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Wines and losses: Respected dealer goes bankrupt, and creditors howl
[September 06, 2009]

Wines and losses: Respected dealer goes bankrupt, and creditors howl

RALEIGH, Sep 06, 2009 (The News & Observer - McClatchy-Tribune Information Services via COMTEX) -- As a fine wine dealer, Robert C. Peel thrived in a world where dentists and doctors run up five-figure tabs without blinking and buy French Bordeaux by the case, never drinking a drop.

Customers of his Raleigh shop often paid upwards of $10,000 for wine that was still aging in European casks, betting that it would quadruple in value by the time the bottles reached their cellars, or at least shine as a collector's trophy.

But in the span of a few months, Carolina Wine Co. fell from its spot among the Southeast's largest wine retailers to a strip-mall storefront with its door locked, its windows covered and scores of customers demanding refunds for five-figure wine that never arrived. Peel filed for both personal and corporate bankruptcy protection, listing more than 1,000 creditors, some of whom claimed losses as high as $40,000. The list includes an M. Easley at the Governor's Mansion in Raleigh and an Itzhak Perlman in New York, N.Y.

Peel's quick descent offers a glimpse into a high-dollar world that even buyers describe as risky, where money most wine drinkers won't earn in a month gets spent like bus fare. And after months of legal wrangling, questions linger and legal paper continues to fly.

A distributor sued Peel in August, claiming he paid for wine with roughly 12 bounced checks. Nearly 60 customers filed complaints with the N.C. attorney general, many saying they are out tens of thousands of dollars for wine bought in advance. They got no satisfaction from the U.S. bankruptcy judge, who recently ordered that all remaining wine go to RBC Bank to offset Peel's $324,000 debt.

"This is a pretty hefty deal," said Edward C. Horton, a San Diego dentist out an estimated $50,000. "I kind of feel like somebody ought to be in jail." Peel, who goes by "Chrish," declined to speak for this story. He came to the door of his stone house on Canterbury Road and explained that he wanted to talk, but instead had to pick up his children from school. He did not return a later call.

Some assets shielded Through all this, bankruptcy files show that Peel keeps his $1 million house, which has a for-sale sign out front, and a $350,000 property in Atlantic Beach. They are jointly owned with his wife, Laurie, making them exempt, and there is little equity. Peel also holds onto 240 bottles of his own wine worth $2,400.

Much of Carolina Wine's inventory, though, has been seized. Five distributors repossessed more than $100,000 worth of wine to satisfy debts. In his order, Judge A. Thomas Small ruled that RBC will pay $25,000 plus rent, costs and utility claims against the estate in exchange for all the remaining wine, which will be sold to recoup losses.

It's a long fall for Peel, described by many as affable and charming. In 2007, his company's receipts totaled $6.2 million, bankruptcy filings show. Though silent now, he told Business North Carolina magazine in 2003 that he started studying wine at UNC-Chapel Hill while his classmates swilled Budweiser. Son of a Williamston lawyer, who earned his own law degree but stopped practicing, he described himself as defying the snobbish wine connoisseur stereotype, sometimes recommending wine that goes well at a pig pickin'.

A top sommelier But for years, he enjoyed a reputation as a top sommelier in the Triangle -- not only with Carolina Wine on Hillsborough Street, but as part owner of now-defunct Enoteca Vin restaurant on Glenwood South, which closed at roughly the same time. His ventures were singled out for praise in Food & Wine magazine and Wine Spectator's 2002 Dining Guide.

Charity work added to his reputation. Carolina Wine ran a regular Internet wine auction for various causes, and Peel often donated wine to local charity events. His personal bankruptcy filing shows a $3,000 cash donation to the Frankie Lemmon Foundation and a $5,000 wine gift to the Red Sword Guild, which raises money for cancer research.

Peel developed a reputation for sniffing out wines that hadn't been discovered and selling them at bargain prices, and his business grew by word of mouth. Customers described a flurry of almost daily e-mail messages, and by the time of his bankruptcy, Carolina Wine did nearly all its business over the phone or by computer.

Wine futures In 2002, you could buy bottles of French wine from Peel at $3.99. But he bragged to The News & Observer that same year that he sold a dozen bottles of Romanee-Conti, at $2,500 a bottle, in less than a half-hour. "I can still sell that kind of stuff with a couple of phone calls," he said at the time.

Much of that pricey wine came through the futures market, a centuries-old system developed by the French, mainly for Bordeaux and Burgundy wines. Typically, a winery announces the number of cases of a vintage it plans to release, offers it for pre-sale, and releases it six months to two years later.

"It would sort of build the intrigue and the mystery of these wines," said Mark Ellis, a Charlotte doctor who lost $27,000 to Peel but recovered most of it from his credit card company. "There's this risk premium built in. You're betting this certain year, this certain vintage is going to be selling at a higher price than they're selling it to you. When I get the wine, it will already be selling at 30 to 40 percent more. I can turn around and sell it at a profit." Prestige, not taste Collectors buying wine futures aren't interested in how it tastes, Ellis said. They want the prestige of a certain label in their cellar. The lure of futures intensified in 2000, Ellis said, when the Bordeaux wines were thought to be the best in the last 20 years, and then again in 2005, when they were considered greater than any year in four decades.

"I looked at it kind of like stamp collecting as an adult," said Horton, the San Diego dentist.

Peel kept Horton's credit card number and ordered widely on his say-so, and much of it stayed at Carolina Wine for years, shrink-wrapped on pallets with his name attached. There's a narrow window when the temperature is right for shipping wine from Raleigh to San Diego, but with more than 3,000 bottles in his collection, Horton said he wasn't in much of a hurry. He figured the wine was fine in storage, and nobody ever told him to collect it. In complaints to the Attorney General's Office, some of Peel's customers said they had forgotten about their orders for a while.

"They'd go ahead and charge the customer's credit card before they had the wine," said Tom Ricks, a lawyer in Charlotte who started an e-mail group of several hundred dissatisfied customers. "Their prices, especially if you bought by the case, could be 20 percent less than anywhere else. ... Until they stopped answering the phones and stopped delivering the wines." Business unravels Ellis, the Charlotte doctor, said Peel should have been keeping customers' prepaid money in an escrow account. Sometime last fall, the business began to unravel. Customers reported sending faxes and e-mails and making telephone calls, and getting no response. A note on the store's door cited technical difficulties with the computer system, but hundreds trying to query Peel about their missing wine heard nothing. Paul Marquardt in Washington, D.C., wrote to the N.C. Attorney General's Office saying witnesses were reporting wine stocks locked up, segregated by customers' names.

"Given Mr. Peel's evasiveness and lack of candor in describing the problems, as well as the large number of creditors pursuing him, there is substantial risk that innocent customers' property will be lost," he wrote.

Anger, skepticism Internet chat boards exploded with criticism. "I don't care who they are, but in this kind of economy and wine market I'm not buying any 'futures,'" wrote Todd McGowan of Raleigh. "If delivery is expected in the immediate next month or two I will ... but not an actual future." In a lawsuit filed in August, Juice Wine Purveyors said Peel wrote 12 checks that bounced in 2008. He then wrote replacement checks and stopped payment on them, the suit said. Carolina Wine and Juice Wine agreed to a $10,000-a-week payoff, which the suit said Peel breached. Juice Wine's suit said the distributor is still owed more than $70,000.

The Attorney General's Office generally does not pursue cases against businesses in bankruptcy, said spokeswoman Jennifer Canada. The courts, she said, are the best avenue for customers' retrieving their money. Through the court, Horton in San Diego sought unsuccessfully to have his wine delivered, arguing that it was specifically labeled with his name. Many customers have gotten money refunded through their credit card companies, including Ellis in Charlotte, who said he got back all but $1,200. He is no longer dabbling in wine futures.

Jake Jacobs, a former employee now at Apex Beverage, declined to comment. The company's Web site, though, promised "unlike many other wine stores, we never charge your account until the wines you order are in stock." Another wine merchant, Craig Heffley at Wine Authorities in Durham, said he and his partner opened their store to get away from the high-priced collector crowd.

"We wanted to deal directly with the people who were interested in enjoying wine," he said.

Meanwhile, the windows are covered over at 6601 Hillsborough St., Carolina Wine's old address. If you stand on your tiptoes, you can still see bottles of wine stacked inside, waiting for someone to enjoy them. or 919-829-4818 To see more of The News & Observer, or to subscribe to the newspaper, go to Copyright (c) 2009, The News & Observer, Raleigh, N.C. Distributed by McClatchy-Tribune Information Services. For reprints, email, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

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