High yield investment fraud

High yield investments are generally considered to include shares, undeveloped land, wine and collectables such as art or classic cars

As traditional investments become less popular due to lower returns, high yield investments have become more attractive to fraudsters.

It is impossible to describe how each scheme works as the only boundaries that are known are the scope and depth of the fraudster’s imagination. Some examples are:

  • Share purchase known as Boiler Room where a fake company offers a unique guaranteed opportunity.
  • Undeveloped land sold in small plots on the premise of gaining planning permission for housing.
  • Wine investment sold later for a large tax free profit.
  • Banks from remote areas of the world offering Bank Guarantees for hundreds of millions of dollars.

The list is endless. The common theme throughout is that all these schemes are designed to part the unwary from their money.

Investing in Fine Wine

Fine wines can make a good, relatively low risk long-term investment. However as with all types of business, there are rogue wine traders who are intent on conning people out of their money. Whether you are a wine enthusiast starting your own fine wine collection or someone looking to build up an investment portfolio, this below provides some tips on how to protect yourself from becoming a victim of wine fraud.

Choose a reputable wine merchant. 

Before you commit to an investment, make sure you are dealing with an honest, reputable business with a successful track record in the trade, especially when buying wine before it is bottled and released to the market - referred to as en primeur. En primeur wine is usually delivered 2-3 years after the vintage and can be particularly open to exploitation by fraudsters.

  • Trading history and expertise
    Find out if the business is profitable, well-established, who the directors are and what experience they have in fine wines. Established UK companies will be registered with Companies House, where you can also check their balance sheet.
  • Contact details
    Ensure that the company has a valid head office address. Consider using Google street view to check its location. Be wary of PO Box addresses and mobile contact numbers only.
  • Unsolicited offers
    Honest as well as fraudulent businesses can use cold calling or direct mail-outs to reach new customers. However take particular care to check the credentials of companies who approach you with unsolicited offers.

Know exactly what you are buying

Before parting with your money, you need to understand exactly what wine you are purchasing and that you are making a sound investment. Remember only specific wines will tend to accrue value and these wines tend to be expensive.

  • Do your research
    Make sure that you are buying the right wines at the correct, competitive prices. The internet is a good way of comparing prices. If necessary, seek another opinion on whether you are making a sound investment.
  • Provenance and quality
    This is crucial to the value of your investment. Make sure you know the provenance of the wine you are buying - that it comes from a reliable origin.
  • Condition
    Gather details about anything which may affect the value of your purchase. For example, fine wine should be in unmixed, sealed cases in the original wooden box. It should not have been repackaged in any way.
  • En primeur prices
    Do not buy en primeur in advance of the prices being published. Reliable traders will not try to sell you en primeur before the producers have announced their release prices.
  • Availability
    Ask whether the merchant has the wine already in stock or whether it will have to be ordered from the producer. Be clear about when your wine will be delivered or transferred into your account.

Look after your investment

How you store and manage your wine investment is crucial to its future value. Whilst you can keep fine wines in your own cellar, wine bought for investment is usually stored professionally, either in your own warehouse account or in a merchant’s customer reserves.

  • 'Duty paid' or 'in bond'
    Wine for investment is usually held 'in bond', meaning that it is free from UK excise duty and VAT while it remains there. Only when the wine is removed from bond are these taxes paid.
  • Access
    Wine held in your own account gives you complete control over it. If you are storing wine in a merchant’s customer reserves, ensure these are clearly identified, stored separately from the company’s own stock and will not be moved without your agreement.
  • Insurance
    Your wine should be insured to at least to the value of the original purchase price. Be clear as to whether you will get a refund from your merchant if a producer fails to supply the wine as arranged.
  • Correct storage facilities
    Your wine must be stored in a secure warehouse with appropriate temperature and humidity levels.

Understand the small print. 
Make sure you are clear what commission, charges and additional taxes you will have to pay on your fine wine investment.

Buying fine wines: A checklist

  • What do you know about the company?
  • Do they have a good reputation?
  • How long have they been in business?
  • Where are they based?
  • Are their prices competitive?
  • What is the provenance of the wine?
  • How much are commission, storage or delivery charges?
  • Will your wine be stored separately from the company’s wine?
  • What documents will you get to provide proof of purchase?
  • Is your wine insured?

(Source: Met Police)


Crime Reduction Officer
Devon & Cornwall Police, Crime Reduction Dept
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Middlemoor, Exeter

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