Wine scam costs investors £110m

Wine investors are being duped out of millions of pounds by unscrupulous salesmen. The conmen seek to lure investors disenchanted with the stock market - offering fanciful investment returns on fine wines, while hiking the cost of a case by as much as 230 per cent over legitimate wine market prices.

The Department of Trade and Industry, which has shut down eight rogue companies in as many months, believes victims have already been duped out of more than £110 million.

Potential investors respond to advertisements placed in investment, expatriate or in-flight magazines. The phone salesmen don't hesitate to lie about investment returns to victims who know little or nothing about wine and spirits - wooing them into buying casks of whisky or cases of port, champagne or classed-growth claret at vastly inflated prices.

DTI investigators have succeeded in shutting down the eight companies, mostly based in and around London, which - in the words of Consumer and Competition Minister Melanie Johnson - "preyed on people who thought they were getting good advice and building a solid investment for the future. In fact, they were simply buying over-priced wine".

A DTI spokeswoman said today: "We now have more in our sights. This is a villainous trade people must be made aware of - and one which we are determined to stamp out."

The latest pirate operation to be closed down - wound up in the High Court by a DTI petition last week - was Liquid Acquisitions, which was offering cases of 1996 Lafite-Rothschild in September last year for £4,407.50. It could have been bought elsewhere for £1,850 at the same moment without difficulty.

Another company, Goldman Williams - also closed down by the DTI - was telling potential customers last year that the price of the Chateau Haut-Brion 1996 had moved from £3,100 in January 2000 to £3,650 in November 2001, an increase of 17.8 per cent. The truth was that that wine could have been bought for £1,000 in January 2000 and only £1,100 in November last year.

Most investors have at least become the owners of the wines or whiskies they were promised, even if they are worth less than half of what they paid.

Not everyone, however, has been so lucky. Another company closed down by the DTI, Boington & Fredericks, sold cases of Chateau Margaux 1996 to customers at the hugely inflated price of £6,820 each - at a time when the wine was worth about £2,200. The wine was said by the company to have been stored at cellars underneath London Bridge. However, a check with the storage company revealed that 10 cases of Chateau Margaux sold by Boington and Fredericks were missing from the company's storage account.

Some of the fraudsters involved in these drinks scams have been imprisoned. Indeed, the pair who set up Boington & Fredericks - Frederick Achom and Anthony Grant - had already served time for previous fraud.