Greenberg vs Koch Trial: Part 6

Day Three: Thursday 28th March 2013

Witness: Eric Greenberg – continued

After lunch, John Hueston resumed questioning Eric Greenberg.  He asked if Jeff Zacharia had specifically asked Greenberg what the source of his older wines was before the October 2005 auction; Greenberg denied that he had.  Hueston presented an email from Jeff Zacharia to Thierry Lovato, cc Eric Greenberg and others, dated 24 August 2005.  Greenberg admitted being familiar with the email.  In the email, Zacharia commented that it would help Greenberg realise more money if they could get provenance for it, because people are “more and more cautious when buying these older bottles”.  Asked if he recalled the email, Greenberg replied that today he did.

Hueston then moved into evidence a further email, to Greenberg himself and cc Thierry Lovato, also dated 24 August 2005.  It embedded the previously discussed email within it, and included a response to that from Lovato, saying that he understood the need for provenance information, but unfortunately he did not have any records, because Greenberg had purchased most of these older wines before Lovato’s time, and suggested that Zacharia ask Greenberg for them.

Zacharia then did that, noting that provenance is becoming a hotter issue for them as more and more buyers are looking for that sort of information, and asking for Greenberg’s thoughts.  Hueston repeated that the hotter and hotter issue is knowing provenance, to which Greenberg responded (cynically, but undoubtedly correctly) that the hotter and hotter issue was getting high prices for his clients.  Lovato had authenticated the bottles (according to Greenberg’s testimony), and Zacharia was looking to get more money for them through the provenance, which he did not have, in that he had sources for the wine – his direct counterpart – but he did not have the history back to the origin of the bottle for the wines dating back to the 19th century.

Hueston suggested that Greenberg, in the interest of getting more money for the client (himself), had tried to provide Zacharia with some information.  Greenberg replied “not really”, at which point Hueston moved into evidence an email dated 25th August at 12.58pm from Greenberg to Zacharia.  In this email, Greenberg responded that he could not provide provenance – he had many sources and could not tie them to the individual bottles.  Greenberg agreed this is what he had written, adding that he wasn’t interested in getting more money for them because he couldn’t represent exactly where many of the bottles came from.

However, 10 minutes later at 1.08pm Greenberg sent Zacharia an email saying “The only thing I can tell you about the older Bordeaux is that they were purchased from Eddie Gelsman at Wine Library or Dave Sokolin at D. Sokolin in Southampton”.  Hueston noted that another source of his older Bordeaux was Royal Wine, but this had not been mentioned in the email.  Greenberg claimed that Zachy’s already knew this, and that other sources, including Christie’s and Sotheby’s had also been left out – he was referring only to bottles he could definitively trace.

Greenberg then protested that “you guys” (i.e. Koch and his legal team) were trying to make a really big deal out of Royal, when he had returned fake bottles to many sources, and “Royal wasn’t the big deal.  The big deal was a lot of people.  The entire industry was riddled with it.” (True, actually, although some, of course, were worse than others.  And there is an irony to Greenberg’s comments here.)

Hueston replied that when Serena Sutcliffe discovered that Royal wine was in Greenberg’s cellar, she told him they were a source of fake wine.  Greenberg agreed this, and added that Sutcliffe had said in an email that she believed Wine Library to be a source of fake wine, and that she had concealed this from him.

Hueston pointed out that Sotheby’s was interested in knowing that Royal Wine was in Greenberg’s cellar. Greenberg claimed that they knew this, and they also knew he had Wine Library, D. Sokolin and many others in his cellar.  Greenberg claimed he had told Zacharia only about the Wine Library and Sokolin wines because they could be tied back to specific bottles.

Greenberg remarked that he had told Jeff Zacharia “many, many, many times” that he had bought wines from Royal, but that it had all been done in person, not by email, adding that he’d proposed to his wife in person too.  Hueston noted that Greenberg had put in writing two sources that had not raised any concerns with Christie’s and Sotheby’s.  Greenberg then lay the non-disclosure in the auction catalogue of Royal Wines as a source at Zachy’s door, claiming they wrote the catalogue, and they decided not to disclose it.  Greenberg claimed that they acknowledged in their depositions that Royal wine was a source, so that was proof he had told them.  Hueston remarked that they would see what Jeff Zacharia had to say.

Hueston then offered into evidence a letter of 26th June 2002 to Jay Cortese of Fireman’s Fund Insurance, from Anthony Coles, cc Eric Greenberg, with an attachment.  Asked if he recognised it, Greenberg claimed only through discovery in this case.  The attachment was a schedule prepared by Greenberg on 10 June 2002, describing Greenberg’s total purchases from Royal, those he believed to be fake and those he thought were questionable.  The letter was a notice of loss, in case he could claim, but the insurance company denied.  Greenberg claimed he had “not once” asked them for money, at which point Hueston asked if he was seeking sympathy; Greenberg replied that would have been nice, but he did not ask for that either. He had been hoping that the insurance company would investigate, and then if they found something incorrect, pay him, and that they would take care of Royal and it would no longer be his problem.

Hueston then noted that the total of fake wines on the schedule was $912,301 of fake wines, excluding the questionable ones.  Greenberg agreed, but stated this was a belief, not a determination of fact.  (Awfully precise for something that’s just a belief.)  Hueston then commented that these were just “wild-ass guesses”, as Greenberg had testified in his deposition.  Greenberg confirmed he had not told the insurance company these were just “wild-ass guesses”, which were the wines with the question marks next to them.  The sums for the fake wines were, in contrast, guesses, but not wild-ass guesses, but their “guess” status was not disclosed either.  Greenberg said that everyone knows that insurance companies do their own examinations and don’t take anything you say to be the truth.  Hueston then clarified: because Greenberg felt that they are not going to be taking anything he says seriously, he felt it was acceptable to submit a document that falsely indicated he had done serious investigation when, in fact, it was based on “wild-ass guessing”.  Greenberg replied that he had submitted what he thought was a potential loss for them to investigate.

Asked if he had spoken with a representative of the Fireman’s Fund, Greenberg replied he did not recall the conversation, but he knows there were notes produced.  The court was then played, at Hueston’s request, part of Greenberg’s deposition in which he said that he did not speak to them; his attorney did.  Greenberg said after the deposition had been played that he knew his attorney had talked to them, and he would admit that he probably did, but he could not recall the conversation.

Hueston then moved into evidence a set of notes, handwritten by Jay Cortese, summarising his conversation with Eric Greenberg on 5th June 2002.  It set out a number of statements in it, including the size of Greenberg’s cellar, the amount he had spent with Royal, the fact that Sotheby’s had informed him of counterfeit wines in his collection, that he had hired a “top dog” New York lawyer, and that up to $1.6million of his wine might be fraudulent.  Greenberg denied any recollection of any part of this conversation.

Greenberg then further denied any recollection of telling Fireman’s Fund that he wanted to put Royal out of business, that he did not want to negotiate bottle by bottle because he didn’t trust them, and he would not give the wine back because they would probably sell it to someone else.  He also denied any recollection of saying “This whole fraud is theft”.  He had no recollection of telling Fireman’s Fund that it was just like buying a fake Picasso, and in fact disagreed with the statement, commenting that “Grape juice in a bottle is far different from a…. $30 million Picasso”.  He agreed “It would be” when Hueston asked if this was a figment of Cortese’s imagination.

Hueston then asked if Fireman’s Fund was the only insurance company to which a claim had been submitted, and Greenberg confirmed it was not, that his attorneys had submitted a notification of loss to AIG.  He emphasised again that his purpose was to get the insurance companies to investigate, and ideally for them to have paid him and dealt with Royal in whatever way they saw fit.  Greenberg agreed that he had not sent the schedule he sent to AIG and Fireman’s Fund to Zachy’s.

Hueston then switched to speak about John Kapon, CEO of Acker Merrall & Condit.  Greenberg confirmed he had sold several times wine through AMC, and that as part of these sales he would from time to time have contact and communication with John Kapon.  Greenberg also confirmed that he had testified he would only sell wine through auction houses he believed did a good job of authenticating wine, and that he had relied on Kapon to authenticate wines that he was intending to sell at the 2003 auction that AMC did for Greenberg.  Hueston produced that auction catalogue, and turned to the introduction of Greenberg’s lots, in which it stated that it was the “first of hopefully many offerings”.  Greenberg commented that this was the first time he had read these words, but agreed that it was the first of several auctions through AMC.

Hueston then produced an email from John Kapon to Eric Greenberg, dated 6th April 2003.  Frank Cialone, Greenberg’s lawyer, objected on the grounds of hearsay.  Hueston argued that it goes to knowledge, intent, and similar issues covered with respect to similar emails discussed.  Judge Oetken accepted it into evidence.  The email was sent after the AMC auction, and attached his post-sale notice and invoice.  The email also noted that there were a lot of things that did not sell, and added “I believe that your collection needs to stay more low-key due to… many whispers in the dark.”  He recommended that next time they not put Greenberg’s wines on the cover, or draw excess attention to them.

Greenberg claimed that Sotheby’s intended to ruin his auctions on authenticity reasons, and that there was another person who made false allegations about him concerning wines that were rejected by Zachy’s being in this AMC auction.  He claimed that that person has spread many rumours about his collection, and that was probably what had happened with the AMC auction.

Hueston noted that Kapon did not mention Sotheby’s in his email.  Greenberg commented that the day before they had heard that Sotheby’s would ruin any auction Greenberg did on authenticity issues.  He added that Sotheby’s was a world-wide organisation, and he didn’t know how many people they had whispering.  He then commented that he didn’t know where Hueston was going with this, but to him it was exasperating.  (To him it was exasperating?  Awwww.  Poor wee baby.)  According to Greenberg, people in the wine trade disparage others constantly, because of pettiness and jealousy, and he has been a victim of that.

Hueston asked if John Kapon was trying to disparage Greenberg.  Greenberg replied that Kapon is one of his very close friends, to whom he’s not been able to speak for a long time, because of this lawsuit and the fact that Bill Koch is also suing him.  Hueston asked if Kapon’s recommendation as stated in the email was to avoid putting wines on the cover or drawing excess attention to them.  Greenberg accepted that this is what the document said.

Hueston then noted that Zachy’s had a contractual obligation not to use Greenberg’s name in the catalogue (although Greenberg did not remember this).  Greenberg commented that it was going to be anonymous, but that he had talked to “numerous, numerous potential buyers” before the auction, so despite his name not being published it was no secret in the wine world.  There were not many people who could have sold 17,000 bottles of wine, and everyone knew who it was, especially the 40-something people who participated in the pre-auction tastings, this group including Brian Orcutt, Bill Koch’s buyer.  Hueston put the contract with Zachy’s up on the screen, which stated that Zachy’s would not use or disclose the seller’s name without express consent.  This consent was not given.

Hueston then remarked that Greenberg sold nearly $20million of wine at the “Imperial Cellar” auction in 2010 with AMC; Greenberg rather churlishly commented that it was AMC who sold the wine, as he was not licensed for auctions.  He agreed that he had relied upon John Kapon, Gil Lempert-Schwarz and Cru Consulting (that would be Robert Bohr, a fan of Rudy Kurniawan’s wines) to authenticate these wines.  Each had, according to Greenberg, full right of veto over any bottle.  (Well, with this group’s track record, that’s reassuring… no?  Who could possibly be missing from this line up… oh, wait…)

Hueston presented an email exchange between Kapon and Greenberg.  Kapon’s email of November 23rd 2004 stated that he had held off putting some magnums into the December sale because there was not sufficient time to make a decision on them.  Greenberg agreed this exchange, and then added that Kapon said that Rudy Kurniawan was coming to town and Kapon wanted Rudy to authenticate them, and that he, Greenberg, took exception to this, because “[t]here was no way  in the world that I trusted Rudy Kurniawan as an expert to be looking at my wine or authenticating my wine”.  (I told you to wait… at least his judgement of one authenticator is accurate.)

Greenberg added that Koch is suing Rudy, at which point Judge Oetken intervened to ask Greenberg to refrain from doing anything but answering the question.

Hueston asked if Greenberg still did business with Kurniawan “after this explosion”, to which Greenberg responded that he thought Rudy’s wines were real.  (Really?!)  This did not, however, mean he was an authenticator of wine.

Hueston returned to the email between Kapon and Greenberg.  Greenberg’s first paragraph was that he had made the whole consignment based on Kapon soliciting him to sell his magnums through AMC, and that if they were not in the sale, nothing was in the sale.  Greenberg agreed he had made this demand, but denied he was angry with Kapon, despite having written “I am fucking pissed”.  He argued that if one knows John Kapon one knows “he speaks like a sailor”, and that they had had a lot of nights out together where he would not want his children to hear the conversations, the tone, and the words used.  Greenberg did accept that the only such language in this email chain came from him.

Greenberg argued that he was most annoyed at having the integrity of his cellar questioned, and in particular at having it verified by another collector, especially one to whom he had returned a million dollars of fake wine in 2008.  Greenberg had written in the email that if his magnums were good enough for Zachy’s, which he regarded as the gold standard of authentication (and in the days Maureen Downey worked for them, they probably were up there) and based on Zachy’s having told them the magnums were real, and on the taste of the wine and other indicia being identical, he thought the wines were real.  (Interesting how he can know the taste of something still in the bottle.)

(There was then an exchange which must have driven John Hueston mad with frustration, because even I was shouting at the transcript.)  Hueston asked if Greenberg had told anyone at Zachy’s that John Kapon had expressed doubts about some of his magnums.  Greenberg asked which magnums, Hueston replied he was asking about the ones at issue here, and Greenberg said he did not know what Hueston was talking about and therefore could not answer the question (repeat with variations several times).  Hueston finally asked if Greenberg figured that the magnums AMC had were close enough to the types that Zachy’s were selling that Kapon should just shut up and sell them.  Greenberg replied that he had eventually said to Kapon that it wasn’t worth the fight, and just to send the wine back.  He added, “if somebody doesn’t want my wine, they can send it back.  I’ll give them their money back, for god’s sakes”.  (Desperate to get that refund offer to Koch in front of the jury, isn’t he.)

Hueston asked if it was Greenberg’s claim that none of the counterfeit magnums that Koch purchased are the same as the magnums that John Kapon had rejected.  Greenberg replied that Kapon had only rejected the Lafleurs, and he does not know if they are the same bottles, because he has many segregated in his cellar.  Greenberg then rambled, almost certainly deliberately, through a number of wines that Koch had bought, and some that Kapon had not rejected (it not being clear if Koch had bought these or not) before Hueston asked him to focus on the question.

Hueston then asked Greenberg to confirm that magnums of Bordeaux Right Bank wines from 1900 to 1961 are extremely rare; Greenberg replied that he had no opinion on this any longer, because of all the litigation that was going on.  Hueston remarked that this was what was represented to the buyers in the October 2005 catalogue.  Greenberg argued that it was Jeff Zacharia who was the author of this statement, that it was his document, his auction company, his license, and that he had control and choice over everything in that auction.  Hueston once again commented that the jury would decide the level of Greenberg’s authorship.  Greenberg conceded that he did not object to the language that these magnums were extremely rare.  He grudgingly agreed that “the wines that were allegedly sold by Zachys to Mr Koch do include those wines”.

Greenberg also conceded that the magnums he had sent to John Kapon included Bordeaux Right Bank wines from 1900 to 1961, and that Kapon had sent detailed notes to him on the wines in question.

John Hueston then produced another email exchange between Kapon and Greenberg, dated 28th November 2004.  In the email, Kapon lists the bottles and the details he would disclose about them.  For a magnum of 1921 Cheval Blanc, this included the level (top shoulder), the fact that it was a bin soiled label, that it was a photocopied label, an old eroded cork, vintage but no branding on the cork, outstanding colour and condition.  (Note: if ever looking at a purchase and you have the combination of 1921, and old eroded cork, do you seriously expect to find “outstanding colour and condition”?  No, didn’t think so.)

Greenberg agreed that Bill Koch alleged that he had purchased two fake 1921 Cheval Blanc magnums from him.  Hueston referred him back to Gil Lempert-Schwarz’s rebuttal expert report which had two magnums of 1921 Cheval Blanc.  Lempert-Schwarz’s opinion is that the label is a reproduction of an originally engraved label, which, Hueston claimed, tied to Kapon’s notes about a photocopied label.  Greenberg argued that a photocopied label did not mean a wine was not authentic, and that Hueston had not shown him any wines that he thought was inauthentic.

Hueston noted that Kapon had said that if he were to offer the wine for sale, the catalogue notes would need to disclose that it had a photocopied label.  Greenberg agreed this would be absolutely necessary “[o]therwise I’d be dishonest”.

Hueston returned to Lempert-Schwarz’s opinion, which claimed that “Under no circumstances” could authenticity be determined one way or another until a bottle has been opened, tasted and tested.  Lempert-Schwarz also wrote that much of the writing on the cork had degraded so that not much is visible (Greenberg interjected that at 92 years old, this was not surprising), and that it was printed onto the cork rather than being branded.  Hueston compared this to John Kapon’s statement that the 1921 Cheval Blanc had a vintage but no branding.

Replying to Hueston’s subsequent question, Greenberg said that he did not tell Zachy’s to catalogue the 1921 Cheval Blanc with a note saying it had a photocopied label, because it was Zachy’s policy that they wrote all the representations in their catalogue and that was a condition of doing business with them.  Asked if they would have allowed him to tell them about a photocopied label, Greenberg added that Zachy’s did not want him to tell them anything – they were the experts.

Hueston asked Greenberg to clarify if it was his testimony that Jeff Zacharia had no interest in hearing any evidence or clues that the bottle Greenberg was offering was inauthentic.  Greenberg started to reply “that the bottle is not…” and then corrected himself to say that he hadn’t then believed the bottle to be inauthentic.

Zachy’s Auction Listing

Greenberg confirmed that Gil Lempert-Schwarz had recommended the 1921 Cheval Blanc magnum be tasted or tested, and that both Lempert-Schwarz and John Kapon had concluded that it had a photocopied label.  Lempert-Schwarz had found no branding on the cork of one of them, and Kapon had said he would need to disclose vintage on cork but no branding.

Turning to the Zachy’s 2005 catalogue, Hueston noted that there was no such disclosure on the entry for the 1921 Cheval Blanc that was offered for sale.  Greenberg said that it was correct that Zachy’s had not put such a disclosure in its catalogue, and he had not seen it nor reviewed it before the auction.  Greenberg had not informed Jeff Zacharia of the label and branding issue because he thought it was authentic, as did Zachy’s and Acker Merrall & Condit.

Hueston then focused on the 1945 Lafite, which Kapon had said that if he were to list it in the catalogue, he would need to disclose, inter alia, that it had a photocopied label.  Greenberg interjected to say it was a laser printed label, so Kapon was wrong about it (because a laser printed label on a 1945 Lafite, or indeed any bottle of Lafite, would be just fine?).  The Lempert-Schwarz report, Hueston pointed out, states that the bottle is a “blatant reproduction”.  Greenberg replied “yes”, and then added that he said the cork bears all the correct markings, so that he thought it was authentic, as did Zachy’s and Acker Merrall & Condit.  He added that Hueston would not be able to show one bottle “except for the inadvertently placed bottle of ’28 Latour” that he had any knowledge of or belief that it was not authentic.  Hueston moved “to strike after “Yes”, and Oetken cautioned the witness to answer the question.

Hueston again asked Greenberg if both his expert and John Kapon had said that the magnum of supposed 1945 Lafite had a photocopied label, or a blatant reproduction of a label.  Greenberg said that it was so blatant it was obvious, and Hueston noted that it was not so obvious that it appeared in the catalogue for his October 2005 sale.  Greenberg again denied any responsibility for this, blaming Zachy’s for any omissions or errors.

With respect to the Lafleurs, Hueston pointed out that Kapon had identified what he referred to as “one fundamental problem” – that the corks all had a vertical, oval Lafleur brand, which they only started using after 1966.  Kapon had not suggested disclosing this in the catalogue, but had in fact written “I cannot offer those Lafleurs in good conscience”.  Greenberg said that John Kapon had a different belief to his own, although he confirmed that he still uses Kapon for authentication.

Hueston noted that after Kapon telling Greenberg that he could not sell the Lafleurs, Greenberg nonetheless offered them for sale in the Zachy’s auction of October 2005.  Greenberg replied that he sold them in 2003, 2004 and 2005, and that there were three that Koch’s team had dropped from the case a week ago that had the same cork stamps.  Hueston replied that he was trying to get an answer, and Greenberg agreed that yes, he had sold them in October 2005.  Hueston pointed out that nowhere in the catalogue is there a disclosure that someone Greenberg considered an expert, John Kapon, would not have sold them because of the cork branding issues.  Greenberg then described a tasting note from Fritz Hatton of Zachy’s in which he described enjoying magnums with the same branding.  (Two notes here, which is that Hatton did not mention the branding, and that these wines were on lists of 34 bottles that Hatton specifically recommended to Zachy’s be excluded from the auction because of authenticity concerns.)

Hueston then noted that Greenberg had been repeatedly saying, despite not having been asked the question, that he disagreed with John Kapon’s opinion on the Lafleurs.  He had repeatedly told him so, although admitted this had never been by email.  Hueston produced an email from Greenberg to Kapon, in which he somewhat sarcastically asked if both Petrus and Lafleur changed corks in 1966 (because it seemed like too much of a coincidence).  Of the 24 bottles at issue in the suit, 12 are Lafleur magnums from before 1966, each of which has a vertically branded cork like John Kapon described in his email.  Greenberg added that this included the three 1947s that were dropped from the case.

The court took a brief break, after which Hueston returned to John Kapon’s email to Eric Greenberg of 28th November, 2004.  After discussing the Lafleurs, Kapon then listed a number of other problematic bottles, including a 61 L’Evangile, a 61 Trotanoy, an 81 Clos L’Eglise and a 61 La Chapelle.  Greenberg claimed that Kapon said he would catalogue them in a certain way, saying they had photocopied labels, but that Kapon thought they were good wines.  Hueston noted Kapon’s comments: “The 1961 La Chapelle is clearly a fake to me.  I could not sell it.”  (And when John Kapon says it’s a fake…..)

Kapon then went on to say “I am trying to run the most reputable business sin the auction game right now which will have long term benefits.” (He wrote this?) Kapon wrote in the email that it was Greenberg who was insistent on selling the magnums, and that if he was confident about them after inspection, it would not be a problem.  Greenberg averred that he did not believe it was he who had insisted on the magnums being in the sale.  Kapon continued by asking Greenberg not to bully him into offering the wines.  Greenberg denied that he had threatened to pull the whole sale from AMC if Kapon did not accept the magnums; he noted that he asked Kapon to send the magnums back and they did the sale.  Hueston pressed on the threat – Greenberg accepted that in an earlier email he may have written that, but he did not carry it through.  He added that John Kapon has since auctioned 30,000 bottles of wine for him. He denied yelling at Kapon on the phone, and that there had been an argument on the matter.

Hueston had no further questions for Greenberg.

Click Here for Part 7.