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Fine wine ‘Ponzi scheme’ mastermind extradited to US
Stephen Burton, the man behind the alleged US$100 million Bordeaux Cellars scam, was flown to New York on Friday to face criminal charges.
British-born Burton has been extradited from Morocco to the US to face charges of money laundering after his firm Bordeaux Cellars was accused of using non-existent fine wines as collateral to hand out loans to wealthy individuals in need of ready cash.
Burton of Tunbridge Wells was flown to New York on Friday 15 December, and appeared in court on Saturday 16 December, where he pleaded ‘not guilty’ to defrauding investors of more than US$100 million between 2017 and 2019.
The so-called Ponzi scheme saw Burton and and co-defendant James Wellesley run a company which they said brokered loans between investors and high-net-worth wine collectors.
According to federal prosecutors, Burton and Wellesley told lenders that the loans would be backed by wine they stored for collectors, and promised profits through interest payments. However, those wines “did not actually exist and Bordeaux Cellars did not maintain custody of the wine purportedly securing the loans”, the US Attorney’s Office for the Eastern District of New York said in a statement.
Burton was arrested in 2022 after entering Morocco on a fake Zimbabwean passport, while Wellesley is currently awaiting extradition in the UK.
If convicted, each could face up to 20 years in prison for wire fraud, wire fraud conspiracy and money laundering conspiracy.
In December 2022, the drinks business reported that Andrew Fuller, the chief financial officer of Bordeaux Cellars, had been extradited to the US as around half of the investors allegedly defrauded in the scam were based in the US.
Fuller and Burton are accused of flying to investor conferences to drum up interest in the scheme, tempting would-be investors with promises of large returns backed by cellars that housed fine wines including cult Napa producer Screaming Eagle.
Those working for Bordeaux Cellars and Bordeaux Cellars London told investors that the companies acted as an intermediary between collectors who needed liquidity to buy fine wines and the investors who provided the money, but prosecutors say these wines did not exist.
Fuller claims he had no idea of the scheme that Burton had devised.