An Iconic Wine Retailer and the Thriller of the Lacking Bottles

New York Metropolis has spawned many iconic retailers: Tiffany & Firm in jewellery; Bergdorf Goodman and Saks Fifth Avenue in trend; F.A.O. Schwarz in toys.

In superb wine, that retailer was Sherry-Lehmann Wine & Spirits.

The Zagat information as soon as stated of Sherry-Lehmann, “If Bacchus owned a wine retailer, this is able to be it.” One of many world’s most prolific sellers of high-end wines, Sherry-Lehmann launched Individuals to Dom Pérignon Champagne in 1947 and the famed Bordeaux Petrus within the Sixties. Its clientele ranged from celebrities (like Greta Garbo and Mick Jagger) to billionaires (just like the Bass brothers of Texas) to run-of-the-mill wine lovers (like me). Due to on-line gross sales, it served clients all around the nation.

But practically 9 many years after its founding, Sherry-Lehmann faces a disaster. Earlier this 12 months, Sherry-Lehmann’s liquor license expired and the shop closed. It owes the state $2.8 million in unpaid gross sales taxes. Dozens of wholesalers have instructed the state liquor authority that Sherry-Lehmann is delinquent on funds. Many have stopped delivering.

The issues, nevertheless, go deeper. Sherry-Lehmann has didn’t ship effectively over $1 million of wine to clients who paid prematurely, in accordance with inner data reviewed by The New York Instances and interviews with clients and former staff.

As well as, clients of Wine Caves, a storage enterprise run by Sherry-Lehmann’s house owners, have repeatedly tried and didn’t get their wine out of storage, in accordance with a buyer and former staff. 4 former staff stated they believed that Sherry-Lehmann was improperly promoting uncommon bottles from Wine Caves to different clients. A prime government on the public sale home Sotheby’s warned no less than one shopper that his bottles saved at Wine Caves have been in danger.

The secretive world of high-end wine has periodically been rocked by scandal, typically involving pretend wine and fraudulent gross sales of uncommon vintages, however by no means involving a reputation as venerable as Sherry-Lehmann.

Peter Ambrosino labored at Sherry-Lehmann for 15 years earlier than quitting as director of operations in 2018. He stated clients complained to him about not receiving wine that they’d paid for. “I used to be bored with seeing good folks being ripped off,” he stated. “An amazing establishment has been flushed down the bathroom.”

Sherry-Lehmann’s former co-owner Michael Aaron agreed. Mr. Aaron, whose father began the corporate in 1934, labored there for many years till he severed ties in 2014. At that time, Mr. Aaron stated, “the grownup was gone, and it was time to get together.”

“It’s heartbreaking to look at an exquisite firm the place I spent 50 years simply crumble,” he stated.

In a current interview, Shyda Gilmer, Sherry-Lehmann’s co-owner, acknowledged that the enterprise had been struggling. He attributed the issues to the lingering affect of the pandemic, tariffs imposed on many European wines by the Trump administration, mismanagement by former executives and administrative snafus.

However he denied ever taking cash from clients after which failing to pay distributors, and he stated anybody who paid for wine to be delivered and didn’t obtain the order was provided a refund or retailer credit score. He additionally stated the corporate had by no means bought wine from Wine Caves with out permission from the bottles’ house owners.

Mr. Gilmer stated he had just lately contributed extra funds to get Sherry-Lehmann again on its ft. “Our aim is to make Sherry-Lehmann the No. 1 superb wine retailer on the earth,” he stated.

Sherry-Lehmann’s liquor license was restored in late March after it paid a renewal charge, and Mr. Gilmer and his spokesman repeatedly stated {that a} grand reopening of Sherry-Lehmann was imminent. However varied dates have come and gone. On a current weekday, the door was locked, the inside lights have been dim and the shop remained closed.

Sponsoring the Black Ball

For a few years, I used to be a Sherry-Lehmann buyer. Then, final spring, I paid about $400 for a case of white Burgundy, which was supposedly in inventory. I by no means acquired the wine, and the corporate refused to problem a refund or credit score, saying the wine was on again order and would arrive quickly. Earlier than lengthy, customer support stopped responding to my emails and cellphone calls.

I used to be hardly alone. About the identical time, evaluate websites and wine message boards have been peppered with complaints from clients, a lot of modest means, who equally paid Sherry-Lehmann for wine that was by no means delivered. Though the shop was famed for its high-end stock of pricy Burgundies and Bordeaux, it had additionally stocked $9 bottles of Beaujolais. Mr. Aaron prided himself on serving clients who may sometime transfer as much as costlier vintages.

A part of Sherry-Lehmann’s enterprise was letting clients pay prematurely for wine that will be shipped a couple of years sooner or later. The sale of so-called wine futures, which Sherry-Lehmann pioneered within the Nineteen Fifties, was a part of a pattern of wine changing into an funding.

I used to be amongst these shopping for futures. In 2016, I ordered 4 circumstances of the earlier 12 months’s Bordeaux classic, which might be shipped after the wine matured in bottles for about three years. Sherry-Lehmann was supposedly holding the circumstances in storage for me. In subsequent years, I additionally purchased 2016 and 2019 futures (wines that have been scheduled to be delivered in 2019 and 2022). These bottles by no means materialized, regardless of Sherry-Lehmann’s repeated assurances that they have been on their approach, quickly held up by customs and pandemic-related disruptions. I in the end concluded that I might most likely by no means see any of this wine. I used to be out a complete of about $6,300.

I don’t often examine issues so near house. Then I began listening to about different clients who had misplaced way over I had. Current lawsuits by aggrieved clients cite losses effectively into the six figures. I started digging.

In earlier many years, Sherry-Lehmann handled its futures gross sales as a “sacred obligation,” stated Mr. Aaron, who began working on the retailer at age 6, serving to the window dresser organize the shop’s eye-catching shows. He grew to become the corporate’s chairman in 1990 and saved a hand within the window shows till he retired in 2008.

If a provider didn’t ship the wine, Mr. Aaron stated, he would purchase it within the retail market and ship it to the client, even when that meant the shop misplaced cash. “Till the day I left, we by no means didn’t ship each single case and bottle, and we delivered them on time,” he stated.

After Mr. Aaron retired as chairman, he retained a small possession stake and remained concerned within the firm. Majority possession of Sherry-Lehmann handed to Mr. Gilmer and Chris Adams, who had began out as momentary staff earlier than changing into full-fledged wine salesmen.

The tall, burly Mr. Gilmer continuously hobnobbed with the world’s elite wine collectors and growers. Sherry-Lehmann grew to become a sponsor of occasions just like the Black Ball, a gala to profit a charity based by the singer Alicia Keys. The corporate additionally hosted occasions on the Masters golf match, the U.S. Open tennis match and the Hampton Basic Horse Present on Lengthy Island.

Wine retailing is a aggressive, low-margin enterprise. Mr. Gilmer was spending freely, together with pouring hundreds of thousands into renovating its retailer and workplaces and increasing to California.

On the similar time, an industrywide shift to on-line gross sales, which just lately accounted for the majority of Sherry-Lehmann’s enterprise, was additional pinching revenue margins.

With Sherry-Lehmann’s funds stretched, Mr. Gilmer started cultivating a rich hedge fund supervisor, Kris Inexperienced, as a supply of capital. Mr. Inexperienced was an avid wine collector and one in every of Sherry-Lehmann’s greatest clients. In 2013, he grew to become a co-owner.

The following 12 months, pissed off with what he perceived as Mr. Gilmer’s and Mr. Inexperienced’s frequent absences and mismanagement, Mr. Aaron lower ties with Sherry-Lehmann and moved to Florida.

Hassle developed quickly after. In 2016, the corporate’s $4.5 million credit score line from JPMorgan Chase, Sherry-Lehmann’s longtime lender, wasn’t renewed. Mr. Inexperienced turned to his cousin Timothy R. Barakett, at whose hedge funds he had beforehand labored, for monetary assist. Although it went in opposition to his higher judgment to lend to a member of the family, Mr. Barakett agreed to lend Sherry-Lehmann hundreds of thousands of {dollars}.

It didn’t stabilize the corporate.

Shrinking Stock

New York requires retail liquor shops to pay wholesalers inside 30 days of receiving items. With rising frequency, Sherry-Lehmann was failing to fulfill that requirement, stated William Crowley, a spokesman for the New York State Liquor Authority. Wholesalers demanded to be paid on supply. When Sherry-Lehmann’s checks subsequently bounced, wholesalers insisted on licensed checks or wire transfers — or stopped doing enterprise with the corporate altogether, in accordance with former staff and Mr. Adams, who was one of many three co-owners till 2020.

By 2016, Sherry-Lehmann’s once-vast stock had begun to shrink. It was round that point that the corporate first didn’t ship wine to clients who had bought it prematurely, stated Mr. Ambrosino, the longtime government who left in 2018, and others concerned within the futures operation.

The issue was simple, in accordance with Mr. Ambrosino and Mr. Adams. At the same time as Sherry-Lehmann took clients’ cash, it wasn’t paying the Bordeaux distributors for the wine its clients believed they have been buying.

“The apply continued to worsen till I stop,” Mr. Ambrosino stated. “I couldn’t take it anymore.” Mr. Adams, for his half, stated he grew so distraught that he sank right into a deep despair.

Mr. Gilmer stated in an interview that Sherry-Lehmann had made all of the required funds to wine distributors on behalf of shoppers. Whereas he acknowledged that current vintages of wine hadn’t been delivered, he blamed the delays on Trump-era tariffs. However these tariffs have been lifted greater than two years in the past, and lots of of these wines have been now broadly accessible in america.

Two of Sherry-Lehmann’s main clients have been Raymond Fong and Pak Chung, longtime buddies, wine collectors and physicians in New York. They’d been shopping for Bordeaux futures for years from Sherry-Lehmann, together with circumstances from prestigious chateaus like Lafite Rothschild, Mouton Rothschild and Margaux.

When three circumstances of Mr. Chung’s 2015 futures (which, like me, he’d purchased in 2016 and anticipated to obtain in 2018) weren’t delivered, his ordinary Sherry-Lehmann salesman, the final supervisor Matt Wong, assured him that the wine was on its approach, Mr. Chung stated in an interview.

A 12 months later, in 2019, Mr. Chung’s 2015 circumstances nonetheless hadn’t arrived. Nor had his and Mr. Fong’s 2016 wines, which they ordered in 2017. Then the coronavirus began spreading world wide, they usually let the matter drop.

The pandemic was devastating to Sherry-Lehmann. Visitors at its Park Avenue retailer dried up as workplace staff stayed house and its prosperous Higher East Aspect clients left the town. Its Champagne gross sales, a pillar of its enterprise, evaporated as weddings, vacation occasions and different celebrations have been canceled.

Annual income plunged by greater than half to $15 million in 2020, in accordance with an individual who reviewed the corporate’s monetary statements. (Eric Andrus, a spokesman for Sherry-Lehmann, disputed these figures with out offering what he stated have been correct numbers.)

Individuals acquainted with Sherry-Lehmann’s funds stated the corporate nonetheless owed Mr. Barakett greater than $6 million and was in default on greater than $2 million in loans from Mr. Aaron.

Because the losses mounted, Mr. Adams stop as a co-owner in 2020. He stated he acquired nothing for his one-third stake within the enterprise and demanded that his title be faraway from Sherry-Lehmann’s liquor license.

Handled Like Idiots

Because the pandemic eased, Mr. Fong and Mr. Chung nonetheless hadn’t gotten their wine. When their 2017 and 2018 futures additionally didn’t arrive, Mr. Gilmer blamed the delays on tariffs imposed on French wine by the Trump administration.

That appeared believable. Then they observed that different wine retailers had the identical vintages in inventory, evidently having overcome any Covid and tariff-related distribution issues. In January 2022, nonetheless having acquired no wine, they demanded an viewers with Mr. Gilmer.

They met at his second-floor workplace at 505 Park Avenue, the place Mr. Gilmer gave them spreadsheets purporting to trace the place their wine was within the distribution chain. Mr. Gilmer promised their wine can be delivered in March 2022.

The deadline got here and went — no wine. Over the course of a number of extra conferences, Mr. Gilmer saved assuring them that their wine would quickly be delivered.

By now, the 2 docs have been so pissed off that they proposed that Sherry-Lehmann merely reimburse them for what they’d paid and hold the wine. “Why would you be so silly?” Mr. Fong and Mr. Chung recalled Mr. Gilmer yelling at them. He maintained the wine was now value way over what they’d paid for it.

“He handled us like idiots,” Mr. Chung stated.

After the assembly, Mr. Chung texted Mr. Inexperienced, one of many co-owners, describing what had occurred. “Nothing is extra essential to me than belief,” Mr. Inexperienced responded, in accordance with Mr. Chung. “I heard your questions, and I’ll get the solutions.”

They by no means heard from Mr. Inexperienced once more.

In December, Mr. Chung and Mr. Wong sued Sherry-Lehmann for breach of contract, in search of the wines they’d bought or the honest market worth, which they estimated was $801,264.

In response, Sherry-Lehmann argued that the contracts with the boys didn’t assure any supply date. In a courtroom submitting, Mr. Gilmer stated that Sherry-Lehmann “anticipates having the ability to ship the wines in 2023.”

“I’m not holding my breath,” stated Sheldon Gopstein, a lawyer for Mr. Fong and Mr. Chung.

Others within the wine commerce scoffed at Sherry-Lehmann’s claims that undelivered wine had been held up by tariff points. William Gladstone, a supplier in uncommon and collectible wines, stated he had acquired and delivered to clients the 2015, 2016 and 2019 Bordeaux orders he bought, as had each different respected supplier in futures — the identical wines that Sherry-Lehmann stated it was nonetheless ready for.

“It’s completely apparent Sherry-Lehmann by no means paid for these wines and doesn’t have the cash to purchase them now,” he stated, including that he had spoken to a number of wine collectors who stated they have been victims of Sherry-Lehmann. “I can’t imagine they’re allowed to do enterprise.”

Mr. Andrus, the spokesman, stated that 90 p.c of current vintages had been delivered and that the remainder would arrive by the autumn.

As for my wine, after I instructed Sherry-Lehmann that I used to be engaged on this text, Mr. Andrus knowledgeable me that the corporate had positioned my 4 circumstances of 2015 bottles, which he stated had been in storage. He stated Sherry-Lehmann had repeatedly tried to contact me however was unable to as a result of I’d moved since inserting the order. The circumstances have been now prepared for supply, he stated.

That clarification appeared arduous to sq. with my many emails, cellphone calls and extra purchases and deliveries after I moved in 2019. Nor did Mr. Andrus deal with my lacking 2016 and 2019 futures orders. I didn’t reply to his provide to ship the wine.

A $358,000 Wine Order

At any given time, Wine Caves — the storage web site in Pearl River, N.Y., that Mr. Gilmer and Mr. Inexperienced personal — is often holding 1000’s of circumstances of invaluable wine for Sherry-Lehmann’s clients.

Certainly one of them is Fredric Mack, the previous chairman of the 92nd Road Y. He stated he had been making an attempt to retrieve his saved wine since November after an auctioneer at Sotheby’s warned him that any bottles saved there have been in danger. (The auctioneer, Jamie Ritchie, then the worldwide chairman of Sotheby’s Wine and Spirits, declined to remark.)

Mr. Mack stated some however not all of his wine had been delivered; he’s nonetheless lacking costly French and Italian vintages. When he referred to as Mr. Gilmer to complain earlier this 12 months, he stated, Mr. Gilmer assured him the wine was on its approach. However it by no means arrived.

After The Instances requested Sherry-Lehmann about Mr. Mack’s wine, Mr. Gilmer instructed Mr. Mack that he’d discovered his lacking bottles and would have them delivered, Mr. Mack stated. As of Wednesday, the wine had not materialized.

In an interview on Wednesday, Mr. Gilmer insisted that was not true: All of Mr. Mack’s bottles at Wine Caves had already been delivered.

On Feb. 28, Sherry-Lehmann’s liquor license expired after the corporate didn’t pay its renewal charge. On March 9, the state liquor authority issued a cease-and-desist order, and the shop closed.

But invoices, transport data and interviews with former staff counsel that Sherry-Lehmann continued doing enterprise.

A March 13 bill, which The Instances reviewed, says that Sherry-Lehmann bought $358,000 of wine to an actual property developer in North Carolina. The transaction included bottles of 1995 Domaine de la Romanee Conti La Tache ($7,995 every) and 1992 Petrus ($4,895 every). The bill listed the wines as having been bought by Mr. Gilmer.

Mr. Gilmer stated Sherry-Lehmann didn’t promote any wine whereas its New York license was suspended, which is a criminal offense punishable by as much as a 12 months in jail. He stated that the true property developer had merely requested that a few of his wine be moved from Wine Caves to a storage middle in New Jersey and that it was not a sale. He didn’t deal with why there was an bill itemizing the wine as having been bought.

Carlos Felipe, Sherry-Lehmann’s director of warehouse operations, stated in an interview that Mr. Gilmer gave him an inventory of the wines and instructed him to have them taken from Wine Caves to New Jersey. Mr. Felipe stated that when he tracked down the wines, he observed that the bottles have been being saved on behalf of the oil billionaire Sid R. Bass and two different Wine Caves clients.

Mr. Felipe stated he was frightened about delivering wine that belonged to another person to a different buyer. He requested Ken Mudford, a marketing consultant who managed Sherry-Lehmann’s stock, for steerage. Mr. Mudford stated in an interview that he, too, was alarmed.

After double-checking with Mr. Gilmer, Mr. Felipe stated, he instructed a driver to ship the wine to the New Jersey storage middle, and transport data reviewed by The Instances point out that a number of the circumstances have been introduced there on March 15. The Instances reviewed pictures that the driving force took of the wine in transit.

Whereas the Wine Caves bottles had initially belonged to Mr. Bass, possession had transferred to his ex-wife, Mercedes Bass, after the couple cut up in 2011. An individual near Ms. Bass stated she had not licensed any sale or switch of the wine.

Mr. Gilmer had beforehand denied that any bottles have been taken from Wine Caves with out their house owners’ consent. When The Instances knowledgeable Mr. Andrus that it had reviewed invoices, transport data and images associated to the wine, he stated that the Bass bottles had been moved by mistake and have been returned the subsequent day.

Mr. Andrus instructed me the title of the person who drove the wine to New Jersey after which returned it the subsequent day. The Instances contacted the driving force, who stated that Mr. Andrus’s account was incorrect however wouldn’t elaborate.

The Bass household just lately knowledgeable Sherry-Lehmann that it deliberate to take away all of its wine from Wine Caves, Mr. Gilmer stated, including that “each bottle and each case might be delivered.” A spokeswoman for Ms. Bass declined to remark.

Mr. Felipe and Mr. Mudford have stopped working for Sherry-Lehmann as a result of, they stated, they went weeks with out being paid. Each stated that Mr. Gilmer threatened them with a lawsuit in the event that they spoke to the media or publicly disclosed any facet of the Wine Caves transaction.

Mr. Andrus denied that Mr. Gilmer made the risk.

Natalie Kitroeff contributed reporting. Susan C. Beachy contributed analysis.