US wine-fraud trial: dealer 'millions in debt'
The entrance to Federal Court where the trial of wine dealer Rudy Kurniawan began December 10, 2013 in New York. Kurniawan is accused of masterminding a lucrative scheme to sell fake vintage wine in New York and London.
Rudy Kurniawan, 37, who has lived illegally in the United States since his asylum bid was rejected in 2003, is accused of blending ordinary wines into fake vintages in his California kitchen to sell to wealthy collectors.
On Tuesday the court in Manhattan was shown photographs of his alleged wine "laboratory" at his suburban Los Angeles home where he lived alone with his Chinese mother.
The place was covered with bottles at all stages of production and there was a "drying zone" according to FBI agent James Wynne who carried out the raid during Kurniawan's arrest in March 2012.
Five years earlier, the man nicknamed "Dr Conti" for his love of Romanee Conti, the fine wine, was considered one of the five top wine collectors in the world, but he owed creditors millions of dollars, prosecutors told the second day of his trial.
That autumn he applied for a $3 million loan without saying he was already more than $10 million in debt, said witness Barbara Chu, a banker at Emigrant Bank Fine Art Finance.
"He said he needed to bridge the payments he received from his family and he wanted to create a new wine company," she told the federal Southern District court in Manhattan.
Kurniawan also said nothing about his illegal status. He said he was a permanent resident waiting for a green card, which would allow him to live and work in the United States, Chu said.
To get the loan, Kurniawan put up as collateral 24 works of fine art estimated to be worth more than $6 million.
Chu's financial services company contacted a specialist who described Kurniawan as "a very large collector of wine... one of the top-five wine collectors in the world," she said.
But after Fine Art made him the loan, it was "approached" by lawyers of New York auction house Acker Merrall & Condit, with whom Kurniawan sold wine for $35 million several months earlier.
Fine Art discovered that Kurniawan had borrowed $8-9 million from the auction house and some clients, which added to interest and other small loans came to more than $10 million.
Fine Art, which in early 2008 cleared $2.5 million for Kurniawan, ordered him to auction off his art work, which included pictures by Andy Warhol and Damien Hirst.
Its funds were then repaid in the spring of 2009.
"You didn't lose a penny," said defense lawyer Vincent Verdiramo. Chu acknowledged that was the case.
Kurniawan, dressed in a navy suit, listened to proceedings intently. He has lost weight during his 19 months in custody and his boyish face was hidden behind large black-framed spectacles.
On the first day of the high-profile trial, the defense portrayed a young man who desperately wanted to fit into the richer, older world of rare wine collectors.
Kurniawan is accused of postal fraud by selling fake vintage wines and of wire fraud by fraudulently obtaining the loan.
His trial is expected to last about two weeks and he faces up to 40 years in jail if convicted.
Although Kurniawan is alone in the dock, the question of whether he had accomplices is likely to loom large over the case with the defense painting a picture of a man being made a scapegoat.
The case involves an alleged attempt by Kurniawan to sell 97 bottles of what he said was wine from the acclaimed Domaine Ponsot winery in Burgundy, France at a 2008 auction in New York.
The sale, worth between $440,000 and $602,000, was halted at the last minute after problems with the lot became obvious.
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