Double Jeopardy: How did Maureen Downey turn $10 million of fake wine into $683 million in 54 months?
In an interview published in Decanter magazine in April 2014, Maureen Downey – founder and owner of San Francisco-based Chais Consulting – was quoted as saying that "The fact is that from 2002, Rudy was selling as much as $1 million worth of wine each year up to his arrest."
(Rudy Kurniawan was a fraudster who sold counterfeit fine wines. He was arrested in March 2012.)
This means that, at best, he sold $10 million of wine. And, as Miss Downey herself admits in this interview, "we’ve no idea how much of that was fake. But clearly, a lot of it was."
How did Maureen Downey go from an implied $10 million in April 2014 to the improbable $550 million figure that has been circulated since at least December 2016? A 55-fold increase in the value of fine wines over a 32-month period defies plausibility.
In fact, the figure keeps going up. In August 2014, only four months after the Decanter interview had been published, Miss Downey declared that "Rudy sold $130 million worth of fake wine".
By October 2018, Miss Downey claimed that $592,222,222–$683,333,333 was the "Value of Rudy K made wine (sic) that still exists in the market".
Timeline of Maureen Downey’s ever-increasing figures
April 2014 | $10 million (implied)
August 2014 | $130 million
December 2016 | $550 million
October 2018 | $592,222,222 – $683,333,333
Worryingly, nobody saw it fit to question Miss Downey’s momentous discoveries, of which there is no record anywhere else. The FBI and other US legal authorities seem to have missed the information revealed by Miss Downey.
As Fabian says in Shakespeare's Twelfth Night, "If this were played upon a stage now, I could condemn it as an improbable fiction".
Who is Maureen Downey?
Maureen Downey has been described by the Institute of Masters of Wine as "an independent expert on fine and rare wine and wine collection management, and is one of the foremost global authority (sic) on wine fraud, counterfeit wine and fine wine authentication."
Miss Downey's functionally illiterate prose – as demonstrated in her frequent twitter / X rants – only occasionally resembles English and then, one suspects, only accidentally.
Having waded through nearly 3,500 words of incoherent and ungrammatical prose and numbers that would stand a good chance of winning the Bulwer-Lytton Fiction Contest (BLFC) at San Jose State University, I can respond to some of the assertions in her "Refutation".
As I will show here, Miss Downey is frequently wrong but never in doubt.
Double Jeopardy
Miss Downey's "Refutation" is akin to a "double jeopardy" defence, whereby an accused person cannot be tried again on the same (or similar) charges and on the same facts, following a valid acquittal or conviction.
However, so egregiously misleading are her figures that they must be reviewed again.
“Now – were Stuart George serious about his allegation, he might have interviewed me about how I arrived at the $550million finding we have meticulously put together and stand by. Had he done so, I would have been able to give him the following information”.
The "pathetic parasite" (as below) doesn't need to interview because the information is (or was) available on your site.
The tweet below (subsequently deleted by its author – why?) is an example of the abuse rather than thought that comes from Chais Consulting when faced with uncomfortable questions.
Miss Downey claims to be a fluent French speaker. In which case she might have read or seen Molière’s comedy Tartuffe, in which the eponymous character is outwardly pious but fundamentally mercenary.
“First off, Rudy made a lot more wine than Stuart George researched and accounted for.”
Actually, what I wrote was: “To be clear, it is challenging to find accurate figures on fine wine fraud because it is an activity that by its very nature is covert and deceitful... The legal documents detail his non-auction, private wine sales, though doubtless much of this information remains hidden even from government investigators who had access to Kurniawan's emails and other documentation. Nobody can be sure of how much fraudulent wine he sold off the record.”
Miss Downey's assertion that “Rudy made a lot more wine than Stuart George researched and accounted for” is very wide of the mark and doesn't refute my case for inaccurate figures being published.
Missing data
Miss Downey wrote, “Because we are missing 81.7% of the time/banking data to see what was paid in, and 53.2% of known (sic) auction consignments sales revenue, plus a myriad of other sales for which we have zero data despite knowing they occurred (sic), it is fair and necessary to add in some amount to represent the considerable missing sales data.”
How is it possible to know that something occurred if there is no data? To state that it is "fair and necessary to add in some amount" is mendacious and is liable to lead to inaccurate and false conclusions. The "missing" data amounts have no credible or demonstrable source.
Perhaps Miss Downey also believes in the existence of the Loch Ness Monster. There is no credible evidence to support the presence of a monster in a Scottish lake – but if Miss Downey says that Nessie exists then it must be true.
Many of the figures presented by Miss Downey are demonstrably inaccurate or incorrect, or guesswork presented as fact. Views that aren't properly based on evidence are likely to be false.
“Secondly, Rudy was not making and selling “average wine.” He was making and selling the rarest, most expensive wines ever made.”
Yes indeed. I clearly acknowledged this.
I wrote, “The average price per lot at the now notorious "The Cellar" auction conducted by Acker Merrall & Condit in New York in October 2007 – at which many of Kurniawan's fakes and forgeries were sold – was (including premium) over $10,500 per lot for a total of over $24m. The 2,271 lots offered in that two-day sale comprised 11,474 bottles, so $2,092.00 per bottle.
If there is $147.2m of Château Rudy still in the market, using the Acker bottle price of $2,092.00 it would equate to 70,363 counterfeit bottles made over a ten-year period, or 7,036 bottles per annum, 135 bottles per week, or 19 bottles every single day.”
The example of “rarest, most expensive wine” cited was 1978 Henri Jayer Richebourg, sold in 2002 for between $2-3,000 per bottle. In December 2016 it was claimed to be worth more than $10,000. So I used $10,000 per bottle to work out how much wine RK could have made over a 10-year period.
I wrote, “Even if you put the average at an inflated $10,000 per bottle, it still requires Kurniawan to have been cranking out an implausible 55,000 bottles at 5,500 bottles per year, 106 bottles per week, or 15 bottles per day.”
“Thirdly, Mr George is looking at Rudy as being only an auction seller, and judging the numbers based only by auction value. In fact, Rudy sold more privately that he did at auction, even if the auction houses did a good amount of that private selling.”
No, I’m not.
I wrote, “In this tale one must follow the money. The best place to do this is the legal documents that pertain to his arrest and conviction in 2012."
Legal documents & sources of the figures
“I have many, many more figures than those which Mr George appears to have taken into account.”
The notion that Miss Downey had access to documents and data that the FBI did not is implausible. Not a single report on the Kurniawan case ever references the figures and evidence that she cites. Bear in mind that she thinks that it is "fair and necessary to add in some amount" – that is, to cite fictitious numbers that have no basis in fact. Miss Downey’s response to the disappointments of reality is to invent her own, in which “missing data” is magically recreated.
These documents are public records: The “Complaint” document, dated 5th March 2012; the Indictment document for “United States of America vs. Rudy Kurniawan”, dated 8th April 2013; and the “Sentencing Memorandum”, dated 1st May 2014.
These public documents detail his non-auction, private wine sales, though doubtless much of this information remains hidden even from government investigators who had access to Kurniawan's emails and other documentation. Nobody can be sure of how much fraudulent wine he sold off the record.
These published figures by government agencies clearly demonstrate that it is a long way to $683 million from the available data.
Confused correlations
“Here are all the listed sales for 1929 Petrus, on Wine Market Journal”
The “large format premium” of 2.25 is reasonable. Thank you also for clarifying that “the magnum is equivalent to two of the 750ml size bottles.” I might never have known otherwise.
The Petrus 1929 is said to be worth 5 x a single bottle, based on a single magnum sold at an auction in October 2005 and single bottle sold in December 2005 using data from Wine Market Journal. That’s where it was at that time, though it’s disingenuous to base a large correlation on two bottles sold at two auctions in a two-month period 15 years ago.
The price of a 1929 magnum sold in October 2006 at 14% below the October 2005 price is not used. It’s worth whatever it last sold for, no? But only the highest recorded figure is used here. And no Petrus ’29 – in bottle or magnum – has been auctioned since November 2013. Wines and other things have to be valued for insurance claims, lawsuits and the like –for which skill (though never modesty or humility) must come into play, according to Miss Downey – but without recent market data the figures are nominal.
A single bottle of Henri Jayer Richebourg 1978 was sold at auction in May 2018. No bottles had been sold since May 2015 and only 45 bottles in total since September 2002, according to the figures taken from Wine Market Journal. That’s not a liquid market that can be used for correlation. One might as well benchmark the art market against Leonardo’s “Salvator Mundi”, which was auctioned on 15 November 2017 for $450.3 million – the most expensive painting ever sold. Ergo my late grandparents’ very bad copy of the “Mona Lisa” is worth £1 million.
Also note that Wine Market Journal's figures are based entirely on auction prices. Miss Downey said, “Mr George is looking at Rudy as being only an auction seller, and judging the numbers based only by auction value. In fact, Rudy sold more privately that he did at auction, even if the auction houses did a good amount of that private selling." Actually, it's Miss Downey who is judging everything with auction-only figures, not me.
Claiming that “many items he made have gained in value over time as much as 900%” is specious. One item (Jayer Richebourg 1978) has gained 900%. Very few others, if any, have also done so.
An ad hominem attack on the "pathetic parasite"
“Mr George was, I believe, in the employ of Spectrum at the time of that sale and can perhaps shed light on this instance, though it is rumored to have been the action of Vanquish employee/manager.”
I can shed light on how I had nothing whatsoever to do with this sale.
I worked on a consultancy basis for Spectrum from May 2010 to January 2011 as its “Head of European Consignments”. But the role was made untenable by Spectrum’s insistence on everything being shipped to California for inspection and photography, which necessitated slip-labelling for import into the USA. This was wholly unappealing to potential consignors so the only consignments that I oversaw were an ex-cellars offer from CVNE in Rioja, sold at Spectrum’s Hong Kong auction 12-13 March 2011 (by which time I had no dealings with Spectrum), and a single bottle of Graham’s 1948 Vintage Port from a private UK consignor, which was sold through an online auction, though I have no record of when this was.
I had no involvement at all with Spectrum’s auction held jointly with Vanquish Wines in London on 8th February 2012 – over a year after I last had any dealings with Spectrum, when it became widely known that many of the wines at this auction had been consigned (via a third-party) by Rudy Kurniawan.
Impossible figures
“From the evidence we physically inspected, Rudy made at least the following numbers of different wines (each representing what would be a unique SKU) from the following producers:”
This lists 489 SKUs.
If we divide $683,333,333 (“Value of Rudy K made wine (sic) that still exists in the market”) by 489, the per SKU price is $1,397,409.68.
It is not clear how many bottles form those 489 SKUs. However, at the now notorious "The Cellar" auction conducted by Acker Merrall & Condit in New York in October 2007 – at which many of Kurniawan's fakes and forgeries were sold – the 2,271 lots offered comprised 11,474 bottles, so 5.05 bottles per lot.
Remember that “we are missing 81.7% of the time/banking data to see what was paid in, and 53.2% of known auction consignments sales revenue, plus a myriad of other sales for which we have zero data despite knowing they occurred (sic)...”
Ok.
Let’s increase the number of SKUs by the 81.7% of "missing" time/banking data to 888.51. Now the average SKU price is $769,077.82.
Now let’s multiply the number of SKUs by the 53.2% of missing "known auction consignments sales revenue" to 749.15. Now the average per SKU is $912,144.88.
Let's add the 81.7% of "missing" time/banking data to the 53.2% of missing "known auction consignments sales revenue" to make 134.9%. Now it totals 1,148.66 SKUs to average $594,896.08 per SKU.
No bottle of wine has ever sold for this much, or for $1,397,409.68 or $912,144.88. (The most expensive bottle of wine ever sold was 1945 Romanée-Conti at Sotheby's in October 2018, when it made $558,000.)
Applying the 5.05 bottles per lot figure to the 489 SKUs plus the "missing data", the average SKU / bottle price is $240.90 ($594,896.08 / 2,469.45 [489 x 5.05]). That's possible, but probably too low for the high-value stuff that Kurniawan was purveying. Remember that the average at the Acker sale was $10,500 per lot.
Using the $10 million figure implied in April 2014, this becomes $28,188,000 if multiplied by 134.9%.
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$150,000,000 multiplied by 134.9% is $352,350,000.
However many calculations are made using Miss Downey's figures, the $683,333,333 figure is impossible to reach. And the per SKU / bottle price is ludicrously high.
Back to the beginning
Let's go back to the $150,000,000 figure (“The range in value – at time of sale – of the wine Rudy K sold”).
Divided by 489, it’s $306,748.47 per bottle.
Multiply the bottles by 81.7% and we get $168,821.96. Multiply by 53.2% and it's $200,226.92.
“$130,000,000 – $150,000,000 The range in value – at time of sale – of the wine Rudy K sold.
$424,305,556 – $489,583,333 Value of Rudy K made wine (sic) that still exists in the market, using above sale value, and an average of a 326% gain in value to 2015.
$592,222,222 – $683,333,333 Value of Rudy K made wine (sic) that still exists in the market, using above sale value, and an average of a 456% gain in value through current market 2018.
By this calculation, which is based on evidence not pure conjecture (sic), $550million is a middle figure in these estimates. It represents an increase in value of 370% across all items over time in the middle of the range.
Considering that Rudy K was making the rarest, most sought-after wines in the world, and doing so in a prolific manner, and that many items he made have gained in value over time as much as 900% (sic), I believe these to be reasonable numbers.”
Note “at time of sale”.
The sales were conducted from 2002 (“Rudy was faking, and trying to get me to sell, 1947 Petrus and Lafleur as far back as spring of 2002”) to 2012, though it should be noted that the FBI began looking into RK in 2008, which made it very difficult for him to operate. He didn’t sell much from 2008 until the time of his arrest in 2012. There was too much heat on him.
Yet again, I must point out that the $150 million figure is not a base figure from 2002. The figure is the claimed value of his counterfeit wines as of 2012 – the end of the “time of sale”. The $550 million figure is the claimed value from December 2016 on.
The wine – or certainly not all of it – was not in situ at the start of this lucrative period and therefore did not enjoy the enormous returns seen in the wine auction market in this period.
We can correlate the $150 million figure against these auction totals and the growth (or decline) of the market from 2012 to 2017. The fine wine auction market was worth $389 million in 2012. By 2017, it had declined 1.9 percent to the previously stated $381.7m. So the claimed $150m figure would now be worth $147.2m, not $550m, or “$592,222,222 – $683,333,333” as is now claimed.
Can $150m in 2012 become “$592,222,222 – $683,333,333” in 2018?
“so many wines he made have sky rocked (sic) in price as have the wines of Henri Jayer and his (sic) #1 production Domaine de la Romanée Conti (sic) – it becomes clear that it is not unfathomable to assess a 370% increase on a $150million production figure.”
Way to go, Maureen!
By the way, Henri Jayer did not, as you wrote here, produce Domaine de la Romanée Conti (sic). That's a worrying slip (as well as a misspelling) by the self-proclaimed "world's foremost expert on wine fraud".
It’s not "unfathomable" – in the sense of being immeasurable – as my figures show. But it is unbelievable, and not in the sense used by sportspeople who have just won something.
The blind leading the blind
Not all of Kurniawan’s bottles were fakes. Some of them – a lot of them – were genuine and therefore do not count in the “fake” totals being cited here.
Miss Downey says, “we do not have any information on the myriad of other sales that Rudy and his agents executed in the 10-year period in question” and “Because we are missing 81.7% of the time/banking data to see what was paid in, and 53.2% of known auction consignments sales revenue, plus a myriad of other sales for which we have zero data despite knowing they occurred...”
If there’s zero data, any assumptions are purely speculative.
Like conspiracy theorists, too many people are too easily seduced into grand explanations. Miss Downey's "refutation" is an example of how some people wish to believe a certain message and, if it is delivered by somebody who shouts it loud enough and often enough, they will believe it even if there is no data to back it up. It is the blind leading the blind.
With friends like this...
Judge somebody by the company they keep, as the old saying goes.
Miss Downey likes to buddy-up with Donald Cornwell, an onanistic amateur enthusiast of fine wine. Despite Mr Cornwell’s relentless self-assurance, he has (as far as I know) never yet set foot in a French vineyard. He has a habit of making erroneous declarations.
For example, of a bottle of DRC La Tâche 1945 he insisted that the “dark green glass (is) typical of the era.”
No, it isn't.
There was a wartime shortage of chromium, which gives glass a deeper green colour. Chromium was used – with iron – to make stainless steel rather than wine bottles. So wartime bottles are pale-coloured. Michael Broadbent refers to a “pale green wartime bottle” in his Vintage Wine note on 1942 DRC Richebourg.
I mentioned blindness, didn't I...?
As for the elusive Mr Cornwell, who likes to hide in his LA bunker, I will paraphrase Bob Dylan’s “Talkin’ John Birch Paranoid Blues” and rename it as “Talkin’ Don Cornwell Paranoid Blues”:
“I was lookin’ high an’ low for that Don Cornwell everywhere
I was lookin’ in the sink an’ underneath the chair
I looked way up my chimney hole
I even looked deep down inside my toilet bowl
He got away…”
"Crap math"
Miss Downey's argument and her use of figures is like Zambia's former presidential spokesman Amos Chanda declaring that the country's dire economic state and worthless currency was because "the kwacha is not depreciating, it is the dollar that is appreciating".
Even with the figures and methodology asserted by Miss Downey, the claimed “$592,222,222 – $683,333,333” figure remains difficult to sustain.
The criterion of embarrassment
Chais Consulting could argue that its figures pass the "criterion of embarrassment" test, whereby an account likely to be embarrassing to its author is presumed to be true as the author would have no reason to invent an account – such as the amount of counterfeit wine in the market that came from Rudy Kurniawan – that might embarrass them.
However, Chais Consulting's history of looking to provoke a reaction and gain attention and the paucity of verified data to support the “$592,222,222 – $683,333,333” figure is, as shown here, wholly inaccurate.
If anybody is guilty of “crap math” (as per a tweet – shown below), it’s not me. Miss Downey might consider the words of Oliver Cromwell, who wrote to the General Assembly of the Church of Scotland on 5th August 1650: “I beseech you, in the bowels of Christ, think it possible that you may be mistaken.” The demonstrable errors nibble away at her loudly self-proclaimed credibility. Such noisy carelessness makes one wonder how much else is incorrect in the work of Chais Consulting.
Miss Downey's use of strong language in her tweets and during her presentations doubtless she would assert is proof of her telling it like it is. But the intemperate language used here, as well as the demonstrably inaccurate and misleading figures, debases any claims to professional expertise and credibility.
As my fellow West Midlander Samuel Johnson said: “I refute it thus!”
1-2-3
There are only three things wrong with Miss Downey’s figures.
They are overblown and exaggerated, using the highest possible correlations. It is not possible that one man, or an army of men (or women), could create that much counterfeit wine.
The figures are largely based on “missing data”, which in all probability doesn’t exist.
And they are inconsistent, ranging from $10 million in April 2014, to $550 million by December 2016, to $592,222,222–$683,333,333 by October 2018.
Actually, they are consistent: They consistently, relentlessly, and quickly climb upwards without any basis in fact.
It is hard to say whether these misrepresentations are simply errors of judgement caused by a poor grasp of the figures, or wilfully done in order to promote Chais Consulting’s vested interest in there being counterfeit wines in the market, which is a deplorable ethical and professional position to take.
At best, Miss Downey has overstated and exaggerated some of the figures in order to dramatise her case.
There is also the unmistakable Downey prose style: "one of the foremost global authority (sic) on wine fraud"; "Value of Rudy K made wine (sic)"; “so many wines he made have sky rocked (sic)"; "the wines of Henri Jayer and his (sic) #1 production Domaine de la Romanée Conti (sic)"...
Of all the trash that Maureen Downey has published about Rudy Kurniawan and about me – about anything and everything, really – what makes her "Refutation" the winner for me is its glorious display of the dense layers of mistakes and misapprehensions that she labours under, demonstrated in the most conspicuous way with the figures in her "Refutation", of which – by her own admission – up to 81.7% has been made-up.
The figures are demonstrably not real.
By extension, Miss Downey’s argument is demonstrably not plausible.
In a 1977 episode of "Dr Who", the Doctor (played by Tom Baker) says: “You know, the very powerful and the very stupid have one thing in common. They don’t alter their views to fit the facts. They alter the facts to fit their views. Which can be uncomfortable if you happen to be one of the facts that needs altering..."
In a list of adjectives that includes valid, semi-valid, improbable, or utterly impossible, it is surely the latter that applies to Miss Downey’s claims – as I have shown.
Bullshitter or liar?
On Bullshit is a 2005 book by the American philosopher Harry G. Frankfurt.
Frankfurt defines bullshit as speech intended to persuade without regard for truth, which I argue is the case with Miss Downey's figures for fake wine.
The liar, says Frankfurt, cares about the truth and attempts to hide it.
But the bullshitter doesn't care whether what they say is true or false…
How to talk Maureen Downey
A short guide to speaking and writing in Chais Consulting’s dialect (adverbs and adjectives):
POSITIVE
NEGATIVE
EXTREME
(Usage note: These may be spoken once or twice e.g. “many, many”.
Also note use of uppercase caps to EMPHASISE A POINT! e.g. "ALL", "FAR", "ANYTHING".)