The Fraud Examiner

Wine Fraud: A Vintage Scheme

By Mark Scott, J.D., CFE 
ACFE Research Specialist

Yes, there is such a thing as wine fraud. Its practice goes back at least as far as the Roman era, and it continues to this day.

Between November 24 and December 15, 2015, the U.S. Marshals Service auctioned off approximately 4,700 bottles of high-end wine once owned by Rudy Kurniawan, a one-time wunderkind of the fine wine scene who is now serving a 10-year prison sentence for perpetrating one of the most accomplished wine frauds in history.

The auctioned bottles of wine were confiscated from Kurniawan’s private stash by U.S. federal agents after they arrested him on March 8, 2012. The proceeds of the sales will be used to compensate Kurniawan's victims, who lost more than $28 million in the scheme.

The events surrounding these high-end wine auctions serve as a reminder that fraud does not discriminate. Any industry (even niche ones), business, association, government, organization or individual can fall victim to fraud.

Wine Fraud

Wine fraud is the intentional adulteration, dilution or misrepresentation of wines for economic gain. It is a form of counterfeiting, and it can occur through methods such as mixing juices or different wines with a lesser-valued wine, intentionally mislabeling a wine, or substituting a lesser-valued wine for one considered to be high-end.

Since the early 2000s, the demand and prices for rare wines has increased rapidly, as have the potential earnings from selling fraudulent wines. Rare and vintage wines are especially attractive to purveyors of fraudulent wines because they generally command high prices, and because of their rarity and the process by which they are made, only a limited number of people have tasted the genuine articles.

Rudy Kurniawan

Rudy Kurniawan, an Indonesian national, exploded onto the wine scene in the early 2000s, buying and selling rare wines at a tremendous pace. A charismatic and generous man with a discerning palate and an exceptional ability to identify and recall specific flavor impressions from experience, Kurniawan captivated the fine wine establishment, and in a short time, established himself as one of the world’s most prodigious wine connoisseurs.

Kurniawan bought and sold millions of dollars’ worth of rarities. He spent as much as $1 million per month to procure rare and coveted wines, and in 2006, Kurniawan sold $35 million worth of wine.

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