Promising sky-high returns, whisky fraud grows in the UK

There are some 48,000 barrels of Scotch whisky quietly aging in Martin Armstrong’s warehouses in southwestern Scotland. Last year, 17 of them became a problem.

- CLAY RISEN

Mr Armstrong normally deals with companies that buy hundreds of barrels at a time from distilleries, then pay him to store them as they age. In July, he started getting desperate calls from people who had bought just one or two barrels from an investment outfit called Cask Whisky Ltd. They had been told that some of those barrels were stored in Mr Armstrong's warehouse.

Cask Whisky had promised those investors sky-high returns. But when the company collapsed last year, it left them scrambling to find their barrels.

“We were inundated by questions,” Mr Armstrong said.

He couldn't help most of them. He had never even done business with Cask Whisky. Still, Mr Armstrong knew exactly what he was dealing with: yet another in a growing number of Scotch whisky-investment scams.

There are dozens of companies like Cask Whisky, often located in London but selling barrels stored in remote corners of Scotland and Ireland, making it hard for clients to see their investments in person. Some are semi-legitimate operations that sell barrels at prices so inflated they will take decades to turn a profit; others are practicing outright fraud.

“There’s a whole range of different types of cask scams, from the mild to the just evil,” said Isabel Graham-Yooll, a whisky consultant in London. “It's a murky old world.”

The City of London Police said it received 89 reports of alcohol investment fraud in 2023, the most recent data available, amounting to nearly $4 million in lost money. Those numbers are set to grow, experts warn, as the global economy teeters and people become more aware of the risks involved in barrel investing and try to get out. Many are about to realise that what they took to be a sound investment is anything but.