Twenty investors poured nearly $176,000 into the Assetton investment company to buy high-quality French wine so they could sell it for a profit in the future. They received certificates apparently from Grand Cru Storage attesting that their wines were safely stored at a facility in Bordeaux in France.
But it was all a sham, a district court heard on Thursday. The certificates were fake and in many cases no wine had been purchased.
The mastermind behind this scam, Mohan Nainan Nainan, 55, was jailed for 11 months after he pleaded guilty to abetting in the forgery of the certificates and misappropriating the $176,000.
He was the director and a shareholder of Assetton, a firm he had founded in December 2007 to sell French wines as investments. In 2009, he accepted $6,532 from an investor to purchase 12 bottles of wine. He convinced her that she would be able to make a profit on their sale in three to five years' time. In January 2011, she instructed him to sell the wines on her behalf but when she did not hear from him after six months she checked with Grand Cru Storage and discovered that her wines were not stored at its facility. Nainan had not bought the wines.
In another instance, he pocketed the payment for six bottles of Chateau La Mission Haut Brion 2000, six bottles of Chateau Lafite Rothschild 2000 and six bottles of Chateau Margaux 2000 which he sold for another investor. These wines were valued at more than $31,000.
Nainan also lied to the Registrar of Companies that his company's paid-up capital was $450,000. But the shareholders had not paid for the shares issued to them.
He was fined $7,000 for contravening the Companies Act.