Bordeaux Cellars Founder Pleads Guilty to $99.4M Wine Scam Defrauding 140 Investors

Stephen Burton, founder of Bordeaux Cellars, pleaded guilty in a Brooklyn courtroom to wire fraud conspiracy and money laundering conspiracy charges related to a $99.4 million luxury wine investment scam that defrauded over 140 global investors, including 71 in the U.S. The scheme, orchestrated with his disbarred British legal partner James Wellesley, involved creating a false wine collateralized loan business that promised up to 12% annual returns. Prosecutors allege the operation, which spanned over a decade, relied on fabricated inventories and non-existent wine to secure investor funds, with victims collectively losing $25 million before the collapse in 2019 [1].

Burton, a self-proclaimed Stanford Business School graduate, marketed Bordeaux Cellars as a service for wealthy collectors seeking liquidity by offering short-term loans secured against high-value bottles like Château Lafleur and Domaine de la Romanée-Conti. From 2010, the pair cultivated an aura of legitimacy through wine industry networking in London, New York, and Hong Kong, while maintaining a Ponzi-like structure where early investors received interest payments from new entrants. Wellesley, who had a prior fraud conviction for a $7.7 million real estate scam, managed the company’s finances and concealed the fraud through shell companies [1].

The scheme unraveled in early 2019 when interest payments ceased and investors discovered the absence of promised collateral. One victim who invested $200,000 found the listed “collateral” wines did not exist. Burton fled to Morocco in 2019 with assets including fake passports, gold bars, and $1 million in cash, only to be arrested with an FBI warrant after attempting to enter the country using a counterfeit Zimbabwean passport. He was extradited to the U.S. in 2022, while Wellesley was extradited to New York from the U.K. in July 2022. Burton’s guilty plea mandates restitution and a forfeiture agreement, though the exact amount remains undisclosed. He faces up to 20 years in prison, with sentencing scheduled for January 6 [1].

The case highlights vulnerabilities in niche alternative investments. Prosecutors note the wine market’s subjective valuation and lack of standardized verification processes were exploited. “The defendants’ lies did not age well,” said U.S. Attorney Breon Peace in 2022. Financial experts emphasize the risks of opaque markets, where trust in traditional gatekeepers can be manipulated. The fraud underscores the need for third-party audits, verifiable ownership proof, and rigorous due diligence in illiquid asset classes. Many victims were advised by brokers or family offices that failed to authenticate the wine inventories, exposing a systemic breakdown in risk management [1].

As the U.S. Attorney’s Office prepares to announce Burton’s sentence, the case remains a cautionary tale for investors. With Wellesley’s trial date pending, the fallout from the scam continues, with victims pursuing civil recovery efforts. The indictment, filed in 2022, charges both men with four counts of fraud and money laundering, reflecting the scale and complexity of the deception.

Source: [1] [Inside the $99 million luxury wine scam that fooled over 100 global investors] [https://fortune.com/2025/07/24/bordeaux-cellars-wine-scam-james-wellesley-stephen-burton/]