Intercontinental Wines, a fine wine investment company based in Southampton, was wound up in the UK’s High Court after misleading its customers about the level of purchases and the storage of their fine wine investments.
The company’s marketing strategy was high-pressure cold-calling that targeted members of the public, emphasising the security and profitability of fine wine investing.
Customers were also told that the wine would be stored in bonded warehouses under personal accounts.
No response
The UK’s Insolvency Service (IS) started receiving complaints about Intercontinental Wines following the company’s failure to respond to enquiries.
The IS investigation revealed that Intercontinental Wines only made purchases for a small percentage of its customers on an ad hoc basis. Additionally, only around 10% of its customers actually had their wines stored in bonded warehouses.
Between March 2015 and February 2017, the company made sales of over £460,000 ($585,196, €516,409), however it purchased only £100,000 worth of stock.
This meant that, without knowing it, customers would need the value of the wine to increase by more than 400% to at least break-even.
The company also failed to provide its customers records of the purchases. The investigators only uncovered the investment discrepancy after receiving the banking records, which showed that the proceeds were used for personal expenditure instead of purchasing wine on the clients’ behalf.
Furthermore, Intercontinental Wines vacated its joint trading and premises in March 2018 but did not disclose this to its customers or the Registrar of Companies.
Unscrupulous
“Intercontinental Wines enticed customers with the promise of attractive returns from building a portfolio of fine wines, entrusting the company to make purchases and store wines at bonded warehouses on their behalf,” said Irshard Mohammed, senior investigator and case manager at the Insolvency Service.
“The company blatantly failed to do so in the vast majority of sales made and instead took customers’ funds on face value, frittering it away on unexplained or personal expenditure.
“These winding-up proceedings show that we will take firm action against companies that operate in such an unscrupulous way.”
