Greenberg vs Koch Trial: Part 15

Mark Curley: cross-examination

Frank Cialone began his cross-examination of Mark Curley by asking what the “inventoried in October 2009” on some of the boxes meant.  Curley replied that he assumed one of his staff put it on there when they inventoried the wine.  He confirmed that the wine inventory database previously presented into evidence showed only the wines being inventoried or moved out of stock.  It did not show them moving between cellars, or out of the country.  He confirmed that he had not been with each bottle every time it had been moved.  When they scan the bar code, they confirm that the bottle it represents matches the bottle they are moving, but he admitted they did not look at the corks to check this.

Cialone noted that one of the bar codes had tape on a corner of it and asked if they peeled off.  Curley noted that sometimes the labels came off.  Sometimes there will be other bar codes, typically on newer wines, from someone else’s database system, but Curley did not recall any on the October 2005 auction stock.

On the Zachy’s invoice, it said that the wines had been shipped to Palm Beach Florida.  Curley thought this was a default entry for Zachy’s; the Koch team would never ask for the wine to be shipped to his office.  Some of the wines were then moved to Florida.

Cialone turned back to the email exchange Curley had with Koch, discussing how the auction houses got things wrong, for example telling them that the wine was ready for shipment but was not.  This was something that they had seen with Acker Merrall and with Zachy’s, and Curley had told Koch about it.  They were frustrated that once they paid, if what was sent wasn’t correct, it was very hard to get the auction houses to rectify that, so they were trying to agree a protocol for payment.  In the case of smaller purchases, they were able to pay when they collected the wine, but for larger ones they needed to trust the auction houses somewhat.  In general, payments were being made between one to three weeks before the wine was received.  For the October 2005 auction, they did not receive the wine until 15 February 2006.

Curley did not know how the bar code labels were generated, what type of printer was used, or whether it was commercially available or proprietary software.

When the wine came in, Curley confirmed they would look at it. He would check levels, and examine for protruding or leaking corks but did not otherwise specifically examine corks.  Cialone suggested this took months; Curley contradicted him, saying it would be 10 days to two weeks at a time if it were a particularly large shipment.  Cialone presented an email from 15 February between Zachy’s and Curley, with Curley asking them what auctions would be delivered that week, and informing them it might take up to 60 days to inspect every bottle.  To his knowledge, Zachy’s did not complain about the time frame.

Curley could not remember if he had returned wines during this period or not, although he had certainly returned wines to Zachy’s in the past.  Cialone produced an email from May 2006 indicating that Curley had returned wines relating to the September and October 2005 auctions.  This included leaking and sunken corks, missing bottles, some with bad corks.  Curley pointed out that this wasn’t the auction being discussed in the case, but one from LA early in 2005.  There was one relating to the particular auction, in which the wrong bottle had been sent.  Cialone asked if Zachy’s was fine accepting the return, and Curley confirmed they were.  Cialone asked if there was anything to prevent the Koch team from bringing in an expert during that two and a half months; Curley replied, “I don’t need an expert to tell me that a ’92 isn’t a ‘98”.  He agreed that no one was preventing him from bringing someone in, and confirmed he was not a wine expert.

Cialone noted that there had been a lot of testimony in the case about a 1921 Petrus magnum that Koch had paid, and the Zachy’s catalogue had referred to part of the vintage being visible on the cork.  He asked if Curley had looked at the cork “to see if Zachy’s delivered what Mr Koch had paid for?”  Curley replied that he had not; he had looked at the front label, and checked to see if the condition of the bottle was good, and if the size was correct.  This was his standard procedure for every bottle.  He would not even necessarily look at the catalogue.  When they checked things in and out, they would look at the bar code, the vintage, the wine and the size, not at cork markings, label colour or anything else related to authentication.

Curley confirmed that he did know that Koch bought two magnums of 1945 Lafite that were in consecutive lots on the same day (which meant they would have sequential bar codes), which he knew from the invoice.  Cialone asked if, when he opened the two boxes that have sequential bar code numbers did he not notice that the labels were different.  Curley clarified that he was in a room with his staff, many of whom were opening boxes, checking bottles, and affixing bar codes, and he may not have actually opened both or even either of those boxes.  At any given time there might have been four to five people there.

Curley confirmed that Koch had a large amount of Lafite, ranging from 1805 to 2000, and these are on display.  However, Curley added that he had never noticed any yellowing on the label, as he had not looked at them closely.  There are probably 100 of the 1945s there, and some have torn labels, some are faded, some are stained.  They all look somewhat different.

Cialone asked if it was accurate that if the catalogue said something had a torn label they would check that it did.  Curley replied it was the other way around – if something had a torn label, or if there was something else wrong with it, they would either try and return it or, if it was just a torn label or one taped on, they would refer back to the catalogue to see if that was declared.

The court recessed for lunch.

On return, Cialone turned to the email Curley had sent to Jeff Zacharia on 15 February 2006 (the day the wines were received), asking for the source of the magnum of 1921 Petrus.  Zacharia had replied later the same day, and about 45 minutes later, Curley responded “Would you please ask the consignor to nail down the provenance”.  Curley could not remember who asked him to ask about the provenance, although he did know it was not Bill Koch.  Curley had not been discussing with anyone concerns about the 1921 Petrus magnum; someone, possibly Brad Goldstein, simply had asked him to ask the provenance questions.  Asked if Goldstein had raised issues about the bottle with him before Koch bought it, Curley replied that he had no recollection, although he did note it had been several years.

Cialone produced an email from Curley to Koch, dated 4th November 2005, a week after the October 2005 auction.  He had been going through notes from dealings with Sotheby’s, trying to figure out if Sotheby’s had told Koch to get rid of the 1921 Petrus magnums that he owned.  Curley remembered that Sotheby’s had come and done an appraisal in 2004, and had made some recommendations.

The email said that the day prior (i.e. 3rd November 2005), Curley had had a conversation with Goldstein, and he assumed that the two wines referred to in it were the 1921 Petrus and the 1865 Latour.  Curley confirmed that Goldstein’s role with respect to the wine collection was to investigate potentially counterfeit wine.

Cialone asked Curley to confirm that they had paid for the wine somewhere between one and three weeks after the auction; Curley responded that he had guessed this would be when they paid, as that was the standard timing.  He agreed that 3rd November was probably before the wine had been paid for.

Cialone then suggested that as at 3rd November, there was already a question regarding the authenticity of the 1921 Petrus, which had cost $30,000.  Curley replied that at this time, he had no idea about authenticity or anything like that.  He was concerned with the likelihood the wine might have turned to vinegar, not whether it was ever real to start with.

Cialone produced a report that had been generated by the Koch inventory system.  He highlighted the 1921 Petrus entries, and directed Curley’s attention to bottle 45861 that had been marked “consumed”, asking him if it was the bottle that Koch had earlier testified that he drank on 4 June 2004.  Curley replied that, looking at the inventory, he could not tell when it had been consumed.

Next, Frank Cialone gave Curley a report he suggested also came from Koch’s inventory system, but Curley responded that he had never seen it before in this format – it could be, but he could not confirm.

Wessel noted that the Koch team objected to the document coming into evidence.  They had not stipulated, unlike most of the other documents, as to either authenticity or admissibility.  The document turned out to have been from the Greenberg Zachy’s litigation, and Cialone claimed that it came from the Koch database, produced in response to a specific request made for information from the inventory tracking system about the movement of the bottles.

Wessel responded that when they gave this document to the Greenberg team, they had said they had a problem with it because they don’t know what it is, and added that Mark Curley had just testified that he did not know what it is.  He added that if Cialone wanted them to check the database for this document that night, he would do, but the request needed to be made.  Cialone argued that this was not a good faith objection.  Judge Oetken decided that Cialone could not ask Curley about the document, because he did not recognise it, but he could ask about the information, as Curley had responded that he recognised that.

Turning back to it, Curley confirmed that the bottle’s status was tracked using terms like “ordered” and “inventory”, and then on 18 June 2004 it was consumed.  Then, in 2007 it was put back into inventory, having apparently gone missing.  Curley testified this was a mistake on the part of his staff.  The bottle had been put back empty into the cellar in 2006, but when the staff did the inventory they counted it as full, as it was in a location just above the regular bottle racks.  He had sent it to be tested, and at that time, there was not a category for that, although these have now been added.

Cialone then asked about bottle 60055, and when it went to France.  Curley responded that he did not think it had gone to France.  He did not know the full extent of the reports that had been produced, but looking at what he had seen he agreed that could not tell from these documents if it had gone to France for testing, to Cape Cod to be examined by other people, or in and out of the Florida cellar.  However, he added that if he were given live access to the database, he could determine this information, adding that it was a well-travelled bottle.

Cialone asked who took bottle 60055 to France, and Curley replied that he had just said he did not think it went to France.  The bottles that did go he believed were taken by Jim Elroy.  Cialone expressed surprise that Elroy, who was only allowed in the cellar if escorted (trying to imply, clearly, that Elroy was not to be trusted, as if this was not standard, and best, practice), was allowed simply to remove bottles and take them to France for several months.  Curley replied that he would not remove them – staff would box them up, have the paperwork that was assigned to them, and Elroy would be allowed to take them to France.  Curley contradicted Cialone’s suggestion that other than the bar code and the fact a bottle had a 1950 Lafleur label, there was no way to differentiate it from any of the other magnums of 1950 Lafleur in Koch’s collection.  He explained that at the point when Elroy started taking things, they took pictures of everything.  He did not know if they took pictures of the corks, but they did of the labels.  However, they did not have a “nick and cut” policy on labels, and when bottles were moved, it was possible another nick or cut might happen.

Turning to a different subject, Curley confirmed he knew Brian Orcutt, whom Bill Koch paid to bid for him at auction.  Koch paid Orcutt 5% of what was bid, so the higher he bid, the more he got paid.  (Something wrong with this picture to you?  I confess this sort of arrangement makes me somewhat uncomfortable – it’s just too ripe for a conflict of interest.)  Curley agreed that he thought that Orcutt’s fees were “extremely high” for what he was doing.  There was then some argument about this, since at the pre-trial conference the Koch team had agreed not to seek Orcutt’s fees from Greenberg should they win.

Mark Curley: re-direct

Bruce Wessel redirected Curley, returning to the question of the document tracking the movement of some bottles, and the empty bottle put back in the rack, giving Curley the chance to explain this in greater detail.  He noted that they keep all the old bottles; Koch makes walls out of them and lights it from behind, and he keeps the labels to make wallpaper out of in the bathrooms down by the wine cellar, and uses the corks for various purposes, including a ceiling in one of the bathrooms.  With the bottle in question, it was empty, but they wanted to investigate it, so Curley put it in the cellar as the safest place to keep it – it would not get thrown out, or have its label stripped, or made into a wall.  When the staff did the inventory, and they scanned the bottle, and it got put back into inventory inadvertently.  The “Missing” status was simply a default, because they had not added in the other categories such as shipped to France.  He confirmed that the bottle had been consumed in June 2004.

Curley confirmed that he had brought that empty bottle with him to the court room, along with another bottle that was not part of the 24 in the case, at the request of the Greenberg team.  Then, yesterday, they had asked him to bring another five bottles.  He confirmed that each time he had been so requested, he had complied.

Wessel noted that Curley was probably the person who knew the most about the Koch wine cellars in terms of invoices, and appraisals, and inventory, and Curley agreed that he is sometimes asked to look for things, for example in this case information on an 1895 Latour and a 1921 Petrus.  Other than doing this and responding to the email that was sent, he did not have any other involvement in the matter.

Wessel noted that on Lot 6 there was a reference to a leaking bottle and “a puddle in the box”, which Curley confirmed was an example of the type of problem they might discover when looking at the boxes.  The process of the visual examination is carried out by Curley and his team, and is quite cursory other than to confirm the information on the label; they would only examine a cork, for example, if they noticed a puddle.

With reference to the statement Curley had made that it might take 60 days to check everything in, he confirmed that this was because they had thousands of bottles coming in, and he wanted to ensure that Zachy’s knew this would not be a quick process.  During this time there were a number of other people helping with the checking in, and it was not in any way an authentication process.  They checked for levels, signs of leakage, signs of damage to the bottle or the capsule, or other obvious physical attributes of the bottle.  Curley added that he had still no idea how to authenticate a bottle of wine.

Handing Curley bottle 60055, Wessel asked if, looking at the bottle, Curley could tell anything about the cork.  He replied that he could tell if it were leaking, but that was it.  Going through the process of checking a wine in, the items would be checked in one lot at a time, whether that was one or 12 bottles.  They would take the bar codes that were assigned to that lot, and go sequentially down, being very careful about putting the bar code on the lot, and then on the outside of the box, putting the bottle back in the box, and then putting the box back in the crate cellar and taking the next box out.

Curley confirmed that the bar codes remain on the bottle, and that he had checked the information about the 24 bottles in this case.  It matched what had appeared on the database extract presented into evidence.

Mark Curley was allowed to step down.

Click here for Part 16.