Vintage Wine Scam Victim Shyness Delays Sentencing

A man convicted of selling more than $20.7 million in counterfeit wines had his sentencing delayed after a federal judge said he wants to know more about the wealthy victims of the fraud and how much they lost.

Rudy Kurniawan’s sentencing, scheduled for today in Manhattan federal court, was postponed until July, with U.S. District Judge Richard Berman saying he’s heard from only a handful of victims who might be entitled to restitution, such as billionaire William Koch, who bought millions of dollars of fake rare vintages.

“We’ll need a list of names and how much money they’d get,” Berman said at a hearing today.

The judge asked U.S. probation officials to investigate Kurniawan’s net worth, questioning if it’s still more than $8 million as previously calculated by U.S. Probation officials.

Koch was one of the few wine collectors to publicly declare he was swindled by Kurniawan, testifying during the trial that he lost about $2.1 million on purchases of about 219 bottles of wines such as Chateau Petrus and Domaine de la Romanee-Conti, which turned out to be fakes.

“Collectors who know they have purchased counterfeit wine frequently refuse to assist in uncovering the fraud because they are either embarrassed or because they simply want to get their money back,” Koch said in a letter to Berman.

Koch, the brother of billionaire energy executives Charles and David Koch, has mounted a legal campaign against counterfeiting in the industry and said he hired more than a half-dozen experts to find fakes in his 43,000-bottle cellar.

CEO Victims

Other victims include former Vornado Realty Trust Chief Executive Officer Michael Fascitelli, who bought about $5.5 million worth of wine, and Petco Animal Supplies Inc. Chairman Brian Devine, who paid $1.5 million for his bottles, according to filings from the government and defense lawyers. Neither of the men testified at Kurniawan’s trial.

Spokesmen for Fascitelli and Devine couldn’t be immediately reached for comment on the sentencing delay.

Assistant U.S. Attorney Jason Hernandez said many wine collectors weren’t willing to seek restitution or declare they’d been swindled.

“Not everyone is as transparent as Mr. Koch and put their losses on the line,” Hernandez told the judge. “A handful of people bought in excess of $10 million, bottles of wine, in very, very rare bottles.”

Hernandez said the cost of having a wine expert sort out the legitimate bottles from the counterfeits would be prohibitive.

Restitution Offset

Jerome Mooney, a lawyer for Kurniawan, said his client has tried to repay victims before the sentencing, which would offset the restitution the judge could order.

“The difficulty we’re having is getting some people to talk about it,” Mooney said.

“You mean buyers?” Berman asked.

“Yeah, people we want to give money to,” Mooney said.

Koch also sued Kurniawan in federal court in Los Angeles. That case is pending.

“We’d like to see these people get their money,” Mooney said after the hearing, adding, “Maybe to them it’s not a lot of money or a big deal, because it didn’t hurt them.”

Kurniawan, who was once called “the biggest and most successful wine counterfeiter in the world,” socialized with actor Jackie Chan and bought luxury cars, a Beverly Hills mansion and fine art with the proceeds of his crimes, according to prosecutors.

An ‘Obsession’

Kurniawan apologized for his crimes in an April 25 letter to the judge, saying acquiring fine wines became an “obsession.”

“Wine became my life and I lost myself in it,” Kurniawan wrote. Fine wines “provided me with access to people and experiences I otherwise would not have enjoyed,” adding, “the things I did to maintain this illusion were so foolish. The end was inevitable.”

Berman said he wants to hear more about Kurniawan’s motives for committing his crimes. The judge also asked for more information about Kurniawan’s net worth.

A Los Angeles warehouse containing an estimated $3.4 million in wines, was seized by the U.S. as well as a house Kurniawan was building in the city’s Bel Air section that was worth about $8 million, Mooney said.

Sentencing Calculations

Berman said the information will help him fashion a sentence for Kurniawan. He needs to assess how big a fine to impose as well as determine how much Kurniawan must pay in restitution.

U.S. Probation Department calculated that under federal sentencing guidelines, which aren’t binding, Kurniawan could face as long as 17 1/2 years in prison. The department’s recommendation, offered without explanation, called for a 10-year sentence, Berman said.

The government seeks a term of 14 years and eight months in prison and asked Berman to order forfeiture of $20.7 million, Hernandez said.

Kuriawan’s lawyers suggested a sentence of two years and three months and a fine of $12,500, saying having his assets seized and spending time in prison in punishment enough.

The case is U.S. v. Kurniawan, 12-cr-00376, U.S. District Court, Southern District of New York (Manhattan).

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE