Last year, fine wine was named the world’s best luxury investment, dethroning other luxury leaders like rare whisky and Hermès handbags. The growth of the high-end wine market over the last few years has been impressive, which, apparently is leading some less than savory character into the marketplace.
As reported by Reuters, two British men have been charged by federal prosecutors in New York with defrauding people into investing nearly $100 million in loans supposedly backed by an inventory of expensive wine that did not actually exist.
According to a grand jury indictment, Stephen Burton and James Wellesley induced people to invest in loans supposedly brokered by their company Bordeaux Cellars and collateralized by wine they stored for wealthy collectors. However, the company allegedly had custody of thousands fewer wines than loan documents reflected, including wine from Domaine de la Romanee-Conti in Burgundy and Château Lafleur in Bordeaux, court papers showed.
Burton and Wellesley both used multiple aliases, alleged prosecutors, and used loan proceeds to make fraudulent interest payments to investors or for personal expenses, in a scheme running from June 2017 to February 2019.
“These defendants duped investors by offering them an intoxicating investment opportunity collateralized by valuable bottles of fine wine that turned out to be too good to be true,” said U.S. Attorney Breon Peace in Brooklyn.
Burton and Wellesley were each charged with wire fraud, wire fraud conspiracy and money laundering conspiracy, and could face up to 20 years in prison.
Lawyers for the defendants could not immediately be identified. Wellesley was arrested on February 4 in the United Kingdom, and Burton is a fugitive, prosecutors said.
Last year, an irreplaceable bottle of 1806 Château d’Yquem was stolen, along with 44 other bottles, in the early morning hours of October 27 from Atrio restaurant and hotel in Cáceres, Spain. All together, the heist involved 45 bottles of wine that are estimated to be worth over $1.1 million.