Why go to the trouble of making and selling fake fine wine when you can convince other people to let you sell their real fine wine and pocket the cash? The founder and former president of an online auction house stands accused of just that. California prosecutors have indicted WineGavel founder Joshua Krummenoehl, charging him with 12 counts of grand theft by embezzlement, amounting to more than $500,000.
Krummenoehl was arrested July 8 in New York and extradited to Napa, where he was booked before posting $50,000 bail July 17. Krummenoehl could not be reached for comment.
According to an indictment filed by state prosecutors in a Napa court and obtained by Wine Spectator, Krummenoehl allegedly accepted wine to be sold through WineGavel's online auctions between Feb. 14, 2011, and April 1, 2012, took payment for the wines, but neglected to compensate the consignors. He also kept unsold wines.
“Within the first year of operation, 2009, Krummenoehl was aware that WineGavel did not have sufficient revenue to operate the business and used the consignors’ profits,” stated supervising inspector Carl Chapman of the Marin County district attorney's office in a declaration in support of an arrest warrant filed June 26 and obtained by Wine Spectator. (One of WineGavel's clients lives in Marin County. The indictment was filed in Napa County, where the firm stored wines for auction.)
“The evidence shows that when Krummenoehl solicited and accepted the consignments from the victims between February 2011 and March 2012, he had no intention of using the proceeds of the sales for its entrusted purpose,” Chapman said. “Krummenoehl knew by February of 2011 that the company’s debt to previous consignors was approximately $600,000 and growing. He knew that when he represented to the consigning victims that he would pay them as per their contracts for the wine sold at auction, he intended to unlawfully appropriate their money and wine for his own purpose.”
Krummenoehl left WineGavel in April 2012 following a series of lawsuits filed against him, WineGavel and parent company Bridgeview Enterprises, LLC. Remy Cointreau filed suit against WineGavel and Krummenoehl for more than $30,000 on March 5, 2012. At about the same time, Krummenoehl, WineGavel and Bridgeview were named as defendants in a series of lawsuits filed by private collectors who had consigned their wine to WineGavel but never received payment, sparking the two-year criminal investigation.
From 2002 to 2006, Krummenoehl was a warehouse manager for NY Wines, the Queens-based license holder for Christie's wine auctions. He founded WineGavel in 2009, and worked briefly as a wine specialist for Wally’s Auctions in 2013 before his employment was terminated in light of the WineGavel lawsuits and criminal investigation.
Matt Carson was installed as new president of WineGavel in April 2012, announcing in a letter to customers that he was hiring a new team to provide stability and growth, but problems continued. As of press time, WineGavel.com is inactive and the company’s phone line is disconnected. Krummenoehl is due back in court Aug. 28.
—Additional reporting by MaryAnn Worobiec