Pity poor Bill Koch.  He’s not the world’s wealthiest man.  He’s only the 92nd richest American, and just no. 329 in the world, worth a measly four billion dollars.  Boy, I don’t know how he gets up in the morning.

And to add insult to injury, he bought 2,669 bottles of wine at one auction in 2005 for almost $4,000,000, and then found out that about twenty-four (or 0.9%) of the bottles were likely fakes.  May as well just throw everything down the drain, right?

Contributor Carl Kanowsky sportin a Zaca Mesa cap!
Contributor Carl Kanowsky sportin a Zaca Mesa cap!

Well, Bill had had enough.  He had already paid $500,000 for four bottles of Bordeaux allegedly owned by Thomas Jefferson.  Those were discovered to be fraudulent when experts determined that the etchings on the bottles had been with an electric tool.  That would have been quite a trick by our 3rd Prez (unless, of course, Ben Franklin stopped by Monticello with a kite and a key).

So Bill decided to begin a one-man campaign against phony wines.  His first step was to sue Eric Greenberg, the source of the wine sold at the auction, and Zachy’s Wine Auction, the auction house that conducted the sale.

Zachy’s at first tried to defend what had happened by saying that its auction catalog warned buyers that the wine was sold “as is.”  The judge rightfully threw out that defense.  You see, there was testimony that Zachy’s knew or should have at least suspected that some of Greenberg’s wines weren’t a whole lot more than Welch’s grape juice.

Greenberg testified that he had told the head of Zachy’s that there might be some problems with some of the wine Zachy’s was going to auction off.  According to Wine Spectator, Greenberg said on the witness stand, “I told them [Zachy’s] I had fake wines in my cellar.”  Despite this advance knowledge, Zachy’s sold a whopping 17,000 bottles from Greenberg’s cellar.

This included a magnum (that’s 1.5 liter-size bottle, equal to two regular bottles of wine) labeled as a 1921 Petrus.  Now, Petrus is one of those wines that only an elite few have ever tasted, mainly because it is so damnably expensive.  A magnum of the 1947 Petrus can be yours for a mere $30,000 (not including tax and you’d have to go to London to get it).

Bill bought the ’21 Petrus, relying on both Zachy’s and Greenberg (another gazillionaire – made his money through the Internet).  After paying $29,000, Bill called Eric to find out the provenance of the bottle.  Eric wasn’t sure but said it might have come from Royal Wine Company.  You might say Koch was dismayed when Eric then told him that Royal had sold Eric “a tremendous amount of fake wine.”  Oh, so now you say something.

But things finally turned around for our good friend, Bill.  Eric claimed at trial that he didn’t know there were any issues with his bottles.  I guess the jury didn’t find that very credible when they heard that, before the auction, 1) Eric got Royal to pay him back for many bottles that he asserted were fake, and 2) Eric’s house manager (you have one of those, too, don’t you?) asked if Eric wanted to throw out the fake wine.  Eric’s response, according to Wine Spectator, “What they did to me, I’ll do to someone else.”

Eric’s mistake was not figuring that the “someone else” would be someone wealthier than him and willing to spend millions to prove a point.  That miscalculation wound up costing Eric $12,380,000 in April of this year.

The true tragedy in this tale is that both sides combined spent an estimated $15M on attorneys’ fees and didn’t use any lawyers from Santa Clarita.  Heck, I would have done it for a mere $6M.

© Carl Kanowsky
Kanowsky & Associates
26481 Summit Circle
Santa Clarita, CA 91350
June 7, 2013