Grapes of graft: healthy demand for rare drops makes wealthy wine collectors easy targets

Fake wine scams are perpetrated at the high end as well as in the middle and retail markets, but a lack of legislation and significant costs make it difficult to prove and prosecute offenders

PUBLISHED : Friday, 19 February, 2016, 8:00am
UPDATED : Friday, 19 February, 2016, 8:00am

Discovering rare, valuable wines is akin to chasing unicorns; we love to believe they exist, but they are rarely ever seen in captivity. For some, sought-after collectibles hold an irresistible allure. Possessing something precious that very few people have becomes an intoxicating obsession. That blind belief can make people susceptible to con men. Strong demand for rare wines makes cashed-up collectors easy targets for counterfeiters. Fakes range from bottles of “Lafite” with blatantly misspelled names, to clever counterfeits that are passed off as the genuine thing. China’s wine culture is still in the wonder years, making mainland buyers particularly vulnerable.

Counterfeiting wine is nothing new. In Roman times, deceitful purveyors swindled drinkers by passing off cheap wine as the empire’s famous Falernian, the Sassicaia of its time. More recently, counterfeiters have targeted collectors and investors by releasing fake valuable wines onto the market. Convicted fraudster Rudy Kurniawan sold hundreds of bottles of purportedly rare and expensive wine to collectors between 2004 and 2012, both at auction and in private sales. Kurniawan’s multimillion dollar counterfeiting operation began unravelling in 2007 when several magnums of 1982 Chateau Le Pin he consigned for auction were identified as fakes. Kurniawan was later convicted of fraud for, among other things, making wine in his home laboratory and selling the bottles as Domaine de la Romanee-Conti and its peers. In some cases, he sold the wines inthe genuine wine’s empty bottles stuck with counterfeit labels he had printed himself.

German collector Hardy Rodenstock shot to infamy in 1985 when the gavel dropped at Christie’s in London on one of the most expensive bottles of wine ever sold at auction – a 1784 Yquem for £105,000. The bottle came from a collection called “The Jefferson Bottles”, marked with the initials Th.J for President Thomas Jefferson. Rodenstock claimed to have made the discovery in a hidden Parisian vault. He has since been disgraced and the authenticity of his entire collection brought into question. Rodenstock was never formally convicted, but the Jefferson Bottles are considered the world’s most elaborate and expensive wine fraud.

Counterfeiting is not just a one-percenter’s problem, though. A large number of scams are also perpetrated in the middle and retail markets. In 2011, Australian brand Jacob’s Creek was caught up in a scandal when fake bottles from China, seemingly bearing its label, wound up in English off-licences. The fraud was discovered by a spelling mistake declaring them a “Product of Austrlia”. Such operations appear foolish and brazen, but David Wainwright, director of Wainwright Advisors, says the counterfeiting industry is a tough one to combat. “In general, counterfeiting is one of the largest, most widespread crimes, yet it has the lowest conviction rates.”

Wainwright, an international expert in rare wine and counterfeit wine, recently speaking at Meiburg Wine Media’s SPIT Workshop, told a Hong Kong audience that a lack of legislation and significant costs make it difficult to prove counterfeiting and prosecute offenders. Hong Kong is one jurisdiction that has robust mechanisms in place to protect its reputation as A-plus. “The Hong Kong government pursues wine fraud under copyright infringement. Importers are required to register all labels and vintages and report any fakes and counterfeits to the authorities,” he says.

Buyers have confidence in Hong Kong. “Just as visitors from mainland China come to Hong Kong for genuine Louis Vuitton, watches and baby formula, they also come here to buy authentic wine,” Wainwright adds.

New anti-counterfeiting technologies, such as ultraviolet authentication, serial numbers and holograms derived from bank note and credit card security, make it harder for crude practitioners to create counterfeits. These tools help protect wines produced post-1980s. Older wines remain vulnerable owing to historically poor record-keeping and careless practices. Petrus used to give out spare labels to visiting retail buyers like goodie bags. Lafite would send out replacement labels for merchants’ damaged stock. There are virtually no labelling records for wines produced before the 1970s; importers had no obligation, nor inclination, to document such things.

Serious collectors can avoid buying fool’s gold by researching what is realistic in the market. You simply cannot buy a magnum of ’62 La Tache from anywhere other than Domaine de la Romanee-Conti itself. Bottles of ’71 Ponsot and a significant number of Henri Jayer vintages just do not exist these days. Henri Jayer believed low yields were the foundation of great wines and he produced some of the world’s rarest, most expensive wines until 2001, three years before his death. The vintner was a farmer at heart and his aversion to record keeping left his legacy exposed. Criminals and con men exploited these weaknesses. Today, Jayer’s Echezeaux is one of the world’s most heavily counterfeited wines.

Hong Kong’s defences help, but the market is far from bulletproof. As with any large investment, buyers should proceed with caution. Buy on release if possible, and only purchase from respected sources and trusted suppliers. Look for labels and vintages that are registered with the government. Don’t be embarrassed to ask questions and request relevant documentation to back up vendors’ claims. Seek professional advice before spending thousands. And, as with unicorns, if it seems too good to be true, it probably is.

Debra Meiburg is a Hong Kong-based Master of Wine