Testimony began Wednesday in a civil trial six years after Florida energy maven William Koch, a yachtsman and collector, sued onetime-billionaire California businessman Eric Greenberg in U.S. District Court in Manhattan over $320,000 he spent in 2005 on two dozen bottles of wine that turned out to be fakes.
The trial threatens to pop the cork on the dirty secrets of the wine auction world, which like the art market has been stung in recent years by a proliferation of fakes.
At the opening, there was plenty of talk of how difficult it is to be sure a bottle is real and how good a fake can be. It's heartbreaking for a true collector to learn that wine is inauthentic because it's more than just a bottle and a flavor, Koch's attorney John Hueston said.
"Koch will say these are links to history," he said, adding that great wines transport people to another era. "It's not just the juice in the package."
Greenberg -- a former billionaire who built two Internet consulting companies before the 2000 collapse of those stocks reportedly reduced his net worth by as much as 90 percent -- asserted his innocence as he took the stand as one of the trial's first witnesses.
"I wouldn't sell a fake wine," he said. "I've never intentionally sold fake wine in my life."
Koch, the brother of famous industrialists and conservative political supporters David and Charles Koch, is seeking compensation for the $320,000, along with unspecified damages. The trial may yet end in a settlement.
Greenberg years ago capitalized on the growing interest in the sale of alcohol for investment purposes, becoming one of the world's top owners of vintage wine, with a collection of more than 70,000 bottles.
According to court documents, Greenberg earned about $9 million when he sold 17,000 bottles of wine at the sale where Koch made his purchases, reducing his collection by about a quarter.
Koch was duped by an auction brochure that promised buyers the "greatest wines of all time" and "extremely rare" bottles dating to the early 1800s, Hueston said.
Koch paid as much as $30,000 for some bottles, including several purported to be from the 1800s. Those included a $22,542 bottle of Chateau Lafite Rothschild from 1805, a $29,172 bottle of Chateau Lafite Rothschild from 1811 and a $33,150 magnum of Chateau Lafite Rothschild from 1870. The oldest bottles are no longer part of the court case.
Unscrupulous wine dealers have been known to put fine-vintage labels on cheaper bottles and try to pass them off as the real thing. Greenberg is not alleged to have done that himself, but Koch's lawyers say he should have known something was amiss.
An investigation revealed that Greenberg had been warned by experts that bottles in his collection were not authentic and decided to push them on unwitting buyers at his auction rather than toss them, Hueston said.
Greenberg is not to blame for any bad bottles of wine Koch bought, said Arthur Shartsis, one of the defendant's lawyers.
A catalog for the sale warned buyers that the wine was being sold "as is" without any promises as to its authenticity.
Further, Greenberg tried to remove bogus bottles himself before the sale and he exposed the corks on bottles so buyers could examine them prior to the sale, Shartsis said. He also used an established auction house with a good reputation that inspected the bottles to aid the pursuit of authenticity, the lawyer said.
On the stand, Greenberg explained how he quickly refunded money to a buyer once who claimed he had sold fake wine.
"I stood behind my wine as I always do and gave them a refund," Greenberg said. "I have nothing to hide."
Greenberg maintains through his lawyers that the ultimate test is to taste the wine itself, a luxury that also can devalue bottles that can cost thousands of dollars.
"The only way to know ... is to taste what's inside the bottle," Shartsis said.
Shartsis was not permitted to tell jurors that Koch is a billionaire, but he dropped some hints.
He noted that Koch spent $3.7 million buying 2,600 bottles of wine from Greenberg and paid a man more than $75,000 daily for two days to make his bids for him at the auction. He criticized Koch for failing to hire people to inspect the bottles he intended to purchase before the auction.
The dangers of trading in rare wines was already apparent to Koch, who learned in 2005 that four bottles of French wine he believed had been once owned by Thomas Jefferson were fake.
Since then, he's been on a bit of a crusade against wine fakery, having sued wine companies, auction houses and Greenberg, saying in court papers that counterfeiters for years "have duped wine collectors into paying millions of dollars for near worthless bottles of wine."
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