Huge, 4 Million Bottle French Wine Fraud Exposed

By - March 19, 2018
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French government officials this week revealed shocking details of a massive fraud that was committed by a major wine bottler in the Rhone, believed to be Raphael Michel, where as much as 15% of all Cotes du Rhone wine was falsely labeled.

According to a press release offered by the Direction generale de la concurrence or DGCCRF, it was learned that 480,000 hectolitres of table wine, equalling millions of bottles, was falsely labeled as Cotes du Rhone, Cotes du Rhone Villages and even Chateaneuf du Pape. The DGCCRF described the wine fraud case as an enormous misuse of the Cotes du Rhone name.

The company that engaged in the fraud was not named, but as noted above, it is likely Raphael Michel, which is a major bulk bottler in the Vaucluse area of France and is one of the biggest producers of these prestigious red wines.

In August 2017, the company chairman, Guillaume Ryckwaert and several high level managers were arrested for fraud, tax violations and deception. Ryckwaert eventually made a $1.5 million bail and was barred from having anything to do with the company while it was being investigated.

It was already believed by that time that the wine fraud could be up to 300,000 hectolitres and several major contractors, including the huge supermarket chain Carrefour, cancelled their contracts with the wine company.

Alleged Fraud Lasted More Than Three Years

The wine fraud has rocked the Rhone Valley of France in the past year. Ryckwaert and his co-conspirators have been accused of masterminding a fraud since 2015. It is alleged they sourced four million cases of table wine and resold it as premium wine from the Rhone region.

According to Philippe Pellaton, president of the Syndicate of Vignerons of the Cotes du Rhone, the company has been under investigation since the fall of 2017. Investigators have been asking companies to verify information, sales contracts and generally asking questions about the Raphael Michel company.

Some details of the case are still confidential. But what is known today is that agents from the National Customs Judicial Service or SNDJ noticed many violations when they audited Raphael Michel in 2016. SNDJ investigators received tips when paperwork the company filed was not accurate. It is alleged the fraud spanned from October 2013 to March 2017.

Rapael Michele was established in 1899 and was bought by Ryckwaert in 2002. The company expanded quickly under his leadership, especially after he raised capital from outside sources. Raphael Michel is a trader in various types of bulk wine. It sources it from 4,000 growers in the Rhone Valley, Chile, Argentina and other areas of France.

Next, the company creates blends before selling the wine to various bottlers. The facilities it owns in Piolenc has four loading areas that can pump 6700 cases of wine each hour into tankers. The company most recently reported income of $94 million and sold 10 million cases in 2017.

Investigators say it is too early to know if the grape growers were involved in the scandal. They stressed that the extensive auditing process worked and the agents were successful in conducting a deep investigation. They added that the mechanics of the alleged fraud were stopped and the criminal case will proceed.

But experts note the case could drag on for over a year. There are other people in the company that still need to be questioned.

Wine fraud has been a problem in France over the past decades. In 2016, Francois Marie Marret, who was the owners of several Bordeaux companies, was put in jail for two years and fined $9 million for a scam that blended cheap table wine with expensive Saint Emillion and Pomerol Laland wines. These were then sold to various supermarkets and other cheap outlets. More than one million bottles were destroyed by court order.

In 2015, the president of a Chablis producer was put in jail after it came out that he was tainting his Chablis wines with juice from Provence and the Rhone. This scam went on for over 10 years. In 2010, 12 French winemakers were also convicted of selling fake pinot noir to the company Gallo.

Another major wine scam in recent years involved an illegal immigrant in the US. Before Rudy Kurniawan was even 30, he had risen to become a major player in very rare wines. But in 2008, he made a big mistake that ruined his career.

It occurred at a wine auction in Greenwich Village at the restaurant Cru. There were 22 lots of red wine from Domaine Ponsot, which is a famous Burgundy producer that collectors love. Six of the lots were said to be Close Saint Denis, which is one of the greatest appellations from the Burgundy area. All of the vintages were from 1945 to 1971, with a price of $70,000 per case. All of them were supposedly stored in Kuriawan’s ‘magic cellar.’

There was only one issue: His father did not have any access to Clos Saint Denis vines until the early 1980s. So, those vintages were fake.

All 22 lots of the fake wine were pulled from the auction. To be sure it was done, a representative from the Ponset family flew from France and went to Cru. Kapon waited for his lots to be served. Eventually, he told the crowd that the lots had to be withdrawn because they were not authentic.

Eventually, Kurniwan was arrested in March of 2012 on charges of fraud. He never did testify at his trial, but he did write a letter to the judge that said he regretted that his name would forever be associated with a crime that soiled the one thing that he was good at.

After he is released in 2012 from jail, he will be deported to Jakarta. This master con man of wine will never be able to sell fake wine in the US again. But as the other cases above have shown, it is all too tempting to pass off cheap wine as expensive wines, so it is bound to happen again.