bordeaux futures in 2001, of which less than $25,000 worth was delivered.

When the customers approached Silver about not receiving their wines, according to the complaint, Silver told them he had been unable to obtain the bottles and blamed bad weather for the missed shipments.

However, in November 2003, Silver offered many of the same Bordeaux wines he had failed to deliver to his customers--including Château Ducru-Beaucaillou, Château La Mission-Haut-Brion and Château La Conseillante--in his store and through his monthly newsletter at prices nearly double what he had originally charged for the futures.

According to former Silver Spirits employees interviewed in connection with the complaint, Silver avoided his unhappy customers by identifying himself on the phone as his deceased father-in-law and by entering and exiting his store through the back door. In May 2004, Silver allegedly told one of his customers that he had been "living off the profits" of the 2000 Bordeaux sales, and that his Silver Spirits business was failing. The store closed later that month. The Perfect Grape, however, remains open.

The complaint also alleges that Silver continued to charge customers for storing wine at Vintage Vault, his wine-storage facility, long after he ended his lease there in 2001. Former employees reported that Silver would regularly sell the wines customers were storing at Vintage Vault without their permission so that he could fulfill new orders. At the time Vintage Vault closed, one employee said, there was very little, if any, wine left at the facility.

Some of the customers have filed civil suits. If convicted of fraud, Silver could face up to five years in prison.

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