Thursday, March 28, 2024

"The $9.5 Million Hangover: Did a wine-world insider swindle his Bordeaux-swilling pals?"

From New York Magazine's Grub Street vertical, March 18:

The dinner cost $7,250 a plate, but that isn’t what Krešimir Penavić remembers about the evening. What Penavić recalls is, first, the wine: four rare bottles from Domaine de la Romanée-Conti, the estate worshiped by oenophiles around the world. And, second, meeting Omar Khan, the man seated across from him, who was larger than life in every sense. “In his mass, in his voice, in his appetite, in his talk,” Penavić says. “He was sitting there buttering bread and complaining that the food was not fat enough to be served with his wine.”

The men were dining at Daniel Boulud’s flagship restaurant in February 2015, during La Paulée de New York, a weeklong celebration of the grape harvest in Burgundy. Khan, 48 years old at the time, was a familiar presence at this kind of event, where wine aficionados paid huge sums to share special vintages poured by renowned French winemakers. He wore tailored suits on a body that an acquaintance described as “perfectly spherical.” Holding court, he’d talk in a honeyed baritone about literature, business, and travel, sharing lessons he’d learned climbing Mount Fuji or waiting for a cappuccino at the Beau-Rivage in Geneva. His alluring old-world twinkle had helped him start a business hosting his own wine events, which were gaining a reputation for being some of the most extraordinary tastings in New York.

Penavić jumped at the chance to attend one. Soon he was a regular at Khan’s events, paying as much as $25,000 a seat. Penavić, who immigrated to the U.S. from Croatia in 1990 on a math scholarship, had made a fortune as one of the earliest employees at the billionaire-minting hedge fund Renaissance Technologies. He races Ferraris, spends summers aboard his 150-foot double-masted yacht, and underwrites the search for ancient shipwrecks on the floor of the Adriatic. But of all his hobbies and indulgences, it’s wine that puts a special glint in his eye. “It’s a beautiful process, to coax something like that out of a fruit,” he says, after telling me about the vineyard he owns on an Istrian hillside. “No other fruit is like that. It can be so complex. It can be so many things. It can change so much over time — hours or decades. To me, it is the most fascinating product that we get from nature.” When Khan asked Penavić to begin investing in his wine venture, he readily agreed.

Khan pitched a simple arrangement. Staging one of his dinners might cost $100,000 — to reserve a private room at Jean-Georges or another fine restaurant; to source six to ten rare bottles; to pay a sommelier. If Penavić advanced him $60,000, Khan said he would cover the rest, and they’d split the profits 50/50. The exact amounts varied according to location and size. Penavić gave Khan $75,000 for an event in London and $75,000 for another in New Jersey. He also gave $250,000 for a 37.5 percent stake in Khan’s plan to do monthly events overseas.

Penavić says his private bankers vetted Khan. But over time, he started to become suspicious. The events were postponed again and again, and when Penavić asked for updates Khan was evasive. “A month goes by, and then six months go by, and then a year goes by, and this dinner hasn’t happened yet,” Penavić says. “I’m like, ‘What’s going on? Do the dinner!’ He says, ‘Oh, this and that happened, and perhaps we’ll do it in London, and there weren’t enough people interested. We’ll see. I’m going to be in New York soon, let’s talk.’”

At some point, Penavić says, though he can’t say for sure exactly when, he realized that he’d invested some $5 million in Khan’s events and never seen a dime of profit. That’s when he started calling around to other wine people. “My hit rate was 100 percent,” he says. “Every single person I called answered the phone and said, ‘You’re calling about Omar, aren’t you?’”

In September 2019, Penavić and 12 other members of the New York wine elite sued Khan in state court, alleging that he had taken them for nearly $8.3 million. The charge was as extraordinary as it was embarrassing: For people immersed in a hobby predicated on discernment, they’d proven to be pretty easy marks. The U.S. Attorney for the Southern District of New York began investigating Khan, and in February 2020, prosecutors filed an indictment. But the authorities were unable to make an arrest. By then, Khan had fled the country.

Con men abound in fine wine. But unlike, say, Rudy Kurniawan, who famously emerged out of nowhere to dupe Burgundy fiends out of $28 million in the 2000s, Khan didn’t need to put on airs. His late father, Najmul Saqib Khan, was a Pakistani diplomat who served in Saudi Arabia; Japan; Washington, D.C.; and New York, where he was consul general — a position that allowed him to mingle with the city’s power brokers. In the 1980s, Saqib, as he was known to friends, became particularly close with the real-estate scions William Zeckendorf Jr. and Daniel Rose, who could often be found bidding up the price of rare wines at auction.....


A quick search of the blog, query wine fraud turns up:

Questions America Wants Answered: "Why is Domaine de la Romanée-Conti So Expensive?"

 Possibly related:
"Vineyard-Raiding Baboons Favor Pinot Noir"

What a bunch of wine snob poseurs.
Merlot is just fine, especially if it's dolled up as Chateau Petrus.
Berry Bros. & Rudd is running a special case price, "Buy 6 and save £ 2667.37".
A Romanée Conti (pinot noir) will cost you double or triple. BB&R is price on request.
Either way, possibly more than the average baboon has in petty cash.

"The 6 Most Statistically Full of Shit Professions"

#6. Stock Market Experts
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#4. Art Critics 

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In one auction alone in 2006, Kurniawan sold $24.7m of wine

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One of the Greatest Editor's Notes of All Time: The Secret To His Success Edition
From Vinepair, Feb. 2, 2016:

Meet The VC Who Actually Makes Money Investing In Wine Brands
Ed. Note: This article was written and published prior to Charles Banks’ indictment for wire fraud, unsealed in Federal court on 9/9/16. This article, which discusses many of his business ventures, is in no way an endorsement of any of his financial practices or alleged crimes....
Here's the original story.

And many more.