Wine Investment Fraudster Spyros Constantinos jailed for 8 years for £1 million con

Spyros Constantinos sentenced to 8 years 

(credit: http://cliparts.co/clipart/2452126) 

On 29th July 2015 serial fraudster Spyros Constantinos was jailed for eight years at London’s Old Bailey (Central Criminal Court).

This sentence follows Constantinos’ conviction on 25th June on ten counts that included running a fraudulent business, intent to defraud and acting as a company director while disqualified. His trial lasted three weeks and was brought by Tower Hamlets Trading Standards.

An eight-year jail sentence is in the upper range of sentences given to drinks’ investment fraudsters over the last decade. Constantinos compounded his fraudulent activities by running companies while banned as a director.  

Following the collapse in 2006 of the Bordeaux Wine Consultants Ltd, Constantinos’ first wine investment company, he was banned from being a UK company director from 2008 to 2017. However, he acted as company director for several companies including Alpha Invest Worldwide, The Premier Bordeaux Wine Company and Classic Bordeaux Wines, which was based in Marbella.

Constantinos raked in around £1 million from duped investors. Instead of buying wine, he spent money on himself and his family including holidays in San Francisco and New York.

One investor, Dr Norman Dearden, was defrauded of nearly £500,000, while another lost £250,000 of their life savings. 

Constantinos was adept at fobbing off his increasingly desperate investors with promises that they would shortly receive their money back or that their wine was safe in a bonded warehouse, while all the time plying them with further wine investment opportunities. Of course these promises were never fulfilled as Constantinos siphoned off his clients money for his own purposes.   

In March 2013 Constantinos left the following comment (typical of his false promises) a earlier post on investdrinks about The Premier Bordeaux WineCompany:  

'All clients will receive all of their monies within a 6 month period. The company has had financial issues that are being resolved. This is not a scam and no fraud has taken place. I have never not responded to client emails with updates etc. This matter is already being dealt with by lawyers. I apologise to all clients that have been affected by this situation but once again I would like to reiterate that it my intention and belief that all clients will be paid the money that they are owed with interest within a 6 month period.' 
S. Constantinos 

The only financial issues faced by Constantinos' companies was how rapidly he could trouser his clients' money to fund his lifestyle. Constantinos' comment was a clear admission that he was running a company, while banned as a UK director.  

Five months later Constantinos was back again making promises (see below) but also acknowledging that he was under investigation by Tower Hamlets, which would lead him to the dock at the Old Bailey and then to prison.  

Spyros Constantinos again:

24 August 2013 at 14:19

There you go. This is the problem with having such blogs. Anyone can write a load of rubbish!! I have not fled the country - and I certainly don't owe 30-40m!!! . It remains my fullest intent and belief that the clients that have been affected by this unfortunate situation will receive all of their money back at least when this situation is resolved. Spyros Constantinos.

25^th August 2013 at 09:21

Hi Jim. As you are aware there is an investigation taking place. I have been advised that I should not go into any details of anything at the moment. I just wanted your readers to know that I haven't disappeared and it remains my intention and belief that those that have been affected by what has happened will receive their money back. Spyros.
http://investdrinks-blog.blogspot.co.uk/2010/02/premier-bordeaux-wine-company.html

Constantinos claimed he was let down by his fine wine supplier – Alexandre – a Russian based in Marbella. Similar script used by fraudster Daniel Snelling – equally unsuccessful!

Spyros Constantinos, 44, at the Old Bailey (London)

 Report from the MailOnLine 

'Banned company director 'swindled investors out of £1million in wine scam and spent it on fancy chocolates, shopping sprees at Harrods and Selfridges, holidays to Disneyland'

• Spyros Constantinos, 44, was banned from running a company in 2008
• But he 'squirmed' around restriction to continue wine business, it is said
• He convinced customers to invest life savings in luxury wine portfolios
• And used the money to pay for flights and shopping sprees, it is claimed   

By Stephanie Linning for MailOnline

Published: 16:38 GMT, 2 June 2015 | Updated: 18:07 GMT, 2 June 2015

Read more: http://www.dailymail.co.uk/news/article-3107687/Banned-company-director-swindled-investors-1million-wine-scam-spent-fancy-chocolates-shopping-sprees-Harrods-Selfridges-holidays-Disneyland.html#ixzz3cSeN9uwX
 

Also Drinks Business here.

 

Spyros Constantinos is banned from being a UK director from 21st July 2007 to 20th August 2017. His address on Companies House list of disqualified directors is: 

Apartment A1-2-6 Urbanization Andalucia, Calle Las Vedras, Marbella, Malaga
Spain

The UK company ban is in connection with his first wine investment company Bordeaux Wine Consultancy Ltd.

Stephen Williams (The Antique Wine Company) – a clarification

I have recently received several messages from worried clients of the Premier Bordeaux Wine Company. One of the sales people at the Premier Bordeaux Wine Company uses the name Stephen Williams, which may well not be his real name. Unfortunately people have wrongly jumped to the conclusion that this Stephen Williams is the Stephen Williams of the long established Antique Wine Company that was founded and has been run by Stephen Williams for best part of 20 years. 

I contacted Stephen Williams at The Antique Wine Company today to alert him to the confusion and am very happy to make it clear that there is no connection between the two Stephen Williams and no connection between the two companies.

Stephen Williams (The Antique Wine Company):

'As you suspected, this is nothing to do with me and I am naturally concerned that our clients and others could wrongly associate me with Premier Bordeaux Wine Company.

For the past twenty years and more, I have run The Antique Wine Company, we are a properly constituted wine merchant supplying fine wine mainly for consumption rather than investment, to satisfied clients in the UK and around the world.' 

investdrinks comments:

I trust that Mr Sypros Constantinos of the Premier Bordeaux Wine Company will immediately advise his saleman to chose another name. Better still would be to put the sales force on gardening leave while the Premier Bordeaux Wine Company ensures that they have sourced all the wine that their clients have purchased.

 

 

The Premier Bordeaux Wine Company

Enquiry:

'I have been contacted by this Company (The Premier Bordeaux Wine Company) and sent a somewhat impressive brochure. Wine is not an area I have invested in, so could you kindly give me advice on this Company.'

*

My response:

The Premier Bordeaux Wine Company was incorporated on 3rd December 2009 and its registered office is 788-790 Finchley Road, London NW11 7TI.

Its trading address from its website: www.tpbwc.com is

111 Buckingham Palace Road,Victoria, London, SW1W 0SR. Telephone: 08000 114 219
Email: : info@TPBWC.com
The website was registered on 24th June 2009

(On 2nd December 2009 Premier Bordeaux Wines Ltd, believed also to offer wine investments, was incorporated with a registered office also at 788-790 Finchley Road, London NW11 7TI. Its website is 'undergoing total redevelopment'.

Clients are directing to their trading address: Premier Bordeaux Wines, 145-157 St John’s Street London EC1V 4PY
Tel: 0800 0114 219
Fax: 0845 226 4624
Email: info@premierbordeauxwines.com)

The Premier Bordeaux Wine Company's brochure suggests that the company has been around for rather longer than public records show:

Some extracts from the The Premier Bordeaux Wine Company brochure:

'The Premier Bordeaux Wine Company are passionate about the fine wine market and we are delighted with the tax free returns that we have achieved and continue to achieve on behalf of our clients. Our global network of contacts and strategic partners allow us to source the rarest and most sought after wines on behalf of our clients and puts us in the perfect position to sell their wine at any time.’

‘The Premier Bordeaux Wine Company is keen to secure large amounts of en primeur wines so that we have access to as many of the world’s greatest wines to sell at a future date. Securing wines at this stage provides us with the best opportunity to fulfil future orders.

Of equal importance, purchasing en primeur in significant quantities affords us significant purchasing power in the market meaning we can purchase wines at the best possible price.’

Their 'Income Investment Model that Yields 8.9%+ per annum':

• ‘Up to 500 clients enter agreements with us on current and future en primeur campaigns by purchasing wine futures (each client is the legal owner of the wine he/she has purchased)
• By buying en primeur wines in substantial quantities, TPBWC can obtain the most competitive price. Price differentials can vary by up to 10%.
• TPBWC pays participating clients 8.9% of the total purchase price* (standards charges) in order to repurchase the wine at the same total purchase price in three years time (similar to a Repo transaction in the money markets).
• After three years, TPBWC buys the wine back at the original purchase price.
• The wine is independently valued.
• If the wine’s value has increased from the total purchase price then TPBWC pays the client/seller a further 60% of any upward price movement from the (purchase price plus standard charges). TPBWC retains 40% share of capital growth.
• If the wine’s value has remained the same as or decreased from the purchase price, then no further payment is made. The client has already received an 8.9% return on his/her investment.
• TPBWC either holds or sells this wine to a third party.
• The process is repeated for subsequent en primeur campaigns.

(Elsewhere in brochure TPBWC gives an example of how the scheme works and undertakes to pay clients 8.9% of their purchase price 'within 30 days of receipt of payment' and a further 8.9% 'within 1 year and 30 days of the purchase date'. Then a further 8.9% a year later and three years after the original purchase date TPBWC buys back the wine at the original purchase price and within 30 days of buy-back a further cheque – 60% of the increase in value.)

From public records The Premier Bordeaux Wine Company has no track record. Although each client is the legal owner of wine purchased, there are elements of their Income Investment Model that might be construed by the FSA as a collective investment and therefore require FSA authorisation, which they do not currently have. If this was an FSA approved scheme it is unlikely that TPBWC would be permitted to make the 8.9% guaranteed claim.

In the FAQ section of the brochure is the question: 'What if TPBWC goes bust?'
Answer: 'The Premier Bordeaux Wine Company is run on solid business principles and is not indebted to banks or third parties. Overheads are kept to a minimum and our focus is always long term. However, even if the worst case scenario materialised and TPBWC did 'go bust' clients funds are secure. All wines are allocated by the case to individual clients at the time of purchase and would be easily distinguished by the official receiver.'

Unfortunately as TPBWC was only founded at the beginning of December 2009 the company has naturally not yet been required to file any accounts. Furthermore experience shows that it can often be far from straightforward identifying an individual's wine when they are kept in a company's umbrella account if the company has gone bankrupt.

For en primeur purchases this becomes a nightmare because it is impossible to identify a client's wine when it is part of a barrel of still maturing wine. In a number of cases when en primeur companies have gone bust, their clients have lost all or most of their money.

My advice
I would not consider buying wine, especially en primeur, from The Premier Bordeaux Wine Company nor signing up to their Income Investment Model.

Beware of guaranteed returns

There are a number of wine investment companies currently offering guaranteed returns. Investments that come under the aegis of the UK FSA (Financial Services Authority) are not allowed to promise future returns and must warn that past performance is no guarantee of future performance. Exceptions to this will usually include bank and building society savings accounts but certainly will not include wine funds, which come under the FSA as they are collective investments..

This week there was press release (see here) from Cult Wines Ltd promising a guaranted 8% return in a year on a wine investment fund:

8.5% Guaranteed return on wine investment fund from Cult Wines – London 
'22/01/2010  Cult Wines of London, are offering investment portfolios with a guaranteed return of 8% over 12 months using assets of the Rothschild products such as Lafite and Mouton. The Risk is taken away from the client and provides a safety net of 8%, while the expected returns are much higher up into the double digits.  This doubles any available savings rates offered by mainstream banks.'
See rest of the release here.

On the face of it this would appear to be a fund that ought to require FSA authorisation and shouldn't be claiming an guaranteed return. It is, however, not a fund as Oliver Gearing, CEO of Cult Wines Ltd explains:

'It technically is not a fund as each investor is allocated cases of their own wine. The investors also retain the right to continue to hold their wine past the 12 months. In essence we give each investor the option after 12 months to sell their wine back to us at 108% of its purchase value, they can either take this if the wine hasn't increased by 8% or if it has gone up more than 8% they can ignore the option and continue holding their wine for longer. We are giving the investors a safety net but from our end backed on our own finances and assets.

Finances and assets cover the base total of chosen products from 0-108%. Our company investment/investors and of course the risk attached to the company have been carefully devised and set up with expert help.  We have a master of wine, who is a contact of our family, who has been involved in the proceedings. With this combined expertise we feel quite confident in the chosen products and risk elements, being Lafite 08/Mouton 08, and we feel that we have fully covered our clients.

As it happens, we have finished running the 8% project as we have filled our small test quota up to the maximum cash budget.'

Therefore, as it is not a fund, it is not regulated by the FSA and it would appear that you can  happily make claims of guaranteed returns. Another company – The Premier Bordeaux Wine Company offers a cheque for £100 and 'your certificate of entitlement to an investment that yields 14.9% per annum guaranteed'. 

Also in the press release from Cult Wines Ltd is a highly selective example of a big return from one wine from a very particular vintage.

'Bordeaux Fine Wine has been the investment of the ‘Noughties’ proving to be a top-performing asset ahead of equities, houses, oil and fine art. A case of 1982 Lafite Rothschild has increased in price by 857% over the last decade, from £2,613 (Dec’ 99) to £25,000 (Nov’ 09).'

Bordeaux Fine Wine may or may not be 'the investment of the "Noughties" but you cannot prove it to have been a better performing asset than equities, houses, oil and fine art just by reference to Lafite 1982. 

I'd be very wary of being offered a guaranteed return by a wine investment company.