In 2009, Koch filed separate lawsuits against Acker Merrall & Condit and Kurniawan, alleging fraud. (He had filed a lawsuit in 2006 against Hardy Rodenstock, the man he believed faked the Jefferson bottles.) “I want to shine a bright light on this whole fraud to show how bad it is,” said Koch.85
* * *
In the early morning hours of March 8, 2012, before the sun had fully risen over the San Gabriel Mountains in Los Angeles County, a group of FBI agents rang the doorbell of a beige and brick Mediterranean-style house in Arcadia. Kurniawan, a slight man with glasses, opened the door, still clad in his pajamas and bathrobe. As he stood there blinking at the sight of federal agents clustered on his doorstep in one of Los Angeles’s suburban communities, he was informed he was under arrest.
After the agents led Kurniawan off in handcuffs, they searched the house he lived in with his sixty-four-year-old mother. It was a veritable wine-counterfeiting factory. There were hundreds of bottles stacked on the kitchen counters. Some lay casually on the floor. Hundreds of fake wine labels bearing names of the world’s most prestigious wineries sat in drawers and on tables. There were forged Petrus labels, instantly recognizable to wine lovers, with its name printed in bright red against a beige background. There were labels from Domaine de la Romanée-Conti with its well-known black blocky lettering. There were labels from Château LaFleur and Screaming Eagle.
Kurniawan also had baskets filled with wine capsules that covered the tops of bottles, decorative stamps with the names of historic châteaux, stencils that could be used to make serial numbers, and sealing wax. Thousands of corks, both used and new, lay scattered about. Kurniawan had tacked aluminum foil over the windows so nosy neighbors couldn’t peek in.
The arrest and raid answered the question that had consumed many members of the wine world: how had Kurniawan amassed hundreds of bottles of the rarest and most desired wine in the world?
As FBI agents swarmed through the house, the answer soon became clear. Kurniawan had been known in wine circles for his impeccable palate, his ability to remember the taste and feel of almost any wine he had ever sampled. He could pick up a glass, swirl it, smell it, taste it, and then name the type of wine, the region, the year, and often the grape. He had a sense memory that astounded those who had joined him at dinners where dozens of bottles of wine were poured in a single evening.
Kurniawan had used this special palate to forge wines. Agents found an area in the kitchen where Kurniawan mixed various wines together to imitate famous and rare vintages. The FBI agents found open bottles of Ridge Monte Bello Cabernet Sauvignon, reds from Charles Krug and Joel Gott, and newer French varietals as well. Investigators later determined that Kurniawan had mixed these newer California wines with batches of French wine from the 1970s he had purchased directly from a French négociant, or broker. One recipe for a fake 1945 Mouton Rothschild called for “one-half 1988 Pichon Melant; one-quarter oxidized Bordeaux; and one-quarter Napa Cab.”86
None of the open bottles of wine were worth more than $100 to $250 a bottle, yet Kurniawan had convincingly blended them together to create wines that sold for tens of thousands of dollars a bottle.
The arrest shocked the world of fine wine, which for years had regarded Kurniawan as one of the most precocious and generous wine collectors around. It also vindicated some experts and wine collectors who had warned that the wine auction world was so caught up in its glass bubble of decadence and extravagant spending and drinking that it ignored obvious signs of fraud. In certain circles, drinking and buying large amounts of rare wine had become a competition played out on the world auction stage. Wine had always been a status symbol, but in recent years, with an increase in global wealth and the rising popularity of auctions, it had become obscene.
Many experts, and many of the young Turks who had so publicly celebrated with Kurniawan, were ashamed. His widespread fraud showed that people who considered themselves wine connoisseurs were as easily cheated as those who knew little about wine. They were so impressed by Kurniawan’s palate, his fancy clothes, cars, and watches, and his unparalleled access to unusual wine, that they didn’t bother to question the likelihood of one man owning bottles so rare that some had not been seen in the market for more than thirty years.
Kurniawan’s ten-day trial in federal court in Manhattan drew reporters and camera crews from around the globe. Koch testified about his purchases, as did a number of other collectors who believed that Kurniawan had cheated them. In December 2013, the thirty-seven-year old Kurniawan was convicted of manufacturing and selling $1.3 million of fraudulent wine. Prosecutors believe that the number is much higher than that. They think that Kurniawan has sold more than $20 million in fake wines. Other specialists in wine forgery think the fraud may be as high as $100 million. But the prosecutors have not been able to get people who were defrauded by Kurniawan, except for a few like Koch, to step forward. Apparently they do not want to publicly admit they have fake wine, either to avoid embarrassment or to preserve their ability to quietly resell those fake bottles into the frenzied wine market to recoup their losses.
In August 2014, a seemingly contrite but stone-faced Kurniawan was brought back into court to be sentenced. Just a month earlier, he had settled the lawsuit brought against him by Koch. Kurniawan agreed to pay $3 million in restitution and tell Koch everything he knew about the world of wine fraud. Before the federal judge handed down the sentence, Kurniawan’s lawyer suggested that his client should not get much jail time. After all, Kurniawan had swindled rich people of a luxury product, which hardly seemed a crime. One wine lover had even spent $231,000 for a single bottle of wine—which meant he had plenty of cash to spare. It was nothing like swindling someone of their life’s savings, the lawyer argued. Nobody died.
The federal judge listened to Kurniawan’s lawyer and then completely ignored the request. He sentenced Kurniawan to ten years in prison, fined him $20 million, and ordered him to pay $28.4 million to seven victims.
Why did Kurniawan do it? Why did he squander his family’s fortune and its good name? In a revealing letter sent to the judge before sentencing, Kurniawan admitted that he became obsessed with rare wine because of the access it gave him to influential and wealthy people. He loved the attention he received when he swooped into a restaurant carrying some of the world’s rarest (but fake) vintages. “Wine became my life and I lost myself in it,” Kurniawan wrote. “This obsession attracted attention and I admit that I enjoyed it. I met a lot of interesting people who were very successful and intelligent. We shared a common interest in wine and my wines provided me with access to people and experiences I otherwise would not have enjoyed. I thought these people were my friends and I wanted to be accepted in their world.”
* * *
Kurniawan’s arrest and conviction has sparked a conversation about the amount of fraudulent wine in circulation. Koch and others, including Maureen Downey, a fraud expert who runs Chai Consulting in San Francisco and who helped the FBI with the Kurniawan case, have been stating loudly for years that some auction houses, brokers, and retail stores deliberately overlooked information about fakes because there was so much money to be made. The auction houses failed to thoroughly inspect the wines they sold, ignored troubling telltale signs like smudged labels, capsules with ages that didn’t match the labels, or indistinct stamps. The auction houses and wine stores didn’t want to alienate their customers (who are often those who consign wine) or shut down the auction party by questioning provenance. “It’s a combination of laziness, greed and ego,” said Downey. “They are lazy because they are not paying attention. They are greedy and therefore they don’t choose to pay attention. The excuse I get time and time again is ‘I’ve been in this business for thirty years … who are you to question me?’” Downey was referring in particular to John Kapon and Acker Merrall & Condit, even though prosecutors have never implicated the firm and its director in fraud, nor suggested they knew that Kurniawan was falsifying wine.
Even after 2008,
when there was broad-based suspicion of the provenance of Kurniawan’s wines (Acker Merrall & Condit distanced itself from Kurniawan after the Domaine Ponsot fiasco and stopped selling his wine), numerous places chose to disregard the warning signs. Sommeliers at Cru and other restaurants continued to mail empty bottles of rare wine back to Kurniawan. Although the sommeliers probably didn’t know what Kurniawan wanted to do with the bottles, their assistance allowed him to refill the bottles with fake wine and repeat the cycle of fraud. In 2009, Christie’s offered Kurniawan’s wine at three separate auctions. In February 2012, just a month before Kurniawan’s arrest, Spectrum Wine Auctions of Los Angeles and London’s Vanquish offered up a number of large-format bottles of Domaine de la Romanée-Conti—the kind of rare large bottles that Kurniawan had often sold. A Los Angeles attorney named Don Cornwall did some research and learned that Kurniawan had used a proxy to consign the wines. But when Cornwall notified auction officials that Kurniawan was the true seller, they ignored him. Cornwall posted his suspicions on the wine bulletin board Berserkers, under the heading “Urgent Warning: Rudy Kurniawan Is Trying to Auction More Wine. Buyer Beware.” His posts prompted a lively discussion that caught the attention of the wine press. Once reporters questioned the wines’ provenance, they were pulled from the auction.
And what about of all the thousands of bottles of wine that went through Kurniawan’s hands? Many of them now belong to private collectors, brokers, and wine stores. Many observers fear that those who were duped by Kurniawan might try to quietly sell their wine in China and other parts of Asia. Some say Kurniawan’s deceit has tainted—perhaps irreparably—the rare wine auction market. Global auction sales of rare and fine wines dropped 19 percent in 2012 and another 13 percent in 2013, and some observers believe the doubts about provenance are partially to blame. Laurence Ponsot, whose wines Kurniawan faked and who embarked on a one-man mission to expose the fraud, estimates that as much as 80 percent of the pre-1980 wine for sale at auction may be counterfeit. Others believe the number is much lower than that.
* * *
The mailing address for the fine wine merchant Golden West Wines is located in an old Victorian building on San Francisco’s tony Fillmore Street, not far from the Pacific Heights mansions with their breathtaking views of the bay and Golden Gate Bridge. Golden West sells high quality wines, but not through a storefront, and the address is just a post office box. Instead, Golden West lists its wines for sale online and sells to customers around the globe.
In late June 2001, Golden West’s owner, William Mazer, got a routine request: Would his company be interested in purchasing a case of 1989 Château Palmer? The wine, from a respected producer, was a red Bordeaux made from grapes grown on gravel hillocks. Some critics thought the 1989 vintage was the best of the decade. Mazer said yes and paid the seller $95 a bottle for a total of $1,140.
Two weeks later, the same seller sent Golden West another inquiry. This time he offered eight bottles of Château Ducru Beaucaillou from the small Bordeaux town of St. Julien in France. Golden West paid the seller $105 a bottle for a total of $840.
Two months later, in late August, the seller offered the wine merchant a much larger selection: more than seven cases of outstanding French wine, including a 1982 bottle of Château Cheval-Blanc from the St.-Emilion section of Bordeaux, worth about $400, some Pichon Lalande, and a Pomerol from Château La Conseillante, among others. It was an excellent offering, one that Golden West’s clients would be sure to snap up. Mazer offered $8,030 for the lot.
There was nothing unusual about the transactions. People who had wine to consign or sell routinely approached Golden West and similar auction houses. Interactions were often conducted by phone or email. The merchant usually asked if the seller had the right to sell the wine—but the inquiry into its provenance didn’t usually go far.
In this case, the seller did not have the right to sell the wine, although he never informed Mazer and Golden West of this.
The seller was Mark Anderson. After two years of running Sausalito Cellars, he had finally figured out a way to make money on his business—although it wasn’t legal. He sold his clients’ wine.
* * *
Most of the clients at Sausalito Cellars did not actively manage their wine collections. They were collectors who wanted to age their wine, sometimes for decades, so they left it (safely, they thought) to sit in a cool and humid space. Some of the clients, like the International Society of Food and Wine or the Society of Medical Friends of Wine, were active, coming in every few months to pull out some bottles for an event or a tasting. But many of Anderson’s far-flung clients almost never visited the cellar or came at most once or twice a year. And there was one client who was most unlikely to visit since his wine was caught up in bankruptcy proceedings: Bacchanal’s Samuel Maslak, who had sent Anderson 756 cases of fine wine.
Over the next four years, Anderson would sell $279,418 worth of wine to Golden West.
That wasn’t the only wine merchant Anderson sought out. In February 2002, Anderson approached Premier Cru in Emeryville, which had a retail store and an online market. Over the next two and a half years, Premier Cru would purchase $296,235 in wine from Anderson.
* * *
On the outside, everything looked normal at Sausalito Cellars. By the fall of 2002, the company had outgrown its small jerry-rigged place on Marinship Way. Anderson decided to move the storage facility a short way north to a class A building on Libertyship Way, right by the water. The new facility was located in a three-story peach-colored building owned by Orlando Lobos, a local businessman and property developer whom Anderson had gotten to know through the Chamber of Commerce. At 2,500 square feet, the new space was about three times larger than the original spot. The rent was $5,000 a month. Anderson installed steel shelves, rolling racks, and a video system so “each bottle is observed by no less than three high definition video cameras.”87 He once again offered a computerized inventory system and state-of-the-art cooling. He said on the Sausalito Cellars web page that the space was “setting the standard—nationally and internationally” and would keep the wine in “protected solitude.”
There was one more thing promised on the website: security for clients’ wine.
“Is Sausalito Cellars in the business of buying or selling wine?” Anderson wrote on the website. “No.”
* * *
By the fall of 2003, Anderson had gotten into such a rhythm, was so unconcerned about his actions that he didn’t even try to hide his illicit dealings from his employees. Anderson would pull out a box, strip off all signs of the client’s name, and then hand the boxes over to a hired cellar worker to put in a van. Anderson and the worker would then cart the wine over to Premier Cru on the eastern side of the San Francisco Bay or to Golden West in the city. Anderson was so brazen that one of his employees, Elliot Brewer, made an annotation in his time card for the week of December 7–13, 2003. In the space where he was to note his activities, Brewer wrote: “Helped Destroy Evidence.”88
PART FOUR
EXPANSION
CHAPTER TWELVE
THE STRUGGLE FOR RECOGNITION
On a warm day in June of 1862 a group of men gathered in a building on lower Broadway in New York City. They were members of the American Institute of the City of New York, a civic organization formed by inventors in 1838 to promote agriculture and the mechanical arts. The men had come together south of Canal Street to sample California wine—considered an oddity at the time.
H. A. Graff of Brooklyn, who was “well acquainted with foreign wines,”89 had brought six bottles to the meeting. The men, agriculture and horticulture enthusiasts, were part of the Farmers’ Club, one of the institute’s many committees. Each week, the members examined a different aspect of farming. Their topics were varied; they had recently discussed the cultivation of strawberries, the Hessian fly, and a new law about cattle on the highway.
Even though the Civil War was raging and recent battles in Virginia had claimed the liv
es of 12,000 men, the men’s focus on agriculture was keen. None of them had ever tried California wine. It was a novelty product, difficult to find on the East Coast. California wine was just starting to be noticed in San Francisco—Virginia peach brandy, magnolia whiskey, Catawba wine from Ohio, and French Champagne were all more popular than California wine, so it is no surprise that hardly anyone in New York had sampled it.
California was so distant from New York that bringing wine there was a challenge. The transcontinental railroad hadn’t been completed yet (that would happen in 1869) so the most common way to transport wine to New York or Boston was to ship it around Cape Horn. This voyage of 14,700 miles took six to seven months and added considerably to the price. But it had the advantage of allowing the wine stored in pipes, a kind of narrow barrel, to age, a practice few California winemakers bothered with in those early years.
The first shipment of California wine to the East Coast occurred in October 1860, and was sufficiently significant that newspapers took note. “This commencement of the exportation of Californian wine will prove of much advantage to the State,” commented an article. “Our natural market … will be in the Eastern States, where the climate is not favorable to the grape.”90
The first exporters were Kohler & Frohling, a company formed by two German musicians in San Francisco who had given up their instruments to plant vineyards in southern California. The firm opened a New York store in 1860. A year later, Jean Louis and Pierre Sainsevain, the nephews of Los Angeles wine pioneer Jean-Louis Vignes, set up a shop on Broadway.
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