Column: Arbor Vinous

It’s all over except for the lawsuits.

A court in southern France has convicted a dozen wine producers and merchants in what Agence France-Presse called “one of the biggest scams ever to rattle the world of wine.”

Their crime? Duping U.S. wine behemoth E&J Gallo by substituting cheaper grapes for Pinot Noir in 1.5 million cases of wine they sold to Gallo for its moderate-priced “Red Bicyclette” label, in the process pocketing nearly $10 million in illicit profits.

Did Gallo ever tumble to the scam? Au contraire.

The French and British press, which require scant encouragement to paint Americans as loutish arrivistes on matters of the grape, pointed out with barely-restrained glee that no one at Gallo detected the counterfeit juice, either by tasting or testing. And no whistle-blowing American wine critic ever raised the cry, “This can’t be Pinot Noir.”

One defense lawyer even had the gall to plead for acquittal of his client by dryly noting to the court, “Not a single American consumer complained,” while The Times (U.K.) went so far as to tweak Washington Post wine critic Dave McIntyre’s lavish praise of wines from the region.

But it was a French police fraud squad, in the role of a real-life Inspector Clouseau, that brought the scheme to light.

Their audit of wine brokerage firm Ducasse produced a puzzle: records showed that Ducasse bought bulk 2006-vintage “Pinot Noir” from producers in France’s Languedoc region for about 60 cents a bottle at a time when the premium variety’s market price was hovering close to $1.00.

Investigators followed the money – and juice – straight to wholesaler Sieur d’Arques, who purchased the bulk wine from Ducasse and subsequently supplied Gallo with 18 million bottles of Languedoc “Pinot Noir” for Red Bicyclette.

Unfortunately, there was a problem. Pinot Noir isn’t widely grown in the region, and 18 million bottles substantially exceeds the entire annual crop of the producers involved – a fact not lost on French authorities.

Tests revealed that Red Bicyclette Pinot Noir from 2006 and possibly earlier vintages – already fobbed off on Gallo’s unwitting U.S. customers for $7 to $10 a bottle – contained a blend of Merlot and Syrah, varieties worth roughly half the price of Pinot Noir.

By the time police and judges finished untangling things in late February, a dozen producers and dealers were found guilty of dipping their tastevins into the fraud.

But their fines and suspended sentences amounted to barely a slap on the wrist. Ducasse manager Claude Courset, fingered as the scheme’s mastermind, drew a $60,000 fine and a six-month suspended sentence according to La Depeche newspaper. His firm took in nearly $5 million in profits.

Still unclear: Was Gallo the unwitting dupe of its French partners, as it claims, or – as some in the blogosphere have hinted – an all-too-credulous “see no evil” co-conspirator? Even if they lacked the tasting chops to identify the bogus grapes, weren’t they a little too slipshod not to DNA-test a wine they needed to meet consumer demand during the post-Sideways Pinot Noir boom? Shouldn’t they have been aware they were purchasing more “Pinot Noir” than their Languedoc producers had available?

We may eventually find out. Since U.S. law holds wine importers responsible for the veracity of their labels, revenooers from the Treasury’s Tax and Trade Bureau are hot on the case. As far as the TTB is concerned, Gallo’s claim to being hoodwinked by the French may not exculpate their sale of – but failure to detect – 18 million wrongly labeled bottles.

For its part, Gallo told the Washington Post’s McIntyre that it would “work with the appropriate U.S. authorities to determine any next steps required for potentially mislabeled pinot noir in the marketplace.”

(Meanwhile, the Red Bicyclette website continues to remind visitors that its wines are cultivated “with Old World passion and simplicity … like the charming lifestyle of Southern France.”)

Since no American business imbroglio winds down without the grace note of a class action suit, a Los Angeles law firm has gone to court against Gallo and Sieur d’Arques to seek “restitution and damages for the fraudulently sold wine.”

In a press release that cries out for a faux outrage voiceover by Jon Stewart, lawyer Eric Kingsley alleges that both firms “engaged in unfair competition, false advertising, and fraud … for passing off inferior Merlot and Syrah grapes as Pinot Noir.”

Kingsley also notes, “Winemakers will take advantage of an unsophisticated public especially in the $10 a bottle category where these bottles were priced.”

But why didn’t some wine-savvy tasters or critics detect the fraud?

Over at carriage-trade Forbes Magazine, “lifestyle editor” Eric Arnold offers a ready riposte: “No oenophile in his or her right mind would ever buy Red Bicyclette.”

But in an industry often mocked for its tolerance of poseurs, pedants and more than a few out-and-out charlatans – not to mention high-end collectors chasing rarities – Arnold may vest unwarranted confidence in the sophistication of his readership.

Lest they draw solace that only downscale bicyclistes could fall for such shenanigans, let me introduce German rare-wine impresario Hardy Rodenstock who, for two decades, regularly located, poured, and sold dozens of high-end wine rarities from centuries past.

“Rodenstock’s circle of drinking buddies included some of the most seasoned collectors on the planet, and he also lured a number of eminent wine writers to his events, including the Wine Spectator’s James Suckling and the most important critic of all, Robert Parker,” according to an article in Slate.

His stature may have peaked in 1998, when he staged a tasting of 125 vintages of Château d’Yquem (no, that’s not a typo) that attracted a pantheon of international wine glitterati and fawning coverage from the world’s wine media.

But an undercurrent of suspicion always trailed Rodenstock, even among those coddled by his hospitality. In 1994, British wine power couple Serena Sutcliffe and David Peppercorn bit the hand that poured for them by publicly questioning the authenticity of multiple 1920s-era vintages of Château Petrus that Rodenstock served from 6-liter bottles at one of his annual extravaganzas.

Or, as a 2007 New Yorker article questioned, “How could one collector find so much rare wine?”

It now appears that he didn’t have to.

Today Rodenstock stands accused of duping all those friends and other supposedly savvy collectors into buying the rarest of all counterfeits: bottles of 18th century Bordeaux purported to have once belonged to Thomas Jefferson, America’s first great wine collector.

(Benjamin Wallace, whose 2008 book The Billionaire’s Vinegar spun the emergent Rodenstock saga, notes that President Jefferson, “in his first year of office, spent $2,800 of his $25,000 salary on wine.”)

Rodenstock claimed his Jefferson bottles – engraved with the initials “Th.J” – to be a recent discovery, unearthed behind the false wall of a Paris basement. He steadfastly declined to disclose additional information about them, such as who found the bottles, where and when, and how many bottles were in the cache.

A single bottle from Rodenstock’s hole-in-the-wall stash remains the most expensive bottle ever hammered at auction, sold by Christie’s for $155,000 in 1985. (The winning bidder: Christopher Forbes, scion of the magazine family. A certain symmetry emerges.)

Florida oil billionaire Bill Koch offers a different perspective. “Rodenstock is charming and debonair. He is also a con artist,” reads Koch’s court complaint.

Koch, the billionaire with a 40,000 bottle wine cellar behind Wallace’s title, filed suit in 2006 against Rodenstock for selling him, through third-party dealers, four fraudulent Jefferson bottles: one each of 1784 and 1787 Branne Mouton (now known as Château Mouton-Rothschild), and 1784 and 1787 Lafitte (now “Lafite-Rothschild”). His cost: $500,000 in 1988.

Although Rodenstock’s attorneys have managed to delay trial on the case for several years – in large part by disputing the jurisdiction of U.S. courts – the wine world now widely views the Jefferson wines and, by extension, most of Rodenstock’s other elderly finds, as fakes that he produced or, at the least doctored.

In no small part, that’s because experts hired by Koch determined that the glass in his Thomas Jefferson bottles may date from the 18th century, but parties unknown powered up 20th century electric tools to engrave the lettering on them.

(Highly recommended: a 20-minute YouTube video in which Master of Wine David Molyneux-Berry, former head of Sotheby’s wine division, describes how he identified the latter-day-etched Jefferson bottles and connected Rodenstock to numerous suspected counterfeits in other high-end cellars.)

The German magazine Stern – which called Rodenstock the “Indiana Jones of the bottles” – said it has located a printer who copied antique labels on old paper for Rodenstock to use. Analysis of the glue used to attach some of Rodenstock’s labels showed it contains chemicals that didn’t exist when the wines were allegedly produced.

Meanwhile, the litigious Mr. Koch has filed multiple suits against an assortment of collectors, auction houses and dealers from whom he purchased bottles that now appear counterfeit – most of which can be traced back to Rodenstock. His determination to root out counterfeit wines, and the enemies he’s accrued in the process, earned him a December cover story in the Wine Spectator

Then, just this week, Koch dropped his biggest bombshell to date. He filed suit against Christie’s International, claiming that the London-based auction house “has engaged in a pattern and practice of selling counterfeit wines for many years.”

According to the Wine Spectator, Koch says he has located the two German engravers who carved the initials into Rodenstock’s Jefferson bottles, and has ex-Christie’s employees willing to testify that the firm and its former wine director, Michael Broadbent, were lax about investigating counterfeits.

Billionaire Koch says he’s spent $7 million on his investigations, with little hope of recovering the majority, even if he wins his lawsuits.

None of Koch’s cases has yet come to trial, and there’s no prediction of what outcome the TTB investigation or class action suit will bring for Gallo. So we have no way to know who’s the biggest fool at last.

Meanwhile, have a good April.

About the author: Joel Goldberg, an Ann Arbor area resident, edits the MichWine website and tweets @MichWine. His Arbor Vinous column for The Chronicle is published on the first Saturday of the month.