MANHATTAN U.S. ATTORNEY AND FBI ASSISTANT DIRECTOR-IN-CHARGE ANNOUNCE CHARGES AGAINST WINE DEALER FOR MULTI-MILLION DOLLAR FRAUD SCHEMES
FOR IMMEDIATE RELEASE
Thursday March 8, 2012
Defendant Allegedly Attempted to Sell More than $1 Million Worth of Counterfeit Wine
Preet Bharara, the United States Attorney for the Southern District of New York, and Janice K. Fedarcyk, the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), today announced fraud charges against wine dealer RUDY KURNIAWAN. Between 2007 and 2012, KURNIAWAN allegedly engaged in multiple fraudulent schemes relating to his wine business, including attempting to sell counterfeit wine that, if genuine, would have been worth over $1.3 million. He is also charged with fraudulently obtaining millions of dollars in loans. KURNIAWAN was arrested this morning in Los Angeles, California, and is expected to be presented in federal court in the Central District of California at 2:00 p.m. PST.
Manhattan U.S. Attorney Preet Bharara said: “Mr. Kurniawan’s days of wine and wealth are over, if the allegations in this case are proven. As alleged, Rudy Kurniawan held himself out to be a wine aficionado with a nose for a counterfeit bottle, but he was the counterfeit, pawning off prodigious quantities of fraudulent wine himself to unsuspecting auction houses and collectors. But his alleged scheme did not end there – he also secured millions in fraudulent loans to fund a high-end lifestyle. He will now have to answer for his alleged crimes.”
FBI Assistant Director-in-Charge Janice K. Fedarcyk said: “The bad-faith sale of any commodity you know to be a counterfeit, fake or forgery is a felony. Whether you are peddling a Picasso or a Petrus, a Botticelli or a Burgundy, unless it is what you say it is, the sale is a fraud.”
The following allegations are based on the Complaint which was unsealed today in Manhattan federal court:
KURNIAWAN has long been a collector of fine and rare wines. He has sold millions of dollars of wines in recent years, including approximately $35 million worth in 2006 alone. Since that time, KURNIAWAN has also held himself out to be a wine expert who was particularly skilled at identifying and detecting counterfeit bottles of rare and expensive wine. In an interview, KURNIAWAN told a major publication that he could spot the tell-tale signs of counterfeit bottles of wine, such as counterfeit labels, corks that had been tampered with, and improper bottle markings.
Kurniawan’s Attempts to Sell Counterfeit Wine
KURNIAWAN attempted to sell counterfeit wine on at least two occasions:
First, in 2008, KURNIAWAN consigned for auction at least 84 bottles of counterfeit wine purporting to be from Domaine Ponsot in Burgundy, France, which were expected to sell for approximately $600,000. Although KURNIAWAN represented that the wine was authentic, it was not. He attempted to sell one bottle that he said was a 1929 bottle from Domaine Ponsot, but that was not possible because Domaine Ponsot did not begin estate bottling until 1934. He also consigned bottles of wine that had purportedly been bottled between 1945 and 1971 from the Clos. St. Denis vineyard of Domaine Ponsot. However, Domaine Ponsot did not make wine from that vineyard until 1982. Ultimately, the wines were withdrawn from the auction at the request of Domaine Ponsot’s Administrator. When questioned by the Administrator about the source of the counterfeit wines, KURNIAWAN said that he acquired the bottles from a certain person in Asia and provided the Administrator with two telephone contact numbers. However, neither telephone number led to that person or anyone else who sold wine. One number was the contact for a regional Indonesian airline, and the other was associated with a shopping mall in Jakarta.
Second, KURNIAWAN attempted to sell some of his wine using a straw seller after his wine-dealing came under increased scrutiny, and major auction houses became reluctant to accept his wines for auction. In February 2012, in exchange for a fee, the straw seller agreed to pretend that KURNIAWAN’s wine was really his own and then further agreed to consign wine for sale at an auction in London under his own name, rather than KURNIAWAN’s. Through this straw seller, KURNIAWAN consigned approximately 78 bottles of Burgundy wine that purported to be from Domaine de la Romanée-Conti. If authentic, the 78 bottles were expected to sell for approximately $736,500 at auction. Ultimately, however, the wine was withdrawn from the auction after people began suggesting it was counterfeit. For example, on a prominent wine-appreciation bulletin board, one individual detailed a series of concerns about the authenticity of the wine, noting, among other things, that some of the bottles included four digit serial numbers when genuine bottles would have had five- or six-digit serial numbers; that the foil around the cork was not like the foil that covered the corks of genuine bottles; and that the labels on bottles of wine purporting to be from 1959 to 1971 included an accent mark that did not appear on bottles until 1976.
Kurniawan’s Other Fraud Schemes
KURNIAWAN also engaged in multiple fraudulent schemes to obtain millions of dollars in loans, at the same time he was spending millions on wine, clothing, jewelry, and travel. In one scheme, in late 2007 and early 2008, KURNIAWAN lied in order to procure a $3 million loan from a Finance Company. He made false representations concerning his liabilities, specifically, by understating his personal debts by over $11 million. In another scheme, in May 2008, KURNIAWAN pledged certain artwork as collateral for millions of dollars of loans he obtained from a New York auction house when he had already pledged the artwork as collateral in connection with the $3 million loan from the Finance Company. KURNIAWAN failed to disclose to either the New York auction house or the Finance Company that he had double-pledged this collateral. In a third scheme, in 2009, KURNIAWAN attempted to defraud the New York auction house by selling a portion of his wine collection at auction without the New York auction house’s consent. The wine he was attempting to sell had also been pledged as collateral to secure the millions of dollars of loans he had received from the auction house.
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KURNIAWAN, 35, of Arcadia, California, is charged with three counts of wire fraud and two counts of mail fraud. Each count carries a maximum sentence of 20 years in prison.
Mr. Bharara praised the work of the FBI’s Art Crime Team and its New York and Los Angeles field offices. He added that the investigation is ongoing.
The charges and allegations contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
This case is being handled by the Office’s Complex Frauds Unit. Assistant U.S. Attorneys Jason P. Hernandez and Stanley J. Okula, Jr. are in charge of the prosecution.