The Wine Trials: An Update
Late yesterday, Bill Koch won his lawsuit against fellow collector Eric Greenberg; a jury in New York ruled that Greenberg had defrauded Koch by knowingly selling him counterfeit wines. The jury took just two hours to reach its verdict and awarded Koch $379,000 in compensatory damages; it reconvened this morning to decide on punitive damages. If the eight jurors want to really stick it to Greenberg—and based on the speed with which they returned the verdict, they clearly did not think well of the onetime billionaire (much of his fortune apparently evaporated when the tech bubble burst)—this loss could be a brutally expensive one for him, especially if he’s forced to cover Koch’s legal fees. Koch reportedly spent $10 million pursuing the case. After this experience, I wouldn’t be surprised if Greenberg gave up wine and switched to beer. It might be all that he can afford now. (For those of you with time to spare and a taste for legalese, here’s the transcript of the closing arguments and the verdict.)
It is a huge victory for Koch, who filed the lawsuit in 2007. Although the Florida energy tycoon won a default judgment three years ago against Hardy Rodenstock, who sold him four of the so-called Thomas Jefferson bottles, Koch has had mixed results in his campaign to rid the wine market of fraud. A lawsuit he filed against Christie’s in 2010 was dismissed, and he has also had some setbacks in cases that he’s brought against Acker Merrall and Royal Wine Merchants. The Greenberg complaint was the first Koch lawsuit to reach a jury, and as such, it was an important test. The wine fraud issue doesn’t generate a lot of public sympathy; rich guys buying $30,000 bottles of wine and getting swindled by other rich guys is an issue that is more likely to provoke Schadenfreude than outrage. The challenge for Koch’s lawyers was to not only prove their case, but to convince a jury that even billionaires purchasing obscenely expensive old wines are entitled to consumer protection. Koch’s attorneys succeeded in doing that, and the fact that a jury found in Koch’s favor is no doubt very encouraging to the prosecutors preparing the case against Rudy Kurniawan. Indeed, from what I understand, Jason Hernandez, the Assistant U.S. Attorney who is the lead prosecutor in the Kurniawan case, was in the gallery for much of the Koch v. Greenberg trial.
But Hernandez wasn’t taking a break from the Kurniawan matter. On April 8th, the government obtained a superseding indictment against the alleged counterfeiter At a hearing two days ago, Hernandez told Judge Richard Berman that the new indictment consolidated some of the claims contained in the previous indictment and added two more wine sales to the charges against the 36-year-old Indonesian collector. In addition, the new indictment includes a list of assets that the government wants Kurniawan to forfeit, including two homes in the Los Angeles area, nearly $750,000 worth of jewelry, a Lamborghini, an $18,000 Montblanc pen (for his handwritten tasting notes?), a stake in an unnamed restaurant, and a stake in a land management company in Burgundy (as I reported in my Vanity Fair article about Kurniawan, he invested in a business set up by winemaker Étienne de Montille to finance the purchase of vineyards in Burgundy, notably de Montille’s acquisition of a parcel of Vosne-Romanée Malconsorts).
Kurniawan pleaded not guilty to the new indictment, and it was during Wednesday’s hearing that Judge Berman tentatively scheduled the trial to start on September 9th. Hernandez indicated that he may have to ask the judge to push back the start of the trial because several winemakers he intends to call as witnesses will be tied up at that time with the harvest. Presumably, one the government’s star witnesses will be Burgundy winemaker Laurent Ponsot. As you may recall, Kurniawan’s undoing began with the allegedly fake bottles of Ponsot Clos Saint-Denis and Ponsot Clos de la Roche that he tried to sell at an Acker Merrall auction in April 2008. Ponsot traveled to New York to prevent those bottles from being sold and thereafter embarked on a quest to find the source of the fraudulent wines. He soon concluded that Kurniawan himself was the counterfeiter, the FBI eventually got involved, and Kurniawan is now sitting in a Brooklyn jail cell awaiting trial.
In other legal news from the wine world, Robert Parker posted a video last weekend in which he said that The Wine Advocate will be publishing Antonio Galloni’s Sonoma report in its next issue. Galloni’s failure to turn in that report, and his stated intention to post it instead on his own site, led The Wine Advocate to file a lawsuit against him last month. If Galloni has indeed had a change of heart, I assume the lawsuit will be dropped. But I’ve seen no updates yet on the status of the case. Stay tuned!