Oh My Fraud

Warning: This is a machine-generated transcript. As such, there may be spelling, grammar, and accuracy errors throughout. Thank you for your understanding!

Greg: Listen, Caleb, this comes directly from the application for the search warrant. It says FBI agents found bags containing wine labels, bags of wine corks, wax used to seal corks. Rubber stamps used to stamp the year of a wine vintage. Empty bottles of wine, including large format bottles, wooden wine crates, bottles submerged in water to aid removing the labels, computer equipment, including printers and stacks of preprinted wine labels printed on high quality paper.

Caleb: Sounds like a full fledged wine forgery factory.

Blake: If you'd like to earn CPE credit for listening to this episode, visit Earmark Cpcomm. Download the app, take a short quiz and get your CPE certificate. Continuing education has never been so easy. And now on to the episode.

Greg: Hello and welcome to Oh My Fraud, a true crime podcast where our criminals create multiple sets of books instead of collecting multiple sets of human teeth. I'm Greg Kite.

Caleb: And I'm Caleb Newquist.

Greg: Caleb, before we get into it, I just want to read another one of our listener reviews real quick, if that's okay.

Caleb: Of course it's okay.

Greg: Greg So a listener whose username is k e 2020 gave us five stars and said fun and informative.

Caleb: Oh well that's a that's nice. And, and you know that it's got to be from an accountant because Katie 2020 just got to the point. No screwing around. No time for complete sentences. No time for punctuation. Right. Just and.

Greg: And just. She said it like she saw it and and I'm going to say that is for real great feedback. Great positive reinforcement. Because if we boil down what we want every episode to be, I would say that would be fun and informative.

Caleb: Yeah, I think that's true. And so if you out there are listening, if you think our podcast is fun and informative, go leave us a review on Apple or Spotify or Earmark if you're here for the CPE and then maybe we'll just read it on a future episode. Wouldn't that be a nice surprise for you?

Greg: It'd be a wonderful, a wonderful treat.

Caleb: A Yes, a delightful treat.

Greg: So, Caleb, changing subjects? Yes. You. You've never struck me as a particularly sentimental person. But I'm still curious. Are you a collector of anything? Do you have, like. Do you have, like, a secret collection stash of of stuff that you just love finding and keeping?

Caleb: Oh, I'm curious where Greg is getting these insights on en moi. Uh, yeah. I am not a particularly sentimental person, but I do kind of like old things. So, like, I have. I have. I have like 3 or 4 typewriters. Some of them are like from or they're pretty old, like they're from the 50s. Including a nice. That's, yeah.

Greg: That's a collection. Yeah.

Caleb: I mean, but I don't have that many you know, I've got a couple, I just got a second adding machine I have so I have two old adding machines, I have a few, I have a few typewriters, I have a small record collection. Like some people are really into vinyl and have like huge collections and mine's pretty small and like there's some I have some fun records, but like I don't have like, I don't know, I hear about people that collect knives and shit and I'm just like, What? What are you doing? What are you, you know, like what? What are people doing with knives? I don't know. I mean, I'm trying to think of another couple things like, oh, like when we travel around the country, we like to go to national parks and they have these vintage posters for all the national parks. And we and so we kind of collect those. Have you seen those?

Greg: Yes, I have. My buddy. I got a buddy who has like four of them in his living room. They're very.

Caleb: Cool. Yeah, Yeah. So we collect those. I mean, that's just stuff that I like, though, you know, It's not like I wouldn't say that I'm like a speculator or anything like that, but you asked about collecting anyway. Yeah. Anyway, what about you, Greg? You have a you have a you have an interesting collection, don't you?

Greg: I do. And I'm very proud of my collection because I don't I'm. I'm pretty confident that no one else has the same collection that I have because. Well, because you mentioned when you travel to National parks, you get the little the vintage national parks posters. And it's not uncommon for people when they travel to collect things from everywhere they go, like, you know, like souvenir spoons or shot glasses or ashtrays or something like that's pretty, pretty standard. But but for me, what I do whenever I'm out of state, I play the lottery until I win a cash prize. And listen, the cash prize has to be in.

Caleb: What's the most you've ever spent to win?

Greg: Oh, well, it was in Louisiana was the most. I think I spent about $60. Wow. But but listen. No, no. It's because Louisiana kept screwing with me because the I kept winning. But I would either win a free ticket, I don't care about a free ticket or I'd win $10. And I'm going I'm shooting for a prize that's in the single digits. So I kept and and this bodega where I kept buying my scratchers at, they like, I went back there so many times and they just were confused. And and they just started laughing at me and busting my balls. Right. Because I was back to get more scratchers. But, but after I win. So like I said, I want to win. I want to win single digits and then I don't cash it at the state that I'm at. I bring it home with me. I go online, I print out the form, I fill out the paperwork, I put a stamp on it in an envelope. I send it snail mail and I wait for a paper check to get sent. I collect paper, I collect lottery checks from different states, and when it comes, I laminate it and I put it up on the wall and they're all 12 of them are hanging right over there on my wall.

Greg: And it is one of my most prized possessions. As a matter of fact, I just I just won Montana just last month. I got a Montana check. And it's it's mostly free. Nobody I don't think anybody who's ever come to my house has been like, what are these? And just I like have to point them out because they're not that like they don't really pop. Uh, so but but, but, but, but the, the fun thing is accountants usually really appreciate it because they know how frustrating it must be for all these states to I mean, first off, the, the whole like, the whole cash prize is completely upside down because the state has to get me a $1 check. The state probably has to do about $30 worth of work. So that's got to be frustrating on one hand. And then the accountants are also like and you're not cashing these checks ever. So whoever's reconciling the state lottery bank account is like going this God damn Greg Kite still hasn't cashed his $2 check from Louisiana. When is he going to do that? So which delights me. That tickles me.

Caleb: Yeah. Always off by a buck or two.

Greg: Exactly.

Caleb: That's about the weirdest fucking collection I've ever heard about. So I.

Greg: It's my pride and joy. But here you go. Love it. Next question. Okay. And you and you actually alluded to this earlier, so I think I know the answer is no. Yeah, but it sounds like. Do you own anything that you're keeping? Only because there's a chance that maybe someday it'll be worth a lot of money. Like, you know, like I'm thinking baseball cards or action figures or something like that.

Caleb: No, I mean, define a lot of money.

Greg: Uh, just like I'm not.

Caleb: I'm not retiring on any.

Greg: Yeah, well, that's the thing. None of this stuff. Okay? So, like, one of mine, I. I found a bunch of, like, especially when I was younger. Like, when I was probably when I started, when I was around 12. I started anytime I saw a wheat backed penny, I'd hang on to it. Oh, yeah. So I've got a I've got a bag of wheat backed pennies and those count, I mean someday that back penny will be worth $0.02. And then my, my big wheat backed penny payout will be $1.08, which will be so great for my kids. The other two and again, these are all long shots. The other ones, for some reason I got a couple of comic books that I that I'm that I'm holding on to. Superman.

Caleb: Superman, number one.

Greg: No, no, no. Nothing nearly that cool. I've got an old Casper the friendly ghost that I got, I think somebody gave me. Here it is. If you're. If you're watching. There it is. Here's a picture of it. I Yeah, I'm not even smart enough to know it might be. I don't even know what number this is. I can't see it on. Oh, number 218. Casper the Friendly Ghost. Number 218. So that sounds like a low number for him. And. And yeah, all this stuff. I mean, this random crap that, you know, the. You know what flotsam that I've held on to. Wow. It's all.

Caleb: Greg. Greg Kite, ladies and gentlemen. Pulling out the.

Greg: Well.

Caleb: I'm.

Greg: I'm drinking some Burgundy wine from Burgundy, France. It brings out the best vocabulary I have. So, Caleb, people have collected and they've speculated in all sorts of things. And obviously one of those things that people have both collected and speculated in is wine. There have been people who've been purchasing, storing and reselling old bottles of wine almost forever. However, it wasn't until the 1970s that speculative wine investment became like it turned into like the modern type of speculative purchase. And that yeah, like I said, that didn't even happen until around the 1970s.

Caleb: Now, wine is different from other investments because it's consumable scarcity increases over time, not just because wine gets lost or because bottles get broken, but because people drink the wine. The best wines can be stored for 100 years, but wine's quality typically peaks in less than 50. And regardless of the drinkability, some collectors just really, really want a bottle of super old wine not to drink it, but just to have it more bragging rights. For example, billionaire Bill Koch bought four bottles of Thomas Jefferson's wine for $100,000 each just because he's got so much money. And he thought it would be cool to own four bottles of Thomas Jefferson's wine. And for those who are not familiar, Bill Koch is to the Koch brothers. What Gummo was to the Marx Brothers. Technically, he is one of the brothers, but no one really gives a shit about him.

Greg: So that's very that seems very appropriate. I think that's a great analogy.

Caleb: Yeah, it's perfect. Yeah. Um, and here's a surprising but obvious fact. In the wine collector world, at least in the United States, it is almost exclusively rich, old white men. You know what Bill Koch? Kind of rich old white man. But in the early 2000s, an Indonesian man of Chinese descent, a guy in his 20s, became a big damn deal in the collectible wine world.

Greg: This new entrant into the collectible wine community was named Rudy Kurniawan. He was born in 1976 in Jakarta, Indonesia, and he came to the United States somewhere around 1993, presumably to go to school at Cal State Northridge, a school from which he did graduate. And while he was a student, he lived in a modest apartment in Pasadena with one of his older brothers. And then in 2001, their mom moved in with them. You know how when you're in college, the coolest thing that you can do is have your mom move in with you? That's what happened to good old Rudy. And it turns out Rudy wasn't just a wine enthusiast in the collectible wine community. He was known in the community as a wine savant. He had this incredible ability. It's an incredible palate for wine, where he could he could identify wines just by smell and taste. There's this there's this story, a first hand story of someone who saw him at this blind wine tasting event where he was able to accurately identify both the winery and the vintage of ten out of 12 wines. Do you do you understand what I'm saying, Caleb?

Caleb: I do. I understand you perfectly well.

Greg: Yeah. Because he was like. Because what? Like, what am I drinking here? I've got a I've got a Beaujolais from Louis Jadot in Burgundy, France. So he could and he could so he could taste it. And he'd go, Oh, yeah, this is a Beaujolais from Louis Judo. And he'd be like, I think it's a 2021. And like, that's that's what he could do just from tasting it, not from I mean, I, I have to keep looking at the bottle just to tell you what it is and it's right in front of me. So that's, that's a skill this guy could do. It's amazing. Yeah. Yeah. And impressive. Arguably, this guy, Rudy, he had the most refined palate for wine ever. He was. He was kind of the wine goat when it came to this kind of thing and kind of the origin story, Rudy's origin story, as told by himself, is his love of wine began somewhere. It was either he he couldn't remember if it was 1999 or 2000, but he did remember. It was that one of his dad's birthdays party birthday parties where he ordered a bottle of 1996 Opus One Cabernet Sauvignon. And apparently it blew his goddamn mind. And there was something about that bottle of Opus One that, like, flipped the switch in his brain. And at that point, he he I mean, basically, this sounds this sounds hyperbolic, but he he really did basically just devoted his life to fine wine from that point on.

Caleb: Full, full disclosure. Okay. I've been to Opus One and I drank some Cabernet and it was good, but it didn't blow my goddamn mind. So either either I am, you know, I either have a shit for palate or, you know, maybe this Rudy character is, you know, um, I don't know, a little bit theatrical when it comes. Comes to wine. I don't.

Greg: Know. Well, okay, well, both of us watch it. That's. I don't think that's too far of a stretch. Watching. We both watched a documentary about Rudy, and he and he did seem there was something that did seem a little bit, uh, kind of theatrical about him. His, his, his interest and enthusiasm for wine was so overblown that at least for people who aren't that excited about wine, it does seem a little bit overblown, A little over the top.

Caleb: I will say. I like wine. Fine. I don't like it so much that I kind of go on like if you watch this documentary called Sour Grapes, the people that they talk to on there like are just going on and on and on and on and on and like. And I like wine. I like it fine. I've had some very nice experiences, but like, hearing these people and hearing Rudi talk about it is really fucking annoying. It's just fucking annoying. It's.

Greg: It's. It's kind of like listening to somebody explain crypto. It's. There's, there's kind of a, there's definitely a feel that's similar. Yeah. To both of those.

Caleb: Yeah. Nicely, nicely said. Nicely said.

Greg: So. So like I said, Rudy went all in on fine wine after his exposure to the opus One Cab Sauv. Is that what the cool kids call it? Is the cab Sauv? Sure. Now? Yep. And so? So, Rudy. Rudy started going to every tasting like wine tasting event that he could attend, and he started spending an insane amount of money buying wine. Some of these tastings that he went to would cost as much as $25,000 to attend a tasting and which which is ridiculous. But then compared to what Rudy spent on wine just in the years between 2004 and 2008, he bought $40 million worth of wine on his Black American Express card. And and that's that's just what he bought on his Black American Express card. I couldn't find anything that said how much he bought on his orange Discover card. So that could be up to $800, which I think is the limit.

Caleb: Yeah, like 1500 on something.

Greg: All discover cards. Yeah. So yeah, just. But regardless, it was at least 40 million bucks he spent so 10 million bucks a year for four years on wine. Crazy.

Caleb: Sure.

Greg: Yep. Now, Caleb, you might be asking, where did Rudy get all this money to. To. To just dump into old, amazing wine? That's a great question. And it was also a question a lot of people in the wine world were asking of Rudy as well, because he's this new entrant into this place and he's just buying up everything. And so Rudy claimed that his family, his money, he had a lot of money because his family had a lot of money and his family had a lot of money because his family had exclusive rights to import Heineken beer into Indonesia. Now, I don't know a whole lot about Heineken beer, and I don't know a lot about the beer market in Indonesia. But I would have to think that if one family got a taste of every Heineken beer that any Indonesian ever drank, there's a decent chance you could be sitting on a on a pretty big pile of money, don't you think?

Caleb: Absolutely. Yeah. That seems like makes sense. A license that could potentially be a license to print money.

Greg: Yeah. Yeah, potentially. And again, don't know a lot but but that's that was one of the things about Rudy is that he he always I mean he'd answer everybody's questions and a lot of times he'd be a little bit, you know, vague with his answers. And so there's always kind of this mystery about him. But the mystery was it made sense that there was mystery because. Well, because the other thing that he claimed is that as a rich kid with rich parents, he did receive a monthly allowance of $1 million. And but he's rolling with all these hyper rich people anyways. So they'd probably be going like, yeah, you're in the import export business overseas, you came here to America and your folks are like, Cool, you live in America and here's your million bucks a month to just, you know, walking around money. Um, for his allowance and just but just to make this clear, Caleb, I'm pretty sure I also could have gotten a $1 million a month allowance myself as a kid. I did the math and I could have gotten that if I had mowed our lawn 200,000 times every month. That's all it would have taken. And then I also could have lived. The life would have been amazing. Think of all the wine I could have bought as a 13 year old.

Greg: It would have been vast. I could still be living off of my cellar of wine. Uh, but Caleb, not only did Rudy buy, not only did he buy tons of wine, he also sold tons of wine. So he was very much in the speculative. I'm going to buy low, sell high kind of thing here, just to put this in perspective. So again, between 2004 and 2008, he bought 40 sorry, $40 million worth of wine. And then in 2006, just in the year 2006, Rudy sold 17,000 bottles of wine at auction, which grossed him over $35 million. So the guy is he's he's a Wheeler dealer. He's. He's he's in this thing. Yeah, not bad. And, dude, everybody loved him. He was. Yeah. This guy was universally beloved by by everybody in the in the wine community. He was a he was a rock star because again, like we said, he had this godlike palate for wine. He had this encyclopedic knowledge of. Wine. And on top of that, he was extremely generous and extremely humble with everybody else who was in this this, you know, tip of the top crust of humanity who could buy $40,000 bottles of wine. He was known he was very well known for opening and sharing these ridiculously expensive, ridiculously rare bottles of wine that he just happened to own.

Greg: And at parties. This was this is what I thought was really interesting at parties. He was he had this ability and he was well known for doing this where he would basically outdo everybody, everybody else's wine because, you know, I mean, think about it, Caleb. You're at one of these, you know, you're with a bunch of other wine collectors and everybody's kind of having this pissing contest about who's who's the best. And you're, you know, but you're kind of doing it subtly, like going, Here's the wine I brought, you know, and you pop it open and everybody goes, Ooh, wow, this is fancy. And like, at the end of the night, Rudy would always be holding on to something that he knew would be like this. You know, this this, you know, royal flush kind of of of presentation of a wine. And he'd pull it out, but he'd do it like he would outdo everybody else's wine. But also he, it's like he wasn't a dick about it either. So because of that, the wine community absolutely loved him. Here's a here's a quote from the book in Vino Duplicitous. It says, Rudy wanted to share the pleasure and he did not seek gratitude. And so gratitude is exactly what he got.

Caleb: But then there was a wine auction in New York City April 2008. The Great Recession was underway. Wasn't a Great Recession. It was a pretty awful recession, but nevertheless a pretty horrible recession. Yeah, but this was still before Lehman Brothers had gone under. So a lot of us were still, you know, kind of in denial. And as a result, people were still spending on ungodly amounts of money on wine. This auction was a raucous party, and it was at Aker, Merrill and Condit. I don't know if that's how you spell it. Maybe it's Candy. But anyway. Yeah, but that's all they did. This is like I looked this place up. It's like it's like one of the oldest businesses in the US that goes back to like 18, 20 and all they do, they do their wine, their wine merchants, and they do wine auctions. And this is what they do. Anyway, about halfway through the auction. John Is it Cappon Yeah, I.

Greg: Think let's say let's use Cappon and Cappon, said Capone. If we said Capone, people would get the wrong idea.

Caleb: They would certainly. Anyway, he's the chairman and owner of Aker, but he's the and he's an auctioneer and he announced that 22 lots of here comes the French CLOs, Saint-Denis wines. These 22 lots of this wine was being withdrawn. No explanation, but they were just no longer available. All this occurred while Loren Ponsot, the owner and operator of the CLOs Saint-Denis Winery, was standing silently in the back of the room watching. So why did this winemaker from Burgundy, France, come all the way to New York City to squash the secondary market sale of his wines? Because the wines were fake. Okay, That's.

Greg: That's a that's. That's a great reason.

Caleb: Good reason, right? Yep. One bottle of CLOs Saint-Denis, pictured in the auction catalog, proudly displayed a 1945 vintage. But. Clausen Denny didn't start bottling wine until 1982. Okay, So, yeah, he.

Greg: Pissed me off too. If I was mad. If I was. Yeah. If that was my wine, I'd be like, okay, I'll call bullshit on that.

Caleb: Yeah. Okay. So another excerpt from the book in Vino Duplicitous quote. One photo showed 12 bottles of 1962 CLOs de la Roche, each topped with a bumpy, dull red wax capsule. But unlike the wax crowns in the Acker photos, ponchos are smooth instead of bumpy, bright red rather than dull red. Turning the page, Ponzo got another surprise A full page photo of a single bottle of 1929 CLOs de la Roche. The label stated. Okay, here we go. More French.

Greg: Good luck.

Caleb: Good luck, Mayan. But Domaine bottled at the property that says Ponzo could not be. My grandfather did not bottle wine at our Domaine until 1934. End quote.

Greg: I was so hoping you'd do the accent. That made me so happy. That's my favorite part of any podcast we've done ever.

Caleb: There were several other irregularities that pointed to the spurious origins of these bottles. And here's where it gets a little weird. All 22 withdrawn lots were being sold by Rudy Kurniawan.

Greg: Lauren Ponzo, the guy at the back of the auction. That in my brain is just very disappointed as he looks on with the proceedings. So he he knew of Rudy, but he did not know Rudy personally. And so while he was in New York, he scheduled what must have felt like the most awkward lunch meeting ever with Rudy. Probably felt a lot like like Rudy probably felt like he was being called into the principal's office. And Lauren Ponzo probably very much felt like the vice principal calling him in. And while at the lunch, Ponzo asked him point blank, Where did you get the wine from? And Rudy in. In response, he expressed his disappointment that the wines were fake and he was understandably embarrassed and frustrated that he'd been bamboozled into buying them in the first place. But like I said, Ponzo wanted to know where he got them from. Rudy said he couldn't remember who he'd purchased the wines from, but he promised Ponzo that he'd go through his records and and give that information to Ponzo. So about six weeks later, Rudy sent Ponzo an email stating that he purchased the wines from, quote, the seller of Pok Hendra in Asia and then later in July. So a couple of months later, Ponzo met with Rudy again, this time in Los Angeles. And at that meeting Rudy also gave Ponzo two phone numbers for Pok Hendra, both of them being phone numbers for Indonesian phone numbers.

Greg: So when Ponzo got home to France, he obviously wanted to call the phone numbers to get a hold of this Pok Hendra to see where he got these fake bottles from. So he called the first number. It just went unanswered. He called the second one. It ended up going to a fax line, turned out one of these phone numbers was for an Indonesian airline called Lion Air, and the other one was for a hardware store at a strip mall in Jakarta. So that seems a little off and weird. And then yeah, yeah. Not yeah. So, you know, and who knows, maybe Pok Hendra, maybe he's, maybe he's the executive at Lion Air and maybe he owns, you know, commercial real estate such as the strip mall in Jakarta. So, you know, not, not a, not, not totally, completely devastating to Rudy, but also definitely not anything that's really helping him back up his story either. But then Lauren Poncho's impression of Rudy really got in the toilet when Ponzo started talking to some of his associates in Asia who informed him that Pok means Mister in Indonesian and that the name Hendra is just as common in Indonesia as like the name Smith is in the United States. So saying that he got the bottles from Pok Hendra in Asia is kind of like saying he got him from Mr. Smith in the Western hemisphere. Not really, not really narrowing it down much at all.

Caleb: Regardless, most people believe that Rudy was a victim, not a perpetrator. The main reason was that Rudy regularly gave a money back guarantee along with the sale of his wines, but that came back to bite him in the ass in 2009, when a wine collector and Goldman Sachs partner named Andrew Gordon concluded, along with the help of some wine specialists, that most, if not all, of the $2.2 million of wine he purchased from Rudy was fake. Rudy made good on his promise and agreed to take the wine back.

Greg: Now I've got to say the money back. I mean, how how would you feel about that if you were buying some collectible stuff? And one of the words that I don't think we're actually going to use it other than right now in this episode is provenance. I wasn't that wasn't in my lexicon before we looked into this case. But but provenance is kind of the pedigree, kind of the like the paper trail going, okay, this, this bottle, you know, I can I can show you who I bought it from. And they and they, they there was some, some sort of evidence that showed where they bought it from. And there's evidence going all the way back to whoever first bought this bottle from wherever. In whatever year it says it was supposed to be. So lacking provenance, I think a money back guarantee seems to be a mean to me. That would be a pretty powerful incentive to believe somebody that this is this is the real stuff.

Caleb: Potentially agreed and yeah, potentially.

Greg: Or it could be a great way for a scammer to really continue to pull the wool further over your eyes.

Caleb: 100%. And by the way. Providence should have been in your lexicon because it came up in episode 31. Inigo Philbrick in the Inigo Philbrick in The Art of the Fraud, because provenance is very important in artwork, secondary sales, I think.

Greg: I think I blacked out for that episode.

Caleb: You blacked out for that episode. Listeners, go back and check out episode 31 and see if Greg is with us on that one. Listen. Okay.

Greg: So so some people here's the thing. There's people who say they get blackout drunk. Um, and I don't really believe that that's a thing because. Because they're like going, oh, I got I blacked out. I don't remember anything. I mean, I just, I mean, I remember flashes, but, but other than that, I don't remember anything. And I go, that's, that's my whole life, Caleb. That's my whole. I don't remember a God. I remember flashes, but that's. I don't remember. So I'm apparently a blackout podcasting sometimes because that's just that's just how life is for me.

Caleb: American Greg Kite.

Greg: Yep.

Caleb: Remember Bill Koch? He found out that a bunch of his collectible wines were fakes. Like 40,000 bottles of fakes that cost him $4 million. That understandably pissed him off. And what does a super rich guy do when he gets pissed off? I don't know either. But in this case, he started suing anybody who might have ever put a finger on any of his fake bottles of wine.

Speaker4: Oh.

Greg: That's. That seems appropriate.

Speaker4: Yeah.

Caleb: One of the people he sued sent him a check, refunding the entire amount Coke paid for the wine plus interest because. Yeah, but Coke wanted blood. Nuts. Money. He's got money.

Speaker4: Yeah.

Caleb: Yeah, he wanted blood. So he sent the check back and sued the guy anyway.

Greg: Right. Because you would think that if somebody pissed off at you, send them all their money back and add some on there for interest and they'll be like, cool, we're square. But yeah that's that just shows that he was he this was this is like a kill bill level revenge for the fake bottles of wine.

Caleb: Coke was pretty successful with his lawsuits, but he wasn't satisfied. So he had one of his people, a retired FBI agent, who had been gathering evidence for his civil cases. He had that guy contact the FBI to try to get criminal charges filed against the unfortunate people who happened to be on Coke's shit list. After receiving all the information from Coke's investigations, the FBI determined that the most provable case was the case against Rudy Kurniawan.

Greg: So after combing through Rudy's emails and combing through his credit card records, the FBI discovered that Rudy was buying a lot of really fancy paper, a lot of ink pads in different colors and a shit ton of French wax. He was also having tons and tons of empty wine bottles like fancy wine bottles shipped to his house from fancy restaurants in New York and in California. And he also sent emails to experts asking about which French waxes were the most brittle. He also purchased 2009 old Non-collectible bottle bottles of Burgundy. And again, you kind of go, Why? I mean, he would he bought these things for like less than 100 bucks a piece. And here's a guy who regularly spends thousands of dollars on every bottle, but he's buying these these crappy ones that are clearly, you know, non-drinkable at this point. So Rudy was purchasing a bunch of items that ostensibly would be necessary to counterfeit wine. And he was the seller of a lot of wine that experts had shown were counterfeit. And with all this information, the FBI felt like they had plenty of evidence for a case against Rudy, and therefore they were able to attain a warrant for Rudy's arrest, which was issued on March 6th, 2012. And again, another account from the book In Vino Duplicitous. The FBI team donned bulletproof vests before driving to the unremarkable stucco walled four bedroom home with a Lamborghini in the garage and a Mercedes and a Land Rover in the driveway at precisely 6:00 Am. An agent stepped up to the door to knock and announce FBI. Open the door. No answer. The agent pounded louder when it seemed certain that no one in the house could still be asleep. The agent said, Get the ram. And just then Kurniawan pajama clad opened the door. Inside his house. They found Rudy's entire wine counterfeiting operation, complete with bottles soaking in the sink to get the labels off, and even recipes for how to duplicate the taste of old wines using newer, cheaper wines.

Caleb: On December 18th, 2013, a jury found Rudy guilty of manufacturing and selling millions of dollars of counterfeit wine. They also found him guilty of fraudulently obtaining a loan for $3 million. Oh, right. One detail we failed to mention earlier is that Rudy was up to his eyeballs in debt. He owed over $10 million to Acker the auction house. And although he promised to refund 2.2 million to Andrew Gordon, the Goldman Sachs guy, he never actually paid him. And when he applied for the $3 million loan, he forgot to tell the financier about any of this debt. And the collateral he pledged for this loan was already pledged to Acker. For that loan. In August 2014, Rudy was sentenced to ten years in prison. He was also ordered to forfeit $20 million and to pay $28 million in restitution to his victims. And oh, by the way, those four bottles of Thomas Jefferson wine that Bill Koch owns, they're fake. Not Rudy fakes, but still fakes. So, Greg, did we learn anything?

Greg: Yeah. And again, it's one of those things where it's like, learned or just some, some previous ideas, some previous beliefs were reinforced through this case. One of the things that was reinforced for me, Caleb, is that I am I'm a very trashy human being.

Speaker4: Oh.

Caleb: Please, go on. I You're being a little harsh, but please, I want to. I want to understand more.

Greg: No, no, no. It's. It's so easy to have your your, like, self esteem eroded when you when you read an entire book about people who who are who very, you know, are very distinguished and you know and they they know the differences between any kinds of wine at all. And for me I'm this I'm this punk from Utah who doesn't hardly even drink any wine because I don't even really like wine. So right there, I don't even really like wine trashy. And then the one wine that I do enjoy is Riscatto, which is, I believe it's an Italian sparkling wine. That's. It's a lot closer to to like Martinelli's sparkling apple cider than it is to wine And, and then that got me thinking. Okay my favorite alcohol just in general is Lauder's brand. Scotch. Yeah, that's the $10 bottle of scotch. And I fucking love it because I'm trash. And. And I swear I've even told you this before when we've done something in person, Caleb, where someone will be like, Hey, try this. You know, here, have a sip of this. Whatever. It's super expensive and super high end, and I'll be like, Don't you will waste that on me because I have no palate and I have absolutely no class.

Speaker4: Oh.

Caleb: Greg, let's just. I mean, you're being a little harsh.

Speaker4: Yeah.

Greg: Did I mention I have a Mother Teresa of Calcutta comic book that I'm saving for my children's inheritance? Yeah. Classy. High class all the way to the grave. Another thing that was reinforced to me is that fraud in any particular industry impacts that entire industry. Case in point, because of Rudy. People I mean, they already kind of didn't trust old bottles of wine again, because of what we're talking about, the provenance thing. Do you have a paper trail that proves that this is really what it claims to be? But as a result of Rudy and Rudy's shenanigans that increased exponentially in the wine collecting world. So as a result, these collectible wine prices have gone down and investors have lost money, not just the investors who were saddled with the fakes, but also the investors who have the real stuff. Because, like I said, people are now even more skeptical about whether or not they're buying the real stuff. And the fraud depressed the overall market as well because it's introducing more risk. And when you have more risk, the prices are going to reflect that by going down. Another thing I learned, Caleb, is that there is a thing that exists called the FBI art crime team. Did we talk about that in the Indigo Art episode?

Caleb: I don't think the art crime team came up, but I have to imagine that those were the folks that were involved.

Greg: They should have been because those are the guys who investigated this case. And and here's what I found out. The FBI art crime team, it's not a big team right now. They only have a couple dozen agents. And it's not an old team that because I mean, it's not an old team that don't don't hear that. I'm saying that the FBI just recently started dealing with art crimes. They've been dealing with art crimes for forever. But the art crime team itself became a thing. It was created in 2003 because that was in the middle of the Iraq war. And during the Iraq war, there was a lot of looting. And they wanted a dedicated team to be able to both identify and return any stolen works of art back to Baghdad.

Caleb: Yeah, makes sense. One thing about the FBI thing that I would mention is if you watch the documentary, you watched the documentary Sour Grapes, right? They interviewed one of the main guys, the main FBI guys. And it was interesting because at one point he just said, I don't remember exactly how he said it, but he's just like, I'm just a finance guy. Like he's just like he's just an accountant and he just happens to work on and on the art scene. Because really, I think that's what's so interesting about, uh, really. So virtually everything we talk about is like, these are just, these are just crimes of numbers, right? I mean, yes, in this case there is there is actual there is tangible property being passed off as, uh, you know, you know, as one thing and it's another like, misrepresentation. Right. And people lying. Yeah, right. Yeah, but, but the, the, the numbers. The numbers is where all the evidence is. Right. And so that's what I think is so fascinating is like you need, you need a team of accountants to fucking put everything together so that you can have a case. If you want to make a case against these guys, then you need accountants. And I think that's what's always fascinating to me.

Greg: Yeah, for sure. Yeah. And I think if we're thinking about the same part in the documentary, the the FBI art crime team member says that he didn't know anything about wine, so he, like, bought a Wine for Dummies book and or like an Idiot Complete Idiot's Guide to Wine and Wine Tasting. And he read that and then he's like, I'm ready to solve this case now.

Caleb: Yeah, yeah, I remember. It was good. Yeah.

Greg: Wonderful, wonderful beat in the in the documentary. So, Caleb, the last thing that I'd like to mention that I learned from this case is and again, this was just reinforced to me, it's so easy to fake inventory and, and or just, I guess, to manipulate inventory. In this case, he was creating counterfeits that just said they were one thing and they were really another thing. But I think about I think back to the crazy Eddie episode where remember when they would have like a pipe burst in one of their warehouses and they would just they and they just held on to obsolete inventory and just like threw it into the threw it into the, you know, the flooded basement to go. Here's another thing we can claim on our on our insurance claim. Here's another one. Yeah. So they were doing that you know and and I think it was I think it was that same thing with Crazy Eddie where when the auditors would come to, to audit the inventory, they'd just have empty boxes that I guess the auditors never attempted to lift. And so they had no idea that they were just empty appliance boxes instead of the real thing. I also think back to the salad oil scam, another way that inventory was just manipulated there where they they put water into the vats because oil rose to the top and water went to the bottom.

Greg: And so the again, the auditors would just dip a ladle in and go, yep, this looks like oil. But the ladle wasn't long enough to get down to the below the layer of oil in the VAT to where the the water was. So so inventory inventory is a real easy thing to manipulate. In this case, I did It was fascinating to just see the ways that it was easy for Rudy to manipulate it because like we've said, he had this incredible way. He could just tell when he knew what wines tasted like. So he was able to put together these formulas of cheaper wines to to imitate the more expensive wines. But then on top of that, you know, most of the people, even in the book, you'd hear all these people that say, I'd never tasted a 1945, you know, CLO de la Roche. And that was my dream, was to have a sip of that wine. So they didn't. So even if he didn't have it dead on, no big deal because nobody knew what it was supposed to taste like anyways because it never tasted it before.

Greg: And. Right. And the other funny thing, Caleb, and this came up a couple of times in the research that I that I did was there was this behavioral economics side of things as well, where people, if people were told that a bottle of wine was very rare, very expensive, and that it was supposed to be very good, their brains would would like make that that was like a self-fulfilling prophecy for their brains and their tongues and their noses. They would if you were told, this is an amazing bottle of old wine, even if later it was proved that it was fake, the people at the time that they partook in the wine would go, This is the best frickin wine I've ever had in my mouth in my whole damn life. And. And there's this. So there's this, like, psychology that's also working on Rudy's behalf to help the con move along. And it's and it's really, really weird because so many times people even try to talk themselves through being conned. They were like, I. I objectively had a fantastic time when I consumed the bottle of fake wine. So I'm just going to say that that was wonderful experience and and they're just going to hold on to it, even though it kind of got the, you know, its tires flattened later with the truth.

Greg: So that was the stuff that was making Rudy's job easier. Some of the stuff that made it harder, though, is that, again, you've got people who are like fanatical about these bottles of wine. So we had the collectors and the drinkers who knew so much minutia about what they were getting into. Like like for instance, Caleb, there was one, one story, you know, like we kind of gave some broader strokes about the bigger ways that people were tipped off to the fraudulent wine. But one of them was that I can't even remember what the word was, but there was a word on one of the bottles that during some years it had an accent over one of the letters, and on other vintages it had the accent over a different letter and people were able to go, Aha, this accent is over the letter on a year when it there was no accent or the accent was somewhere else. I mean a tiny it's not even a letter. It's like a mark above the letter and people go gotcha. So, so he's dealing with, with Uber nerds and trying to trick Uber nerds about the thing that they're Uber nerds about.

Caleb: Yeah, he was able to fool most of the people most of the time. But not everybody. Not the Uber nerds. Not the Uber wine nerds.

Speaker4: Yeah, exactly. Yeah.

Caleb: I guess the only thing that I would mention is that this and I mentioned it earlier, but this episode reminds me a lot of episode 31. Inigo Philbrick in The Art of the Fraud. And it's, you know, a young guy, a young, talented guy in his field, his chosen field.

Speaker4: Who.

Caleb: Got in over his head, maybe I don't know. I don't know what you think, Greg, but I don't get the sense and again, I didn't do as much research as you did, but in some sense, you don't get the you really don't get the impression that Rudy's like a bad guy. You get the sense that he wanted to be in this rarified world. And he got in over his head and he was just like, all the plates were spinning, man. And he was just doing whatever he could to keep them all spinning. And and if you like that kind of story, then you should go check out episode 31 about it's it's about the art world instead of wine. But it's, it's very similar, I'd say.

Greg: All right, Well, that's it for this episode. Remember that? Sure. The French let the Nazis roll their tanks up the Champs-Élysées. But if you fuck with their wine, you're going down.

Caleb: And also, remember, if you're hard up for money, just throw Thomas Jefferson's name on an old bottle of Charles Shaw and sell it to Bill Koch. What could go.

Speaker4: Wrong? Hey.

Greg: What? Nothing. Nothing. If you want to drop us a line, we'd love to hear from you. So please send us an email at Omi fraud@earmark.com. And Caleb, if people want to get a hold of you, where can they find you? Out there on the Internet.

Caleb: I'm on the website formerly known as Twitter at Newquist, and my LinkedIn is backslash. Caleb Newquist. Greg, are you on X or LinkedIn?

Greg: I am, and I was able to hack my way back into my own account after they made the change. So yeah, I'm kind of there. I don't check it a lot, but yeah, I'm on Twitter at Greg Kite and I also will occasionally drop into LinkedIn with my name slash Greg Kite.

Caleb: Oh My Fraud is written by Greg Kite and myself. Our producer is Zach Frank. If you like the show, leave us a review or share it with a friend. It helps people find the podcast. Be sure to subscribe on Apple, Spotify wherever you listen to podcasts. Earmark. If you listen on earmark, you already know this, but you get CPE if you don't know this. Get on earmark if you want CPE. It's lovely.

Greg: I've got I've got so much CPE already and I'm like only 25% of the way through my reporting period. It's unrecognizable.

Caleb: Greg has Greg has all the CPE. You could have all.

Greg: I'm going I'm going for a record. I'm going to try to get 120 credits before I have to before I have to make my, you know, turn it all in.

Caleb: Life goals.

Greg: I'm going to get there. It's inevitable.

Caleb: Join us next time for more averse swindlers and scams for stories that will make you say, Oh, my.

Greg: Oh, my. Fraud.