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According to an investigative piece that ran last year, Daniel Oliveros and partner Jeff Sokolin ran Royal Wine Merchants, a Manhattan retailer, considered one of the biggest players in the fine wine market.

Oliveros and Sokolin were known as “the sexy boys” of the wine biz. They lived as lavishly as their wealthy customers—staying in swank hotels, often hiring limousines, and routinely opening thousands of dollars’ worth of rare wines.

Oliveros’ marriage to porn star Savanna Samson added to the aura and the intrigue. But what really set the sexy boys apart was their seemingly limitless stock of legendary old wines, many of them in supersize bottles—quantities and formats that no one else could get their hands on.

According to an article that appeared on Slate.com, Oliveros and Sokolin “bombarded clients with faxes touting their latest finds: multiple bottles of 1961 Latour à Pomerol (“Kinky Juice!”), magnums of 1945 Mouton Rothschild (“our latest sexy purchase”), a double magnum of 1949 Cheval Blanc (“Perfect condition. Better than 1947!!! Trust me!!!”). It seemed too good to be true. Apparently, it was.”

Billionaire wine collector Bill Koch later filed a lawsuit against Christie’s auction house that included some provocative claims about Oliveros and Sokolin. Koch has now followed up with a 48-page lawsuit against Oliveros and Sokolin filed in the US Court Southern District of Florida.

Background to the lawsuit: Third-party import records obtained by Koch suggested that Royal served as a middleman for Hardy Rodenstock, a suspected wine counterfeiter. Rodenstock, a Munich-based collector, shipped hundreds of bottles of wine, virtually all of them rarities, to the United States through Royal.

The quantities were improbably large, and wine experts who have seen the figures believe that many if not most of these wines were knockoffs. Slate.com turned up evidence tying Oliveros and Sokolin to the sales of counterfeit wines, and at least one of the fakes they allegedly sold, a 1921 Château Pétrus, is on the list of wines that Rodenstock sent to them.

Koch, a 70-year-old energy tycoon, is notoriously litigious, and the Christie’s complaint was the sixth lawsuit he has brought since 2006 as part of an effort to combat what he believes is an epidemic of wine counterfeiting.

Last year a U.S. District Court awarded Koch a default judgment in litigation that he had initiated against Rodenstock in 2006. On May 27, 2010 a New York court, however, dealt him a setback, dismissing a fraud complaint that he had filed against Acker Merrall & Condit, another auction house, in 2008.

Four other suits are still pending. Koch, who has a 40,000-bottle collection, purchased four Thomas Jefferson wines in the late 1980s, and he launched his crusade after learning that these were likely fakes and that other wines in his cellar were also suspect.

Koch seems to feel that the wine auction market is full of swindlers and charlatans.

Oliveros, a native of Venezuela, and Sokolin, who is of Russian descent, opened Royal in 1990. The liquor license was in Sokolin’s name alone.

According to court records, in 1986 Oliveros had been arrested and charged with stealing approximately $20,000 worth of wine from Long Island’s Garden City Hotel, where he had been employed. Oliveros confirmed the arrest and said he had pleaded guilty.

The front of the store was unremarkable, but the back room of Oliveros and Sokolin’s enterprise was another story: It was bursting with fabled wines.

After visiting Royal in 1999, a gobsmacked William Grimes of The New York Times described it as “Ali Baba’s cave” and reported that “Strewn all over the floor and stacked in the makeshift racks were the artifacts of a glorious civilization. A 1952 Latour caught my eye. Then a 1949 Chateau d’Yquem, a 1955 Cheval Blanc, a 1900 Lafite. … The display was, shall we say, casual. Sitting on a case of priceless Bordeaux was someone’s lunch.”

Royal’s huge inventory of great Bordeaux and Burgundies quickly made it a favorite among collectors. Oliveros and Sokolin also became renowned for their splashy tastings as well as the acuity of their palates, which seems to be a recurring theme.

Usually held at Oliveros’ Manhattan apartment, the tastings would begin first thing in the morning, run late into the night, and feature a dizzying procession of venerated wines, which were knocked down with cold cuts and Indian takeout. Whether they were uncorking dozens of iconic bottles or staying at the luxurious Hôtel de Crillon in Paris, Oliveros and Sokolin lived inexplicably well for wine retailers, and among their peers, they were the subject of constant speculation and much suspicion.

Where were they getting all the money, and more importantly, where were they getting all the wine?

In his lawsuit, Koch claims that for years, counterfeiters have duped wine collectors worldwide into paying millions of dollars for near worthless bottles.

According to Koch, wine counterfeiters employ a variety of techniques. One technique is to obtain an authentic empty wine bottle, fill it with inauthentic wine, affix a counterfeit label that misrepresents the nature, vintage, and age of the wine inside, and seal it with an old cork.

A counterfeit bottle of high quality can often fool even meticulous collectors. It is not uncommon for wine to go bad from legitimate causes such as poor storage conditions. Therefore, if a bottle does not taste right, collectors often view it simply as bad luck.

The Koch lawsuit goes on to allege that Royal, Oliveros, and Sokolin have been instrumental in importing, promoting, and selling counterfeit rare wine to the American market. Koch’s investigation has recently revealed that from at least 1998 to 2008, Oliveros and Sokolin knowingly purchased hundreds of bottles of counterfeit wine and circulated them into the marketplace.

If real, the hundreds of counterfeit bottles Oliveros and Sokolin injected into the marketplace would have been worth more than eight million
dollars, Koch contends.

From 1998 to 2008, Oliveros and Sokolin according to the records of a wine importing, distributing, and brokering company located in New York and of a third party custom broker and freight forwarder located in New Jersey, served as the primary importer of Hardy Rodenstock’s counterfeit wine to the United States.

“It tums out the wines were too fine, too prized, and too rare to be genuine,” states the lawsuit.

Representatives of some of the châteaux have revealed to Koch that certain vintages and bottle sizes imported were likely never produced at all, and others were never produced in the volume Oliveros and Sokolin imported them.

Koch also claims to have “evidentiary support” to establish that Oliveros and Sokolin entered into an agreement with Rodenstock whether tacit or implicit-to import, promote, and sell his counterfeit wine as genuine.

Koch recently discovered that he purchased at least 32 bottles that Oliveros and Sokolin imported and sold into the United States market place. Koch purchased the 32 bottles indirectly and through multiple transactions.

Despite knowing that each bottle was counterfeit or probably counterfeit at the time they imported and sold it, Oliveros and Sokolin represented that each of the 32 bottles was genuine.

The information contained in the lawsuit is pretty exhaustive including detailed import records and an intriguing insider’s look into the marketing end of the wine business. Sokolin as the owner of Royal, earned significant sums from such sales. Oliveros, though nominally a salesperson, also earned significant sums. Though Oliveros earned a “generous” commission, based in part on the company’s overall sales.

For his part, Hardy Rodenstock has had a long and illustrious career creating,promoting, and selling counterfeit wine. Since the mid 1980s, he has promoted and sold many exotic, rare wines that he claimed to have “discovered” under amazing circumstances.

The wines often came from people or locations that Rodenstock refused to identify. The details he did provide were often incredible; he claimed to have acquired wines from a bricked-up cellar in Paris, from secret caches in Venezuela and from hidden imperial cellars in Russia. Selling these rare bottles earned Rodenstock fortune and fame in the rare wine community. All or nearly all of the bottles were counterfeit.

Rodenstock’s long-term scheme duped numerous collectors, including Koch. Koch purchased wines from Rodenstock, which were purported to have once belonged to President Thomas Jefferson.

Only in the mid-2000s, when a museum planned to exhibit a photograph of some of these bottles, did Koch first learn that any of the bottles were probably counterfeit. Thereafter, Koch’s investigation exposed overwhelming evidence the wines were counterfeit. Rodenstock had claimed the wines dated to the 18th Century. Experts determined that the bottles were engraved with electric tools.

German witnesses admitted that they had engraved wine bottles for Rodenstock. Another German witness admitted he had counterfeited wine labels for Rodenstock. Koch initiated legal action against Rodenstock in the Southern District of New York, and obtained a default judgment on May 17, 2010.

In order to succeed in his decades-long wine fraud, Rodenstock needed to create demand for his counterfeit wine, and to sell his counterfeit wine without arousing unwanted suspicion. Oliveros and Sokolin helped him achieve both goals by serving as his middlemen. Oliveros, as the chief salesperson, promoted and marketed Rodenstock wines, especially at the retail storefront.

Oliveros and Sokolin imported nearly eight million dollars’ worth of counterfeit wines to the United States and were aware, according to Koch, that Rodenstock was a notorious counterfeiter. Nevertheless they sought to conceal the nature of their relationship and arrangement with him and communicated with Rodenstock regularly by fax.

According to the suit, individual collectors of rare and fine wine often do not consume their wine, but rather store, trade, and resell it.

Individual collectors rarely detect counterfeits, because they
generally accept each bottle of wine to be what it purports to be, they usually do not taste or open the wine, and they have little incentive to discover counterfeits. Once a bottle is determined to be counterfeit it is next to worthless.

“Most of the bottles Oliveros and Sokolin have imported continue to circulate and to dupe collectors, investors, and consumers,” states the lawsuit.

“Until all Defendants’ imports have been identified, located, and removed from the marketplace, victims will proliferate. Thus, Defendants’ fraud is ongoing.”

Most of these wines, according to the suit, move through four auction houses: Acker, Christie’s, Sotheby’s, and Zachys. In 2004, these four auction houses led the United States market and worldwide market in wine auction sales. A fifth major United States auction house, Hart Davis Hart, has recently loosened the four houses’ stranglehold on the United States market.

Koch is claiming damages in an amount to be determined at trial, but no less than $547,693, the amount Koch paid for the 32 counterfeit bottles.

Koch is also suing Onliveros and Sokolin according to The Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”).

Koch is asking for Injunctive relief to prohibit further wrongdoing by Defendants; Damages for all injuries suffered as a result of Defendants’ unlawful conduct; Exemplary damages in an amount to be determined at trial; Punitive damages in an amount to be determined at trial; Declaratory relief, as appropriate under FDUTPA $ 501.211; Attorney’s fees, as appropriate under FDUTPA $ 501.211; Court costs, as appropriate under FDUTPA $ 501.21l; Treble damages, as appropriate under 18 U.S.C. $ 196a(c); Pre-judgment interest; and further legal and equitable relief.