An investigation into the startling fraud accusations that have upended the fine wine world.

Wine, beer, and other potent potables.
June 14 2010 3:36 PM

What's in the Bottle?

An investigation into the startling fraud accusations that have upended the fine wine world.

(Continued from Page 1)

 Oliveros and Sokolin installed themselves in a peculiar location—an out-of-the-way apartment complex on Manhattan's East Side that was reached by crossing a footbridge over FDR Drive. The front of the store was unremarkable, but the back room was another story: It was bursting with fabled wines. After visiting Royal in 1999, a gobsmacked William Grimes of TheNew York Times described it as "Ali Baba's cave" and reported that "Strewn all over the floor and stacked in the makeshift racks were the artifacts of a glorious civilization. A 1952 Latour caught my eye. Then a 1949 Chateau d'Yquem, a 1955 Cheval Blanc, a 1900 Lafite. … The display was, shall we say, casual. Sitting on a case of priceless Bordeaux was someone's lunch."

Royal's huge inventory of great Bordeaux and Burgundies quickly made it a favorite among collectors. Oliveros and Sokolin also became renowned for their splashy tastings (as well as the acuity of their palates, which seems to be a recurring theme—Rodenstock, too, was known to be impressively discerning). Usually held at Oliveros' Manhattan apartment, the tastings would begin first thing in the morning, run late into the night, and feature a dizzying procession of venerated wines, which were knocked down with cold cuts and Indian takeout. Whether they were uncorking dozens of iconic bottles or staying at the luxurious Hôtel de Crillon in Paris, Oliveros and Sokolin lived inexplicably well for wine retailers, and among their peers, they were the subject of constant speculation and much suspicion. Where were they getting all the money, and more importantly, where were they getting all the wine?

Advertisement

Bill Koch's lawsuit against Christie's suggests one answer: Hardy Rodenstock. According to records obtained by Koch, Rodenstock shipped 818 bottles of wine to Royal between 1998 and 2008. (Koch is now trying to find out what other wines Rodenstock might have sent to Royal during this period or prior to 1998.) The invoices, which Slatehas examined, contain staggering quantities of celebrated wines, an astonishing 87 percent of them in large-format bottles (which are rarer than standard 750 ml bottles and are particularly prized by collectors). One hundred and seven magnums of 1961 Pétrus. One hundred and one magnums of 1961 Latour. Eighty magnums of 1945 Mouton Rothschild. Forty-seven magnums of 1947 Cheval Blanc. On and on it goes. By Koch's calculations, the total value of the wines, if they were legitimate, would be just under $8 million. But among people in the wine industry with whom I've spoken—and I've done more than three dozen interviews for this article—there is deep skepticism about the authenticity of the wines that Rodenstock shipped to Royal. "It's impossible that someone could come up with that many bottles of these wines in such a short period of time," Geoffrey Troy, a longtime New York fine wine merchant said. "It doesn't add up. There's just no way."

Despite the doubts about Rodenstock's wines, it has still not been proven in a court of law that the bottles he sent to Royal were fakes, that Royal knew they were fakes, or that it sold them. (As for what might have been in those bottles if they were indeed counterfeits, no one has a clue at this point. Click here to learn more about how fake wines are made.) Contacted by Slate, Rodenstock declined to comment on the matter. In a letter that he sent to U.S. Magistrate Judge Debra Freeman on April 29, he claimed that he had never delivered some of the wines listed on the invoices. He said nothing about the legitimacy of the wines. When Sokolin was deposed by Koch's side earlier this year, he was shown the invoices and confirmed that they were genuine. Oliveros told Slate that Royal did "some business" with Rodenstock and that he had "zero concern" about the authenticity of the wines. He said he remains in touch with Rodenstock and would continue to buy wine from him if the opportunity or need arose.

Alongside the import records that Koch has brought to light, Slate has found other information suggesting that Royal—which is still doing business, but at a different Manhattan location—has been a major source of counterfeit wines. A wine consultant who worked for Christie's in the mid-1990s told me that the majority of the suspicious wines that he and his colleagues came across at that time were traced back to Royal, which he described as "the most consistent problem in the supply chain." A current employee of Sotheby's said that Royal has accounted for an "inordinate share" of the fakes that his firm has encountered. Additionally, a prominent collector and one fine wine dealer both said they stopped buying older wines from Royal in the mid-1990s after being sold bottles that they judged to be counterfeits. (Most of the people interviewed for this story asked to remain anonymous because of pending or potential litigation related to these issues.) But it's an ongoing dispute between Koch and a Bay Area collector named Eric Greenberg that offers the clearest indication that Royal was selling fraudulent wines, and at the center of the dispute is a bottle of 1921 Chateau Pétrus.

1_123125_2218862_090529_pep_divider_568

In 2007, Koch filed a lawsuit alleging that Greenberg knowingly sold him seven counterfeit wines at an auction in New York, including a magnum of the 21 Pétrus. Koch's complaint, which is still pending, asserts that Greenberg, a tech investor, bought certain of these bottles from Royal, and an insurance claim that Greenberg filed appears to support this. Koch obtained the claim earlier this year after subpoenaing it from Fireman's Fund Insurance Company, and his investigators shared it with Slate.It shows that Greenberg purchased $2.1 million worth of wine from Royal between January 2000 and March 2002. In or around 2002, according to Koch's suit, Greenberg was informed by Sotheby's that his wine collection, comprising "tens of thousands of bottles," contained a "significant number" of fakes. Koch says that an independent appraiser hired by Greenberg, William Edgerton, confirmed that there were counterfeit wines in Greenberg's collection. Both Sotheby's and Edgerton verified these details for Slate. (Edgerton is now consulting for Koch.) Greenberg filed his insurance claim in May 2002. In it, he said that Royal had sold him dozens of fake wines; by his tally, fraudulent bottles accounted for $912,301 and possibly more of the $2.1 million in wine that he had purchased from Royal during that two-year period. He provided Fireman's Fund with a list of wines that he bought from Royal, and it included five magnums of 1921 Pétrus. In November 2002, the insurance claim was denied because Greenberg's wasn't covered against losses related to fraudulent business transactions and his policy had also expired. According to Koch's lawsuit, Greenberg hired an attorney to pursue claims against Royal but then settled with Oliveros and Sokolin. Oliveros told Slate that Greenberg was "a good client" and bought "a fair amount of wine from us" but said he couldn't comment on any dispute that Royal may have had with him or any settlement they may have reached.

TODAY IN SLATE

Culturebox

The Ebola Story

How our minds build narratives out of disaster.

The Budget Disaster That Completely Sabotaged the WHO’s Response to Ebola

PowerPoint Is the Worst, and Now It’s the Latest Way to Hack Into Your Computer

The Shooting Tragedies That Forged Canada’s Gun Politics

A Highly Unscientific Ranking of Crazy-Old German Beers

Education

Welcome to 13th Grade!

Some high schools are offering a fifth year. That’s a great idea.

Culturebox

The Actual World

“Mount Thoreau” and the naming of things in the wilderness.

Want Kids to Delay Sex? Let Planned Parenthood Teach Them Sex Ed.

Would You Trust Walmart to Provide Your Health Care? (You Should.)

  News & Politics
The World
Oct. 22 2014 2:05 PM Paul Farmer Says Up to Ninety Percent of Those Infected Should Survive Ebola. Is He Right?
  Business
Business Insider
Oct. 22 2014 2:27 PM Facebook Made $595 Million in the U.K. Last Year. It Paid $0 in Taxes
  Life
The Eye
Oct. 22 2014 1:01 PM The Surprisingly Xenophobic Origins of Wonder Bread
  Double X
The XX Factor
Oct. 22 2014 10:00 AM On the Internet, Men Are Called Names. Women Are Stalked and Sexually Harassed.
  Slate Plus
Tv Club
Oct. 22 2014 5:27 PM The Slate Walking Dead Podcast A spoiler-filled discussion of Episodes 1 and 2.
  Arts
Brow Beat
Oct. 22 2014 10:39 PM Avengers: Age of Ultron Looks Like a Fun, Sprawling, and Extremely Satisfying Sequel
  Technology
Future Tense
Oct. 22 2014 2:59 PM Netizen Report: Twitter Users Under Fire in Mexico, Venezuela, Turkey
  Health & Science
Wild Things
Oct. 22 2014 2:42 PM Orcas, Via Drone, for the First Time Ever
  Sports
Sports Nut
Oct. 20 2014 5:09 PM Keepaway, on Three. Ready—Break! On his record-breaking touchdown pass, Peyton Manning couldn’t even leave the celebration to chance.