Two men scammed wine investors out of $99 million in Ponzi scheme, US says

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In an elaborate Ponzi scheme that lasted nearly two years, two Britons persuaded investors to make nearly $100 million in loans to wealthy wine collectors, according to federal prosecutors.

But those collectors never existed, prosecutors said, nor would the vast reserves of valuable wine the men promised would guarantee the loans.

Stephen Burton, one of the men prosecutors say led the scheme, pleaded not guilty Saturday to charges of wire fraud, wire fraud conspiracy and money laundering conspiracy in federal court in Brooklyn. Burton, 58, had been extradited to the United States from Morocco, where he was arrested last year after he was caught trying to enter the country with a fake Zimbabwean passport, according to prosecutors.

James Wellesley, 56, is accused of conspiring with Burton. He was arrested last year and remains in extradition proceedings in Britain, prosecutors said. If convicted, the defendants face up to 20 years in prison each.

John S. Wallenstein, Burton's attorney, said Saturday that Burton denied the charges. A lawyer for Mr. Wellesley could not be reached for comment Saturday.

Burton and Wellesley were the CEO and CFO of a company called Bordeaux Cellars, according to the indictment, which was filed in February 2022. From approximately June 2017 to February 2019, according to the indictment, they approached investors in the United States. and other countries, some of whom were New York residents, alleging that his company negotiated loans to high-net-worth wine collectors.

The men, who used several aliases, told investors that the loans would be backed by a vast inventory of wine stored by Bordeaux Cellars that included thousands of dollars' worth of bottles from Domaine de la Romanée-Conti in Burgundy and Château Lafleur in Bordeaux. , and that investors would receive regular interest payments from wine collectors, according to a criminal complaint filed in 2020.

But Bordeaux Cellars owned thousands fewer bottles of wine than promised, the indictment says, and executives used money from lenders to pay interest to other investors and line their own pockets.

The scheme collapsed in February 2019, when Burton and Wellesley stopped paying interest to investors, according to the indictment.

Burton “will now prove justice for the fine wine scheme alleged in the indictment,” Breon Peace, U.S. Attorney for the Eastern District of New York, said in a statement Saturday. “This indictment sends a message to all perpetrators of global fraud that you can run from authorities, but not forever.”



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