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Financial Fraud Law

The Case of the Counterfeit Wine

 Financial fraud comes in all sizes and types.  Including, it now turns out, in counterfeit wine.

Wine dealer Rudy Kurniawan has been found guilty by a jury in Manhattan federal court for engaging in a scheme to manufacture and sell counterfeit bottles of purportedly rare and expensive wine for millions of dollars. Kurniawan also was convicted of a scheme to fraudulently obtain a $3 million loan from a financing company. He was convicted following a one-week jury trial before U.S. District Judge Richard Berman.

Manhattan U.S. Attorney Preet Bharara said, “Rudy Kurniawan perpetrated a vintage fraud scheme, not only peddling counterfeit wine, but concocting, bottling, and labeling what he foisted on his victims. As the jury found in its verdict today, Kurniawan was also the author of a fictional tale that enabled him to defraud a lender out of $3 million. He now stands to pay for his fraud with time behind bars in a federal prison.”

Kurniawan has been a collector of fine and rare wines and rose to become one of the most prominent and prolific dealers in the United States of purportedly rare and expensive wine. From 2004 through 2012, prosecutors alleged, he engaged in a systematic scheme to defraud wine collectors and others by selling and attempting to sell numerous counterfeit bottles of purportedly rare and expensive wine. According to the evidence at trial, Kurniawan manufactured counterfeit bottles of rare and vintage wine at his home in Aracadia, California, operating what was, in effect, a counterfeit wine laboratory. The government asserted that Kurniawan mixed and blended lower-priced wines so that they would mimic the taste and character of rare and far more expensive wines; poured his creations into empty bottles of rare and expensive wines that he procured from various sources; and created a finished product by sealing the bottles with corks and outfitting the bottles with counterfeit wine labels he created. As the government contended, Kurniawan then sold and attempted to sell these counterfeit bottles of wine at auctions and in direct sales to wealthy wine collectors. Kurniawan earned millions of dollars through the sale of these counterfeit bottles of wine, according to prosecutors.

Prosecutors also contended that Kurniawan devised and carried out a scheme to fraudulently obtain a $3 million loan from a financing company located in New York City that specialized in extending loans that are secured by valuable collectibles, such as art and wine. According to the government, Kurniawan obtained the loan by providing false information to, and concealing material information from, the financing company, including falsely omitting approximately $7.4 million in outstanding loans, falsely representing his annual expenses, and falsely representing that he was a permanent resident of the United States when he had no legal immigration status in the United States and had, in fact, been ordered by an immigration court to leave the country years earlier.

Kurniawan was convicted of one count of mail fraud, which carries a maximum sentence of 20 years in prison, and one count of wire fraud, which also carries a maximum sentence of 20 years in prison.

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