Bill Koch

Zhen Wang Huang is not a name, I suspect, that will mean much to readers of No.3. To his brash, wealthy, West Coast friends, he was sometimes known as Dr Conti, but – to the world at large – this young, mild-mannered, Indonesia-born wine collector went by the name of Rudy Kurniawan. You still may not have heard of him, but these days, to discover that you have a “Rudy bottle”, or worse a “Rudy case”, in your treasured cellar is enough to send most wine collectors into paroxysms of despair. If, at some stage in your wine buying life, you have unwittingly bought a Rudy bottle, you have almost certainly been sold a pup.

In December 2013, the staid, traditional foundations of the fine wine market were resoundingly shaken by the news that Rudy Kurniawan had been sentenced to 10 years’ imprisonment by a New York Court. His crime, according to the American legal system, was “mail and wire fraud”, but this doesn’t do justice to the scale of his wrongdoing. Experts are unsure of the exact value, but it is estimated that between 2002 and his eventual arrest in 2012, Rudy sold $100 million worth of fake wine.

The extraordinary thing is that Kurniawan appears to have been operating a one-man, cottage industry from his home in Arcadia, a quiet suburb of Los Angeles. When the FBI knocked on his door in the early hours of 8th March 2012, investigators found a veritable treasure trove of wine fakery. The doorway was almost blocked by a huge pile of old wooden wine cases, and in the kitchen, they found open bottles of good quality young Californian wines, as well as older French wines, with a handwritten “recipe” for the fake wine (a 1945 Bordeaux Premier Grand Cru Classé) that Rudy had been starting to blend the night before. The value of that fake wine, incidentally, would now be in the region of £14,000 per bottle, so well worth opening a few bottles at £100 each for the blend. The air-conditioning was set to “chilly”, and all the downstairs windows were covered with tin foil, both for privacy, but also to maintain cellar temperature. Perhaps most concerning were the boxes they found containing stacks and stacks of fake labels, of the most expensive wines in the world, along with fake vintage stamps, corking machines, stencils, and countless empty bottles, genuine corks and capsules.

Rudy’s favourite technique in his “early phase” was to refill genuine old bottles, often left over from grand tastings and dinners. As his knowledge of labels grew, and he became more confident that he could get away with it, so he took to the wholesale counterfeiting of labels, which he would then add to old bottles of inferior wine. Very often these wines were brought in bulk from old cellars in France, where the owners were probably delighted to see the back of them. As well as selling to trade and private customers, Rudy’s main route to market for his fakes was high-profile auctions. In 2006 alone, in two separate auctions, he sold over 16,000 bottles, together worth more than $22 million.

If Rudy’s one-man operation is not alarming enough, consider then the potential scale of wine counterfeiting in parts of the world long known for their wholesale faking of luxury brands. Between 2010 and 2014, an intellectual property lawyer, Nick Bartman, undertook several self-funded investigatory trips around mainland China, to gauge how big a problem the wine industry might have with fakes. His suspicions were first aroused while visiting a wine trade exhibition in Hong Kong, where he witnessed people working in teams, taking surreptitious label photos of the big Australian wine brands who were exhibiting. One or two people would distract the exhibitor while another would take close-up photos of the wine labels. What Bartman found on his travels was remarkable. PR companies were openly offering advice on wine label reproduction to anyone willing to pay, and he found complete bottling plants, in local wineries, pouring out prodigious amounts of cheap wine, bearing fake labels of more illustrious names, usually (but not exclusively) from France.

Wine fraud, to use the modern phrase, is not a new phenomenon. Indeed, the selling of all food and drink has long been rife with shortcuts of one form or another. Few of us will not, at some stage in our lives, have succumbed to the lure of the BBQ at the village fête, or worse, the fast food van on the way home after a night out. Who amongst us has not, just for a second, wondered if what we are eating really is “100 percent British beef”?

To discover that you have a “Rudy bottle”, or worse a “Rudy case”, in your treasured cellar is enough to send most wine collectors into paroxyms of despair.

By contrast, how many of us have ever stopped to consider, at a friend’s house party, if the well-known brand of plonk they have cheerfully been glugging, was actually what it said on the label?

We assume, in the firewall security of our modern world, that by the time we get home on a Friday evening, the very least we can expect, is that our glass of salmon-pink rosé will be what it says on the label. And surely when you reach for the Barossa Shiraz or Super Tuscan Cabernet to go with your farm shop sausages, there won’t be a problem there?

As an industry, this is the problem with which we are faced. Wine is inherently a “good news” sort of thing to sell. People don’t want bad news to cloud their wine-led conversations. As a wine merchant, when asked at the dinner table what I do for a living, no one has ever said “gosh, how awful for you” on hearing that I spend my days deciding if wines are real or not. There is a sort of assumption that, no matter how bad my day has been, at least I’ve only been examining wine, and not losing millions on a currency deal, or replacing the wrong knee joint. Quite right too. Wine is a beverage of pleasure and its consumption should be a moment in time when you can forget those pesky forex fluctuations.

Wine is a beverage of pleasure and its consumption should be a moment in time when you can forget those pesky forex fluctuations

It’s the “good news” thing that meant Rudy Kurniawan got away with it for as long as he did. I urge you, if you have not already seen it, to watch the 2016 film Sour Grapes (available on Netflix), which uses contemporary movie footage of Rudy Kurniawan, along with contemporaneous accounts, to explain the magnitude of his fraud. It makes compelling viewing, even for those not interested in wine, and one of the most remarkable things is the extent to which several of those who were conned by Rudy steadfastly refuse to accept that he did anything wrong. In fact, the more cynical amongst you will be yelling at the screen in frustration at their sycophantic short-sightedness, while at the same time congratulating yourselves on being perfectly happy with a glass of Good Ordinary Claret.

Down the ages, all wine counterfeiters have played on the “good news” side of wine. In Roman times, substances such as lead would be added to wine to make it taste sweeter. Pliny the Elder noted that even the nobility could not avoid adulterated wine. The very fact that, after a glass or two, one’s taste buds are dulled has long meant that wine or beer could be diluted without the drinker being aware. More recently, the most famous fine wine counterfeiters have relied on both the bonhomie and the mystique which surrounds fine wine to cast their nefarious spell.

In 2010, a court in the US found German collector Hardy Rodenstock (real name Meinhard Görke), guilty in absentia of selling some of the most famous counterfeit bottles of all time – the so-called Jefferson bottles. In early 1985, Rodenstock had apparently unearthed some incredibly old bottles, in a bricked-up Parisian cellar, which were engraved with the initials “Th. J.”. The implication was that these had belonged to Thomas Jefferson, who at one time had been US Minister to France, and who went on to become the third President of the USA. The first of these bottles, purporting to be a bottle of “1787 Chateau Lafitte”, was sold in London in December 1985, and remains the single most expensive bottle ever sold at auction – it fetched £105,000. The rest of the Jefferson bottles were sold at subsequent auctions, with four bottles being bought by the US art and wine collector, Bill Koch.

As questions over the authenticity of the Jefferson bottles began to surface in 2005, Koch made it a personal mission to bring Rodenstock to account, spending millions of dollars in bringing a civil lawsuit against him. The details of Koch’s private investigation into the mystery surrounding the bottles, have been documented in a book – The Billionaire’s Vinegar, by Benjamin Wallace, published in 2008. It is, however, an indication of the complexity of the case that it took five years before the court eventually found in Koch’s favour. Significantly though, the Jefferson bottles were probably only the tip of the iceberg in terms of the number of counterfeits that Rodenstock unloaded onto the fine wine market, over several years, and clearly the fact that he was not arrested means that we may never be sure exactly how many fake bottles he was responsible for.

There are striking similarities between the way in which both Rodenstock and Kurniawan operated.Both men ingratiated themselves into the rarefied world of ultra-rich wine collectors. They were both seemingly lavish with their hospitality. Rodenstock would hold extraordinary vertical tastings (that’s the same château over several vintages) which would last an entire weekend, and were attended by the great and good of the wine world, collectors and critics alike. Rodenstock famously did not provide spittoons for these events, meaning that a great deal of wine was consumed by those tasting, which must inevitably have dulled their critical senses to a degree. The bottles being tasted were always opened away from prying eyes and the tasters rarely, if ever, got to see the corks of the bottles being tasted.

Moreover, in the case of both men, the wines they were pouring were often so rare that it was unlikely anyone present would have tasted those vintages before. They were therefore batting on a pretty flat wicket, when it came to convincing people that the wines tasted “correct for their age”, as so few people could say what “correct” meant.

More than 500 bottles of wine found to be counterfeit or unsellable are destroyed at a landfill in Creedmoor, Texas, Dec. 10, 2015. The wine was from the private collection of Rudy Kurniawan, the man convicted of fraud in federal court in 2013 for producing and selling millions of dollars of counterfeit wine. The U.S. Marshals were responsible for destroying the counterfeit and unsellable wine and selling the authentic wine. At the destruction, the wine bottles are crushed by a crane, and the glass is collected for recycling on site. The liquid contents of the bottles are collected and composted. The cardboard and wood from the boxes and pallets are also recycled or composted. Photo By Brien Aho for the US Marshals

Kurniawan quickly went from being a naïve amateur wine geek, whose interests lay more with modern Californian Pinot Noir, to – almost overnight – being an acknowledged authority (amongst his peers) on some of the greatest Burgundy vintages ever made.

Nobody quite knows when this transformation took place, but none of the high-rolling tasting groups of which Kurniawan became an integral member seemed to think that this was in any way strange. Rudy would organise bacchanalian dinners at the most expensive restaurants in California and New York. At the end of the evening, it was not uncommon for him to pick up the entire tab for the event, and at some of these dinners $200,000 worth of wine could be drunk in a night.

It is thought that many of the bottles opened at Rudy’s dinners were entirely genuine, although he would almost certainly sneak a couple of his own “ringers” into the line-up. Crucially though, the staff at the restaurants in question were under strict instructions to gather up the empty bottles and corks, and send them back to Kurniawan’s house, where they would eventually be refilled with his own unique recipes, before finding their way back onto the market. Interestingly, he was adamant that the bottles be returned with any dregs containing sediment. Recreating “authentic” sediment in bottles purporting be 50 or 60 years old was one of the toughest problems for Rudy to crack, and it was much easier if he had the real thing to work with.

The Jefferson bottles were probably only the tip of the iceberg in terms of the number of counterfeits that Rodenstock unloaded onto the fine wine market

Both counterfeiters tapped into the vinous zeitgeist of their era. Rodenstock capitalised on a huge boom in the wine auction market in the mid-1980s, when the owners of large European estates sold off the contents of their cellars. Kurniawan caught the tremendous rise in fine wine prices being fuelled by new markets in the Far East in the early 2000s. In doing so, they mirrored the work of fraudsters since time immemorial; they saw sustained price rises in a sector of the luxury goods market, and counterfeited the relevant product. I am sure you can all name several famous watch brands that you have seen being sold at bargain prices in foreign street markets. The same goes for handbags, jewellery, clothing and so on – from airline parts to formula milk, the list of counterfeit products is almost endless.

So, where does this leave the fine wine market today? It’s fair to say that the Kurniawan trial was a real shot across the bows, for a trade that for too long had buried its head in the sand on the matter of counterfeits.

Today, enormous steps have been taken by the trade to tighten up its act. However, it took increasing pressure from consumers, usually Chinese or Japanese, before merchants and brokers in Europe cottoned on to the fact that provenance is king. If you can’t prove where the wine has come from and where it’s been stored, then you will be hard pushed to find a buyer these days.

There was a time when any titbit of information about rogue suppliers or problem stock might be buried by the trade if it threatened reputations or could provide some competitive advantage. Thankfully, now merchants across Europe are sharing information, on both genuine and fake bottles, and wines with no clear provenance are becoming increasingly rare.

Producers around the world are spending millions on anti-counterfeiting technology. Some are better at sharing that information with their customers than others, but the increasing transparency in the trade means that we are constantly finding interesting new “tells” hidden in the fabric of a wine label, which provide us with a clear and efficient method to authenticate the wine.

In this regard, Berry Bros. & Rudd was probably the first to invest heavily in staff training, enlisting the help of one of the world’s foremost experts on wine counterfeiting, so that we can safely say, our anti-fraud procedures are among the highest in the UK. Our warehouse check-in teams inspect and photograph hundreds of cases of fine wine every week. They use digital magnification, ultra-violet light, torches, jeweller’s loups, measuring tapes and razor blades backed up with years of experience, to be as certain as possible, that we don’t let anything slip through the net. If we get to the stage where our last resort is to open a bottle, to tell if it’s real, then we have lost the battle.

Today it might strike us as odd that it took so long for the wine trade to sit up and take notice. Once again, it is the friendly, good-natured side of the business which means that people were often too embarrassed to ask the relevant questions, for fear of upsetting a long-standing supplier, who just as often was also a friend. This goes not only for the upper end of the market, but for the mass-market side of the business as well. There have been numerous incidents, historical and recent, of the illegal blending of bulk wines destined for global retail markets. These are often lowly table wines being used to dilute vats of more expensive wines to make it go further.

The most severe case, of course, was the Austrian wine scandal of the ’80s, when diethylene-glycol (antifreeze) was used to add sweetness to bulk wines – sweetness being the barometer of quality in Austrian wine at that time. At a stroke, this destroyed the Austrian wine market for the next 15 years. Subsequently Austrian Wine Law was revised to be among the strictest in the world, with the result that the vast majority of their output today is for dry wines.

The success of all such fraud relies on trust and on the passive acceptance of the end buyer not to probe too deeply. Naivety often plays a role, and – sadly – greed is the other big factor in why the fraudsters succeed. Merchants too often see the Pound signs clocking up before they stop to think, and private collectors see what they want to see. They see only another “stamp” in their collecting book, and forget the cardinal rule of buying pretty much anything: “If it looks too good to be true…”