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Does the Counterfeits Crusader Deserve Our Thanks?

Bill Koch has spent eight years and millions of dollars picking fights over wine

Posted: Mar 28, 2013 1:20pm ET

By Mitch Frank

The picture is still hanging in my office: Bill Koch, the energy executive who has made fighting sales of counterfeit rare wines a personal obsession, stares menacingly at me, wearing a cowboy hat, a bandana and a sheriff's star. The shot was taken when Wine Spectator photographed Koch for our Dec. 15, 2009, cover story, "The Crusade Against Counterfeits." The outfit was Koch's idea: In addition to wine, he collects Old West memorabilia.

In the end, we opted for a shot of Koch in a suit, holding a magnum of Château Pétrus 1921. Koch says he bought that bottle at a 2005 Zachys auction of 17,000 bottles of wine from the cellar of California tech entrepreneur Eric Greenberg. Koch alleges that Greenberg bought it from Royal Wine Merchants, and Royal sourced it from German wine broker Hardy Rodenstock. Koch believes it’s a fake.

That magnum, and all those players, are back in the headlines this week, as a jury of six men and two women hear Koch v. Greenberg in a Manhattan federal court. Koch has been suing Greenberg for six years over 24 bottles he bought for almost $350,000 at that auction, wines he says are counterfeit. (Contributor Peter Hellman, who has doggedly pursued this topic, has written an excellent summary of the case.)

Knowing Koch, that photo of him looking like Wyatt Earp is not far from how he sees himself. He has been pursuing legal action against collectors and auction houses for eight years now, spending millions of dollars on attorneys and private investigators, trying to uncover who is responsible for fakes in the auction market.

Some people find Koch an unsympathetic character. The founder and president of Oxbow Group, a Florida-based energy firm, Koch is worth about $4 billion—$470 million of it made in a settlement after a two-decade-long legal battle with his twin brother David and older brother Charles over the company their father founded. Yes, he sued his own twin. He also subpoenaed his own mother.

Beginning in 1985, Koch spent more than $12 million on 40,000 bottles of wine, buying big at auctions. He especially loved 19th century Bordeaux. This is behavior that auction experts equate with believing e-mails from "Nigerian princes" asking for financial help. Some wine lovers have said that if Koch truly spent $4 million on counterfeit wines, trophy wines he may never drink, he deserved to be duped. Others have referred to these lawsuits over six- or seven-figure wines as silly rich-man squabbles.

When Koch first complained to Greenberg that some of the wines from his cellar were fakes, Greenberg offered him a refund. Koch refused. During the first day of the trial, Greenberg's legal team asked for this to be included as evidence. “We’ve spent cumulatively about $14 million on a claim that is probably between $100,000 to $200,000,” said Greenberg's lead lawyer, Arthur Shartsis. “The legal system shouldn’t be doing this—at all. Particularly when one of the parties, years ago, could’ve avoided the costs by accepting a full tender. This case is an embarrassment to all of us."

It's true that Koch is litigious. But these arguments—that he was asking for trouble when he bought those wines, or that he should have taken a refund and moved on—don't hold water.

Judges have allowed this case to proceed because Koch has presented evidence that suggests Greenberg knew the wines were fake. Our reporting has found evidence that other collectors who discovered they had purchased fake wines turned around and auctioned the bottles to someone else. Although some rare wines will tragically never be drunk, plenty of restaurants and wine lovers buy them to drink and enjoy. Those buyers deserve peace of mind.

Is it Koch's job to clean up wine auctions? Maybe not. But in the years he has been making a fuss, auction houses have amended their legal disclaimers to allow clients to return bottles that prove to be fake. Collectors have improved their diligence. Some routinely post warnings about problem auction lots on wine message boards, asking the wineries to inspect them.

Would all these things be happening if Koch wasn't making such a stink? I look at that photo of the guy with the sheriff’s star and I think, probably not. What do you think?

David A Zajac
Akron, Ohio —  March 28, 2013 2:32pm ET
I would say he has probably helped, but overall his methods make you wonder if this isn't all about Mr.Koch and not as much about the wines. He isn't a sypathetic figure at all, not that he cares, he has $4,000,000,000. So at one time I both cheer him, yet I have a hard time worrying about the end result, after all, I drank my last magnum of 21 Petrus last night and I'm out of 45 DRC. However, I do have some good zins at home...wonder if he is interested in them, I can guarantee they are authentic!
Steve Kubota
Bellingham, WA, USA —  March 28, 2013 2:35pm ET
Koch has the financial resources to pursue and seek justice for all. Many counterfeiters will not have the resources to defend themselves and I hope this may act as a deterrence. Wine is starting to be embraced by new cultures and people around the world making this more attractive to counterfeiters. I see the potential for counterfeiting becoming more and more prevalent in the new markets, especially so in the Peoples Republic of China and southeast Asia where wine knowledge isn't as strong as it is in the traditional wine markets.
Jim Mcclure
Ft Worth, TX USA —  March 28, 2013 7:03pm ET
I think any time someone stands up to any form of theft, con or deceit in an industry it is a good thing. It's even better that it is someone with the resources to really go after the fraudsters.

People who take the attitude that he deserves it, or that, "he's got billions, who cares if he gets conned out of such a small percentage," are hypocrites, as they would certainly be upset if they spent $1000 on a special, but ultimately bogus bottle, or even if they spent $50 at a boutique winery for a Cab, only to find out it was Concord grape juice inside.

Slainte, Mr. Koch, and keep up the good efforts. I may never have the chance to try, much less purchase the level of wines at play in his case, but it's good that a precedent is being set for the results of such actions and the industry from the top down is more aware and cautions of them.
Louis Robichaux
Highland Village, Texas —  March 29, 2013 3:31pm ET
I completely support Koch in his efforts to expose the shady underbelly of super high-end wine auctions. Let's look at a few comments in your post above:

"Is it Koch's job to clean up wine auctions?" -- certainly not, but those of us who have an interest in old wine should very much appreciate Koch's efforts.

"Our reporting has found evidence that other collectors who discovered they had purchased fake wines turned around and auctioned the bottles to someone else." This assertion alone supports what Koch is doing. Collectors who recycle wine they know, or suspect, to be fake should face more than just giving the purchase price back. That would be like requiring a burgler to simply return the stolen property. Such remedy does not provide a disincentive for fraudsters.

"Others have referred to these lawsuits over six- or seven-figure wines as silly rich-man squabbles." That notion is non-sense and BS. Goes back to my prior statement. If Greenberg knew the wines were fake but is only required to give the money back, there is no justice.

Let justice be done!

Richard Gangel
San Francisco, CA USA —  April 1, 2013 11:39am ET
If Mr. Koch has strong evidence that the wines are counterfeit and that Mr. Greenberg knew that to be true he could have presented his case to the legal authorities, such as the FBI, who could have pursued criminal charges against him. Under such circumstances Mr. Koch would have been able to reclaim his losses in addition to seeing Mr. Greenberg behind bars. This is the kind of case (no pun intended) that a federal prosecutor would love to get his hands on. We are well aware of the case that is being prosecuted against Kurniawan. So why couldn't Mr. Koch take it to the feds and let them handle it? From what you have described as to Mr. Koch's litigiousness, it seems that there is more to this story than Mr. Koch's acting as a knight in shining armor for the wine-buying public.
Warren Porter
Toronto, ON, Canada —  April 1, 2013 5:08pm ET
If the comments above are indicative then it appears Bill Koch has support of the collector community. Anything that can stem the tide of counterfeit wines is good for the industry. Power to him.

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