How Northern California wine storage services are safeguarding collections against theft

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Where is your wine? For many wine lovers, the answer is on the kitchen counter.

But for some connoisseurs and collectors, prized bottles are stored in rented space where security is as essential as the temperature.

That is because, according to experts, while wine can be a highly valuable commodity, oftentimes the security associated with collecting and storing bottles does not match that of other luxury goods, making them a target for thieves and fraudsters.

One Santa Rosa business, Oeno Vaults, seeks to provide safety and security for wine owners.

The over 10,000-square-foot facility features rows of climate-controlled storage lockers that clients can rent for a monthly fee. The base fee is $80 a month to store 12 cases or 144 bottles, then 40 cents per bottle per month after that.

Director of Operations Dakotah Anderson said the facility also ships and delivers wine to clients wherever they may be.

“We consider ourselves a wine collection management company,” Anderson said.

The facility’s security measures include 24-hour surveillance and a system to tag and track each bottle to a client’s private and alarmed storage locker. Keypads locks also separate different areas of the facility, adding layers of security.

All that caution may seem excessive to the casual wine drinker, but it is essential according to Maureen Downey, the managing member and founder of Chai Consulting LLC. Downey is a San Francisco-based expert in wine fraud who works managing private collections, mostly those of high-net-worth individuals.

She said wine theft is not uncommon and even on the rise, not just from storage facilities but also restaurants, stores, and homes.

A case in point is a recent federal prosecution in Maryland that touched the North Bay. A federal judge sentenced a Maryland man, William Lamont Holder, 54, to 18 months in federal prison for stealing wine worth between $550,000 and $1.5 million from clients, including some in Napa.

Holder owned a storage facility and clients paid him to transport and store wine. But instead he sold the bottles as if they were his own, underscoring the difficulty of tracking and verifying bottles once they have been sold off by a bad actor.

In another well-known heist from Bay Area businesses, wine was stolen from The French Laundry in Yountville in 2014. In 2017, a federal judge in California sentenced Davis Kiryakoz to 15 months in prison following his conviction for conspiring to steal wine from the famed Napa Valley restaurant.

A co-conspirator, Alfred Georgis, was sentenced to 37 months in prison for conspiring to transport the high-end wines. The thieves conspired to take about 110 bottles of wines valued at nearly $550,000 from the French Laundry on the day after Christmas. They sold about 63 of the stolen bottles for nearly $221,000, the Business Journal previously reported.

What other clients besides you who have access to a facility where your wines are stored can be a crucial factor, as evidenced by a massive arson committed at a Mare Island storage facility in 2005.

Sausalito resident Mark Anderson was sentenced to 27 years in prison in 2012 on charges related to embezzling over $800,000 from clients whose wine he stored in a Mare Island warehouse, at which Anderson was one of multiple renters. In an act of arson he torched the warehouse with over $200 million worth of choice Wine Country library collections to cover his tracks, the Business Journal previously reported.

Still, Downey said while no safe is impregnable, facilities like Oeno Vaults helped deter would-be thieves.

“If you think about the philosophy of running away from a lion, you don’t have to be the fastest, just faster than one other guy,” she said of her approach to protecting stored wines.

“When Oeno Vaults goes the extra mile that doesn’t mean it’s impossible to break in there,” Downey said. “But if you’re a thief you’re going to go for the low hanging fruit,” she added, noting the more layers of security in place the less attractive the target might be to thieves.

Beyond theft, fraud is also a persistent issue, Downey said.

“The reason that wine theft is on the rise is that the wine and spirits market is totally opaque,” she noted “There is no trail of provenance, nothing at the bottle level where people can know who they’re buying from and the legitimacy of bottles.”

Anderson at Oeno said his company inventories bottles based on about 13 different attributes, including vintage, varietal, vineyard designate and others. That process is more aimed at digital labelling and ensuring all bottles are accounted for in the facility however.

Downey said a company she founded, Chai Vaults, is working on a digital track and trace system that she is looking to get up and running later this year to cut into the issue of sellers passing off ill-gotten or counterfeit wines.

History shows however that a bad actor does not even need access to wines to make a criminal profit off them.

According to the U.S. Department of Justice, John E. Fox, the former owner of Premier Cru, a now-bankrupt wine shop based in Berkeley, was sentenced to 78 months in prison for wire fraud in connection with selling wines he did not have in what prosecutors described as a Ponzi scheme.

According to federal prosecutors in San Francisco, Fox admitted that he falsified purchase orders for wine he had never contracted to purchase, entered the phantom wine into Premier Cru’s inventory for sale, and then sold or caused Premier Cru’s salespeople to sell the phantom wine.

He also acknowledged that, between 2010 and 2015, he sold or attempted to sell approximately $20 million worth of phantom wine that he had never actually purchased prior to entering them onto Premier Cru’s inventory, federal attorneys said.

Given the numerous ways criminals can profit off of other peoples’ wine or even counterfeit wine, Downey sought to refocus the narrative. “This is not a wine story,” she said. “It’s a crime story.”

Staff Writer Chase DiFeliciantonio covers technology, banking, law, accounting, and the cannabis industry. Reach him at chase.d@busjrnl.com or 707-521-4257.

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