U.S. wine dealer's 'magic cellar' filled with lies: prosecutors

By Joseph Ax

NEW YORK (Reuters) - An Indonesian man, once considered one of the top five wine collectors in the world, made millions of dollars selling counterfeit vintages to unsuspecting collectors, U.S. prosecutors told a jury on Monday.

Rudy Kurniawan, 37, operated what prosecutors called a "fake wine factory" out of his home in California, obtaining empty rare bottles, printing fake labels and spending thousands on traditional French wax to produce hundreds of counterfeit bottles he sold to finance an extravagant lifestyle.

"The magic cellar - that's where Rudy Kurniawan, the defendant, said he found the seemingly endless stash of rare wines he sold for years," Assistant U.S. Attorney Joseph Facciponti told jurors in New York federal court at the end of a week-long trial.

"There was just one problem. There was no magic in the magic cellar. There were only lies," Facciponti said.

Among his purported victims was the billionaire industrialist William Koch, who has spent years pursuing those who sold him counterfeit wines and who testified last week for the prosecution. Koch is a brother to Charles and David Koch, who are well known for financing conservative political causes and the arts.

Kurniawan's defense lawyer, Jerome Mooney, said his client had unknowingly acquired counterfeit wines and was being made a scapegoat for a pervasive problem.

"In these wine markets, counterfeits are rampant," Mooney said in his closing argument, occasionally looking over at his client dressed in a now ill-fitting dark suit.

Kurniawan, the son of Chinese parents who raised him in Indonesia, became known for a delicate palate, seemingly able to identify even the rarest vintages by taste alone.

Prosecutors said he used that talent to enhance his fraud, mixing a "witches' brew" of cheaper wines he poured into bottles in an effort to fool even the most discerning of wine drinkers.

But in court, Kurniawan, who once sipped those fine wines out of Riedel glasses, was drinking water out of white Styrofoam cups.

Kurniawan, is also charged with securing a $3 million loan by misrepresenting his debt and his immigration status. He faces up to 40 years in prison if convicted of wire and mail fraud.

The turning point may have been an auction in New York in 2008, prosecutors said, when Kurniawan tried to sell at least 84 counterfeit bottles purportedly from the French winery Domaine Ponsot. One bottle, for instance, may have been made in 1929, even though the winery's first vintage was in 1934, according to prosecutors.

Laurent Ponsot, who runs the winery, testified last week that he flew to New York after receiving a call and had the auction house pull the wines off the table.

Mooney, the defense lawyer, argued that Kurniawan was printing labels and using wax in an effort to "fix up" bottles he had purchased in good faith. The government failed to show that Kurniawan acted with intent to deceive, a necessary element for fraud, he said.

But Jason Hernandez, another prosecutor, told jurors that if they bought that story, "then you might believe that a man with a white beard is going to come down your chimney next week and leave you a case of 1945 Domaine de la Romanee-Conti."

(Reporting by Joseph Ax; Editing by Daniel Trotta and Leslie Gevirtz)

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