8 ms·

The Fall of a High-End Wine Scammer

100 points by kspaans 10y ago

revelation 10y ago
This seems like a generic scammer. He didn't even have the brain to run it as a pyramid scheme, you certainly don't want your big clients to only ever receive 1 bottle.
- CaliforniaKarl 10y ago
  Just guessing, but I'd say that it's harder to pay back the original people because they're not being paid in cash, they're being paid in a harder-to-get product. Or the guy simply forgot about the older orders...
- pbhjpbhj 10y ago
  I didn't RTFA tell me he at least offered to cellar the wines for then at an extra cost then have lots of different people expensive tours of 'their' wine racks?
biocomputation 10y ago
Sounds like I'm not the only one who gets headaches from wine.
- brianwawok 10y ago
  That's sulfites right? Do they make lower sulfite wines? They might.
  - mikekchar 10y ago
    Sulfites are a natural product of fermentation, so you won't be able to find wine completely free from sulfites. US labelling requires the sulfite warning (or did 20 years ago, the last time I was in the US ;-) ), even if no more sulfites are added in processing. Sulfites are often added at bottling time in order to reduce oxidation of the wine. If the wine is very young, it is usually filtered, which can introduce oxygen into the process. Thus young wines often have sulfites added. If a wine has been aged for a couple of years, it will not need to be filtered and so it might not have sulfites added. Depending on the winery, you may find that higher quality wines will have little enough sulfites that you won't get a headache. Keep in mind my original sentence, though, if you are allergic to sulfites. No wine (or beer) is free of it, so if you are in danger, do not consume it.
  - biocomputation 10y ago
    Probably. Beer is fine, but I don't really drink that either.
    - S_Daedalus 10y ago
      Beer is not fine if you have a real sulfite allergy.
      - biocomputation 10y ago
        Noted.
ImTalking 10y ago
If the guy is a scammer, then why is his fall disastrous?
- bradbatt 10y ago
  I'm assuming disastrous for all of the people he bilked out of their money.
- PhasmaFelis 10y ago
  Disastrous for him, at the least.
hownottowrite 10y ago
Watch Red Obsession for a little background on this market. http://m.imdb.com/title/tt2419284/ http://m.imdb.com/title/tt2419284/ Should be on Netflix - edit: but it is not :(
- ndonnellan 10y ago
  "Unavailable to stream" :-(
  - S_Daedalus 10y ago
    $4 rental on Amazon, it actually looks worth it to me. Free if you have Sundance, but I somehow doubt that there are a ton of cable subscribers on HN...
  - hownottowrite 10y ago
    Bummer. It was up there a couple months ago.
- dexterdog 10y ago
  That was a very good doc that I put on about a year ago. I'm not a wine guy, but it's a great story.
S_Daedalus 10y ago
It's almost as though the world of fine wine is full of rich suckers who truly believe they have a rare and golden palette. Delightful.
- walrus01 10y ago
  They can hang out with the people who buy $3500 ceramic insulators for their $14,500 stereophile grade audio cables.
  - qaq 10y ago
    It's often the same people :)
    - walrus01 10y ago
      Huge Venn diagram overlap.
  - S_Daedalus 10y ago
    This is a very funny joke, right? No such things exist at those pricepo- Google Oh god no. I'm genuinely surprised, although I shouldn't be.
    - haddr 10y ago
      Please check the special $1000+ power cables for audiophiles...
      - kevindong 10y ago
        Alternatively, look at the people who pay the utility companies to install a utility pole/transformer just for them. Because, apparently, normal electricity is too noisy/dirty because other people are using it too.
        S_Daedalus 10y ago
TazeTSchnitzel 10y ago
> Meanwhile, the store was becoming even slower to deliver. In February 2012 a participant on Wineberserkers.com, a popular discussion board, started a thread titled “Why does Premier Cru take so long” that would continue unspooling into outrage for the next four years. If you want to amuse yourself, here's the thread: http://www.wineberserkers.com/forum/viewtopic.php?t=61257 http://www.wineberserkers.com/forum/viewtopic.php?t=61257 It's interesting to me that even the mere hypothetical suggestion that Premier Cru was a Ponzi scheme produced such outrage.
- S_Daedalus 10y ago
  Powerful, respected people, or just people with enough money to demand to be treated as such, do not like to be made fools of any more than you or I, some even less so. Do they want to believe that they're so thick they've been swilling crap and scammed? People usually believe what they want to believe, for as long as possible.
  - nerdponx 10y ago
    Nobody said anything about the why am being bad. The scam is that the wines they ordered just didn't exist -- what little they did receive was the genuine high-quality stuff. That's the whole reason the scam was able to take off
    - S_Daedalus 10y ago
      I phrased that poorly, I didn't mean in this case. I'm thinking in general of study after study that shows most people can't tell the difference between red or white wine without the color as a guide. Also, "Wine" to "Why am", classic autocorrect. I wonder how much longer we're all going to get to enjoy them?
      - nerdponx 10y ago
        Arguably more embarrassing than auto correct, I was dictating it to my phone.
h4nkoslo 10y ago
Any business that has a long delay between collecting revenue and delivering product is vulnerable to this - it's one of the reasons, for instance, that life insurance is so highly regulated. Grey-market auto sales (eg of high-end sports cars that need to be imported & converted), real estate development (Galt's Gulch in Chile), and sales of silencers or other highly regulated firearms stuff (lots of paperwork to wait for) are other examples. Hell, even Kickstarters are notorious for this. One problem is that it's really difficult to distinguish business incompetence from never intending to follow through, so often the guy pulling the scam won't be prosecuted and pops back up pulling the same scheme in a different market. It's totally legal to solicit orders and only then try to fulfil them, and depending on the market sometimes there is an issue actually getting the product.
- jeffdavis 10y ago
  I thought there was a law against taking money selling a product, and then spending it on something else and having no money left to fill the order. Is that true?
  - JumpCrisscross 10y ago
    No, because then using pre sales or deposits for operating expenses would be illegal. Fraud is generally based on intent in addition to outcomes.
teh_klev 10y ago
If you enjoyed that Bloomberg article you might enjoy this story which was posted a while back on HN: http://nymag.com/news/features/rudy-kurniawan-wine-fraud-2012-5/ http://nymag.com/news/features/rudy-kurniawan-wine-fraud-201... HN discussion: https://news.ycombinator.com/item?id=10474174 https://news.ycombinator.com/item?id=10474174

100 points by kspaans 10y ago

This seems like a generic scammer. He didn't even have the brain to run it as a pyramid scheme, you certainly don't want your big clients to only ever receive 1 bottle.

CaliforniaKarl 10y ago
Just guessing, but I'd say that it's harder to pay back the original people because they're not being paid in cash, they're being paid in a harder-to-get product. Or the guy simply forgot about the older orders...
pbhjpbhj 10y ago
I didn't RTFA tell me he at least offered to cellar the wines for then at an extra cost then have lots of different people expensive tours of 'their' wine racks?

biocomputation 10y ago

Sounds like I'm not the only one who gets headaches from wine.

brianwawok 10y ago
That's sulfites right? Do they make lower sulfite wines? They might.
- mikekchar 10y ago
  Sulfites are a natural product of fermentation, so you won't be able to find wine completely free from sulfites. US labelling requires the sulfite warning (or did 20 years ago, the last time I was in the US ;-) ), even if no more sulfites are added in processing. Sulfites are often added at bottling time in order to reduce oxidation of the wine. If the wine is very young, it is usually filtered, which can introduce oxygen into the process. Thus young wines often have sulfites added. If a wine has been aged for a couple of years, it will not need to be filtered and so it might not have sulfites added. Depending on the winery, you may find that higher quality wines will have little enough sulfites that you won't get a headache. Keep in mind my original sentence, though, if you are allergic to sulfites. No wine (or beer) is free of it, so if you are in danger, do not consume it.
- biocomputation 10y ago
  Probably. Beer is fine, but I don't really drink that either.
  - S_Daedalus 10y ago
    Beer is not fine if you have a real sulfite allergy.
    - biocomputation 10y ago
      Noted.

ImTalking 10y ago

If the guy is a scammer, then why is his fall disastrous?

bradbatt 10y ago
I'm assuming disastrous for all of the people he bilked out of their money.
PhasmaFelis 10y ago
Disastrous for him, at the least.

hownottowrite 10y ago

Watch Red Obsession for a little background on this market. http://m.imdb.com/title/tt2419284/ http://m.imdb.com/title/tt2419284/ Should be on Netflix - edit: but it is not :(

ndonnellan 10y ago
"Unavailable to stream" :-(
- S_Daedalus 10y ago
  $4 rental on Amazon, it actually looks worth it to me. Free if you have Sundance, but I somehow doubt that there are a ton of cable subscribers on HN...
- hownottowrite 10y ago
  Bummer. It was up there a couple months ago.
dexterdog 10y ago
That was a very good doc that I put on about a year ago. I'm not a wine guy, but it's a great story.

S_Daedalus 10y ago

It's almost as though the world of fine wine is full of rich suckers who truly believe they have a rare and golden palette. Delightful.

walrus01 10y ago
They can hang out with the people who buy $3500 ceramic insulators for their $14,500 stereophile grade audio cables.
- qaq 10y ago
  It's often the same people :)
  - walrus01 10y ago
    Huge Venn diagram overlap.
- S_Daedalus 10y ago
  This is a very funny joke, right? No such things exist at those pricepo- Google Oh god no. I'm genuinely surprised, although I shouldn't be.
  - haddr 10y ago
    Please check the special $1000+ power cables for audiophiles...
    - kevindong 10y ago
      Alternatively, look at the people who pay the utility companies to install a utility pole/transformer just for them. Because, apparently, normal electricity is too noisy/dirty because other people are using it too.
      - S_Daedalus 10y ago

TazeTSchnitzel 10y ago

> Meanwhile, the store was becoming even slower to deliver. In February 2012 a participant on Wineberserkers.com, a popular discussion board, started a thread titled “Why does Premier Cru take so long” that would continue unspooling into outrage for the next four years. If you want to amuse yourself, here's the thread: http://www.wineberserkers.com/forum/viewtopic.php?t=61257 http://www.wineberserkers.com/forum/viewtopic.php?t=61257 It's interesting to me that even the mere hypothetical suggestion that Premier Cru was a Ponzi scheme produced such outrage.

S_Daedalus 10y ago
Powerful, respected people, or just people with enough money to demand to be treated as such, do not like to be made fools of any more than you or I, some even less so. Do they want to believe that they're so thick they've been swilling crap and scammed? People usually believe what they want to believe, for as long as possible.
- nerdponx 10y ago
  Nobody said anything about the why am being bad. The scam is that the wines they ordered just didn't exist -- what little they did receive was the genuine high-quality stuff. That's the whole reason the scam was able to take off
  - S_Daedalus 10y ago
    I phrased that poorly, I didn't mean in this case. I'm thinking in general of study after study that shows most people can't tell the difference between red or white wine without the color as a guide. Also, "Wine" to "Why am", classic autocorrect. I wonder how much longer we're all going to get to enjoy them?
    - nerdponx 10y ago
      Arguably more embarrassing than auto correct, I was dictating it to my phone.

h4nkoslo 10y ago

Any business that has a long delay between collecting revenue and delivering product is vulnerable to this - it's one of the reasons, for instance, that life insurance is so highly regulated. Grey-market auto sales (eg of high-end sports cars that need to be imported & converted), real estate development (Galt's Gulch in Chile), and sales of silencers or other highly regulated firearms stuff (lots of paperwork to wait for) are other examples. Hell, even Kickstarters are notorious for this. One problem is that it's really difficult to distinguish business incompetence from never intending to follow through, so often the guy pulling the scam won't be prosecuted and pops back up pulling the same scheme in a different market. It's totally legal to solicit orders and only then try to fulfil them, and depending on the market sometimes there is an issue actually getting the product.

jeffdavis 10y ago
I thought there was a law against taking money selling a product, and then spending it on something else and having no money left to fill the order. Is that true?
- JumpCrisscross 10y ago
  No, because then using pre sales or deposits for operating expenses would be illegal. Fraud is generally based on intent in addition to outcomes.

teh_klev 10y ago

If you enjoyed that Bloomberg article you might enjoy this story which was posted a while back on HN: http://nymag.com/news/features/rudy-kurniawan-wine-fraud-2012-5/ http://nymag.com/news/features/rudy-kurniawan-wine-fraud-201... HN discussion: https://news.ycombinator.com/item?id=10474174 https://news.ycombinator.com/item?id=10474174