A French judge has ruled in the case of the faux Red Bicyclette. A court in Carcassonne handed out suspended jail terms and fines on Wednesday to 12 members of the Languedoc wine industry for selling millions of bottles of Pinot Noir to Gallo for its Red Bicyclette label that were illegally cut with cheaper Merlot and Syrah.

The defendants, including figures from various vineyards, cooperatives, a broker, the wine merchant Ducasse and the large cooperative Sieur d'Arques, were convicted of selling the equivalent of 18 million bottles of falsely labeled wine. The court gave them suspended jail sentences of between one and six months and fines from 3,000 to 180,000 euros. The judge said that, "the scale of the fraud caused severe prejudice to the wines of Languedoc in the United States."

The saga dates back to 2006 as demand for Pinot Noir was surging. Gallo had been working with a Limoux-based co-op, Sieur d’Arques, on various wines for Red Bicyclette, and asked for a Pinot. The co-op did not have enough of the grape variety, so it contacted Ducasse, a merchant house in Carcassonne, to help buy from other growers and producers.

In 2008, during an audit by the French fraud agency, officials found several inconsistencies. Ducasse had sold 53,889 hectoliters of Pinot Noir when the entire region only produces around 53,000 hectoliters a year. In addition, the wine had been sold for 58 euros per hectoliter, much less than the typical bulk-wine market price of 97 euros per hectoliter for Vin de Pays d’Oc Pinot Noir.

In January, all the suspects except two executives from Sieur d'Arques pled guilty. Prosecutors told the court that the scam produced 7 million euros in profit.

A Gallo vice president, Susan Hensley, released a statement saying, "We are deeply disappointed to learn today that our supplier Sieur d'Arques has been found guilty of selling falsely labeled French Pinot Noir as recently as March of 2008. Based on the available information of the Pinot Noir that the French courts have investigated, Gallo imported less than 20 percent of the total and is no longer selling any of this wine to customers."

Hensley added that they "believe that the only French Pinot Noir that was potentially misrepresented to us would have been the 2006 vintage and prior."

There has been no evidence that Gallo knew of any fraud. One industry executive familiar with Gallo's projects with foreign partners did note that the Modesto company requires strict production costs when working with partner wineries. Gallo has found new suppliers when those cost projections aren't met.

Back in France, the wine industry fears that the swindle could undermine the credibility of fellow French winegrowers.