Bloomberg News

Billionaire William Koch Wins Trial Over Fake French Wine

April 12, 2013

Billionaire William Koch

William Koch, founder and chief executive officer of Oxbow Carbon & Minerals LLC, arrives at Manhattan Federal Court to attend the closing arguments in his trial against California businessman Eric Greenberg, in New York on April 11, 2013. Photographer: Emmanuel Dunand/AFP/Getty Images

Billionaire William Koch won a fraud lawsuit in which he claimed a consigner sold him 24 counterfeit bottles of wine from France’s Bordeaux region and may get punitive damages as the jury resumes deliberations.

The federal jury in Manhattan yesterday found against the consigner, Eric Greenberg, concluding he made fraudulent representations about the authenticity and provenance of the wine, including many purported grand crus that cost Koch tens of thousands of dollars. The jury awarded Koch $379,000 in damages, comprising the amount he paid for the wine at a 2005 auction and $1,000 in compensatory damages for each bottle.

“I absolutely can’t stand to be cheated,” Koch, 72, said after court. “Now we got one faker so we’re marching down our hit list of fakers. This is just a start.”

The jury of six men and two women, who heard Koch and Greenberg testify during the three-week trial, are scheduled to return to court today to consider punitive damages. Koch, the brother of conservative Tea Party funders David Koch and Charles Koch, is the founder of West Palm Beach, Florida-based Oxbow Carbon & Minerals LLC.

Koch sued Greenberg, the founder and chairman emeritus of Scient Corp., alleging he defrauded him and had falsely advertised the verity and quality of the wines. Koch said that Greenberg falsely promoted the collection as “the Best of the Best,” claiming that some dated back to the Belle Epoque, he said in a 2007 complaint filed in federal court in New York.

‘Corrupt’ Industry

Koch estimated that hundreds of millions of dollars in counterfeit wine have flooded the vintage market.

“This is just the first step to hold Mr. Greenberg accountable,” Koch said. “Millions if not tens or hundreds of millions of counterfeit wines are sold every year. The counterfeiters don’t want anyone to know, for $100 they make it and mark it up to $15,000, I myself paid $100,000 for a counterfeit wine. To me the whole industry is corrupt.”

Greenberg and his lawyers declined to comment on the verdict after court.

The wines at issue included a purported 1864 Chateau Latour bottle, which Koch bought for $14,160, two 1950 Chateau Petrus magnums he bought for $20,060 each, and a 1921 Chateau Petrus magnum that cost Koch $29,500.

The jury heard closing arguments from lawyers for both sides yesterday.

Arthur Shartsis, a lawyer for Greenberg, argued that his client hadn’t misrepresented the wines and had instead relied upon wine experts at Zachys to inspect and authenticate his bottles for the sale. Shartsis said that the auction catalog also included a provision that the wines were sold “as-is” and said Koch hadn’t bothered to inspect the bottles before the sale or make any inquiries.

Greenberg’s Belief

“Mr. Greenberg did not believe those bottles were fake,” Shartsis said. “Mr. Greenberg believed those bottles were real. How can you be reckless when you’ve given them to the top people in the world to be examined? If there is a mistake here -- for all you know Zachys made the mistake and it’s not recklessness by Mr. Greenberg.”

John Hueston, a lawyer for Koch, told jurors that Greenberg had inadvertently purchased wines from counterfeiters, which he argued had “infected” Greenberg’s wine cellar. Hueston said Greenberg later learned about the fakes and had even tried to sue the sellers. The lawyer said Greenberg eventually sold them at Zachys after two other auction houses had rejected the wine because of concerns about authenticity.

Blaming Zachys

“Mr. Greenberg chose to keep that information to himself so he could get top dollar,” Hueston said. “He’s saying here, blame Mr. Koch, blame Zachys, but don’t blame me. But we will show you he is to blame and it’s time for him to take some responsibility.”

The suit was one of several filed by Koch against wine consigners and auction houses that he says sold counterfeit wine. An earlier lawsuit against New York-based Zachys Wine and Liquor Inc., where he’d bought the wine, was settled for an unspecified amount.

“What Greenberg did was treat me and Zachys the way you treat mushrooms,” Koch said after court yesterday. “Kept in the dark and fed manure.”

Koch also filed a lawsuit alleging he bought counterfeit wines marked “Th.J.,” that had purportedly belonged to Thomas Jefferson. Koch won a default judgment against German wine dealer Hardy Rodenstock, who had consigned the purported Jefferson bottles to Christie’s for sale. A lawsuit against Christie’s for that sale was later dismissed by a federal judge in New York.

Koch left court yesterday with his lawyers and some of his wine experts, saying his next stop was dinner at Daniel, a French restaurant on Manhattan’s Upper East Side.

“I’m thirsty, I want a glass of wine,” Koch said. “And if it’s not a good bottle, I’m going to sue them.”

The case is Koch v. Greenberg, 07-cv-09600, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Patricia Hurtado in New York at pathurtado@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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