Greenberg vs Koch Trial: Part 9

Day Four: Monday 1 April (continued)

Witness: Eric Greenberg (re-cross)

Hueston finished, and Cialone rose to re-cross-examine.  He asked if Greenberg had ever seen exhibit 530, the email exchange with Jeff Zacharia regarding the provenance of the 1921 Petrus, at his deposition.  Greenberg replied that no one showed it to him at his deposition.

Cialone then showed Greenberg one of the emails to George Derbalian, saying that the Jayer wines had corks of the AC (i.e. Village-level) wines “like we saw at Daniel that night”.  This referred to a dinner that Derbalian and Greenberg had had at Daniel after Maureen Downey had delivered to him the two bottles that Martine Saunier had determined were not authentic.  In other words, he tasted bottles of the exact same indicia.

He turned to the email from 28 October 2004, to Jeff Zacharia, going through the estimate of reserves, asking Greenberg what he meant by them having wine in there that was his, and there being much that was missing.  Greenberg replied that there was wine on the list not from him, and some of his was not there – he felt it was an issue of poor cutting and pasting of a spreadsheet.  The missing wines represented about 60% – 70% of the value of the sale.  With reference to some of the reserves being “absurd”, this was Greenberg’s reaction to the minimum prices put on his wines, which he felt were well below their worth.  This did not bother him, because “when you have a good business relationship with somebody, you back and forth and try to get things right”.  Greenberg commented that his lack of faith had nothing to do with the authentication of the wines, but in the accuracy of the list of his consignment.

Cialone queried who B Nelson was.  Greenberg replied that he was a former Zachy’s employee who got replaced [because] his follow up was not very good.  He had gone by the time of the October 2005 auction.

Cialone mentioned Michael Egan’s conclusions about the Lafleur bottles, and asked Greenberg to recall his exchange with John Kapon on them, in which Greenberg had not agreed with Kapon’s comments on the cork markings.  Greenberg confirmed that Kapon had not raised any other reasons why he thought those wines were not authentic.

Cialone then put up the agreement between Zachy’s and Greenberg, having commented that Hueston had made much of Greenberg’s involvement in lotting.  Cialone pointed out where the agreement specified that the seller would be involved in lotting, and would have the final say in it.  He established that nowhere in the contract did it say that the seller would be involved in describing the wine, or authenticating it.  Greenberg confirmed that he was not asked to fly to New York to personally inspect 17,000 bottles for sale; that was why he had hired Zachy’s.  In his experience of auctions, he has never been his job to write the catalogue descriptions and this would, in fact, not be appropriate.

They then turned to the interrogatory response, which established that where Greenberg had found a suspect wine to be legitimate, it was returned to his collection, in some cases because a producer verified an aspect of it.  Cialone asked if Greenberg saw a problem with returning a wine he now thought was real to the collection.  Greenberg confirmed he did not see a problem.

Cialone turned to Rudy Kurniawan, and the “suspects” wines he had referred to in his email.  These were magnums of 1961 Latour a Pomerol.  Greenberg confirmed that these were wines tasted with Kurniawan, and that had been authenticated by Zachy’s in 2003.  He noted that Koch had bought three of them in the same auction, and that those were not in this case.  Greenberg had told Rudy Kurniawan that he thought they were genuine, and that he (Rudy) did not know what he was talking about.  Greenberg confirmed he believed at the time and still did believe they were genuine.

Asking about the “suspects” wine, Cialone asked if Greenberg thought there was a problem with Kurniawan offering to sell the wine, given that Greenberg thought it was genuine.  Greenberg replied no, but he wouldn’t let Kurniawan sell it.

Greenberg confirmed that his opinion of Rudy Kurniawan had since changed.  In October 2007, Greenberg was doing a large single-seller auction, with 11,000 bottles, called the Golden Seller.  (He remembers it because this was the day he was served for the case in question.)  On that day, John Kapon of Acker Merrall Condit told Greenberg that he would never accept any wine that had a Rudy provenance in an AMC auction, because he did not have a belief they were authentic.  (This is a fascinating statement on the part of John Kapon at this date.  It’s important to remember at this stage that Rudy Kurniawan was still selling wine through AMC.  In fact, the infamous Ponsot bottles were included in the auction for April 2008, some seven months later.  If Greenberg is telling the truth here, and is accurate in his recollection, it means that Kapon knowingly put fake wine up for sale in April 2008.)

This was a shock to Greenberg, because he had $1m of Kurniawan stock.  Greenberg confirmed that between the 2004 “suspects” email and the 2007 interaction with John Kapon, he had continued to buy wine from Rudy Kurniawan, who had also sold $40m worth of wine on the market.  After the discussion with John Kapon, Greenberg “forced a refund” of all his wines from Rudy Kurniawan that was facilitated by AMC, and every (full) bottle went back to him.  He knew which wines he’d bought from Kurniawan because he had put stickers on them.

Cialone asked if he thought Kurniawan was a “bad guy” when he gave his deposition, and when he got the email about “suspects” Bordeaux in 2004.  Greenberg said that he said in his deposition that Rudy was a “shit”, although he regrets using the word now (that the jury can hear him), but that at the time he bought wine from Rudy, he thought he was a good guy, and the wine was real.

Turning to Michael Egan’s report, Cialone noted that although Egan concluded counterfeit, he concedes some of the vertical branding on the Petrus bottles.  Nowhere in his report does Egan say that because the corks are vertically branded, they must be counterfeit.

Cialone asked Greenberg about lawsuits he had filed in the past.  He had indicated that he had a lawsuit against someone who bought wine from him at Sotheby’s, but who did not pay their bill, and Sotheby’s could not get collection.  Greenberg got the details of the buyer, and filed a suit in New York, which has not been pursued.  The filing was in 2003, and there was a default judgement, but there were no depositions, no court appearances, nothing.  He had forgotten about it by the time of his deposition.

Regarding the suit against William Edgerton, Cialone asked why Greenberg considered this part of the Koch case.  Greenberg replied that Edgerton was once his expert witness working for his attorney in the Royal Wine matter, and he had a duty of confidentiality under legal ethics and standards, and it was part of the Greenberg team’s defence strategy to file the complaint.  That case got filed, but then was dropped after 60 days.  Cialone noted that Hueston had said that once Greenberg got his money, he dropped those threats.  He then asked if Bill Koch had ever requested his money back.  Greenberg replied no, at the same time as Hueston objected, which was sustained by the judge.Cialone averred that the Koch team had opened the door to that line of questioning, at which point Hueston asked to address it at the side bar, i.e. away from the jury.

(At the side bar)

Cialone argued that his line of questioning did not go to Greenberg making the offer.  Arthur Shartsis added that one of Koch’s representatives had sought and received a refund for certain bottles, with shrunken corks, etc. and these were refunded.  The fact, Shartsis stated, that Koch sought refunds for certain bottles but not others is relevant to the transaction itself.  Not going back for a refund in this case deprives Greenberg of the right to explain what happened.

Oetken asked what the relevance is of whether Koch asked for his money back.  Shartsis explained that Koch had never asked for his money back for these wines.  Hueston had asked if Greenberg thought the lawsuit was unfair, and because the refund offer is not admissible, Greenberg cannot say “I thought it was unfair because I offered him his money back”; it appears as if the only way Koch could get reimbursed was to sue.

Moez Kaba, for Koch, argued that they were trying to say that Koch did not ask for a refund, but Greenberg would have gladly given it if they asked, “I always give the money back”.  He emphasised that it is not a breach of contract clause at action.  Bringing it up would make it seem that it was Bill Koch who denied the refund.  He emphasised that Oetken had ruled it was not admissible, that it had nothing to do with the consumer fraud case of action.  Someone sometimes asking for their money hack has no relevance in a fraud case.

Hueston then emphasised that Greenberg had denied what Hueston had asserted ( “I am not litigious; I’m not litigious”) and that was the end of the questioning.  Those questions had been made to refute the impression that Greenberg was always a victim, never the instigator of any legislation.  It was not a door opener to the refund issue.

Shartsis argued that there was a parallel with the Royal dispute – Greenberg got his money back there for having bad wine, and Hueston would argue that the jury should get Koch his money back from Greenberg by this means.

Oetken replied that the question in the case is whether it is relevant to fraud, and the fraud charged is not what happened after the transaction.  He sustained Hueston’s objection.

Greenberg was allowed to step down.

Hueston moved to be allowed to play part of Mr Sokolin’s deposition.  Cialone objected on the grounds of hearsay, while Hueston countered it was impeachment.  It was the testimony from Mr Sokolin saying that he remembered clearly that his life was definitely threatened by Greenberg, and Hueston felt the jury was entitled to see it and judge his credibility.  Oetken allowed it.

Click here for Part 10.