Thirst For Profit Leads To Bad Morning After For Victims of This Wine Investment Scam

Some wines are so fine that they are considered investable, similar to stocks and bonds. Investors never open the bottle to taste. Instead, the rare quality stuff is simply kept and carefully stored while the price goes up. As an alternative investment designed to diversify, highly prized wine can make sense for the right kind of investor.

That’s why scam artists, posing as experts, sometimes succeed in fine wine “marketing.” They know that this particular alternative investment has been providing good returns and they find interest when prospecting.

Casey Alexander is under arrest after authorities accused him and others of operating such a scheme and allegedly bilking customers out of millions of dollars, according to an article in the Washington Post. He is said to have worked for three companies – Windsor Jones, Charles Winn and Vintage Whiskey Casks – where he and others cold-called prospects, sometimes using fake names and fake British accents.

At least 150 people lost more than $13 million dollars in the scheme, which federal investigators say operated for 5 years. The Post reports that “an unnamed 89-year old and a 73-year old from Michigan” were among those who were victimized. Elderly people, in particular, were targeted in the scheme which the investigators claim used “deceptive and aggressive tactics.”

After the 89-year-old reported it to police in Ohio, the FBI entered the case which eventually led to arrests. Alexander has been released on a $50,000 bond, according to court records. The Post reports that he is described by victims as being “incessant and pushy” and is now prohibited from contacting them.

Securities regulators in the states of California, Washington and Texas have sent “cease and desist” orders to Charlies Winn and its related companies, prohibiting them from continuing to operate in those jurisdictions. 

The case points up the attraction to this type of alternative investment as a way to diversify with an asset that has produced especially strong returns over the past year, with the Liv-ex Fine Wine 1000 showing 25.6% returns so far in the past 12 months.

 Similar to certain kinds of expensive art, the price trend of highly prized bottles of wine is closely watched by participants in those markets. Such appealing returns make it possible for scam artists to find and sometimes convince unfortunate victims.

Investors new to this market can avoid similar scams by utilizing SEC-regulated investment platforms such as Vint, which sells securitized shares of valuable collections of wine and whiskey. 

Related: Fine Wine Continues To Outperform The Stock Market

Photo by Sinisha Karich on Shutterstock