by Wine Owners
Posted on 2015-03-05
You’ve got to laugh. A friend of mine contacted a company called Noble Rock, ostensibly on behalf of his father who had a fine wine collection. My friend’s name is Peter Bevan.
Having requested a valuation from Noble Rock, and offering to sell his wine through them, they called him back offering to sell carbon credits. As interesting a segue as I have ever come across...
Once the conversation was brought back to the question of his father’s wine, he was told that his wine collection had gone up in value substantially. This surprised Peter since he hasn’t yet provided details of the wines to them.
So how could they possibly know what his wines were worth? The Man from the Rock patiently explained to Peter that they knew because every time a wine was bought en primeur the details of the buyer and their wines were entered onto a Register – which they had looked up and that was why they knew about his wines!
Valuations that were subsequently discussed were sky-high, predicated on the well-practised advance fee fraud of paying a sum of money up-front to get the wine to Hong Kong, where it would be sold at auction at a massive premium to market. In this case the advance fee was justified on the basis of it being a VAT payment of 10%. Peter queried, if it was VAT, why it was only 10% of the value and not 20%; the answer being that only half of the VAT due was payable straight away. A novel concept that would interest HMRC I’m sure.
It was all so entertaining and extraordinary. But there is a serious side since people are being taken for a royal ride. Otherwise these people wouldn’t exist would they? The message is clear, do not take calls from people you don’t know selling by phone. And if anyone suggests there’s a way to sell wine at a market premium (check the market level price on www.wineowners.com), they are conning you. It simply doesn’t work that way.
Oh, and what happened to my friend Peter? Well, his name wasn’t really Peter; his real name is Mark. Mark Bevan, of Nexus Wine Collections. He runs one of the UK’s most successful specialist fine wine storage businesses, and had contacted Noble Rock because a number of his clients had been approached by phone spinning their yarns of criminal intent.
by Wine Owners
Posted on 2015-02-10
It’s become apparent over the last few weeks and months that consumers who’ve already been taken advantage of by companies like European Fine Wines (EFW) are being targeted yet again with advance fee frauds and ‘White Knight’ scams.
What’s more, the cold-callers approaching those people who had previously bought from EFW seem to know an awful lot about their prior purchases. We can only presume that the EFW customer base was filched and passed around the London and Bromley wine underworld?
One of our members was approached recently by Rothstein Capital & Partners, who purported to be working in partnership with the receivers of EFW to assist former clients in recovering losses.
On that basis they offered to find buyers for her stock. The prices quoted were well ahead of market levels, for example £14k for her case of 2003 Latour (actual market price £6,500).
They then advised that the case of Latour 2003 she had received in 2013 had been misallocated, and that 'her' case was still held at the Chateau. She was told that she could not sell the case of Latour in her possession, as it did not bear her ‘log number’. She was told that her case needed to be exchanged for the correct case before they could proceed to sell it, and offered to arrange shipping of the 'correct' case from Bordeaux, provided she cover the insurance costs associated with shipping, which would cost £1,000 up front.
As reported in Jim Budd’s excellent resource on wine fraud, Investdrinks Blog, The liquidator, Nedim Ailyan of Abbott Fielding Limited, was understandably scathing of this advance fee fraud and according to Jim Budd of Investdrinks has reported Rothstein Capital to the police.
This isn't an isolated instance reported to us: another member was approached with a similar proposal, requesting that she pay for shipping fees plus a commission fee of £1,500 to get her wine to Hong Kong where it would sell at a premium.
EFW ex-customers are not alone in being targeted.
An elderly gentleman who had bought from Bordeaux Fine Wines previously, was contacted before Christmas with an offer to place wines for sale at auction in Hong Kong, again on the proviso that he pay £2,000 for shipping (and insurance). He was informed by the cold-caller – going by the name of Jay Kingsley - that his case of Montrose 2009 for which he’d paid £3K (at a time when it was worth no more than £1,500) would fetch £7,000 in Hong Kong due to heightened demand ahead of the Chinese New Year.
If you’ve bought from EFW or other cold callers from so-called wine investment companies, watch out for these scams, demand to know how the cold-caller got your information, and do not be taken in. Collect as much information as you can about the caller and their contact details, and report them to Jim Budd. Check the value of your wines on the Wine Owners website, and do let us know.
The bottom line is: if it sounds too good to be true, it will almost certainly be a scam.
by Wine Owners
Posted on 2014-08-14
As prices of fine Bordeaux continue to tumble, the chancers, city trader refugees, the numerically challenged, con-merchants and worse - who set up so-called wine investment companies over the last few years and who attracted hot money and gullible consumers’ hard-earned cash - are continuing to go bust as their mini ponzi schemes or lop-sided balance sheets run out of road.
The latest to hit the headlines are Encarta Wines, Canary Wharf Wines and the snappily named En Primeur Ltd. These add to the list of Culver Street, Premier Cru Fine Wine Investments (who transferred their clients to Cult Wines), and European Fine Wines this summer.
These events do serve to further depress prices, as two things happen: distressed stock comes onto the market and is quickly traded; and consumers who have been stung take flight and get out at any cost. I suspect these events contribute to the overshoot that is a typical behaviour of all bear markets. Whether we’re already in overshoot territory, only time will tell.
It is really rather depressing how people get seduced into putting money into these businesses. Very often we see prices being offered to consumers that are far higher than market rates. For Christ's sake, don’t buy from cold callers you’ve never heard of! At the very least buyers really need to check the value of wines via Wine Owners Market Level pricing or by browsing the range of merchant prices listed through Wine-Searcher. One such consumer contacted Wine Owners earlier this year after they’d been offered a case of Montrose 2003 by a firm selling prestige fine wine at £2,100 per 12x75cl IB when the market price was £1,350-1450 at the time. The implication was that it had been rerated 100 points by Parker and that it was primed to go rise to £2,500 per case. In the event it had not been rerated, was not rerated, and today stands at £1,450.
Then there’s the story of Nobles Crus (the wine fund of Elite Advisors) who were forced to suspend redemptions last year by the Grand Duchy of Luxembourg’s financial regulator due to insufficient assets to meet the demands of clients heading for the exit door. Then in May this year something akin to a sweetheart deal was stitched up with leading creditors that led to redemptions at a notional value of €37M (Read the FT article Luxembourg embroiled in fine fine row).
What the true worth of the fund is, no one really knows. Ernst & Young were apparently used to bring authenticity to a suspect valuation method that included punchy Hong Kong auction prices. Supposedly there are €51M of assets left in the fund. Yet the fund has not filed accounts since 2011. Rumour has it that a variety of potential buyers have sniffed the assets over the last year only to walk away, believing values to be too high. One thing is likely: investors would be lucky to get out with the 28% discount to valuation that Banca Generali achieved when it recently sold their shares in Noble Crus to an unnamed 3rd party, as and when they manage to redeem.
How can a global leader like Ernst & Young have accepted a proprietary valuation methods for auditing a fund’s value, especially when that valuation was being questioned by other parts of the mainstream fine wine market including Liv-ex? How can the presumed oversight of a leading Italian Bank, who was a shareholder in Noble Crus, have still allowed a situation like this to develop? Not that regulated markets are necessarily any better. And they say the opaque derivatives market is booming once again…
But doesn’t this further demonstrate the value of being in control of your own portfolio of fine wine? A bit unfair perhaps on the good guys such as The Wine Investment Fund, Wine-Source and other reputable, well-run funds. But of course people who want to build their own portfolio are a different breed to those who are happy to go into a collective, so you can’t really compare. Collectives address a certain market seeking financial diversification and targeted returns, which isn’t the same as the mainstream fine wine market of collectors and lovers.
