Bottom of the barrel for wine investors

FROM the outside, the Premier Cru wine store in Berkeley, California, looked like a traditional, upscale wine-seller. The 29,000-square-foot store was lined with tapestries, wood shelves and a "rare wine room" stocked with trophy Bordeaux and Burgundies.

Yet, Premier Cru didn't just sell wine off the shelves. According to court documents, it built a global, multimillion-dollar trading empire selling futures contracts for French wine to thousands of rich collectors and investors over the Internet.

Now investigators and customers are looking into whether Premier Cru's futures business was also used to fund the largest Ponzi scheme in the wine world - with some of the biggest victims coming from China. In January, facing mounting lawsuits from customers, Premier Cru filed for Chapter 7 bankruptcy liquidation. The company listed US$70 million in debt and only US$7 million in assets. Along with more than 9,000 victims, the crash of Premier Cru has left a trail of questions: What happened to the more than US$60 million in customer payments? How did a 35-year-old wine store that became a favourite of the rich suddenly go bust? And how did so many smart collectors get bilked out of millions?