How to Avoid Wine Investment Scams: Tips & Tactics, Examples

by Hunter Robillard

The popularity of fine wine as an investment vehicle is on the rise, but so are wine investment scams.

Victims of wine scams typically lose around $7000 on average to scammers.

But, there have been cases of investors losing more than $350,000 as well!

That said, investing in fine wine can be highly profitable if done securely through a reputable wine investment firm.

To help you invest safely, let’s delve into how wine investment scams work, three recent incidents, and some essential tips that will help you avoid falling victim to such scams.

We’ll also show you how Vinovest - a leading wine investment platform, provides a 100% secure way to invest in fine wine.

5 Most Common Tactics Used In Wine Investment Scams

You should be able to recognize how criminals conduct wine investment scams to avoid falling victim.

So, let’s explore the five most common tactics used in such alternative investment scams:

1. Establish Fake Companies

Fraudsters set up fake companies with legitimate-looking websites. They may use their extensive wine knowledge to “sell” their legitimacy.

2. Cold Calls Promising Outstanding ROI

The scammers contact their victims with unbelievable wine investment deals, including exaggerated wine prices and projections.

Most scammers target individuals with large cash savings, such as retired people or those who just received an inheritance.

These cold callers usually pretend to work with a trusted wine investment company or famous brands, making them appear legitimate.

Often, they are persistent, regularly calling, building a rapport with their victim over time or pestering them until they agree to sign the deal.

3. Official Looking Documents

Another way wine scam artists put their victims at ease is with authentic-looking documents.

The fraudster will send fake documents such as agreements with legitimate bonded warehouses like London City Bond.

Usually, once the victim signs on the dotted line, they will receive the paperwork reflecting bogus figures. This “paper trail” gives some victims a sense of security that the deal is legit.

In extreme cases, investors figure out they’ve been scammed only years later!

4. Long Drawn Out Proceedings

Another tactic that could indicate a scam is when the fraudsters deny investors the right to sell their wine.

Common excuses include:

‘It’s not a good time to sell as wine prices are low.’
‘the market will be better in ...’
‘It’s best to wait …’

The unscrupulous wine broker may be delaying proceedings to buy time to cover their tracks.

5. Disappearance

As soon as the victim transfers their money or wine, the fraudsters break all contact with the investor.

3 High-Profile Wine Investment Scams

Here are three wine investment schemes that recently took place:

1. Wine Investors Scammed in $13m Fake Wine Scam

More than 150 retired victims were scammed out of $13 million in a wine and whiskey scam by a British citizen named Casey Alexander between 2017 and 2021.

Mr Alexander was charged with conspiracy to commit wire fraud for running three companies:

Windsor Jones
Charles Winn
Vintage Whisky Casks

Employees of these companies called elderly Americans and convinced them to “invest” in supposedly prestigious Bordeaux fine wines and collectible whiskey bottles.

The Charles Winn company website also featured a video of a well-known master sommelier talking about wine to help the company appear more legitimate.

Some of the most significant scams the companies conducted include:

One victim sent the company $85,000 for investment in fine wines after being promised a 40% ROI.
Another victim, an 89-year-old man from Ohio, wired more than $300,000 to the Charles Winn LLC company.

When the victims attempted to get their money back from Windsor Jones, Charles Winn LLC and Vintage Whisky Casks employees, they were ignored or given several excuses. The victim in Ohio decided to report the incident to the police, who alerted the FBI.

Authorities apprehended Casey Alexander after an employee tipped them off that he would be traveling from England to Ohio.

2. The $100m Fine Wine Backed Loan Investment Scam

In another notorious investment scam, between 2017 and 2019, investors were promised expensive wine bottles as collateral for loans they paid to two businessmen, Stephen Burton and James Wellesley.

The accused were arrested and charged in New York for conspiracy and wire fraud related to their companies, Bordeaux Cellars Limited and Bordeaux Cellars London Ltd. They used these firms to take out loans, supposedly backed by valuable bottles of wine.

The men, Stephen Burton and James Wellesley were actually running a Ponzi scheme. They used new investors’ money to make interest payments to other investors. They also used investment money to pay their own personal expenses.

Despite some investors receiving interest payments for a time, all interest payments ceased in February 2019, and no principal investment was returned.

3. Wine Dealer Convicted of Wine Investment Fraud

This 2021 wine investment scam involved the wine fraud Rudy Kurniawan, an Indonesian national living in Los Angeles.

Kurniawan was well known for his lavish collection of Burgundy and Bordeaux fine wines. He often took these collectible wines to wine tasting events, helping cement his reputation as a wine expert. He also sold many bottles at auctions, private sales, and to wine collectors.

These are the critical events that led to his arrest in 2013:

In 2006, Kurniawan sold $34 million worth of wine at two Acker Merrall & Condit auctions. 22 lots of Domaine Ponsot Burgundy were identified as fakes by Laurent Ponsot, the winery's fourth-generation proprietor. However, Kurniawan was undeterred and continued selling wines despite being questioned.
In 2012, the FBI discovered a fake wine assembly line in Kurniawan's Los Angeles kitchen. Authorities discovered forged labels of the world's rarest and most expensive wine bottles, custom stamps and rare French wax.
In 2013, a federal jury pronounced Rudy Kurniawan guilty of fraud for selling counterfeit wines and defrauding a finance company. This made him the first person tried and convicted for selling fake wines in the U.S. He served nearly nine years of his sentence and was handed over to ICE in 2020.

How To Avoid Becoming A Wine Scam Victim

Here are a few tips that can help you avoid wine investment fraud:

Avoid cold calls from unknown companies: Do not answer cold calls from unknown numbers to avoid falling victim to wine investment schemes. If someone calls and is quite persistent, you should hang up the phone and block the number.
Check the credentials of the wine investment company carefully: Do not sign over your wine or money without exhaustively checking that the company is legitimate. Research the company and check for references.
Don't fall for overly inflated figures and promises: Fine wine typically outperforms other equity markets like gold. But, if an investment opportunity sounds too good to be true, it’s best to walk away.

To report fine wine investment fraud, contact:

United States: The Federal Trade Commission (FTC)
UK:Action Fraud - National Fraud Intelligence Bureau UK, Financial Conduct Authority, Trading Standards UK

But you shouldn’t let these wine investment scams deter you from this highly profitable alternative investment.

Simply opt for the safest route - invest with a trusted and reputable wine investment firm!

A 100% Safe Way to Invest in Fine Wine - Vinovest

Vinovest is an AI-based platform that helps you buy, store, and sell rare wine bottles from all around the world from the comfort of your home.

Moreover, you don’t need to be a high net worth investor to begin investing in this financial market - a minimum investment of $1,000 is all that’s needed to get started.

So what makes Vinovest unique?

Authenticity: With Vinovest, you don’t have to worry about being duped into purchasing fake wines. Vinovest’s wine experts and master sommeliers trace the provenance of every single wine bottle and guarantee its authenticity before the money leaves your wallet.
Secure and optimal storage: Your wine cases are stored in bonded warehouses located near some of the world’s best wine regions. You can rest assured that your wine bottles are safe with 24/7 monitoring and optimal conditions of humidity, temperature, air quality, light, and vibration.
Selling: You can sell your wine at any time. But fine wine typically peaks in value after 5-20 years. Our team of experts will advise you on the best liquidity options and periods to sell. We'll also work with you to maximize your return on investment, no matter the market conditions.
Insurance: All your bottles are insured against theft, damage, and loss, so you don't have to worry about the safety of your investment.
Fees: All these perks come at a minimum fee of only 2.5% (or 1.9% for portfolios of over $50,000), and this covers all the services, from buying, storing, and selling to authenticity check, insurance, and portfolio management.

So, if you’d like to try your hand at fine wine investing, Vinovest provides the easiest and safest way to start building an enviable wine portfolio!