My phonecall from a wine investment scammer

Tony Levene is invited to buy wine by a cold-caller. Apparently it's a fantastic investment...

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Would you pay £550 for a bottle of red wine? That's a lot more than the average person's take-home pay for a week and works out at around £125 for a glass – at that price you can calculate a price per sip.

Well, I wouldn't - £5.50 is near my Sainsbury's trolley limit.

But, according to Peter Doulton, who called me from a so-called “fine wine brokerage”, there are lots of people who will. And this time next year, they will be happy to pay even more – at least 15% extra, he assures me.

That's not how the conversation started, however. It was the usual “where did you get my details from?” from me and the standard response of “you completed a marketing survey some months ago.”

Now Peter Doulton is not his real name – halfway into the call he forgot which alias he was using and changed to Jon. Nor was he calling from the City of London as he claimed – I tracked him to a call centre in deepest Kent.

How it starts

Oddly, Peter started out asking if I had seen the news today.

“What news? There's a lot of it.”

“The Independent has had articles about risky investments every day for a fortnight.” I have not checked this but it is possible.

Neither Peter nor his firm is regulated by the Financial Services Authority (it does not need to be). But that does not stop him telling me about the “£42bn in stockmarket linked bonds”. These promise to return the greater of your money or your cash plus stockmarket growth in five or so years' time.

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“Everyone is looking for safe investments and they go into this because the banks and building societies and financial advisers tell them to do so. But the guarantee is provided by the banks. And you can't rely on the banks – they are all very volatile due to the eurozone crisis – so this is not safe.”

“So what is safe?” I ask.

“Fine wines from Bordeaux. All your gains are tax free,” he says. (The tax free bit is true – although the Treasury is thinking of changing capital gains tax rules to include more wines.)

I can think about lots of reasons why putting the family fortune in wine is not a good idea – the bottle breaking or me drinking the contents as well as more fundamental investment reasons.

But Peter assures me: “There's huge demand for fine wines. Last year, prices went up 26 per cent and this year, they will go up at least 15 per cent. There's a scarcity of good Bordeaux wines.”

Finally, he got round to a concrete proposal. He wanted me to open an account in a bonded warehouse in Essex, spend £6,500 on a case of 12 bottles of Mouton Rothschild claret and sit back until he advises me to sell. Then he will take 10 per cent of my gains.

“You've got to trust me. I'm down to my last case of this wine so if you miss out on buying now, you will miss it forever.”

The greater fool theory

Investing in wine depends on the “greater fool” theory. There has to be an idiot out there prepared to pay more than you did – and that person has to rely on someone else upping the price again. It is not like shares where rising profits will increase the value of your holding.

I was asked to pay more than the broker had paid for a product whose price is difficult to check – it can depend on which end of the vineyard the grapes came from - and even more difficult to justify. And there are plenty of other, cheaper, vintages around.

I was not prepared to be that “greater fool”. I left the wine on the shelf. Now back to Sainsbury's.

Read more posts on this blog: My phonecall from a scammer | Nine things you need to know about scams