Two childhood friends have found themselves at the center of a multimillion-dollar fraud prosecution in New York after what started as a luxury wine lending business promising lucrative returns cost investors nearly $100 million.
Representatives from the U.S. Attorney’s Office told Fortune Burton pleaded guilty Thursday to wire fraud conspiracy and money laundering conspiracy. He faces a maximum of 20 years in prison for both charges, and his sentence will be announced at a January 6 hearing. Burton’s plea also included mandatory restitution and a forfeiture agreement, the dollar amount of which was not stated on the record.
The indictment of Burton and Wellesley, filed in the Eastern District of New York in 2022, alleges the two men raised $99.4 million from over 140 investors, 71 of whom were based in the U.S., and lost a collective $25 million. Prosecutors say Bordeaux Cellars, by and large, never had the wine it claimed to hold as collateral, and many of the specific bottles listed in loan documents were never in its custody.
Charges include one count of conspiracy to commit wire fraud, three counts of wire fraud, and one count of conspiracy to commit money laundering. If convicted, each man faces up to 20 years in prison.
Burton, who claimed to be a Stanford Business School graduate, was the alleged brainchild behind Bordeaux Cellars and founded the company in 2010. He positioned his business as a unique solution for wealthy wine collectors who needed liquidity. The company, according to prosecutors, purported to broker short-term loans secured by high-end bottles of wine—think Château Lafleur and Domaine de la Romanée-Conti—with promised investor yields of up to 12%.
By early 2019, Burton and Wellesley’s scheme began to collapse, legal documents stipulate, when interest payments allegedly stopped and calls to Bordeaux Cellars’ London office went unanswered. One investor who had wired $200,000 discovered the “collateral” wines didn’t exist. According to prosecutors, the entire operation was little more than a Ponzi scheme.
Wellesley was arrested in 2022 and held in an U.K. prison for several years before being extradited to New York on July 11. Whether or not his codependent’s change of plea will impact the future of Wellesley’s fate in the upcoming train remains unknown. A trial date has yet to be set. Lawyers for both Wellesley and Burton did not immediately respond to a Fortune request for comment.
