DTI plans bloody end to the 'web claret' fraudsters

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The Department of Trade and Industry is using new tactics by launching pre-emptive strikes against a web of traders offering dubious claret investments. There has been a surge of cases involving a network of firms, dubbed the "claret web", which are believed to have defrauded people of millions of pounds by claiming that fine wine investments would offer high returns.

Three firms which offered to buy top-growth clarets, Croft and Dupont, Ashley White and Ashley Witter, have been wound up by the High Court since last year after allegedly selling wine which did not exist or selling it at highly inflated prices. Despite their closure, and prison sentences this year totalling more than 20 years for four men caught fraudulently trading in whisky and champagne investments by the Serious Fraud Office, several dishonest firms are continuing to trade.

As a result, company inspectors are attempting to break up the chain of companies in the claret web by applying to the High Court to close them as soon as they begin trading and before complaints mount up.

Earlier this month, the High Court agreed to wind up Harley Fine Wines because of the direct links between one of its directors, Lynton Guest and his previous firm Ashley White, which had similar trading practices.

The DTI alleges that Harley Fine Wines had failed to buy any claret it had sold to investors, even though funds were being withdrawn from company accounts. "It appears that the company has no assets," said one source.

The Official Receiver has also begun enforcement action against a second Harley Fine Wines director, Aurora Menon, who was said to have been closely involved with Ashley White. The firm is believed to have taken £150,000 from investors.

Mrs Menon has been accused of failing to co-operate in the Receiver's investigations into the affairs of Harley Fine Wines and Ashley White, despite a Section 447 order under the Companies Act 1985, which compels directors to co-operate with DTI investigations. Mrs Menon, who could not be contacted, has been a director of at least two other dissolved companies, including one company called Sportwell, which also involved Mr Guest. He is known to have been a director of at least four dissolved or liquidated firms.

The string of claret fraud cases has so alarmed the legitimate wine trade that the industry body, the Wine and Spirit Association, has issued a detailed code of practice which reminds its members about the new distance-selling regulations.

The new regulations give consumers buying by mail or on the web a seven-day cooling-off period as part of a range of clearer rights for the public.

One investor in Ashley White, who asked not to be named, bought a case of Troplong Mondot 1995 for £840. The wine does not exist in that name and cost twice its true market value. "I thought I had been an idiot, and I should have known better," the investor said.

Jim Budd, a wine investment journalist who runs a website devoted to exposing drinks frauds (www.investdrinks.org), said the claret web firms deliberately focus on relatively wealthy people.

"People are asked whether they've considered diversifying their portfolios, and told that fine wine offers a very good opportunity," Mr Budd said. "People are led to believe they can make a serious profit."