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Feds say bogus wine collection duped investors to tune of $99 million

Two British men are at the center of an indictment that says they took in nearly in $100 million from investors for a brokerage that was purportedly backed by bottles of valuable wine never in their possession.

BROOKLYN (CN) — Punning prodigiously for the occasion, a federal prosecutor announced criminal charges connected to a purported loan brokerage for collectors of rare wine, saying they rooked investors for $99 million by claiming they held onto valuable vintages as collateral.

“Unlike the fine wine they purported to possess, the defendants’ repeated lies to investors did not age well,” U.s. Attorney Breon Peace said in a Tuesday statement announcing  the criminal indictment. “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.”

The four-count federal indictment was filed a day earlier in Brooklyn against James Wellesley, 55, and Stephen Burton, 57 — the latter of whom remains at large. As the principals of a business they called Bordeaux Cellars, Burton and Wellesley purported to broker loans between investors and high-net-worth wine collectors. Though they claimed that they held onto the bottles of expensive wine for wealthy collectors as collateral for outstanding loans, prosecutors say there was never any wine. The two U.K. men allegedly used loan proceeds to make fraudulent interest payments to investors or for personal expenses.

These investor solicitations occurred between June 2017 and February 2019, according to the complaint, at conferences held in the United States and overseas. The scheme induced investments exceeding $99.4 million, the government says.

Though investors received interest payments as promised for a time, prosecutors say the payouts stopped in February 2019, and the investors with loans outstanding received no principal thereafter.

Meanwhile the wine collection at Bordeaux Cellars did not match what loan documents indictated.

The 10-page criminal indictment charges Burton and Wellesley with wire fraud conspiracy, wire fraud and money laundering conspiracy. If convicted, they each face up to 20 years in prison.

Wellesley, who also went by Andrew Fuller and Andrew Templar, was arrested on February 4, 2022, in the United Kingdom. The fugitive Burton also goes by known aliases Andrew Pittman, Robert Allison and Derek Campbell.

The case has been assigned to U.S. District Judge Pamela K. Chen, an Obama appointee.

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Categories / Consumers, Criminal, Securities

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