Old Tricks, New Medium
Written By: Kasey Carpenter on Fri, Oct 17th 2008
"A fool and his money are easily parted" - Thomas Tusser, 16th century English poet.
Remember those scams of the 80's and 90's you heard about where there was an underground call center full of undesirables with colorful personalities and a misspent talent for dramatic acting who would cold call the idle rich to sell them junk real estate ala Al Pacino and Ed Harris in "Glengarry Glen Ross" or investments in imaginary gold mines like, again, Ed Harris and Vince Vaughn in "The Prime Gig?"
Seems someone has taken that approach and applied it to the ripe-for-the-picking world of wine. Someone spent the money to buy a list, from God knows where, full of doctors and lawyers and began the hunt. Promises were made, lies were bought, and an Atlantic ocean slowed down prosecution of the offenders, for awhile. Until the Serious Fraud Office (SFO) arm of the United Kingdom's justice system took notice.
The end of September saw conviction and sentencing of four defendants who were operating such a boiler room outfit as seen in Hollywood, under the name of Vintage Wines of St. Albans (always good to shore up your credibility with the inclusion of a saint) and the first week of October saw a raid on a similar operation called International Wine Commodities Ltd (or IWC for short - again, nice official sounding name and a not so faint tie to one of the finest watchmakers on the planet) for offering futures with one tiny glitch - they never bought the wines they sold to their "clients."
The IWC case is pretty cut and dried, same old song and dance of selling something they never had, but the St. Albans one is more interesting because of the language under which one aspect of the case was brought to bear. They promised high returns, up to 130%, and were unable to deliver on the promise. Now of course some of the wine promised never arrived, and like the IWC case, this is clear out and out fraud. But the SFO also levied charges against Vintage Wines of St Albans because in some instances the wine that did make it to the buyers was valued at something other than the pie in the sky return promise under which the wine was sold.
Now doesn't this bring up an interesting point? What if a retailer, auction house, or unsuspecting wine writer tells you you will be guaranteed a ROI of 130% on a given lot of wine? Well in England that is enforceable. I imagine there had to be some sort of documentation to support the claim made by Vintage Wines, otherwise it would be a hearsay case.
This is one I'd love to open up for discussion, anyone have any thoughts on this? Should we now begin holding those who prognosticate on a wine's potential to a higher standard than just "taking their word for it?" Should we hold them to a verbal contract, a binding and actionable statement that will offer the buyer some relief if their 2007 Bordeaux futures pan out and aren't worth beans? Will this kind of precedent force auction houses, indices, and brokers under a proverbial rock when it comes to dispensing wine advice? Or will you now see legal disclaimers akin to those on a prospectus when you buy your futures?
Interesting.
