Greenberg vs Koch Trial: Part 10

Day 5: Tuesday 2nd April 2013

The trial was played the depositions of Serena Sutcliffe MW of Sotheby’s, and of Gail Clark of the Fireman’s Fund insurance company, with both the Koch and Greenberg’s side playing their particular pieces.

Witness: Jamie Cortes

Jamie Cortes is an estate manager for Anthony Petrello, an oil man from Houston, which involves managing all the people who work on his properties.  He is also Petrello’s private chef.  (In 2012, Anthony Petrello , CEO of drilling company Nabors and a former corporate tax lawyer, was the best-paid CEO in America, earning $68.2m.  Mr Petrello is no stranger to litigation himself, having embroiled himself in many disputes, including one over his neighbour’s house, the sale of which he tried to force to himself at a reduced price, on the grounds that his daughter is disabled. Interesting argument from the man who was a key figure in the sacking of Geoffrey Bowers for AIDS.  The name Geoffrey Bowers robably doesn’t ring a bell.  The name Tom Hanks will – Bowers was the real life person on whom the movie Philadelphia was based. Charming man.)  At the time of the trial, Cortes had been employed by Petrello for eight and a half years; before that, he worked for Eric Greenberg for about four years, ending on 29 November 2004.

Hueston put in front of Cortes a non-disclosure document with his signature on, that Cortes did not recall signing, but accepted there was a possibility he could have signed.  Acting for Greenberg, he was effectively the housekeeper and chef, running the house, and about 18 months into his employment assuming responsibilities for Greenberg’s wine cellar, which had just been completed.  With Thierry Lovato and Andrew Dombrowski, he did the inventory, and moved the wine into the cellar.  Once the wine had been moved, Cortes was responsible for checking in deliveries of more wine.  From time to time, he helped put together wine for sale.

Hueston asked who suggested putting together an inventory, and was told it was Greenberg, who was in charge of what it would and would not include, and how it would be done.  Thierry Lovato had suggested a bar code system to Greenberg, but Greenberg paid no attention to that.  The inventory was done by going through the boxes and listing things on notepads, which were then transcribed to a spreadsheet, regularly sending it to Eric Greenberg.  They worked up to 18 hour days to get in the region of 60,000 to 75,000 bottles inventoried.

Cortes recalled meeting Serena Sutcliffe MW and another person from Sotheby’s whose name he did not know.  As she arrived, Greenberg was on a conference call, so Cortes greeted her and brought her down to the wine cellar, on the ground floor of the house.  Sutcliffe wandered around the cellar, saying repeatedly “It’s too good to be true”.  She pulled a capsules back, having asked permission first.  However, Cortes reached a point where he needed to call Greenberg because Sutcliffe was pulling so many capsules back (25 to 30), and had expressed doubts about the authenticity of the wine.

Cortes testified that Greenberg came down, and went round the cellar with Sutcliffe and the other Sotheby’s representative.  Cortes waited about five minutes, and then Greenberg ordered him to return to doing inventory with Thierry Lovato.  In the time Cortes was with them, he remembered Sutcliffe telling Greenberg that he needed to get the wine authenticated if they were to proceed.  She recommended Bill Edgerton.

That evening, while Cortes was cooking for Greenberg, they discussed the visit.  Greenberg was very upset to find out he had counterfeit wines, because he wanted a top notch wine cellar.  He said that he was going to go after the person who sold him the fraudulent wine.  To do this, Greenberg went through invoices, and came to the conclusion he had bought the majority of the wine from Royal Wine Merchants.

Turning to Bill Edgerton, Cortes confirmed he came to the house one Saturday to authenticate wines, staying there for 10 or 11 hours, working with Greenberg, Cortes and Lovato.  Greenberg determined the wines that Edgerton would examine.  Cortes could not remember the number of bottles pulled, but he did recollect that Edgerton examined 115 to 120 bottles that day.  (Note: This is roughly 6 minutes per bottle, and is certainly not enough time to make an accurate assessment of high-risk bottles unless they are glaring fakes.)

Edgerton did not come back, and Cortes testified that he and Lovato were mocking what he was doing because there did not seem to be a science to it.  However, they did suggest to Greenberg that it would be a good idea to retain Edgerton so he could go through the whole cellar.  Greenberg did not want to proceed.

Greenberg told Cortes that he was going to sue Royal, but he was concerned because he had heard they had connections to the Russian mafia.  (I would, in that case, be very concerned.)  One night at dinner Greenberg told Cortes that he’d settled with Royal Wine.  Greenberg refused to disclose how much he’d settled for, but added “better, I get to keep the wine”.

Cortes asked if he could keep a couple of bottles of the wine as a trophy of all the hard work he’d done.  (Really?  Can’t say I believe this.)  Cortes claims he asked because he was on salary, and the other two, Thierry and Andrew, were paid hourly, at $75/hour, and when he was working 15 to 20 hour days, this felt unfair, but since the wine was phony, it wouldn’t matter.  Greenberg replied to him “Absolutely not, I purchased that wine, what they did to me I’ll do to them; what they did to me, I’ll do to someone else.”  Cortes understood this to mean Greenberg was going to sell the wine to a third party.

Moving on, Hueston noted that Cortes helped pack wines to send out for auctions.  This was often difficult for Cortes and Lovato, because if there were a number of the same bottles, they didn’t know which to pick.  Greenberg always instructed them to “pick the shittiest bottles”.  Cortes emphasised this meant the least attractive bottle, and noted that he’d never been instructed to pick a fraudulent bottle.  However, if they saw a photocopied label, for example, they would send that.  Cortes had asked Lovato about this, who had replied “just because it’s photocopied doesn’t mean that it’s not real.” (Oh yes it does.)  Cortes emphasised he just sent the shittiest bottles; he was not then nor at the time of the trial an expert in determining counterfeit wine.  For wines coming in, in contrast to those being sent out, they would check with Greenberg if there were any stains on the label, or if anything didn’t look right.

Cortes noted that just because a bottle didn’t have a nice label didn’t mean the wine inside was not good.  (Personal note – total agreement here.  A client had two cellars, one with perfect conditions for the label, and the other with perfect conditions for the wine, but dreadful for labels.  I know which I would prefer, by a mile.)  Hueston asked if Cortes had ever seen the catalogues for the auctions he packed for, and Cortes confirmed he had not.  He agreed that he would have felt uncomfortable picking “the shittiest bottles” to go to an auction that was supposed to be “the best of the best”.

Hueston asked Cortes what Greenberg’s role was with respect to his wine cellar.  Cortes replied that Greenberg was completely hands-on – the others were just told what to do, and expected to do it.  Greenberg would purchase wine, occasionally he would help pack but not often.  He principally dealt with vendors.  Hueston noted that there had been a representation that Greenberg spent 1% to 2% of his time on his wine cellar; Cortes replied that it was a lot more than 2%.

Asked if any representatives from other auction houses visited the cellar, Cortes noted that John Kapon had come, and he thought Christie’s may have been there, but on a Saturday when Cortes wasn’t there.  He had no recollection of Greenberg telling Kapon or any other auction house representative about Serena Sutcliffe’s visit.

Hueston asked Cortes to describe the circumstances of his leaving.  Cortes explained that in his role, after three to five years, it’s time to move on (but he’s been in his current position for over eight…)  He knew he was going to leave, and got a headhunter involved to replace his position.  Cortes claimed there was an agreement with Greenberg that if he finished the wine inventory, and that of all the furniture, art and other belongings that Greenberg had that he would get his bonus.  Cortes was sent a confidentiality agreement to sign, and returned the keys, at which time he was supposed to pick up a cheque for his bonus.  When Cortes got there, the cheque was for $2500, compared with the expected $25,000 to $30,000, so he did not sign, and he just left.

When this happened, Cortes felt upset, but also relieved, because it was a new chapter of his life.  He knows he is good at what he does, and moving to Houston he is making double what he did with Greenberg.

Cortes: Cross-examination

Frank Cialone rose to cross-examine Jaime Cortes.  He commented that Cortes had said he was thankful for Eric Greenberg, and asked if that was why he had called Greenberg an asshole when he got in touch with Bill Koch.  Cortes replied that he thought what Greenberg did was unethical, and he had intended to do it, because he’d said to Cortes on a couple of occasions he would do to someone else “what they did to me”.  Cortes added “so someone that runs their life like that, I would consider an asshole, yes, I would.”

Cialone turned to Cortes’s deposition, given in August 2010.  Cortes confirmed he had a chance to speak to counsel before that deposition, and that he had spoken with Koch’s counsel, with Brad Goldstein, Oxbow’s Director of Corporate Affairs,  and with Jim Elroy, and investigator.  Cortes confirmed that he had his own lawyer, but denied that Koch was paying for it; he explained that Koch had indemnified him if Greenberg came after him, but that he hasn’t paid for Cortes’s attorneys, at the deposition or the trial.

Cialone then asked if Cortes remembered saying in his deposition, under oath, that he had no reason to believe that Greenberg had intentionally defrauded anyone.  Cortes confirmed he remembered saying it.  Cialone produced an email to Goldstein from Cortes, in which he states “I would love to meet with you and Mr Koch to discuss my stay at the Greenbergs.  My info will help you guys bring this asshole down.”  Cialone noted that Cortes had travelled from Texas, and noted that Cortes believed Greenberg owed him a $25,000 bonus and was angry over it.  Cortes replied that he, unlike Greenberg, was a man of his word, but he had moved on from being angry.  He had not told Goldstein he was angry; he’d said he was disappointed.

Cialone played Goldstein’s deposition.  Cortes confirmed that he knew Goldstein was running all of the wine-related litigation for Bill Koch.  Cortes did not think that Goldstein represented his perspective in the right manner; Cialone tried to get Cortes to say Goldstein was lying; Cortes simply said that Goldstein was not telling the truth.

Cialone asked if Cortes had spoken with Koch’s counsel before the trial, and for how long.  Cortes replied it was about an hour ago.  He did not know then that he would come up for the trial; they asked Cortes, via his attorney, to come up.  He came up on Saturday, and spoke with them again, with his lawyer and two or three of theirs.  He did not talk about what he was going to testify to; they emphasised to Cortes that all they wanted was that he tell the truth.  Cialone asked if Cortes was telling the truth in his deposition under oath or in his testimony; Hueston objected, and it was sustained.  Cortes said he was telling the truth today.  The deposition in 2010 went on for hours and he was exhausted.  He could only remember what he could remember; it was a long time since he’d worked with Greenberg.

Cialone asked how long Cortes was with Serena Sutcliffe; he replied that it was about 25 to 30 minutes before he called Greenberg to come downstairs.  Cialone said that she had told him lots of things about the wine she was looking at; Cortes replied that she was actually speaking to a colleague, not to him.  She did not ask if they could peel back capsules; she simply announced it was proper protocol.  Cortes didn’t say anything to her, but after she had done this a few times he felt uncomfortable and called Greenberg to come down.

Cialone then suggested that Greenberg, after Sutcliffe and her colleague had left, had instructed Cortes to pull back the capsules.  Cortes denied this.

Cortes confirmed that very few people were allowed to visit the cellar.  It was in Greenberg’s home, and had a number of very valuable and breakable things in it.  Cortes did not find this strange – in fact, he thought it was a normal approach.

Returning to the question of which wines to put in, Cialone referred to the instructions to include the “shittiest wines” in any sales.  Cortes did not understand this to specifically refer to photocopied labels, but that if there were two wines and only one was to be sold, it would be the less nice-looking one that would go.  He did understand that this would include photocopied labels.  When pressed as to whether this was a standing instruction replied “He told us a couple of times.  We didn’t have to ask him again.”  Cortes did not think “shittiest bottles” meant counterfeits; he simply thought it meant those that were not pristine, or not as pristine, which were to be kept in the cellar.  He did not see anything wrong with keeping the nicer bottles in the cellar.

Cialone noted that Cortes had said he would not have felt comfortable packing wines for a “best of the best” auction, and asked what his involvement was in packing wines for that auction.  Cortes replied that he wasn’t there; he had no involvement at all in it.  For the auctions he was involved with, he would not knowingly have packed counterfeits, and was not instructed to pack known counterfeits.  However, when Cialone noted that Greenberg had segregated his counterfeit wines, Cortes noted this was only 118 of them, in 75,000 bottles.  He did not have any idea how many of these were counterfeits.

Cialone asked if it was Sutcliffe who had recommended Edgerton; Cortes replied he believed so.  He did not know if Edgerton was retained by Greenberg’s lawyer in the Royal matter.

After Edgerton came, Greenberg went through the invoices for his wine.  Cortes had never seen the spreadsheet Greenberg prepared showing his invoices from Royal Wines.  Edgerton came in about 2003.  Cortes did not know if Greenberg went through the invoices in his office before Edgerton’s visit.  Cortes confirmed he had suggested to Greenberg that Edgerton should go through the entire collection, which Greenberg denied.  Although Thierry Lovato made fun of him, Cortes had no doubts about Edgerton’s qualifications for the job, although he was concerned at the relative shortness of time accorded to the review.

Cialone asked if Cortes remembered turning around questionable bottles in the racks.  Cortes explained that if Greenberg had any doubts whether the wine was authentic, they would turn it around, but he did not recall if that was before or after Edgerton’s visit.  Cialone pointed out that in his deposition Cortes had said it was after Sutcliffe’s, and asked if the deposition refreshed his memory.  Cortes replied again that he did not recall.  Cortes confirmed that at some point they had boxed some wines up and segregated them, and that these remained boxed up and segregated until at least when he left Greenberg’s employ, in November 2004.

Cortes also confirmed that he had testified that Greenberg at some point concluded that Royal had sold him counterfeits, and agreed with Cialone that at no point did he think that every Royal bottle was counterfeit.  In addition, Edgerton did not conclude that every Royal bottle was counterfeit.

Cialone showed Cortes the confidentiality document from July 2001.  Cortes confirmed that it looked like his signature, but he did not remember signing the agreement.  He knew that when he left, they wanted him to sign another agreement, and he did not.  Cortes confirmed that Goldstein had asked if he had a confidentiality agreement, and that he had said no.  Cortes repeated that he did not remember signing any confidentiality agreement.  In contrast, he did remember not signing one in November 2004.  The document with his signature on it was dated 25 July 2001, which Cialone said was not long after Cortes had started working for Greenberg.  Cortes replied that he thought he started in 2000, but perhaps he was wrong.

Cortes agreed that he was working in Greenberg’s home, witnessing conversations he had with his family and business associates, and seeing all the things of value he had in his home.  He accepted that it was not unusual to be asked to keep this in confidence.  He also accepted that this date was before the Sutcliffe visit in 2002, so was not linked to counterfeit wine.

Cialone suggested that Sutcliffe had not looked at more than 20 bottles of wine in Greenberg’s cellar.  Cortes corrected him, saying she was there longer than that – 25 minutes with him and then some further time with Greenberg.  In the time, she picked up 25 to 40 bottles.  Although she did not actually say particular bottles were counterfeits, she did express quite clearly that she had doubts about the provenance of some of the bottles.  He did not know how many bottles this related to.  When she left, Greenberg made it very clear he would not let her cherry pick his collection.  Cialone asked if Cortes thought Greenberg was going to force Sotheby’s to accept counterfeits; Cortes replied that he could not answer that.

Cialone noted that Cortes had testified he was not aware of Greenberg telling any other auction house about the visit with Sotheby’s, or the dispute with Royal.  Cortes confirmed this, but noted he was not with Greenberg 24/7.  He did not know that Jeff Zacharia had come for a visit in November 2002, and had, therefore, no idea what Greenberg had told him on that occasion, or anything Greenberg may have said when in his office.

Cortes confirmed that Greenberg had “a ton of wine”, and although they started the inventory in 2002, they didn’t finish it until November 2004.  They kept getting shipments in on a regular basis.  With all of that, it would not have been possible to go into the cellar and pick up a particular bottle of wine that came from a specific vendor, although it would have been in 2002, when they started working on the inventory, because at that point all the wine was still in boxes, and so they knew where they came from.  By the time of Sutcliffe’s visit, however, that information had been lost because all the wine was on shelves in the cellar.

Cialone then turned to the statement (which I think of as the smoking gun in this case) that Cortes said Greenberg had made: “What they did to me, I’m going to do to someone else”, and asked when Greenberg had said this.  Cortes replied that this was after Greenberg had found out he’d settled with Royal, but he didn’t know the date.  It was probably late 2003.  Cortes confirmed that Greenberg had told him that he did not have to send wine back to Royal as part of the settlement, but Cialone told him that Greenberg did in fact send nearly 200 bottles back.  Cortes said he was not aware of this, which Cialone queried, arguing that Cortes spent the majority of his time working in his wine collection.  Cortes noted that 200 bottles in comparison to what they were receiving every day and what they had in inventory was nothing.  He confirmed that the 118 bottles that were segregated never left.  Cialone queried this, and Cortes replied that these bottles were in the holding cell.  This was 30 feet by 25 feet, with ceilings of 12 feet high, and it was packed with wine.  The segregated wines were off to the right hand side in boxes, with wine all around it.  The only way you could get to that wine is to move hundreds and hundreds of cases – very heavy cases.  Cialone asked if when Greenberg sent wine back to Royal he didn’t send the bad stuff that had been segregated, but the good stuff.  Cortes replied that he didn’t know what Greenberg had sent, but it wasn’t the segregated wine.

Cialone returned to the testimony Cortes had given regarding Greenberg saying he would do to someone else what had been done to him.  Cialone suggested that Cortes thought this was something he said out of emotion.  Cortes replied that Greenberg was “like a tyrant.  He blew up all the time” and that he had got accustomed to this.  Cortes never asked him about it again because he strongly felt that Greenberg did have the intention to pawn the wine off on someone else.

Cialone asked Cortes to confirm, which he did, that he worked for Greenberg for almost a year after this point, and that he thought, on leaving, that Greenberg and his wife were “good people”.

Cortes also confirmed that Thierry Lovato had told him about the same statement, as had Steve Selover, the contractor who built the wine cellar and did other projects in the Greenberg’s home.  Cortes has not contacted either of these people in connection with the lawsuit; he occasionally buys wine through Lovato, but has not spoken with him about the suit.

Cortes, re-direct

Hueston rose to redirect, returning first to the email Cortes had written to Goldstein in which he called Greenberg an “asshole”.   Cortes confirmed that this was how he felt when he wrote it because of the experience he’d had.  Cialone objected that this was getting into character evidence.  Hueston countered that Cialone was trying to impeach Cortes on “you think he’s good people”, which means the character question was put into issue directly by Counsel.  Oetken said he would allow it briefly.

Cortes described an incident where a delivery man, about 9am, was running in a panic out of the house as Cortes arrived, with Greenberg following him out.  Greenberg pounced on the delivery man, Cortes got in between them, and got hit in the back of the head for his troubles.

Hueston then returned to the deposition testimony that Cortes had given stating that he was concerned that Edgerton’s review was too quick.  Asked if he had any other concerns, Cortes said that he just thought it was very fast – it didn’t look like rocket science, and it was very fast.

Cortes confirmed it was just 118 bottles that were put aside, into different boxes depending on the size and type of wine.  They were put into a “holding cell”, separate from the main wine cellar.  There was no way anyone could accidentally walk in there, put their hand into one of the boxes, and add it to an auction package, because there was just too much wine blocking it.  These were the only wines that he remembered being segregated in any way.

Hueston then asked Cortes to describe what Serena Sutcliffe looked like.  Cialone objected, on the grounds that Cortes had been in court that morning watching it on video.  Cortes replied that he thought she “looked like that, but with grey hair”, and confirmed he had seen her before.

Hueston asked Cortes if he worked for Koch, or if he had received any compensation or payment for his testimony that day.  Cortes replied he did not, and he decided to come to New York to give testimony to the jury because “Mr Greenberg actually did what he said he was going to do”.  He did not think that Greenberg would do it in front of him, because Cortes had too much information about his lifestyle and his cellar.  His reiterated that his understanding was that Greenberg was going to do it to someone else, and added “and I still stand by that today, and that’s what’s happened”.

Cortes, re-direct

Cialone opened his recross by asking Cortes if his testimony was that Greenberg could never have sent out counterfeit wine if he wanted to with Cortes there because Cortes knew too much.  Hueston objected that this mischaracterised the testimony, and Cortes replied that he had not said that.

Cortes confirmed that he did not know that 200 bottles were returned to Royal, and he would not have learned because it was such a relatively small amount.  He also confirmed that he did not know that Jeff Zacharia came to the cellar.

Returning again to the “asshole” email, Cortes confirmed this was five years after he had stopped working for Greenberg, but he still had the same feelings.  He now feels he has moved on – he is in a better place, and he makes a lot more money now.  Cialone questioned how legitimate this was, and Hueston noted that he felt in doing this Cialone was opening the door to further questions regarding Greenberg’s assholeness….  Cortes replied that he was angry that Greenberg had not kept his word, especially with regards to the bonus, when he had done his side of the bargain.

Cialone asked if 118 bottles that Edgerton examined were all segregated and if they were all counterfeit.  Cortes replied that they were the Edgerton-examined bottles, with stickers on, but he did not know if they were all counterfeit or not, because he was not privy to the report.  Cialone queried this, saying he thought that Cortes was with Edgerton all day; Cortes replied that the report wasn’t formed that day.  Edgerton had said that he thought that some were not real, and he explained the reasons why.

Cialone noted that Cortes had testified at his deposition that the only reason he thought Greenberg intended to defraud someone was because Steve Selover had told him he made the same statement to him.  Cortes said he could not recall that far back.  Cialone played from both Cortes’s and Selover’s deposition.

Cortes confirmed that after the Edgerton bottles were segregated, there were a lot of bottles still turned in the racks.  When they were asked to pick a bottle for an auction, these bottles would be picked if they were “among the shittiest bottles”.  They turned bottles for lots of reasons, not just because it was questionable – for example, they turned the last bottle of a vintage of a particular wine to indicate that the next vintage was starting.

Cortes: further redirect

Hueston returned to the asshole question, asking if Cortes had been able to give all the reasons he thought this about Greenberg.  Cialone objected, and it was sustained.

Hueston then asked about the statement that Cortes remembered regarding Greenberg’s intentions with respect to the wine.  Cortes that he remembered it for two reasons.  The first was that he was offended that Greenberg would not give him a bottle.  The second was that Greenberg had said he was going to do to someone else what they did to him, and this was a statement that remained with him to this day.

Click here for Part 11.