A New York jury awarded $12 million in damages to a US billionaire, who said he had been defrauded when he paid hundreds of thousands of dollars for supposedly vintage wine that turned out to be fake.
Florida energy magnate William Koch 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. The jury awarded $12 million in damages to Koch, who said he had been defrauded when he paid thousands of dollars for supposedly vintage wine that turned out to be fake.
John Hueston, a lawyer for Florida energy executive Bill Koch, confirmed the award to AFP, saying his client was very pleased with the outcome.
The decision was the culmination of a high-stakes trial, during which Koch, brother to the politically connected siblings who help fund the US conservative Tea Party movement, accused California Internet entrepreneur Eric Greenberg of fraud, saying he had been sold fake vintage wine as part of a $3.5 million purchase he made at auction.
The plaintiff, who has never denied he was on a crusade to clean up the wine trading business, was ecstatic about the outcome.
"There was a code of silence in this bloody wine business, and now it's been broken," he was quoted by media reports as saying.
The legal battle started in 2007 following an auction, in which Greenberg consigned part of his 70,000-bottle-strong cellar for sale. Koch bought 2,669 of the bottles.
They had extraordinary labels like a Chateau Latour 1928, worth $2,873, a Chateau Latour 1864, several Cheval Blanc 1921s, and a Chateau Petrus magnum from 1921 that was bought for $29,500.
Koch testified he had been looking for "the best of the best," and thought he was getting it. Some bottles were said to have come from "English royalty."
But 24 bottles bought for $355,000 turned out to be fake, said Koch.
The scam of pouring cheap booze into prestigious bottles is an acknowledged problem in the wine world, with former major dealer Rudy Kurniawan set to go on criminal trial later this year in New York for allegedly running a fake wine factory in his home.
In a sign of the stakes in these rarified circles, Koch and Greenberg threw considerable legal resources at the trial.
Both men attended, each sitting flanked by half a dozen lawyers and assistants, while the jury handled evidence, including bottles of wine that the amateur might assume would cost a fortune -- but could be worthless.
Greenberg's lawyer in the civil trial in Manhattan, Arthur Shartsis, said Koch's case was just sour grapes and that his own client had never knowingly served a legally questionable wine.
"Mr Greenberg didn't believe those bottles were fake," he said in his closing arguments to the jury. Shartsis sought to shift the blame from his client to the auction house Zachys.
"In the contract, Zachys had complete responsibility," he said.
"Somebody made a mistake, that is not a fraud."
Besides, the auction rules stated that wines were sold "as is," meaning there was no guarantee, Shartsis said, adding that Koch could hardly have failed to know this.
But Hueston argued that Greenberg went ahead with his consignment to Zachys in full knowledge that the bottles included fakes -- and in fact hoping that Koch would snap them up.
"Mr Greenberg knew it and he didn't tell anybody," Hueston told the jury. "He sold those bottles for top dollars."
According to Wine Spectator, a trade publication, Koch has spent more than $10 million on this suit, but considered the legal fight a matter of principle rather than just an attempt to recoup the money.
"Collectors and individual sellers don't want anyone to know they have fake wine," he told the publication before the trial began. "They want to dump it on others. I'm the only guy who's blowing the whistle on it."
Meanwhile, Kurniawan, once hailed as one of the world's most influential rare wine dealers, has pleaded not guilty to his fraud charges and is tentatively scheduled to go to trial on September 9.