When the FBI art squad raided a suburban home in east Los Angeles 10 days ago, they walked into a sommelier’s darkest nightmare. Behind the nondescript facade was a sophisticated laboratory of blank wine labels, heat-aged corks and decades- old empty bottles bought at up to £1,000 a pop and ready to be filled with cheap plonk.
If the investigators needed further proof that the world of fake wines was booming — driven by new technology, Asian wealth and global gullibility — they only had to unlock the garage at 9638 East Naomi Avenue, Arcadia. Inside sat a Lamborghini, a Mercedes-Benz and a Range Rover, together worth nearly as much as the £550,000 house.
This weekend their owner, a 35-year-old Indonesian who calls himself Rudy Kurniawan — though investigators suspect he has a Chinese family name — is in prison facing multiple fraud charges that, if proved, could have him locked up for the next decade.
The global wine business, which amounts to sales of 30 billion bottles a year, may face more enduring scrutiny as deep-pocketed collectors wonder whether they, too, have been suckered.
In 2007 Wine Spectator magazine estimated that 5% of the best wines in circulation might be fake. It said the more hands an old wine passed through, the more chance there was of it being a young pretender. If anything, experts say, wine investment has grown more perilous since then.
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Take the strange case of Hardy Rodenstock. Nothing was ever legally proved against this Polish-born dealer, who, like Kurniawan, built up a clientele by buying in stock from the most respectable auctions and doling out sips at posh wine tastings.
In 2005 Rodenstock sold wine he claimed had been bottled for Thomas Jefferson, one of America’s founding fathers. He declined to take it back when investigators suggested the 18th-century bottles had been engraved by a 20th-century dentist’s drill. Today Rodenstock is in Germany, beyond the reach of American lawyers.
The FBI claims Kurniawan spent mysterious “family money” to establish himself at Beverly Hills wine auctions. He spent up to $500,000 at a time to acquire old burgundies. Among the Los Angeles wine collectors he was a rock star in grey T-shirts and black jeans. He drove a Ferrari or Bentley Continental Flying Spur and said he collected Damien Hirst and the local hero Edward Ruscha — “although art makes wine look cheap”, he told a newspaper. His mere appearance at Sotheby’s in New York was enough to drive up prices.
The Wine Market Journal estimates that the price of some rare burgundies has jumped by 300% a year over the past decade. “Before Rudy I could go out and buy old burgundies: they were cheaper than the new ones. But now older wines sell for 20 times what I used to pay,” said Allan Meadows, the editor of Burghound.com, which tracks wine trends.
In 2006 alone Kurniawan sold $35m-worth of wine, a fraction of the 50,000 bottles he once held in America and Europe. He boasted that he preferred wines bottled before the phylloxera louse devastated French vineyards in the 19th century. As few in Los Angeles had ever tasted such a wine, he was largely unchallenged.
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He was also bold. When the Rodenstock scandal started to shake clients’ confidence, he offered a money-back guarantee against fakery. Weeks later, the FBI said, he started blending fakes in Naomi Avenue.
There are many methods of wine forgery: sticking a vintage label on an ordinary bottle, refilling old bottles (although recorking is an art) or a reverse fraud, where a buyer claims he has been sold a fake and sends back a replica, keeping the authentic original. The trick is to scale it up to an industrial level, which is what the FBI believes took place in Arcadia.
There had been whispers about Kurniawan since 2008, when a consignment of Domaine Ponsot, a niche burgundy, was put up for sale.
Laurent Ponsot, the current proprietor, pointed out that his family did not make a grand cru Clos Saint-Denis (a fabulous red burgundy) in 1945 (a vintage year). Yet Kurniawan was offering some for sale. In fact, the family did not start bottling this wine until 1982. Furthermore, Ponsot said, the bottles lacked the signature of his grandfather Hippolyte: “He would sit by the fireplace every night and sign them all. There was no television in those days. That is a local legend which clearly did not make it to America.”
The sale, which had been expected to pull in at least $1m, was cancelled after Ponsot made a dramatic entrance in the auction room in Manhattan. Ponsot became a wine sleuth, following the trail of fake wine from America to Asia. So did William Koch, a billionaire collector who believed he had been conned by both Rodenstock and Kurniawan. Yet Rudy kept going.
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Court documents indicate the scale of his spending. He racked up $16,322,170.45 on his Amex card between 2006 and 2011, “millions of dollars” flowed through his bank account over the same period and he borrowed more than $11m in 2007 alone. The documents record begging letters from Kurniawan to collectors and auction houses asking for urgent loans and angry messages from them asking when he is going to repay the money.
Last week a former colleague said he was a young man in a hurry to make the right connections and prove himself to his family back home. “He mocked traditional wine merchants, calling them ‘the Dusties’. He said it was all about taste and he had better taste than anyone else. And, for many years, that appeared to be true,” said the colleague, who is expected to speak to the FBI soon.
In the end, it appears, Kurniawan has been undone by the Dusties of the City of London. According to the FBI, Kurniawan dispatched 21 vintage wines to be sold by the auction houses Spectrum and Vanquish at the Mandarin Oriental hotel in London on February 13 this year. One single case of Romanée-Conti 1971 (another superb year for burgundy) was expected to sell for £80,000.
Corney & Barrow, which has sold wine in the City since 1780, had a look at the consignment for its clients and raised the alarm. It spotted errors on labels and capsules — the lead covering on the neck of the bottle — such as misspellings and wrong case numbers.
It had been alerted by red flags raised by Don Cornwell, a Los Angeles lawyer who relentlessly hunts down wine fakers. In London the wine critic Jancis Robinson warned readers of her Purple Pages blog that there was something fishy about the auction.
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Both have repeatedly criticised auction houses that shirk responsibility for the authenticity of wines they sell. But in this case Spectrum and Vanquish acted quickly, withdrew the suspect cases and alerted the FBI in New York.
When the FBI arrived at Kurniawan’s home, its agents found boxes of labels and capsules printed with the names of top chateaus such as Pétrus. There were rubber date stamps. Bottles were soaking in sinks to remove their labels. There were irritated letters to a New York auction house complaining about the quality of the empty bottles it was selling him. He is also thought to have bought bottles from sommeliers at top restaurants.
It raises a question that may be asked in court: what did the auction house think the trader was doing with the bottles — how far does this fraud go?
The answer, say experts, is: around the world. Thousands of Rudy’s bottles are still in the wine chain from Beijing to London, from Hong Kong to Los Angeles. But if the FBI has its way, the world of fake wine will finally be exposed to daylight.