When the One Percenters’ Expensive Liquid Assets Begin Evaporating
Opinion Advocates for ideas and draws conclusions based on the author/producer’s interpretation of facts and data.
Remember the era before the 1 percent of the wealthiest citizens were thrust into the spotlight?
They went about their business and their personal lives in relative obscurity. Oh, they were out there, but they hadn’t become a defined social or wealth stratum. They functioned in the ether of fancy, expensive homes, cars, boats and planes – all symbols of American success stories – and instilling vicarious dreams of success and wealth in the other 99 percent of Americans.
My, my, what a difference a (vitriol-laced, extreme fact-checking, polarized) socially evolving decade can make to bring the 1 percent out of the shadows. From the admired to the derided, their image as swashbuckling, wealth-creating entrepreneurs has begun to devolve to an image of voracious dealmakers, taking advantage of every opportunity presented.
Their escapades and growing fortunes have catapulted their every business and personal action into the public spotlight. And concomitantly, they have become the focus of the nefarious, those who seek to take advantage of the gullible, to scam those who believe their wealth makes them infallible in their decisions.
I’ve previously reported on a number of wine scams of the rich – and now infamous. They share an uncanny resemblance to “bubble” securities sold to sophisticated should-have-known-better investors in the runup to the Great Recession. The rise and fall of cryptocurrency similarly harbors financial traps.
Here are several examples that stand out as a testament that there is a P.T. Barnum customer always at the ready for a “foolproof investment” by the cognoscenti of internet and new-tech entrepreneurs, hedge fund managers and private equity investors.
- When investors are led down the path of seemingly safe investments. Kip Forbes, of the Forbes family financial dynasty, was enamored with the trophies of wealth; in particular, rare wines of estimable provenance. He bid on, and won, a rare wine attributed to Thomas Jefferson’s wine cellar. The world-renowned dealer who was offering this wine presented it as a rarity of impeccable provenance, backed by a highly regarded dealer.
And just as a number of the seemingly safe financial instruments the one percenters acquired, this wine proved to be a failed investment. In the case of this “Billionaire’s Vinegar,” (the best-selling book of the same title), the wine was a fraud and the dealer was exposed for duping a cadre of dealers, investors and media experts. Shame on you, Mr. Forbes.
- When investors knowingly look the other way to invest in unique investment opportunities. Robert Koch, a wealthy industrialist, collects the finest and rarest wines. When he comes upon such wines, he spares no expense in acquiring them, even if the investment may seem outwardly incongruous with the facts at hand. Over a decade, Mr. Koch accumulated an enviable inventory of wines purchased at auctions – and offered by questionable sources.
Succumbing to avarice and ego, he discounted warning signs, ultimately investing millions of dollars in fraudulent wines. Realizing that his blind reliance on wine purchases was ill-placed, he sued for retribution – and lost, leaving him with a significant number of worthless wines in his vast wine cellar. Shame on you, Mr. Koch.
- The FTX/SBF window-dressing and misplaced trust wine correlation. Rudy Kurniawan was the darling of the inner circle of high-end wealthy wine investors and collectors. Gaining the confidence of the wine collecting cognoscenti, he sold millions of dollars of fraudulent wines to sophisticated investors, consistently presenting himself as an insider with impeccable credentials.
His undoing? He went to the well once too often, overextending himself by arranging sales of counterfeit wines to an ever-growing audience of wealthy investors, eventually unable to provide the necessary liquid assets to perpetuate his fraud. Shame on you, duped Masters of the Universe.
None of the woes befalling the rich are new or unique; the history of humankind is littered with numerous examples of avarice.
“To everything there is a season, and a time to every purpose under heaven,” says the Bible.
Do egotistical wine collectors eventually fall victim to their compulsion for accumulating symbols of their wealth? Have the wealthy learned from their not-so-infallible instincts? Stay tuned to your social media sources for updates.
Nick Antonaccio is a 45-year Pleasantville resident. For over 25 years, he has conducted wine tastings and lectures. Nick is a member and program director of the Wine Media Guild of wine journalists. He also offers personalized wine tastings and wine travel services. Nick’s credo: continuous experimenting results in instinctive behavior. You can reach him at nantonaccio@theexaminernews.com or on Twitter @sharingwine.
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