Court case due to begin in New York brings to light claims of widespread counterfeiting in the world of fine and rare wines

It has aged for six years, but the uncorking of a wine-fraud lawsuit in a Manhattan court on Monday looks set to leave a rather nasty – and potentially costly – aftertaste.

Brought by one of America's richest men, Bill Koch, against Eric Greenberg, a businessman who himself was once reportedly worth $1bn, the case will also put a spotlight on what some experts have claimed has been a scourge of the wine market for years: counterfeits. At the heart of the matter are a couple of dozen bottles that were purchased for up to $30,000 each, but may have turned out to be less than vintage. In the process of testimony that could last up to four weeks, the court is expected to hear of alleged underhand tactics used by some retailers and auction houses to offload suspect plonk.

It is a lawsuit with a heady body: nuclear scientists, dodgy wine labs and allegations of a culture of fraud all feature in the civil action brought by a man whose single-minded trail of those he deems responsible for flooding the wine market with fakes has seen him likened to Captain Ahab, the pursuer of Moby Dick.

Certainly the money pumped into the case is of whale-like proportions. Greenberg's lawyers say Koch – who is worth an estimated $4bn – has ploughed "seven or eight million" dollars into the case. The total worth of the wines in question runs into hundreds of thousands of dollars. Koch, who is an avid collector of many things – including 'wild west' memorabilia and nautical instruments – launched his lawsuit in 2007, against both Greenberg and the New York auctioneers Zachys. It followed the discovery, during an inspection, that a number of bottles gathering dust in his impressive cellars were counterfeit.

Some of the suspect bottles are alleged to have come into the possession of Koch through a single-seller auction at Zachys in October 2005. That sale saw Greenberg offload nearly $10m worth of wine in one go. It is claimed that in an effort to offset his shrinking fortune, the founder of the internet companies Scient and Viant sold some $50m of his cellar's contents.

The fine print in at the Zachys' sale catalogue warned of buyer beware, stating "prospective bidders are invited to inspect the property before bidding". Lawyers for Koch say that is an unreasonable demand on a would-be buyer. "It would have taken Koch's expert, Michael Egan, at his current rate of 36 bottles per 15 hours, more than 7,000 hours, at a cost of nearly $1m, to inspect all 17,000 bottles," the billionaire's legal representatives argued in pretrial memorandum of law.

Moreover, they claim that the seller already knew that many of the bottles – some of which were allegedly bought from Royal Wine Merchants, a New York-based specialist in French Bordeaux and Burgundy – were fake. Greenberg was allegedly tipped off by international auctioneer Sotheby's that some of the bottles were not authentic, when it declined to sell the collection. Sotheby's suspicions were later confirmed by a team of nuclear scientists and chemists brought in by Greenberg to analyse the bottles and labels.

Allegations of fraud

But it was not just Greenberg's cellars that had been infected by fakes. The civil action lifts a veil on just how rife allegations of fraud were in the fine wine market in the mid-2000s.

On learning that Royal was behind the sale to Greenberg, Sotheby's head of wine, Serena Sutcliffe, allegedly claimed the wine collector that "the guys at Royal are crooks", and that anything the company sold was likely to be fake, according to a filing by Koch's lawyers. Greenberg subsequently threatened legal action against Royal Wine Merchants and around February 2004 he returned $362,941 worth of wine to the seller, according to court documents filed by Koch's team. In a statement to the Guardian over the weekend, Royal Wine Merchants said it was "incredulous" over the allegation included in Koch's legal filings, adding that it was "the stuff of fantasy".

Sam Israel, Royal's legal counsel, added: "Royal has enjoyed a reputation as a top-tier distributor of authentic fine wines."

Koch says Greenberg concealed what he knew about some of his wines. Koch's lawyers claim he told a house manager: "What they did to me, I'm going to do to somebody else," adding that the comment was taken to mean he intended to offload counterfeit wines. It is alleged that Greenberg first tried to sell magnums of purported 1945 Château Lafite and 1921 Cheval Blanc through Acker Merrall & Condit.

But the auction house's president, John Kapon, expressed concerns. According to documents filed by Koch's legal representatives, Greenberg was "fucking pissed" and wrote to Kapon stating: "If my [magnums] are good enough for Zachys, they are good enough for anyone else."

The allegedly rejected 1945 Lafite was amongst those bought by Koch. Other bottles purchased at the 2005 Zachys auction included an 1811 Lafite, for $29,172, and a 1870 bottle described in auction as "one of the all-time greats". All were found to be among the fakes, Koch's lawyers claim.

The apparently counterfeit bottles were identified by William Edgerton, a noted wine expert employed in 2007 by Koch. Lawyers for the billionaire claim that while Edgerton was examining Koch's cellars, he stumbled across bottles that he had marked as potentially counterfeit during an earlier inspection of Greenberg's collection.

'He's like Ahab'

The lawsuit against Greenberg is part of a campaign by Koch to tighten up practices at wine sales and to pursue those he believes to be responsible for fraud through the courts.

The brother of fellow billionaires David and Charles – who are noted funders of conservative causes in the US – Bill has been allegedly stung in the rare wine market before. He alleges that wine he bought because Christie's had endorsed a similar bottle as coming from the estate of third US president Thomas Jefferson is counterfeit. Last year, a court in the US ruled that he had left it too long to bring a lawsuit against the auction house. A lawyer for Christie's told Bloomberg that the court ruling was "clearly correct".

The decision has seemingly emboldened his drive to pursue the latest court action.

"He's like Ahab," Greenberg's spokesman, Bill Cunningham, told the Guardian on Friday. "Eric offered to him a refund and offered to have a charity event in which experts tasted the wines. Koch turned down the refund and the charity offer." Koch's lawyers confirmed that an offer was made, but that the billionaire returned Greenberg's cheque.

Zachys was dismissed from the complaint last year, with the two sides reaching a undisclosed settlement, but Cunningham said on Friday that Greenberg's legal team expected the case against their client to go to trial as scheduled. "I do not think anybody is confident. We are up against a billionaire with massive resources who has spent the last seven years pursuing this," he said.

Greenberg's lawyers maintain that their client is not responsible for Koch's wine woes. They note that Greenberg was not mentioned in the Zachys sale catalogue and that the auction house inspected and selected the bottles to be sold. "They were not selected by Eric Greenberg," Cunningham said. In any event, Greenberg's lawyers have stated in court documents, "Koch cannot establish his claims."

What doesn't appear to be in question is that fake wines were present in both men's collections. "There is no question that anybody with an extensive collection of wines and who buys from auctions may have inauthentic wines. Every collector has fake bottles in his collection," said Cunningham.

"No one doubts that there were counterfeit or inauthentic wines in [Greenberg's] collection. But what we are concerned with is firstly that Eric Greenberg did not select the wines for auction and did not knowingly sell inauthentic wines. Secondly, even the experts do not agree [about what wines are fake]."

Cunningham said that of the 24 bottles in question, even Koch's experts cannot agree which ones are fake.

The Kurniawan connection

The civil trial is being paired with a criminal one slated for later this year as having the potential to blow the lid off fraud in the fine wine sector. Last year, one of the most prominent wine dealers in America, Rudy Kurniawan, was arrested and charged as the alleged head of a counterfeit wine laboratory that had fooled the wine world for eight years. It is claimed that from his Californian home, Kurniawan – who also goes by the names of Dr Conti and Mr 47 – mixed low-priced wines to mimic the tastes of far more expensive ones.

According to his indictment, he would then pour the creations into empty bottles of rare wines procured from a restaurant in New York City, and complete the fraud by fitting the bottles with fake labels that he created using stencils and rubber stamps. The finished counterfeits would then be sold for up to $50,000 a bottle, prosecutors say.

Kurniawan's trial is expected later this year. But his name is likely crop up in the civil case that is due to commence on Monday. In legal documents, Koch's lawyers allege that in late 2003, Greenberg bought wines from the alleged counterfeiter. Greenberg's representatives accept that their client bought from Kurniawan, but say "so did many other people" and add that he did not know the purchased bottles were fake.

It has been claimed that actions like those alleged to have been conducted by Kurniawan have caused the fine wine market to be flooded with fakes in recent years. Maureen Downey, a rare-wine expert who is set to give evidence as part of the Koch civil action, said: "The media has only been aware of this in the last couple of years, but the most blatant fraud was going on in 2004 to 2009. At that point there was industry pressure to clean up. It is my belief that when the pressure ratcheted up, there was some wholesale dumping in Asia."

She added that the majority of fakes are still around, with their true price unknown to the collector. "Absolutely – most of it is still out there. I find them all the time, everywhere."

• This article was amended on 27 March 2013. The original said that Bill Koch had bought wine through Christie's that purportedly came from the estate of Thomas Jefferson. In fact he bought the wine elsewhere.