A small wine collection amassed by a bottle-blonde swindler marked the start of this year’s fall auction season. Don’t be surprised if you missed it. It wasn’t on the calendars of the major houses. This online auction was held by the house of Gaston & Sheehan, headquartered not in New York, London or Hong Kong, but in the small, central Texas town of Pflugerville.
There were cases of ’04 Margaux and Lafite, and a bit of Burgundy in the form of a couple of wooden crates of ’06 Louis Jadot Bienvenues-Batard-Montrachet Grand Cru, but mostly there were California cult wines – Harlan, Caymus, Abreu and Kistler - on the auction block.
All were kept at a climate-controlled storage facility not far from Austin - a city better known for its politics than its Pomerol. “We do everything to keep the value of the assets,” said Bob Sheehan, who added that he had 30 years of experience in the auction business and runs the family-owned firm.
Almost all of the wines sold for between one-third and one-half of their retail prices. So a case of 12 bottles ’04 Château Lafite Rothschild in its wooden crate went for $5,320.00 instead of the more usual $10,560.00; the 12 bottles of ’04 Haut-Brion – in their two wooden crates – sold for $2,580.00 instead of $5,376.00; and the six bottles of ’03 Caymus Vineyards Special Selection Cabernet Sauvignon – with its wooden crate – went for $655.00, or $109.00 a bottle, versus the average $164.00 a bottle that shows up on wine-searcher.com. The wines were of recent enough vintage that many were on offer at retailers.
Oh, did we forget to mention there was no buyer’s premium?
Fire sale
“The fire sale,” as one law enforcement official described it, came courtesy of the US Marshals Service. Yes - the US Marshals – the same outfit that more than two centuries ago was sent with six-shooters and badges to bring law and order to the Wild West.
The job has changed a bit in the past 225 years and while they still have the badges, the preferred weapon is now a Glock pistol. They still capture fugitives, transport prisoners, protect witnesses and secure the assets of those arrested and charged with a financial crime. When there is a conviction, the Marshals are charged with selling those assets – be they Mercedes-Benz, mansions or Margaux. The sale proceeds are used to reimburse the victims.
Lynzey Donahue, a spokeswoman for the US Marshals Service, said wine sales “fluctuate based on federal court cases nationally, but anecdotally, the Marshals sell wine at least once or twice a year.”
This particular fire sale stemmed from the case of Melissa King, who exchanged her mansion in the posh New York City suburb of Irvington for a cell at a minimum-security federal prison in central Florida about 50 miles (80 kms) northwest of Orlando.
King, married and divorced four times, was originally charged with 12 counts of embezzlement, fraud, money laundering and theft for stealing $42m over the course of six years from the pension fund of Local 147 – known as the Sandhogs’ union.
Her theft cost each union member – who tunnels under New York’s skyscrapers and rivers to build the subways, water tunnels and roadways that are the city’s arteries – between $50,000.00 and $80,000.00.
While the union members bored through Manhattan’s schist hundreds of feet below the pavement, King lived a lavish lifestyle, renting a Park Avenue penthouse for $25,000.00 a month where she never spent the night, one law enforcement official said.
“She was a woman who pursued this lifestyle of luxury. She spent money like a drunken sailor,” said the source, who asked to remain anonymous because he was not authorised to speak to the media. “She just got used to luxury and wouldn’t let it go. This was a woman who had filed for personal bankruptcy and filed a bankruptcy for her original company. But the union stuck with her.”
Court papers showed the stolen monies were in addition to the $540,000.00 annually that the pension fund paid King’s company to administer its pension fund. She eventually pleaded guilty to two counts in October 2011 and was sentenced to six years in prison.
For King, who lived like a queen, one of anything just wasn’t enough. She had siphoned off enough cash to pay for four cars – a 2005 Porsche Cayenne, a 2008 Mercedes-Benz S Class, a 2008 Mercedes-Benz CLK Class and a 2008 Range Rover – and three housekeepers. There was the bodyguard and the hairdresser who came to her mansion in the affluent suburb. There were other somewhat excessive charges: $500,000.00 paid to the department store Neiman Marcus; a $150,000.00-stay at the Ritz Carlton in Palm Beach; the $900,000.00 in mortgage payments on the Irvington home; and the $7m paid to American Express.
But what really set this case apart from being just a run-of-the-mill fraud were the horses. King didn’t play them. She bought them for her youngest child, a daughter who showed some promise as an equestrian. King spent $5.5m to buy, maintain and transport the animals – in some cases flying them by private jet – to various meets and contests. At one point, law enforcement officials said, she had a herd of horses boarded at various stables in the region.
The Marshals have lots of experience with horses and once King entered her guilty plea and was sentenced to six years in prison, they quickly sold them off. Neither the luxury cars nor the $1m worth of jewelry presented any particular challenge.
But the wine – which the Marshals learned of only after King’s arrest – was a different matter. “It wasn’t in her mansion. She kept the wine in a private storage facility. It took us a while to find that, but we did,” the law enforcement official said.
Bargain basement prices
The wine first went up for auction this past August with appraisals that left at least one observer rubbing her eyes in disbelief. A dozen bottles of 2005 Bouchard Pere et Fils Mazis-Chambertin Grand Cru had a minimum bid of $1,530.00. It sold for $1,550.00 (the average retail price is $230 a bottle). Twelve bottles of 1998 Chateau Beychevelle Saint-Julien had a minimum reserve of $410.00. The Quatrieme Grand Cru Classe with its wooden case eventually sold for $810.00 (the average retail price $119.00 per bottle). The two wooden cases filled with six half-bottles (375 ml) of 2003 Chateau d’Yquem had an opening bid of $1,235.00. It sold for $2,020.00.
The US Marshals Service “has contracted appraisers and authenticators who work independently from Gaston & Sheehan,” spokeswoman Donahue said in an e-mail. “These appraisers are used to establish a value for each of the assets which G&S stores for the USMS.”
Admittedly provenance plays a prime role in determining a wine’s worth. But what led the Marshals and other law enforcement agencies to the professionally maintained wine warehouse were receipts for the wines’ purchases and their storage, which is about the same level of authenticity one expects from the better-known auction houses. The Marshals and Gaston & Sheehan took and posted photographs of the wines online – including the now-opened banded wooded crates.
It wasn’t a total blowout. The bidders still had to pay, in many cases, sales tax of 8.25% and had the additional cost of shipping. And while Donahue said the bidding was open to all comers – whether they lived in the US or abroad – shipping outside the US presented another challenge. Neither of the two shippers Gaston & Sheehan suggested on their website (txauction.com) would ship wine overseas. But for those who could overcome the logistical challenges, there were the wine bargains of a lifetime.
At least somebody got something out of it. As for Melissa King’s victims – the members of the Sandhogs’ union – their pensions are gone. The New York Times reported that one victim, Anthony Sylvester, told the judge: “My knees hurt. My shoulder hurts. My back hurts. And I, at age 67, still have to continue working. I should have been enjoying my golden years with my family.”
