Here are the details of that wine auction that started Cheryl Womack’s legal troubles
Cheryl Womack spent big money on obscure wines but didn’t pay taxes, if allegations in a grand jury indictment from Thursday are true.
The Mission Hills businesswoman who cashed in on the $35 million sale of her truck-driver insurance brokerage in 2002 found herself in the cross hairs of federal investigators this week. The feds allege that she evaded $7 million in taxes through a complicated web of Cayman Islands bank accounts, foreign trusts, shell companies and luxury condominiums.
None of the allegations against her have been tested in court.
Womack seemed to hit a snag with federal investigators in 2008 following an exorbitant auction of her massive wine collection. A Kansas City grand jury accused Womack of opening a line of credit with a Cayman Islands bank through a company of hers called Lucy Limited and buying up $1.5 million worth of wine.
By Womack’s own account, her collection grew to 9,000 bottles, “which is far more than can be stored in my 5,000-bottle cellar and considerably more than any one person can drink in their lifetime.”
Given her overstock of fine wines and the realization that she wouldn’t get around to drinking them all, Womack decided it was time to sell.
She hired New York City auction house Aulden Cellars-Sotheby to carry out the sale of 4,775 bottles of her collection. The details of the auction give a glimpse into the lives that the super wealthy lead and the types of things they can spend their money on.
Among the wines in the March 15, 2008, offering were four bottles of the 1996 vintage of Romanee-Conti, which were expected to fetch up to $7,500 per bottle. A case of a 1993 La Tache was priced at up to $18,000. One case of Petrus (a red Bordeaux, for the wine enthusiasts out there) from the 1990 vintage was expected to sell for between $30,000 and $50,000.
Those details were listed in a press release announcing the auction, which included comments from Womack discussing how she treated herself to a 1997 Screaming Eagle and a 1961 Latour over the holidays the year before.
Bidders ended up spending $1,678,900 on Womack’s wines, which beat the purported high estimate of $1.6 million for her offering. Lots of her wines outperformed pre-auction estimates, including six bottles of 1989 Chateau Petrus selling for $19,360 when they were expected to fetch up to just $18,000.
Womack, who was described in the post-sale press release as “one of America’s most successful entrepreneurs,” hailed the results of the auction.
“I couldn’t be happier with my first experience on this side of the gavel,” she said in the press release.
She now finds herself facing the prospect of a different kind of gavel, given the charges against her. The grand jury indictment said she had the auction house wire the $1.6 million to a Cayman Islands bank account. What followed was a series of bank transactions between herself and this Lucy Limited company, which she allegedly described as an investor-owned company that leased her wine cellar. But the feds allege that she tried to make those wire transfers look like arms-length transactions when she really controlled Lucy Limited and used the company to help avoid reporting income on her taxes.
