As this man admits to intimidating investors into the world’s largest whiskey scam, the MoS uncovers a disturbing increase in similar cash scams that have brought misery and financial heartache to innocent people
In a slick commercial, Casey Alexander raises a glass of whiskey to toast its complex flavors – and the huge profits it can bring to the savvy investor. Dripping water from a dropper into his sip, he explains, “It has what’s called an exothermic reaction, and that basically opens up the flavor compounds in it.”
Introducing himself as the senior wealth manager at Vintage Whiskey – a company whose core values are honesty and integrity – he warms to his subject: the handsome rewards to be had in the “glamorous and lucrative” market for high quality and rare single malts Scotch.
Casey Alexander, of Stoke Newington, London, admitted last week to wire fraud conspiracy and faces up to 20 years in prison and a fine of up to $250,000 (£201,000) in the world’s biggest whiskey scam
He has cheated retirees out of thousands by featuring himself in a promotional video as Vintage Whiskey’s chief wealth manager
In it, he introduces potential investors to the handsome rewards to be had in the “glamorous and lucrative” market for high-quality single malts and rare scotches
Watching the video clip, it’s easy to see why people would be willing to give up their cash and savings, tempted by the apparent guarantee of excellent returns.
But despite all the glamor of the presentation, the promises turned out to be fool’s gold. Last week, Alexander appeared in court in the US and admitted to committing the biggest whiskey scam the world has ever seen – after using “aggressive and deceptive tactics” to get $13 million (around $10.5 million). pounds) from 150 senior investors.
He presented Vintage Whiskey as “specialists in sourcing the hardest-to-find and rarest single malt Scotch whiskey casks” and called retirees who offered massive prizes that never materialized.
The 26-year-old now faces up to 20 years in prison. And although his convincing scam was foiled by the FBI, the number of similar scams in the UK is increasing – all based on the international press – and the value of Scotland’s national drink is rising.
Experts have warned that a lack of regulation in the whiskey cask market means potential investors can become easy prey for scammers.
Meanwhile, victims of such scams told the Scottish Mail on Sunday they have lost thousands because they were tricked into making an investment they now believe is too good to be true.
Michael Perry, 79, fears he lost £18,000 after sending cash to a company that promised him a 12.5 per cent return – and then disappearing
Garry Pitchford (pictured) bought seven casks only to find his name was not on the papers at the warehouse and the whiskey in three of them was not what he thought he had bought
Whiskey broker and market analyst Mark Littler said: “This massive case in the US shows just how real the threat of whiskey cask fraud is.
“Although they have historically been a viable investment, there are an increasing number of outright scams aimed at scamming potential investors out of their hard-earned cash.”
The increase in whiskey cask scams is because Scotch can prove to be a very profitable investment in certain circumstances.
In the last decade, the value of rare whiskey bottles has increased by 540 percent – faster than any other collectible luxury item such as watches, works of art or vintage cars. And as the value of individual bottles increases, so does interest in investing in whole kegs.
The concept is simple: buy a cask of quality single malt – either directly or through a broker – and then wait. The longer the spirit matures in the cask, the fictitious more valuable it becomes.
Although value is not realized until the whiskey is bottled and sold, casks can be traded at any age – hopefully for a profit.
The returns on legitimate and well-chosen investments are potentially far, far higher than the stingy rates on savings accounts currently being offered by banks.
And thanks to a quirk of HMRC regulations, cask whiskey is exempt from capital gains tax. However, the system has proven to be a fraud magnet.
Since most investors never actually take possession of the casks they purchase, the paperwork is complicated and requires a certain amount of due diligence and communication with the warehouse where the cask is stored to ensure all the details on the documents match.
In other cases, investors may be buying low-quality spirits that will never appreciate in value.
In the most brazen examples – as in the most recent case in the USA – the investor is simply deceived: money is given for non-existent whiskey casks.
Alexander, who lives in Ohio but was born in Britain, called wealthy pensioners and persuaded them to pay up to £246,000, promising their rare wine and whiskey investments would double in value in three years.
The scammer claimed his company could source the “rarest single malt Scotch whiskey casks”.
The vintage whiskey site gave the appearance of authenticity, reviewing well-known brands such as Ardberg, Glenfiddich and Macaltige Lan. Potential customers were promised an invitation to a “high-end investor” party in Scotland if they bought more of the drink.
However, none of his victims ever saw a penny of the promised returns, and when they tried to get their money, they were ignored or made excuses.
The FBI was called in after the son of an 89-year-old Ohio native contacted them, sparking an international investigation.
Alexander, from Stoke Newington, London, admitted last week to conspiring to wire fraud and faces up to 20 years in prison and a fine of up to $250,000 (£201,000).
Meanwhile, there are claims that whiskey scams closer to home are on the rise.
Michael Perry, 79, fears he lost £18,000 after sending cash to a company that promised him a 12.5 per cent return – and then disappearing.
In January 2021 he received an unannounced call from a company and when a salesman said he didn’t want to lose he decided to “try” himself.
The grandfather and former businessman from Epping, Essex, said: “I said I don’t mind and I was told ‘Oh we’ve got this and we don’t want you to miss it’ and finally I said ‘I will attempt “.
“I don’t know what made me send money – I must have been crazy, but they were very persuasive. So I bought my first batch of whisky, a £3,800 cask.”
But after he sent the money away, they chased him down for more. Mr Perry added: “They called me back and said: ‘We have a great deal on your whiskey and you get a 12.5 per cent return if you buy a little more –
that would give us a serious tool to help you make more money,” and they said I would get the money by the end of the month.
“They sent receipts and contract numbers. I now know anyone can send these, but they looked doable.”
After sending £18,000, Mr Perry decided he would not pay more until he saw a return.
However, his fears were realized when he was told that the company he had ordered his whiskey delivery from had gone into liquidation. Since then Mr Perry has not received any of his money back and the company has not been contacted by this newspaper. He said: “I am angry and disappointed that this has happened as I invested in good faith and trusted this company.”
Another investor has called for more regulation of the keg trade after spending £28,000 on Scotch – but ended in a protracted battle to prove he actually owned it.
Garry Pitchford bought seven casks only to find his name was not on the papers in the warehouse and the whiskey in three of them was not what he thought he had bought.
The 69-year-old from Nottinghamshire said: “We invested in a company that had a bonded account and a license to trade casks. The prices seemed competitive compared to other traders, so the risks didn’t seem to have much of a downside.
“Our camp was in Scotland and we had documents that were claimed to be legal property. We realized that if your name is not on the delivery note that the warehouse receives, you have nothing.’
Concerned about losing his investment, he opened an account with another warehouse, shipped his kegs and requested the relevant paperwork from the merchant.
It was then that he discovered that three of the casks he had paid for did not even contain the type of whiskey he thought he had bought. Brokers who buy and sell whiskey casks are required to be placed on a register called The Warehousekeepers and Owners of Warehoused Goods Regulations (WOWGR), although individuals wishing to purchase casks can set up an account with a Scottish warehouse.
Whiskey trading expert Mr Littler warns investors to check that their investment exists and is lawfully theirs and where it is being stored to ensure there is a lawful sale.
Legitimate whiskey consultant and broker Blair Bowman is concerned the market will be “flooded” in a few years.
He said: “The Scotch Whiskey Association’s guidelines are clear – they state: ‘Before you complete the purchase you should check with the storekeeper what documents they will need and ensure the seller can provide them to you.’
“Without taking the time to do this verification, there is a very real chance that the casks are not registered in your name or even exist.”
Whiskey consultant and broker Blair Bowman fears the market will “flood” in a few years.
Time, with unnamable spirits investors don’t know they bought — like Mr. Pitchford.
He said: “My concern is that people have been wrongly sold a certain type of whiskey they don’t know the real name isn’t on the papers.
“So when it comes time to get out of the investment – everyone will be doing the same thing at the same time – the market will be flooded with indescribable sentiment. Or there will be kegs that are basically orphaned if the company goes AWOL.’
This may be different if you are purchasing a cask direct from a working distillery.
Cask Trade is an example of a company that buys and sells casks directly, ensuring customers fully own the products.
Chief Executive Simon Aron said: “We always create a delivery order for each keg sold. If you don’t have a personal account to receive that delivery order, a company can manage the keg on your behalf.
“In general, the easiest way to ensure legal ownership of a keg is to work with a trusted and fully transparent custodian who will issue a full bill of sale, an invoice and a receipt.”