Two UK citizens indicted in US over multi-million scheme run from London and HK

Two UK citizen defendants allegedly caused investors to invest over $99m in sham loans purportedly collateralised by valuable bottles of wine, the US Department of Justice said in a statement on 1 March.

It said an indictment was filed on 28 February in federal court in Brooklyn charging Stephen Burton, aged 57, and James Wellesley, aged 55, both citizens of the United Kingdom, with wire fraud conspiracy, wire fraud and money laundering conspiracy in connection with a scheme perpetrated through their company, Bordeaux Cellars.

Bordeaux Cellars was the trade name for two private limited companies, Bordeaux Cellars, Limited and Bordeaux Cellars London Ltd., registered, respectively, in Hong Kong and London, England.  

Wellesley was arrested on 4 February, 2022 in the United Kingdom and Burton remains at large.

Breon Peace, United States attorney for the Eastern District of New York, and Michael J. Driscoll, assistant director-in-charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the charges. 

Peace said: "Unlike the fine wine they purported to possess, the defendants' repeated lies to investors did not age well.  As alleged, these defendants duped investors by offering them an intoxicating investment opportunity collateralized by valuable bottles of fine wine that turned out to be too good to be true.

"This Office and our law enforcement partners will work to protect investors from deceptive schemes and ensure that loans that are financed with investor funds are not stolen by fraudsters."  

Driscoll said: "Burton and Wellesley, as alleged, lied to their victims to get them to invest in what ended up being a nearly $100 million scheme. Today's indictment brings their criminal activity to light and reminds other like-minded criminals that illegal investment fraud schemes won't be overlooked." 

The indictment alleges that from at least June 2017 and continuing through February of 2019, the defendants posed as executives of a company called Bordeaux Cellars.  

The defendants solicited investors, including residents of the Eastern District of New York, at investor conferences held in the United States and overseas.  

The defendants claimed to investors that Bordeaux Cellars brokered loans between investors and high-net-worth wine collectors that would be fully collateralized by high-value collections of wine.  

They further promised that investors would receive regular interest payments from the borrowers, and that Bordeaux Cellars would keep custody of the wine pledged as collateral while the loans were outstanding.  

As alleged, these representations were false, the "high-net-worth wine collectors" did not actually exist and Bordeaux Cellars did not maintain custody of the wine purportedly securing the loans.  

Instead, the defendants used incoming loan proceeds to make fraudulent interest payments to investors and for their own personal expenses.  

Burton is a fugitive, it further said, and that anyone with information related to his whereabouts is asked to contact the FBI by calling 1-800-CALL-FBI or by visiting tips.fbi.gov

The charges in the indictment are allegations, and the defendants are presumed innocent unless and until proven guilty.  If convicted, the defendants face up to 20 years in prison. 

The government's case is being handled by the Office's Business and Securities Fraud Section.