just the facts – Drinks fraud cases

Earlier this week police in the UK arrested two people in connection to a suspected GBP3m wine investment scam dealing in Australian wine. The operation, codenamed Operation Iceman, has seen a total of eight people arrested in the operation. Here we take a look at other drinks scams.

• This week, officials from the European Union’s (EU) anti-fraud unit OLAF –  l’Office Européen de Lutte Anti-Fraude – revealed to just-drinks how an international EU customs operation seized 6,400 litres of counterfeit and smuggled alcohol. The operation – codenamed ‘Matthew II’ – was organised by the Czech Republic, working closely with Poland and OLAF. The operation involved a major seizure in Romania of one truck illicitly carrying 1,410 litres of Curtea Taichii, Romulus, and Floredan branded alcoholic drinks. Another 880 litres of undocumented alcohol was found in a Romanian private car, while, separately, 918 litres and 418 litres were seized from two private cars in the Czech Republic.

• E&J Gallo Winery is currently facing a lawsuit over the wine firm’s link to a Pinot Noir wine fraud scandal in France. The class action lawsuit, , filed by law firm Kingsley & Kingsley in California, comes after Gallo said that it may have been duped into buying wine falsely labelled as Pinot Noir from the French wine merchant, Sieur d’Arques. In February, the ringleaders of the French operation were given suspended prison sentences and fines. It is estimated the fraudsters made a collective EUR7m by selling cheap wine at inflated prices.

• In December last year, Italian authorities were investigating whether large quantities of quality wine from the Tuscany region were illegally bulked up with lower end wine and with grape varieties forbidden by local production rules. Up to 10m litres of wine were understood to have been affected, according to Italian press reports. Producers of high-end Chianti DOCG wines and Toscana IGT were involved, with press reports also citing Brunello di Montalcino, which was subject to a similar investigation over its 2003 vintage.

• In October last year, a major counterfeit vodka manufacturing and bottling plant was dismantled in Leicestershire, UK, following raids by HM Revenue & Customs officers. Around 70 officers took part in the two-day operation, resulting in the seizure of 10,000 litres of fake vodka, branded as Glens. More than 35,000 litres of pure alcohol were also seized, enough to make around 100,000 litres of vodka. The customs office estimated the potential revenue loss to the public purse at over GBP1m (US$1.6m). Officers found manufacturing equipment, including stills, bottles and counterfeit packaging, labels and cardboard boxes.

• In December 2007, the former president and co-owner of Domecq Importers in the US was sentenced to ten years in prison for conspiring to defraud Allied Domecq. Michael Domecq was sentenced to serve two consecutive 60-month sentences and ordered to pay over US$4.5m in restitution. Earlier in the year, Domecq and several other senior Domecq Importers executives pleaded guilty to diverting more than $14.6m from Domecq Importers into their personal offshore bank accounts. The conspiracy was though to have taken place from at earliest 1989 until October 1995.

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