Billionaire Koch defeats appeal in fake wine case

By Jonathan Stempel

NEW YORK (Reuters) - Billionaire William Koch persuaded a federal appeals court to uphold a jury verdict and $1.15 million award against Silicon Valley entrepreneur and fellow oenophile Eric Greenberg over the sale of 24 bottles of fake Bordeaux.

By a 3-0 vote, the 2nd U.S. Circuit Court of Appeals in New York on Wednesday rejected Greenberg's argument that there was a "complete absence of evidence" that he deceived Koch into buying the wine, which Greenberg has said he thought was authentic.

David Frederick, a lawyer for Greenberg, did not immediately respond to requests for comment.

Greenberg was accused of knowingly selling the wine at an October 2005 auction by Zachys Wine Auctions, including Chateau Lafite from 1811, Chateau Latour from 1864 and 1865 and a magnum of Chateau Petrus from 1921.

Jurors in April 2013 awarded Koch $12.4 million, including $12 million of punitive damages, after a three-week trial. The trial judge later cut the award to $1.15 million, including just $711,622 of punitive damages. Koch has settled with Zachys.

In Wednesday's decision, the appeals court said there was evidence that Greenberg "exerted influence in selecting bottles for auction," misrepresented chateaus and vintages, and knew his misrepresentations would be communicated to others.

"Given the evidence that the defendant intended to sell counterfeit wine, at auctions aimed at the public, no manifest injustice exists in the imposition of a punitive damages award," the court said.

Koch has filed other lawsuits over fake wine, and last year reached a $3 million settlement with Indonesian wine dealer Rudy Kurniawan in one case.

Kurniawan is serving a 10-year prison term for selling counterfeit wine, including some mixed in his kitchen. Koch testified at his criminal trial.

Moez Kaba, a lawyer for Koch, said "we're very pleased" with Wednesday's decision. "It vindicates the long fight by Mr. Koch to shine a light on the real problem of counterfeit wine in the auction market and hold people accountable," he said.

Koch, 75, is also the founder of the Oxbow Energy group, and won the America's Cup yachting race in 1992.

Forbes magazine estimates his net worth at $2.1 billion. Koch is also the younger brother of conservative political activists and fellow billionaires Charles and David Koch.

The case is Koch v. Greenberg, 2nd U.S. Circuit Court of Appeals, No. 14-1712.

(Reporting by Jonathan Stempel in New York; Additional reporting by Joseph Ax and Nate Raymond; Editing by Tom Brown)