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Brits busted in $100 million Brooklyn wine Ponzi scheme

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Fine wine
SimplSam | Flickr

Brooklyn prosecutors have indicted a pair of Britons accused of scamming investors into proffering pricey loans supposedly collateralized by valuable, and bogus, wine collections.

Stephen Burton, 55, and James Wellesley, 57, both United Kingdom residents, stand accused of bilking investors out of nearly $100 million by posing as executives for a company called “Bordeaux Cellars,” which brokered loans supposedly secured by expensive bottles of wine owned by the borrowers, according to an indictment filed by Brooklyn federal prosecutors.

Between June 2017 and February 2019, the pair of fraudsters used a number of aliases while appearing at trade shows in Brooklyn and elsewhere around the world, pitching their unique investment opportunity. They told prospective investors that they could invest in term loans brokered by Bordeaux Cellars, which were backed by mortgages on expensive bottles of vino as collateral that the company took into its possession until the loan, typically valued at 35-45 percent of the collection, was paid off.

The purloiners got their grift down to a science, even fronting fake names and years of production for the bottles of wine it had supposedly taken into its possession as collateral. In total, the pair sucked $99.4 million out of investors’ pockets, prosecutors say.

It was all baloney, though, as the company never possessed anywhere near the amount of wine it claimed to, or the specific expensive bottles it said it had secured in its vault. Bordeaux Cellars made regular interest payments to investors, as the company promised, but in reality, those interest payments came from other investors rather than from the supposed borrowers’ term payments. Interest payments stopped in February 2019 and no lenders received their principal back thereafter.

“Unlike the fine wine they purported to possess, the defendants’ repeated lies to investors did not age well,” said US Attorney Breon Peace, of the Eastern District. “As alleged, these defendants duped investors by offering them an intoxicating investment opportunity collateralized by valuable bottles of fine wine that turned out to be too good to be true.”

Burton and Wellesley are charged with wire fraud, wire fraud conspiracy, and money laundering conspiracy, and could face up to 20 years in prison for their deeds. Wellesley was arrested in the UK on Feb. 4, while Burton remains on the lam.

Burton previously faced prosecution in the UK over Bordeaux Cellars’ fraudulent activity, and in 2019 he was ordered to surrender £900,000 ($1.2 million) to authorities in the UK after being caught in a London hotel room with a stash of gold bars and 500 lottery tickets. Burton describes himself on his LinkedIn as a “passionate fine wine lover for most of my life,” and claims to own a private collection of over 5,000 cases.

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