It’s been coming for a while.
This morning, the BBC broke a story (now on the front page of its website) about Scotch whisky cask investment fraudsters. The investigation uncovered scams totalling several million pounds where victims were sold overpriced or non-existent casks of Scotch whisky, with some casks fraudulently resold multiple times.
In the piece, the BBC details how convicted scammer Craig Brooks ran two ‘companies’, Cask Whisky Ltd and Cask Spirits Global Ltd, that promised significant returns on investment. Another company, Whisky Scotland, has also disappeared after taking investors’ money, including someone terminally sick. While some within the industry (including me) have written about these scammers for years, it marks the first time that victims’ personal stories and voices are heard as they scramble to figure out what’s going on and whether their casks actually exist at all, with some people having lost hundreds of thousands of pounds.
The sad truth is that there are other ‘businesses’ beyond these three fraudulent firms using similar tactics and making similar false promises about returns on investment, some of them even run by con men already convicted for past schemes in other industries. In December 2023, the City of London Police reported that £3 million was lost by investors to alcohol fraud in the UK. Unfortunately, the figure is likely several orders of magnitude higher when it comes to whisky casks alone.
Here’s how many of these scammers do their dirty work. Using social media and sometimes mainstream media ads to reach a wide audience (including the elderly and vulnerable), they promise a strong and steady return on investment as well as ‘multiple exit strategies’. They’ll point to historical sales of rare whisky as proof that there is money to be made, even though these firms have been warned that their claims are misleading prospective investors.
Having identified the cask they’d like to buy, investors are usually handed a ‘certificate of ownership’ by these firms upon the same of a cask. However, that ‘certificate’ is simply a piece of paper – it does not legally guarantee ownership or even prove the cask actually exists. In the case that it actually does exist, investors have often vastly overpaid what the cask is actually worth on the market.
The ‘multiple exit strategies’ claim is also not really true. In the instances where an investor’s cask is resold, whether real or imaginary, it is done via the ‘investment’ firm who’s found someone in their sales database to pay even more for the cask. These sales, like a pyramid scheme, then allow these companies to claim that their clients have ‘made a profit’ (and in these rare cases, people have indeed made a profit) when really all they did was pass a burning hot potato on to the next victim. This in turn allows the ‘investment’ firm to claim legitimacy as a company that does right by its clients.
In the case of imaginary casks, issuing a ‘certificate of ownership’ dodges the key rule that underpins the sale and management of a Scotch whisky cask: that the purchaser should be able to have direct contact with the warehouse that is storing it. If a purchaser isn’t able to reach out to a warehouse, buyer beware.
In the case of selling overpriced casks that actually do exist and where proper ownership documentation is provided, firms use slick marketing to gloss over the fact that it’s actually very hard for the general public to get ahold of Scotch whisky casks at prices that make sense as an investment. Remember, whisky is ultimately meant to be bottled – this also requires understanding of the industry, the existing market and proper licenses to sell it.
This has now been going on for years. The wider industry and other bodies have been warned for a while that this was occurring but it’s only recently that the media have picked up on the story as more people are realizing they’ve been conned, and it’s heartbreaking.
The key values of transparency, honesty and integrity that have served as a foundation for the Scotch whisky industry’s 21st century boom are now under threat. Hopefully thanks to the BBC’s work, more people will come forward with their stories, as there are certainly many more victims out there. If enough are willing to talk about their unfortunate experiences, we’ll begin to see the end of the Scotch whisky cask ‘investment’ ‘industry’ which has done so much damage already.
This article was originally published on forbes.com
