Two UK Companies Shut Down For Ripping Off Wine Investors

Stephen Little

23 May 2014

Two London-based companies that claimed they could help victims of previous wine investment scams, have been wound up in the High Court following an investigation by the .

The Insolvency Service said in a statement that Capital Bordeaux Investments Limited targeted victims of previous wine investment companies and falsely represented that it could assist them in recovering their losses.

Investors were told that the company would be able to recover and sell their previous wine investments, even if these were made through a company which had gone into liquidation.

Capital Bordeaux Investment Corporate Limited, the second of the two companies, meanwhile, facilitated the operation of this business by allowing its bank account to be used to receive funds from investors. Its bank account shows receipts of £243,980 ($411,653).

The investigation found no evidence to show that any wine was bought by either company. Both companies were wound-up on 14 May.

“These companies cynically targeted people who had already lost money in other wine investment scams and exploited their desire to try and recover some of their original investment. The companies were incapable of recovering such losses. Significantly, none of the funds received from investors were used to buy wine and were instead used for the benefit of those in control of the companies,” said Colin Cronin, an investigation supervisor with the Insolvency Service.

“I would urge victims of wine investment scams to exercise great caution if approached by companies which purport to be able to assist in recovering their past losses,” he added.

In recent years, fine wine has moved from being a niche investment to one that is increasingly seen as mainstream by the investment community. According to a survey of wealth trends by the real estate firm Knight Frank last year, fine wine was the third most popular investment arena for high net worth individuals (defined as those with more than $30 million in net assets) in 2012.

The popularity of investment in wine means there are arguments about certain techniques. For example, the practice in the wine investment world of pre-selling the latest vintage, known as en primeur, has come in for a broadside by The Wine Investment Fund, a London-based fund only investing in Bordeaux fine wines. The Wine Investment Fund says that since its founding in 2003, it has questioned the logic of buying wines en primeur because, it argues, returns achievable are not justified by the higher volatility in the price of these wines during this period. For more on this story, click here.