Normally, such a high rate of interest meant that the loan would be dicey. Not so, the two men claimed— these loans would be secured with prestigious wines from the borrowers’ cellars, transferred to climate-controlled, secure warehouses overseen by Bordeaux Cellars. “What happens in case of a default?” asked Stephen Burton, the 57-year-old head of the firm, at a 2015 conference in Cancun. “We sell the wine.”
“Lots of customers are property developers who are short of cash,” said Burton’s partner, James Wellesley, 55, at a 2017 conference in Las Vegas. “We only lend against investment grade wine …. We’re dealing with mainly French wines, some of the nicer California wines [such as] Screaming Eagle.”
The promise of 12% interest to the lender on a secured loan in an era of record low interest rates seemed too good to be true. And it was. Burton and Wellesley, CEO and CFO of Bordeaux Cellars, were indicted by a grand jury in a Federal District Court in Brooklyn, N.Y., in March on charges of wire fraud and money laundering. They’re accused of inducing investors to “invest in excess of approximately $99.4 million in term loans purportedly brokered by Bordeaux Cellars,” states the indictment.
This story is from the June 30, 2022 edition of Wine Spectator.
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This story is from the June 30, 2022 edition of Wine Spectator.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
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