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The Return of Rudy Kurniawan?

2012 February 8
by Mike

The wine auction market is in an uproar over a sale taking place this evening in London. The auction is being conducted by California-based Spectrum Wine Auctions and London’s Vanquish Wine Ltd. Over the weekend, Don Cornwell, a Los Angeles attorney who keeps close watch on the auction scene, posted information on wineberserkers.com suggesting that a number of Domaine de la Romanée-Conti wines being offered tonight may be counterfeits and that the seller could be the infamous Rudy Kurniawan. In response, Spectrum President Jason Boland posted a comment saying that Kurniawan was not the consignor of the disputed bottles. However, that doesn’t mean he isn’t the seller or that the bottles don’t have a connection to him; according to Cornwell, the wines have been consigned by one Antonio Castanos, whom Cornwell says has acted as an agent for Kurniawan in the past. On Monday, Vanquish invited Aubert de Villaine, DRC’s owner, and the winery’s UK importer, Corney & Barrow, to inspect the bottles. They declined, but Corney & Barrow issued a carefully worded statement yesterday that essentially said: caveat emptor (DRC’s US importer, Wilson Daniels, released a similar statement today). This afternoon, Spectrum and Vanquish announced that they were withdrawing 12 of the DRC lots in response to the concerns expressed by Corney & Barrow. But a clutch of other lots that Cornwell identified as questionable are still being put up for sale.

Kurniawan, who is apparently in his thirties, is truly an international man of mystery. He burst onto the wine scene in the mid-2000s and was soon spending an estimated $1 million a month at auctions. He claimed to be the son of a rich ethnic Chinese businessman in Indonesia and said that “Kurniawan” was an assumed name. Investigators for Bill Koch, who is now suing Kurniawan over the sale of allegedly fake wines, have determined that Kurniawan’s real name is Zhen Wang Huang and that he’s actually from China, not Indonesia (the embroidered biography obviously calls to mind Hardy Rodenstock). A Los Angeles Times story from 2006 gave a vivid portrait of Kurniawan’s Gatsbyesque existence. I encountered Kurniawan several times—at a charity wine dinner in New York, at a La Paulée de New York, and at an Acker Merrall auction in late 2007, where he casually dropped several hundred thousand dollars on a cache of 1982 Château Lafleur. He was a wispy, bespectacled figure who dressed like a hipster/dandy hybrid and who could have easily passed himself off as a teenager (if I owned a liquor store and he came in, I’d card him). It would be easy to say now that I detected something fishy, but I wasn’t so much suspicious as just baffled—by his youthful appearance, and by the crazy amounts of money he was spending.

Kurniawan first ran into trouble in April 2007, when he attempted to sell six magnums of 1982 Château Le Pin at a Christie’s auction in Los Angeles. The bottles were pictured on the cover of the auction catalog; the château saw the catalog and immediately contacted Christie’s to say that based on the photo, the magnums were clearly fakes. Christie’s reexamined the bottles, came to the same conclusion, and pulled them from the sale (ironically, the head of North American wine sales for Christie’s at the time was Richard Brierley, who now oversees the wine department at Vanquish). In April 2008, Kurniawan attempted to sell multiple lots of fake Domaine Ponsot wines at an Acker Merrall auction in New York. Laurent Ponsot, the winery’s owner, traveled to New York to prevent the sale from going forward, and the wines were pulled at the last minute (the counterfeits included bottles of Ponsot’s Clos St-Denis from 1945, 1949, 1959, 1962, 1966, and 1971. The tipoff there: Ponsot didn’t begin producing Clos St-Denis until 1982).

Kurniawan more or less vanished after that. Koch filed his lawsuit in 2009, and it included details of significant financial problems: Kurniawan had defaulted on loans from Acker Merrall, from whom he had borrowed over $10 million, and from New York’s Emigrant Savings Bank, which had extended him a $3 million loan. Kurniawan is apparently still in Los Angeles, where he owns a wine shop called The Wine Hotel. It would be quite amazing if he is indeed trying to sell wines via auction again; given his reputation and the kind of scrutiny that auctions are now receiving on account of the fraud issue, did he really think that he could slip one past the market? What’s even more amazing, though, is that Spectrum and Vanquish haven’t withdrawn all of the DRCs in question (and it is worth noting that Cornwell has said that there appear to be problems with some older Bordeaux that are also being auctioned off tonight and that those wines may have a Kurniawan connection, as well; Cornwell hasn’t yet indicated what specifically is wrong with the Bordeaux bottles).  Their reputations have already suffered a huge blow as a result of Cornwell’s sleuthing, and to proceed with the sale of any of these wines strikes me as downright suicidal. At any rate, this entire episode is a case study in digital empowerment, and the moral of the story is clear: Don’t fuck with the Internet.

37 Responses leave one →
  1. Becky permalink
    March 10, 2012

    Is there any reason to be concerned about the authenticity of older vintages purchased at The Wine Hotel? Has Rudys fraud been associated with the store?

  2. February 14, 2012

    Mike –
    There are likely a handful that have dominated the influx of fakes into the market and have made rather successful attempts, until recently, to divert attention away from the problem, even substantiating the details of the fakes with statements and writings. Some knowingly pushed the fakes forward onto other, less knowledgeable buyers – to recoup their losses. There were a few more who, rather than calling the fakes out (some, despite losing millions of dollars at a time), remained silent allowing and even supporting the less-than-scrupulous-vendors to remain in business. And then there are the many who have also been victims, and agreed to suppress outrage in order to placate friends, vendors or just to remain anonymous for personal reasons.

    So – those that really perpetrated the problem – yes, I agree with your numbers. But in terms of people who were actively part of the market in the mid-to-late 2000′s, there were way more than a few dozen big buyers.

    Maureen

  3. February 11, 2012

    Maureen, the key word is “dominated.” I didn’t say that only 20-25 people participated and that these were the only people affected by fraud; obviously, many more people participated as buyers and sellers, and fraud affected not only buyers and sellers, but auction houses, merchants, restaurants, etc. However, I do think it is fair to say that the auction market in the US was dominated by just two dozen or so players.

  4. February 11, 2012

    *I worked at 3 different auction houses – dealing with thousands of folks who were bidders, buyers and consignors. I fear my last post make it look like each one of these were just ‘departments’. Sorry for the poor writing!

  5. February 11, 2012

    Santo –
    Mike asked how many are affected by the issue of fraud in the market. “During those boom years of the mid-2000s, I would say that the US auction scene was dominated by maybe 20-25 people. Is that a fair statement? ” I do not think this is a fair statement – and I worked in 3 auction departments – bidders, buyers, consignors….. LOTS more than 20-25 guys.
    Ultimately, I think all bidders and buyers of fine & rare feel the effects. I also think that you cannot separate out the US market with other markets as buyers at auction bid across the world.

    I agree that there are a handful of folks who may responsible for fraud – and that is what I stated.

    I might also suggest that it is not wise to call out specific people when you are choosing to remain anonymous…. Just my 2 pennies.

    Maureen

  6. February 11, 2012

    Maureen-

    In the US Mike is right. Think about who was pushing the price of Champagne up in around 2005 to ’09? It was 4-5 American guys who wanted their cellars to worth more but in reality it back fired on them. The price of Champagne started to drop when Greece started to fall apart. There are about 20 major players in the US that seem to push up prices on wines and they all are friends with John Kapon. C’mon you know this! I mean you are in the industry and you start to see the same people bidding on things and it only take a few auctions to realize what they are doing.

    santo

  7. February 11, 2012

    Mike –
    It is absolutely NOT fair to say that the auction scene is dominated by 20-25 guys. The Asian market is driven by about 30 main players, but in the US & Europe – you add up all the folks that bid regularly and purchase at least once a year, I am confident we’d count several thousand.

    Then take all the folks that buy fine & rare at retail and through brokers. Many of those wines are being sourced from auctions – or at minimum their prices are being set by the results from auction. The rise in secondary market Bordeaux & Burgundy has fueled higher futures prices and domaine direct prices. This price rise also trickles down to many other aspects of the market.

    So I think it is a complete mus-categorization to say this only affects 20-25 guys.
    I think it is caused by only 20-25 guys (and that is a HIGH number!)
    But it ultimately affects all buyers of fine & rare wines in the world, if only to serve to chase them away as buyers, due to a lack of trust in observing all the scum-baggery.

    Maureen

  8. February 10, 2012

    http://www.youtube.com/watch?v=HFnOSx6Ow1w

    Here is a video of David Molyneaux-Berry, MW who is basically leading the charge for fake wines.

  9. February 10, 2012

    Donn, it doesn’t seem like a particularly ethical business practice, does it? It makes it awfully easy to manipulate a sale.

    Maureen, I agree: fraud is fraud. But we are talking about a very small number of people who can play in this particular arena. During those boom years of the mid-2000s, I would say that the US auction scene was dominated by maybe 20-25 people. Is that a fair statement? Again, I’m not trying to be argumentative or to downplay the seriousness of the issue, but when you say that consumers have “lost faith in the fine & rare industry,” we are talking about a very limited number of consumers.

    Jay, I don’t know the answer to that question.

    Bill, it is a good thread, and this story still has some way to go, I suspect.

  10. Bill Klapp permalink
    February 10, 2012

    This thread does not suck. But forewarned is forearmed: I am not going to fuck with it…

  11. February 9, 2012

    Santo, echoing Maureen, I’d be curious to know who your MW friend is. It was the duping of an MW, Michael Broadbent, that set this whole trainwreck in motion.

    Jack, another impediment to a serious crackdown by law enforcement is that this is an issue that simply does not resonate with the public; in fact, in my experience, it brings out quite a bit of schadenfreude. Again, crime is crime, and public sentiment shouldn’t sway law enforcement one way or another. But with limited resources, government agencies at the federal and state level might have a time justifying devoting any real resources to high-end wine fraud.

    Dan, that’s very interesting, and while I have no way of knowing if anything like that went on, we can be sure that Spectrum and Vanquish went out of their way to avoid seeing the evening become a complete debacle. But I would like to think that the damage is done; these guys made no real effort to assuage the concerns raised by Don Cornwell and plunged ahead with the sale despite the strong reservations expressed by Corney & Barrow. I understand that that was a no-win situation for them once Cornwell went public with the information, but the least bad option would have been just to suck it up and take all the wines in question out. And did you see that they also pulled a bunch of de Vogue during the sale? I’d love to know the story there.

  12. Jay H. permalink
    February 9, 2012

    A side note to all this: why is a wine merchant like Acker Merrill issuing multi-million dollar personal loans?

  13. February 9, 2012

    The Feds are chasing down counterfeiters/folks involved in fraud. It is happening. And it should happen. Fraud is fraud, and when you add up the cost of what these guys have done to the fine & rare industry, it is much larger than a few “rich” guys getting duped. Consumers have lost faith in the fine & rare industry in general (auctions, brokers, retailers…), because of a few guys who lack integrity. Were it your industry, I think you might find that worth salvaging….

    Santo – I am not sure who this MW is that is “leading the charge” – unless it is Jancis. I had dinner with the Executive Director of the Institute on Friday night, and we discussed fraud – as we normally do. I know all the MWs in the US – so this is one reference I really cant track.
    That said – and despite the fact I cannot tell who you are – I am sure we would have many stories in common.

    Cheers,
    Maureen

  14. February 9, 2012

    Mandy, thanks for stopping by. I agree–I think it is new, unsuspecting buyers in Asia who are being stuck with a lot of the fakes these days. I know there have been stories about fake Lafite, but is the fraud issue otherwise getting any attention in Hong Kong and elsewhere in China?

    Rogersworthe, you make a great point. Given all that’s known now about the fraud issue, there is really no excuse for “sophisticated” buyers in New York and London who get fleeced. That doesn’t mean they deserve to get fleeced or that they don’t deserve restitution, but I can’t object if the Feds feel they have better things to do with their time than chase down wine counterfeiters.

  15. Donn Rutkoff permalink
    February 9, 2012

    Allowing the seller to bid anonymously and without having to pay the auction house premium or buyers premium smacks of RICO. As in Racketeering Influenced and Corrupt Organizations act. By definition, this is a rigged auction where the seller can just submit phony bids until an outsider jumps in and gets BURNT. Totally un-ethical, totally fraud. Thank you Maureen for your integrity. I would not go near an auction house that allows this.

  16. Dan McCallum permalink
    February 9, 2012

    I’m not so certain that we really witnessed an auction. On top of the uncertainties regarding the wines and the underlaying consignors- we can add some doubts on bidders and buyers. The terms and conditions contained an odd clause which basically said, in my understanding, that the consignors as well as the auction house itself could bid on lots and not necessarily pay any buyers fee. Thus a covert means of cancelling lots while maintaining the show; not to mention opening the door to jacking bid levels on otherwise legit lots.
    However, what comes next is more certain. We’ll witness a form of crowd-sourced investigation and justice. Mike, it goes right back to the conclusion of your opening post- and has only just begun.

  17. Jack Bulkin permalink
    February 9, 2012

    I can’t disagree that the F.B.I. has enough on its plate and we can’t afford more needless investigations. Sadly, that didn’t stop them from wasting millions on the BALCO, Roger Clemens and Barry Bonds steroid investigations. I was thinking more of State Authorities than Federal although Wire Fraud is a Federal Crime and the SOP in the Auction World.
    I wonder if any high profile political contributors were de-frauded like Bill Koch’s Brothers, if that might cause more pressure to investigate. If as I and others have suggested here, the new Wine Auction buying Class are located in Hong Kong and China, how much sympathy would there be for investigators here to look into this crap?

  18. February 9, 2012

    Rogersworthe,

    As I do see your side on not wasting taxpayers cash and or hiring an consultant to look over the wines before on bids on them, this would hold up auctions like you would not believe. They way I look at it is, if you are a wine auction specialist (I am still one and I do consult and own my own wine shop), it should be on your shoulders if the wine does come up fake..to a point though. I know for myself I would ans still will notify other specialist that I have formed friendships with to get second and third opinions on said bottles. If all else fails I will cut capsules, photograph the hell out of it, take serious notes and what I think the problem might be then send them off to my MW friend who is leading the charge on fake wines. They way I look at it is if I put my stamp on it, it will either be a true bottle or it will not go to auction or be bid on. I’m not a MW but people tend to trust me and really all we have in this corrupt industry is people trust and our word that we are doing our best.

  19. February 9, 2012

    While agreeing that crime is crime, I would be one of those that simply has no sympathy for rich guys spending hundreds of thousands of dollars on wine in an industry this wide open for fraud. Frankly, I wouldn’t want the FBI to waste tax dollars at a time when the government is several trillion in debt on investigating this issue. If you have $300,000 to spend on rare wine, then you have the money to hire consultants and/or investigators to investigate the wine before you purchase it. Especially when some of the frauds can be detected by a simple google search into the history of the winery.

  20. February 9, 2012

    I’m a little exhausted following all the drama unfolding online but I do hope that the main stream media starts picking up on this and specifically the local media here in HK as I feel like what’s really happening is the new Asian collectors one the scene are being taken advantage of.

    I agree… poignant ending.

  21. February 8, 2012

    Mike I would mention names but anyone who is in the industry already knows who it is. Plus, I cause enough trouble in my home state of WA buy not bringing in local wines due to them only chasing points and a few who are not even making their own wines anymore. There are a few of us bloggers who are just waiting for the right time, then we’ll give the industry a small enama! Just what it needs.

  22. February 8, 2012

    Jack, it probably is too profitable to completely curb. I suspect a lot of the action has moved to Asia, where there’s less scrutiny and more unsuspecting buyers. As I understand it, the FBI has nibbled around the edges of this issue, and may still be doing so. But wine fraud is clearly never going to be high on the list of priorities. And let’s face it: there’s just not a lot of public sympathy for rich guys who spend hundreds of thousands of dollars on fermented grape juice and get sold counterfeit bottles. Crime is crime, of course, and fraud should be punished, but the “politics” of this issue is such that I doubt it ever be a major concern for law enforcement.

    Santo, you should name names!

  23. Jack Bulkin permalink
    February 8, 2012

    As has been inferred here, there is just too much financial profit in selling highly collectible ancient wines to totally stop the fake wine fraud game. The “new” big money in high end wine Auctions from BRIC Nations makes easy targets for such fraud. Why haven’t the authorities gotten more involved in these fraud cases? A couple of stiff sentences for theft by deception might curtail a few of these atrocities.

  24. February 8, 2012

    Maureen, I was at Morrells before they took a dive in the auction scene. David Molyneaux-Berry was coaching two of us on how to spot fakes and problems with wines. I was impressed by the amount of wines that would slip through the cracks from the two larger houses but were spotted by us. What it comes down to is money. I still loved it when I had to tell a certain CEO that the 1950/51 Romanee Conti he was trying to auction off was fake and he should pull it form the auction. It was sold. How can you have a 50/51 vintage of RC when they first vintage after the new plantings were in 52? Guess who’s cellar was up?

  25. February 8, 2012

    Santo, that’s very interesting. And, yes, a lot of the due diligence wasn’t terribly impressive, but there was obviously a strong financial incentive not to scrutinize too closely.

  26. Santo permalink
    February 8, 2012

    I worked for a wine auction house in NYC and everyone knows about Rudy’s collection and how fake they are. We actually sat down one night with a friend who is a MW and we picked apart an auction catalog where he was selling wines, Everything was photographed so well we could just point to the problems with labels and bottle sizes that did not exist. Funny how the heads of these auction departments always seem to miss his wines.

  27. February 8, 2012

    Thanks, Eric, glad you liked it. I thought it was time to lose my virginity and finally unleash an obscenity here!

    Maureen, thanks for stopping by and for that information. I didn’t realize he was active that far back, and it’s amazing that he was able to become such a major player in the auction market despite those early warning signs.

    On another topic, Maureen, I was planning to respond to something you wrote on wineberserkers earlier today. You said that the mainstream media have “conveniently ignored” the wine fraud issue. In 2006, The Wall Street Journal ran a feature about Bill Koch’s pursuit of Rodenstock, The New Yorker did the same the following year, and the Rodenstock saga was the subject of a best-selling book published in 2008 (and let’s not forget that Howard Goldberg of The New York Times raised concerns about Rodenstock back in 1985). At Slate, I wrote four articles about counterfeit wines, including a 5000-word investigative story about Royal Wine Merchants and its ties to Rodenstock. Elin McCoy has reported on the fraud problem for Bloomberg. So I really don’t think that this issue has lacked for press coverage.

  28. February 8, 2012

    Mike –
    I was the senior specialist at Zachys – and we were rejecting Rudy’s wine for consignment as early as 2002/2003. When asked for receipts he stalled and then came up with some faxed document that we could not accept. So we rejected all the wine.
    Maureen

  29. February 8, 2012

    “Don’t fuck with the Internet.”

    Epic comment Mike!

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