Inside the Pappy Van Winkle Forgery Scheme That's Infiltrating Bourbon's Black Market

[MIKA27]

Inside the Pappy Van Winkle Forgery Scheme That's Infiltrating Bourbon's Black Market

Source: Esquire

THE SHOTGUN WAS BROUGHT OUT and the empty bottle of Van Winkle Special Reserve 12-Year-Old bourbon was placed on a fencepost some fifty feet away from the fire pit. It was a hot summer night at a cabin in rural Georgia, and Blake Riber and his buddies had just polished off the bottle of coveted booze. Someone had the smart idea to not pull the trigger—their wives and children were sleeping inside just a few yards away, after all. Instead, Riber walked to the fence, grabbed the bottle, and slam-dunked it into a nearby trashcan, making sure it shattered into countless shards. He may have been a little buzzed, but he had a sober rationale.

"There's a crazy problem right now," Riber, a senior accountant in Jacksonville and the author of Bourbonr blog, told me over the phone. "And you just know it's going on when you're seeing empty Pappy bottles selling for 100, 200 bucks online."

In 2012, eBay banned listings for all bottles of alcohol, effectively shutting down a bustling black market that had emerged in plain sight: Countless users were illegally selling limited beers, bourbons, and other boozes without a license and for well above market rate. That move didn't completely eliminate this robust secondary market; it just forced it to relocate to more secretive corners of the Internet. But within the past few months, something curious has started happening on eBay.

Empty bottles of Pappy Van Winkle have begun appearing on the online auction house—and they're selling for absurdly high amounts. Here's an empty bottle of the 15 Year Old that went for$32. (It's MSRP brand-new and full is a mere $79.99 if you can find it.) And here's a 20 Year Old empty—with its red velvet bag and "hang" tag—checking in at a cool $200 (its MSRP is $149.99). Here's a full set of Van Winkle empties for over $1000.

Who the hell would pay such exorbitant prices for something devoid of the contents that once made it worth purchasing? Perhaps some little old lady looking to make a cool pedant light for her Etsy store? A Pinteresting candleholder enthusiast? Uh, no.

To understand what's happening, you must look at whiskey's secondary market, which now exists mainly on private, invite-only Facebook groups, on sites like BottleSpot, and even on Craigslist. It's here that limited-edition bourbons and ryes like the Buffalo Trace Antique Collection, certain Willett and Four Roses bottlings, and, yes, all the Van Winkles are changing hands daily for well above their MSRPs. A look at BottleBlueBook.com, a fairly active monitor of black market sales, shows 2014 Pappys currently sitting at $657 for the 15-year, $986 for the 20-year, and a whopping $1,677 for the 23-Year (that one has an MSRP of just $249.99).

That's a lot of money moving through an unregulated market. And where there's an unregulated market, there are those more than happy to exploit it. With a little bit of creativity and a broken moral compass, certain unscrupulous sellers see opportunity where others see fodder for the recycling bin.

"EVEN PAYING TEN DOLLARS for a literal piece of garbage is a really strange thing to me," Adam Herz tells me. He's a Hollywood screenwriter and producer (most famous for American Pie) and co-founder of L.A. Whisk(e)y Society, one of America's foremost private whiskey clubs.

This past December he had a weekend off, so he decided to hop on eBay and begin cataloging all the empty-bottle auctions that had recently occurred. Herz quickly noticed something: the same three or four buyers were snapping up all the Pappy empties. Why does this guy needs 50 empty bottles? he remembers thinking.

Bottles of the 23-Year-Old and the Van Winkle Family Reserve Rye have unique, hand-numbered codes on their labels. Herz decided to copy those digits down. Then he went on one of the most prominent black-market Facebook groups to compare his findings to the bottles currently for sale.

"Five minutes. That's how long it took me to find the first fake," he says.

He tells me of one whiskey enthusiast who was duped by a counterfeit Pappy (embarrassed, he wishes to remain anonymous). Late last year he purchased a bottle of Family Reserve Rye (MSRP: $99.99) from a seller out of Lexington for around 800 dollars. He'd never tried the product before, but still had cause for concern when the bottle arrived. A thirteen-year-old rye whiskey should be dark amber, almost caramel-syrup-like in color. The bottle he received was a limp, straw yellow more befitting a much young whiskey. Something was clearly wrong.

Just a month earlier, Herz had catalogued an an empty bottle of Family Reserve Rye sold on eBay with a code of "B4141." The code on the anonymous man's dubious bottle? B4149. A closer inspection was all it took to see an extra loop had been adeed to change that final 1 to a 9. He'd been had.

SUCH FORGERY IS NOTHING NEW. Refilling coveted bottles has infamously happened in the wine world before, such as in the case of The Billionaire's Vinegar. It's happened with scotch, too—a fake-Macallan scandal popped up over a decade ago. Even the craft-beer world was briefly rocked in 2014 when an Iowa man was discovered to be refilling and selling bottles of Toppling Goliath's esteemed Assassin Imperial Stout. It's no surprise bourbon counterfeiting has finally entered into the fray. In fact, bourbon might be the easiest alcohol to fake.

Unlike wine and beer, bourbon doesn't age once bottled. It rarely oxidizes. It's not corked. On top of that, most major bourbons come from similar mashbills. Pappy Van Winkle, for instance, is no longer the same vaunted "juice" that once sprung from the Stitzel-Weller distillery, which has been closed for years. Nowadays it's made at Buffalo Trace along with countless other whiskeys, even using a recipe that calls for the exact same percentages of corn, barley, and wheat used by several of their other releases such as Old Weller.

So similar is Weller's profile to the Van Winkles that Riber coined a term for blending together W.L. Weller 12 Year and Old Weller Antique: "Poor Man's Pappy." But Herz doesn't even think refillers are going though that much trouble. "People say to me, 'they must be using Larceny, that's the closest thing to Pappy,'" he says, citing another wheated bourbon. "Gimme a break! As long as you fill the bottle with a halfway decent bourbon—Mmmmmm, delicious. We're all programmed to accept suggestibility."

You don't exactly need to be a master con artist to pull this off, which is what troubles so many in the industry. You can even find foil bottle coverings, similar to the ones used by the Van Winkles, for pennies on Amazon. Torch the covering with your household hair-dryer, and a refilled bottle suddenly looks as good as new. Furthermore, because black-market bourbon changes hands so often, getting flipped from buyer to buyer, it's often hard to figure out when the bottle first became a little fishy and who exactly was the culprit.

I HAVE NO REASON TO BELIEVE any sort of massive, organized crime ring of empty Pappy Van Winkle refillers is currently flooding the black market. "It's not like the mafia with Macallan," Riber tells me, referring to that aforementioned 2004 scandal. "I just don't think it's to that level yet."

What I suspect it is that a few dudes here and there—maybe bourbon fans themselves, or Kentuckians with some connection to the industry—are buying up empty bottles, refilling them with Weller or some other wheated bourbon, and making a few thousand bucks in profit. Perhaps they are even now selling these fakes directly to bars, as Herz has noticed that counterfeit bottles aren't appearing online as much as they used to. No refiller has yet been arrested. Perhaps the issue is not yet worth the government's time and effort. One source, speaking on the source of anonymity, says he's heard that the TTB is well aware of bourbon's black market and the private Facebook groups that help foster it—and has chosen to ignore them so far.

Still, Herz takes pride that since he began publicly posting his findings on the Facebook groups, less empties have appeared on eBay. They're also selling for a lot less than they were just a month or two ago. Herz believes that's because he has scared some of the counterfeiters out of business.

Unfortunately, despite Herz's best efforts, high-end whiskey refilling isn't going to end any time soon—and it may only be getting worse. Many of the people willing to pay thousand of dollars for black-market Van Winkles are bourbon neophytes that haven't tasted the product before. As Riber tells me, "The (black market) bourbon consumer seems to be the most price-insensitiveconsumer there is right now."Pappy has become a status symbol to certain people, just like a Rolex or fancy sports car. So how hard would it be to dupe these willing suckers into believing a bottle refilled with Weller or Larceny or, hell, Maker's Mark is legitimate Pappy?

Especially if they've already paid a fortune for it and, thus, very much want it to be so.

I'm not going to tell anyone to quit buying bottles from the black market, something I've admittedly done in the past. Quite frankly, until the major bourbon distilleries start offering more realistic MSRPs for their most coveted products, or releasing more of it, a secondary market is always going to exist. Instead, if you want to buy black-market bourbon, make sure you trust who you're getting it from.

And, if you're lucky enough to one day savor the final few sips from a bottle of Pappy Van Winkle, smash the bottle in a trashcan, OK?

[Hamaki]

Given that many of the bourbon and whiskey brands are going away from age statements in response to demand/supply challenges and market prices have risen accordingly, I've been wondering when counterfeiting might be actually become a concern.   

[Hamaki]

It would be interesting to juxatopose counterfitting in different markets such as art, olive oil, alcohol, cigars etc. I think there would be many common themes and many likely a result of unintended consequences due to regulations.  The total amount spent annually on counterfeit products is probably staggering.  

[BrightonCorgi]

I have been quite public on counterfeit Bourbon for many years online.  

It's much easier to fake than wine it's like stealing candy from a baby.  The buyers can hardly tell and they want the vanity & ego to prevail, so they'll believe their own lies.

[polarbear]

I remember seeing a post on a popular spirits forum of a guy asking for an empty Pappy 23 bottle so he could (funnily enough) make a desk lamp out of it
The amount of accusations that got thrown his way was pretty upsetting to see, poor guy
He managed to source one and posted a picture of the lamp a week or so later

It looked pretty good but no one apologised
Seems a lot of people are catching on to the games played by counterfeiters  

[LGC]

I'd like to know if a blind taste test has ever been performed with any of their bottles...

[BrightonCorgi]

I know several wine collectors that take a Sharpie to the wine labels of bottles that they finish.