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Two British men have been charged by federal prosecutors in New York with defrauding people into investing nearly $100 million in loans supposedly backed by an inventory of expensive wine that did not actually exist.
According to a grand jury indictment announced on Tuesday, Stephen Burton and James Wellesley induced people to invest in loans supposedly brokered by their company Bordeaux Cellars and collateralized by wine they stored for wealthy collectors.
Bordeaux Cellars allegedly had custody of thousands fewer wines than loan documents reflected, including wine from Domaine de la Romanee-Conti in Burgundy and Chateau Lafleur in Bordeaux, court papers showed.
Prosecutors said Burton and Wellesley both used multiple aliases, and used loan proceeds to make fraudulent interest payments to investors or for personal expenses, in a scheme running from June 2017 to February 2019.
โThese defendants duped investors by offering them an intoxicating investment opportunity collateralized by valuable bottles of fine wine that turned out to be too good to be true,โ U.S. Attorney Breon Peace in Brooklyn said in a statement.
Burton, 55, and Wellesley, 57, were each charged with wire fraud, wire fraud conspiracy and money laundering conspiracy, and could face up to 20 years in prison.
Lawyers for the defendants could not immediately be identified. Wellesley was arrested on Feb. 4 in the United Kingdom, and Burton is a fugitive, prosecutors said.
