Greenberg vs Koch Trial: Part 11

Day 5: Tuesday 2nd April 2013

Marshall Camp, for the plaintiff’s team, rose to question the admissibility of third-party deposition evidence that could potentially impeach Maureen Downey, the next witness.  Downey had rejected bottles from Zachy’s, and saw what appeared t be the same consignment on offer at Acker Merrall & Condit shortly afterward, and queried with them the provenance, establishing that it was, in fact, the same consignment she had rejected.  Cialone had deposition evidence that would claim it was not, and Camp wanted to exclude this third-party testimony, while allowing her to specify the steps she had taken to confirm her suspicions.  It was agreed that she would be allowed to say she called AMC, but not to specify what they had said, if they wanted to exclude the other testimony.

Witness: Maureen Downey, Chai Consulting

Maureen Downey took the stand, and explained Chai Consulting and what that did.  She noted that before this, she had worked as a wine specialist in auction houses, which involves valuing, lotting, setting reserves and authenticating.  She explained what inspection of the wines meant – for condition, levels, labels, and authenticity, especially for old and rare wines.  She gained her expertise in authentication through experience; there are no courses available in authentication.  At its heart, it is about paying attention, asking questions, and doing research.  Over time, her knowledge of authentication has changed greatly, and she has learned a lot.

She started working at Zachy’s in early 2002, as their first full-time employee, and was there a year and a half until August 2003.  While there, she worked on a consignment of wines for Eric Greenberg, in February 03.  She confirmed that she knew the trial related to an auction of wines in October 2005, by which time she had left Zachy’s and had nothing to do with that auction.

Downey’s role in the Greenberg auction was to process lists, pricing the wines and giving them to Fritz Hatton or Jeff Zacharia, the point people on the consignment.  However, when the wines came into the warehouse, she was the primary person in charge of vetting the wine – assessing and authenticating it. This was a big job because there were over 1000 bottles involved.

She confirmed that during her tenure at Zachy’s she had spoken directly to Greenberg about the subject of counterfeit wine.  She remembered in particular one phone call in which Greenberg was telling her about the labels for Chateau Lafleur, and had said he had had to become an expert himself because he had had so many bad bottles he had to learn to look for photocopies.  He explained to Maureen that the paper and ink become fuzzy, and under magnification the lines are not the fine lines of a letter press, but neither are they necessarily pixilated like you would expect from an inkjet.  Camp noted that there had been a lot of discussion about Greenberg’s experience with corks, and asked Downey if her discussion with him focused on corks.  She confirmed it did not; it focused on labels.

Camp turned back to the consignment from Greenberg in February 2003.  Downey confirmed that it was Greenberg who decided what wines went in the auction.  Camp then asked her how she approached authentication.  Downey replied that you group all the bottles that are similar, because you are looking at them for condition.  She would compare anything that stuck out with a known good standard bottle.  She would use a magnifying glass, a straight razor, and a torch, and would look at the paper grain and colour, the ink colour and printing methods, the glue staining, and the cork.

Asked whether in her experience at Zachy’s a client would tell them if there was a suspected counterfeit in the consignment, Downey replied they would.  She believed this was just general business practice, and recognition of the partnership between the consignor and the auction house, which means that both parties need to bring full information to the table.  They would always ask for provenance history or receipts, although she would not typically ask people if they’d previously been told their wine was fake, because there was a presumption of honesty.

Camp asked if a collector gave her information about a potential counterfeit in the consignment, whether that would cause her to do anything differently in approaching authentication.  Cialone objected, on the grounds it was hypothetical and speculative, and Downey had not been designated an expert.  Oetken overruled him.  Downey said that if she had that information, she would err on the side of caution, and would always look for all the signs to be conclusive.  Generally if you can’t say that it’s fake, you assume it’s real.  If she had that sort of information from a consignor, this balance would have changed, and if she could not have proved it was real, would assume it was not.  She confirmed that Greenberg, in connection with the February 2003 auction, did not indicate any potentially problematic wine in the collection.

Camp asked if there were any particular vintages or producers that came to Downey’s attention as counterfeit.  She replied that there was some 1990 Soldera Brunello di Montalcino, and a number of bottles of Henri Jayer.  With respect to the Jayer bottles, there were a number she had concerns over, so she went to her superiors and shared these concerns with them.  The sole importer of the wines(Martine Saunier) happened to be in New York, so she came to the warehouse and Downey set up all the Jayer bottles, not just the ones that concerned her.  The importer went through all the bottles and pulled out independently almost all the same bottles that Downey had had problems with.  Downey pulled out the two remaining, and Saunier agreed those were problematic as well.  They then cut some capsules, and agreed that the corks were not correct.  Jayer’s Grand Cru wines together with Cros Parantoux have corks with his signature on it, while the village wines have a more generic cork.  At this point Jeff Zacharia called Henri Jayer, who was still alive at that time, and he confirmed that all his Grand Cru wines and Cros Parentoux should have corks with his signature.

At this point, Downey contacted Greenberg about her conclusions.  She told him she was really sorry, but the Jayer’s were not real, and then described all the steps they had taken to determine this, because she did not want him to feel they had come to this conclusion lightly.  He replied “that Henri Jayer was an old bat who didn’t know what he was talking about”.

Greenberg added that he was going to be in New York, and that he wanted to taste some of them.  He told her he was going to be at the restaurant Daniel, and since Downey lived in Gramercy at the time, she agreed to take a few of the bottles to the restaurant on her way home, and she did, dropping the bottles off with the sommelier.

The next morning Greenberg called her to congratulate her on a job well done, and said that they were delicious examples of village wine, but they were not the Grand Cru wines they purported themselves to be, and he understood that Zachy’s could not include them in the auction, so he would pick them up and drink them.

Downey then confirmed that after she had rejected these wines from Greenberg’s consignment, she saw the same bottles being offered for sale through a different auction house.  Several weeks later she received a catalogue from a competitor house, which happened to have some of her very good friends on their team.  She was struck by the cover, and then looked inside and was even more convinced she was looking at the same wines.  Downey explained that there is a character to a wine collection unique to a particular collector and if you have worked with that collection for a while, you recognise it.  She added that in particular, Jayer is incredibly rare, so to have a large amount of it sticks out.  She started going through it, and thought that she recognised a number of bottles that she had specifically rejected, through the photos and the descriptions.  She looked over her notes of the wines that she had returned to Greenberg and became even more convinced.  Downey then called one of her closest friends who worked for Acker Merrall & Condit, because she did not want for them to be selling wine that she knew to be fake and the person who consigned it knew to be fake.

Downey confirmed that it was not at all typical to call a competing auction house to seek to discuss the identity of a client.  She did it in this case because she cares about the integrity of the industry, and she assumed they would care too.  (Not often one can call Maureen naïve….)

Downey confirmed she left Zachy’s in late 2003, and did not know if their authentication process was as thorough as it was in her time there.  She confirmed that stickers were applied in the warehouse, by the warehouse guys, not the specialists.  When specialists go to someone’s house or cellar and do all the assessment and lotting there, they put stickers on the boxes that correspond to lot numbers, and the boxes go back to the warehouse where they are opened and stickered before the wine was shipped out.  However, for large format bottles or very rare bottles, you do not put it in a box that is warehouse appropriate, but one that is shipping appropriate.  For these bottles, they go directly into a shipping box, which goes to the warehouse with a lot sticker on it.  When someone buys that wine, the warehouse guys might not reopen that box to sticker the bottles, so they did not need to repack it.  If the magnum of 1950 Lafleur had been authentic, it would have been completely consistent with such a bottle.

Camp moved on to the question of taste testing for authenticity.  Downey replied that taste was not a valid measure of authenticity, not least because the benchmarks used by people such as Robert Parker were Hardy Rodenstock fakes.  In addition, a lot can happen to a bottle over 70 years or so, and the evolution of a bottle will depend in temperature, light, motion stability and other factors.

Camp then asked Downey if her experience included how collectors manage and inventory their collections.  In her experience, none of these collections involved inventory systems where a collector could not identify where they got particular fine and rare wine from.

He finished by noting that Downey managed private collections, and confirmed that she did not manage any collections for Koch nor Greenberg.  She confirmed she lived in San Francisco, and that Koch did not pay her travel expenses.  She also confirmed that she had been in the courtroom for part of the trial, which was not at Koch’s request.  Camp asked her why she had come, attended the trial, and testified before the jury.  Downey responded:

“I have been a vocal advocate against wine fraud since 2001.  It’s been very unpopular.  I have suffered greatly at the hands of those who would like for this problem not to come to the fore, to not be talked about, to not be prosecuted, to not exist.  I’ve been… I’ve been threatened, I’ve been… I’ve been not allowed to attend certain events because I’m a nuisance…. But I care.”

[Note: Downey’s comments about being threatened are particularly relevant to this case.  We have heard how Greenberg claimed not to be litigious, but how he had filed a suit against Bill Edgerton “as part of his defence strategy”.  What is not widely known is that he also threatened to sue Maureen.  She discovered that although truth is an absolute defence against libel, it would still cost almost $50,000 to get the suit thrown out.  After some soul (and bank-account) searching, she sold almost everything she had of value, gave her attorney $37,000 as a down payment, and told Greenberg to “pound sand”.  Faced with someone who was not going to back down in the face of such blatant bullying, it was, in fact, Greenberg who backed down.]

Maureen Downey: cross-examination

Frank Cialone rose to cross examine Maureen Downey.  He started by asking if it was important now for wine collectors to be able to track individual wines to specific sources; she confirmed it was.  Cialone then asked if it was important at the time she was at Zachy’s.  Downey replied that she wasn’t working on behalf of collectors at that time, so she did not have anywhere near the same level of knowledge as she has now.  She did not ask Greenberg if he did so, but she would have been astonished if no one at Zachy’s did because it was standard procedure.  She was not privy to the conversations other people had with Greenberg, and it was not part of her scope of duties.  If she had doubts about authenticity, she would bring in others and discuss them; she did not always have the final call.  However, if the others agreed with her doubts, the company would reject the wine.

“Doubt was enough, right”, Cialone stated.  Downey replied that she did not know what level of doubt he was talking about, but that if they did not accept the wine as being authentic, they would not represent it at sale.  Cialone said that he believed she had testified that she would accept the wine unless she could prove it was not authentic.  Downey replied that if her finding was that it matched all of the parameters she understood at that time to be the correct ones, she would accept it.  This was based on her own previous experience of the physical bottles, what she had researched, what she had confirmed with producers, and what information her colleagues were able to provide.

Cialone asked if she would agree that her company had superior knowledge to Greenberg when he started doing auctions at Zachy’s.  Downey responded that she could not answer that, as she didn’t know his level of knowledge.  Cialone commented that she had been sitting for several days in the trial and had heard Greenberg say he first became aware of wine fraud in April 2002.  Camp objected that she was being asked for testimony about others’ testimony.  Cialone rephrased the question, to ask if when she spoke with Greenberg, he spoke about Lafleur labels to a level that was beyond her then knowledge.  Cialone asked if he had not done that, she would not have been able to spot they were photocopied labels, and Downey replied she would have spotted it, but he pointed it out as she was not working on that section of the collection at the time.  He was not trying to hide that, and was very open and friendly about it.

Cialone suggested that Greenberg taught Downey how to confirm that the bottles that he was consigning that were estimated at more than $10,000 had “facsimile” (sic) labels.  Downey replied that in contrast, Greenberg was proving that they did not.  Somewhat discomfited, Cialone pointed out that in the catalogue, one item was listed as having a facsimile label.  Downey said that normally she would have rejected such a label; she did not know if she had had a conversation about it.

Cialone then stated that Downey remembered Greenberg explaining how to look for facsimile labels, because she had testified that earlier.  She corrected him, saying that she had testified about photocopied labels, photocopy being a subset of facsimile, which is any type of reproduction.  She agreed that the ability to spot one kind of facsimile did not necessarily translate into the ability to spot another.

Downey reiterated her conversation with Greenberg, noting that it was congenial.  She could not testify to his knowledge of other types of facsimile labels; the only ones she spoke about with him were photocopies.

Showing her a photograph, Cialone asked Downey about the labels on the Lafleur magnums pictured.  She noted that it is hard to say definitively if items are different sizes, as you cannot tell the angle, you cannot tell how big the bottle is, and you miss a lot.  Cialone noted that Jamie Ritchie of Sotheby’s had stated he determined the wines were counterfeit just by looking at the photographs in the catalogue; Downey replied that she preferred to look at real bottles, and confirmed she had done that for the February 2003 auction.  In her professional judgement, with three years of experience, at that time she concluded they were legitimate.  Now, with 11 more years of experience and years of contact with almost all the producers, she would not come to the same conclusion.  Cialone asked if she had ever told anyone at Zachy’s if she did not feel competent to inspect the bottles; Downey replied “Absolutely not.  I did feel competent.”  Moreover, she was still one of the more experienced people in the industry.

Asked if she had called Sotheby’s to ask for a second opinion, Downey reacted with incredulity, but did clarify that this did not mean that she would not reach out to other professionals in the industry if she had a question.  This included reaching out to Martine Saunier, the Jayer importer, and to Henri Jayer himself.

Cialone expressed that she did all of this because she wanted to protect buyers, and that the notion that the auction house just protects consignors is a myth, that Downey had written angrily about.  She denied she had written angrily, but did say that this is something she believes in – auction houses protect the buyers and the sellers.  They do the latter by ensuring their wines are marketed correctly so that they get the highest prices, which includes ensuring authenticity.  Downey confirmed that she believed throughout the time she was at Zachy’s that she and her team were diligent in protecting both buyers and sellers.

Switching tack, Cialone asked if Downey knew who Matthew Chung was.  Downey noted he was one of Zachy’s early employees, and then worked for Chai Consulting for two years, having just left.  She hired him “Cause he’s great”.  Cialone noted that although Downey was not involved with the October 2005 auction, Chung had been, and asked if Downey had any questions about his integrity.  She replied that she had no questions about that, but he is not an authentication expert.  He had told Downey that he went to Greenberg’s cellar before that auction to pack the wines.

Downey testified she had no idea if Greenberg personally pulled the wine or not.  However, as the consignor, one would typically return a list called the selection for sale.  Cialone showed her an email list of wines, but Downey noted that this list said “consignor estimates”, not selection for sale, which was a different thing.  She noted that there were so many lists that Greenberg sent in that she returned back, she has no idea if this is the last list of estimates she sent back or the last list of changes he sent in.  She emphasised that she had no idea, other than consignor estimates, what the list represents.

Cialone asked Downey to surmise that Greenberg had more than one of the same bottle, for example a magnum of 1950 Lafleur, and asked if it was Greenberg who decided which to send.  Downey replied that yes, it was his decision ultimately – whether it was him or his agents, it was his decision which bottle, and certainly not hers.  Although she did not know if he physically pulled the bottles, it is his collection, and whatever he sends in he is choosing to represent.  She added, “Whether he pulls the bottle or not, the people that work for him work for him”.

Cialone then asked about lotting, expressing the view it had nothing to do with authentication.  Downey corrected him, saying that it’s a simultaneous process and that, for example, if a number of bottles need to be pulled from a case because they are inauthentic, that affects the lotting.  The lotting does not, on the other hand, affect the authentication process.

After some interest from Justice Oetken regarding how a lot worked (was he planning his next wine purchase?), which Downey explained, Cialone asked if Downey’s role for the February 2003 auction was to ask Greenberg for provenance information.  She replied that was more appropriate for one of the more senior people.

Cialone turned back to the Jayer wines, asking Downey if she remembered how many bottles she had rejected.  She replied that she did not, but agreed it was more than a dozen, and definitely fewer than 50 (with some incredulity this could be an option).  Cialone showed her the acceptance sheet, which had been produced by Zachy’s as being the only wines rejected from the February 2003 auction.  This document showed that Downey had rejected six bottles each of the 1990 and 1995 Jayer wines.  Downey could not say whether this was the only page, or just one of many, and she would have to refer to her notes from that auction to be certain.

Cialone then showed Downey evidence of her accepting a large number of Jayer wines; Downey (I love this woman’s attention to detail, and this is one of those moments I just want to shout about) pointed out that the majority were G Jayer wines, not Henri Jayer, and that this was very different.  Cialone moved swiftly through to the next page, where Downey noted that a lot of the notes were on one or two bottles, so even though it is a lot of listings, it is not a lot of bottles.  Of the rejected wines, there were six of 12 each of the 1990 and 1995.

Downey agreed that nowhere in the catalogue does it state that Zachy’s found counterfeit wines in Greenberg’s collection, and that while Greenberg might have decided which bottles to send, it was Zachy’s team who ultimately decided which of those that came in to the warehouse to sell.

Cialone noted that while Downey did not believe that tasting is a valid way to assess the wine, Greenberg did.  She confirmed that she had assessed them in part through their corks, which she had seen by cutting the capsules.  If the capsules had not previously been cut, Greenberg could not have previously seen the corks.  There were a number of bottles that did come in with capsules already cut, although she did not remember if these included any of the Jayer wines.

After a break, Cialone asked Downey about her testimony regarding stickers, and noted that she did not know how many times the wines that Greenberg sent for the October 2005 auction were inspected.  Downey replied that she knew they were assessed on site, because Matthew Chung was one of the Zachy’s team at the time, and he then worked for Downey and told her about that.  She did not know if this was done more than once, but she believed the inspection was done on-site, and that Ben Nelson was leading the inspection.  Matthew Chung had also mentioned that “Neil” and maybe “Damian” were there; he had not mentioned that Jeff Zacharia personally went to Greenberg’s house to examine the old and rare wine.  Downey knew that Fritz Hatton had been there several times, but did not know if he had gone in 2005.

Downey confirmed that what she knew about the inspection for the October 2005 auction was simply what Chung had told her, and she had no direct knowledge of how it was handled.  She believed that stickers were required by New York law.  Downey confirmed that if someone had made a mistake on one of the 17,000 bottles in California, it could be corrected in New York.  However, she had no knowledge of whether this happened in the 2005 auction.

Cialone noted that Downey had written a post that related to her claim that the same bottles she had rejected from one auction were sold in the Acker auction in 2003.  From the cover she recognised the consignment, which was a concept that lay people would have had a hard time understanding – so she stated that she recognised some bottles, for the purposes of relaying the information to a broad group of people who might not be familiar with the auction terms.  The totality of the details of the consignment led her to believe it was the same wine, which she then called and confirmed.  She recognised small tears, marks on the labels, and T-cuts, which did not solely relate to the Jayer wines.  In her post, however, she concentrated on the Jayer wines, in response to a post by Lempert Schwarz querying what she had done at Zachy’s.

Cialone showed her, and the jury, the Acker catalogue.  Downey noted that she initially recognised the collection as Greenberg wines.  She then went through and recognised a number of entries that matched the exact same wines and exact same quantity as she had rejected, which caused her to go the next step and make a phone call.

Downey did not know that Greenberg had the largest collection of Jayer in the world (that’s what being a good customer of Rudy Kurniawan can get you).  She commented, in response to Cialone’s assertion that Greenberg had 45 bottles of Jayer’s Cros Parantoux 1990 even after the 2003 auctions, that this was a remarkable number.

Downey confirmed that she had worked on a further sale with Greenberg wines even though she believed he had intentionally consigned counterfeit wine to an auction.  She did not, as Cialone asked, give him a chance to explain himself, because she believed he had done something bad, and she was not going to talk to him about it.  She did not know what he would have done to her if she had actually gone back to her and told him what she believed.  She was told by Mr Dombrowsk that if she had mentioned it to him, “Mr Greenberg would, quote, break my legs.”

Maureen Downey: re-direct

Camp had a few final questions for Downey.  He noted that the February 2003 auction at Zachy’s was advertised as the Greenberg collection.  In contrast, the Acker auction was anonymous.  He showed Downey an email, exhibit 329, which she confirmed she had not seen prior to the trial.  The email was from Kapon to Greenberg, stating “in retrospective (sic), we should have avoided putting your wines on the cover or drawing excess attention to your consignment”.  Downey agreed that this was consistent with the conclusion that Greenberg’s wines were depicted on the cover.

Maureen Downey: re-cross

Cialone noted that Greenberg’s wines were on the cover, but that it does not mean that the specific 12 bottles of Jayer that she had rejected were on the cover.  Downey replied that she did not know if any of the wines that she had rejected were on the cover.

The email referred to “whispers in the dark”, particularly with respect to the Jayers.  Downey denied being one of the whispers, at least back then.

Witness: Richard Brierley

There was then video deposition testimony from Richard Brierley, referring to his time at Christie’s.

The trial then concluded for the day.

Click here for Part 12.