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$10M spent to win $380K in deceptive business practices case

After a California Internet entrepreneur’s two consulting businesses failed, a billionaire energy executive from Florida bought 17,000 bottles of his premium wine at a 2005 auction in New York. The wine was allegedly worth $3.7 million. Unfortunately about two dozen of those bottles turned out to be counterfeits. Worse, the Florida man felt sure the California man knew it.

The energy executive sued the Internet entrepreneur for deceptive business practices, false advertising, fraudulent misrepresentation and fraudulent concealment. On Thursday, after years of litigation, a federal jury awarded him $380,000. The case isn’t quite over — this week the same jury will decide whether the Florida man should be awarded punitive damages, as well.

According to the magazine Wine Spectator, the Florida man spent around $10 million on the lawsuit, although it isn’t revealing its sources. Why?

“There was a code of silence in this bloody wine business, and now it’s been broken,” he told the magazine. I can’t stand being cheated. But the worst thing of all is that counterfeiting degrades the love of the vintner for his wine.”

The business fraud trial lasted more than two weeks. Although the California man testified he would never have intentionally sold counterfeit wine and pointed out that the plaintiff had turned down his offer for a full refund, the jury took only two hours to hold him liable.

Even if the jury decides the Internet entrepreneur should have to pay punitive damages, it is highly unlikely that the award will make up the more than $9 million-difference between the outlay for the litigation and the damages awarded to the energy executive.

But that’s not the point. The Florida man told reporters he was elated and plans to toast his win with a glass of fine wine.

Source: ABA Journal, “Elated billionaire wins $380K in federal suit over fake wine; he may have spent $10M in legal fees,” Martha Neil, April 12, 2013

Our law firm represents Nevada clients in business fraud cases. For more information, please see our website.

John P. Aldrich
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