Whisky galore, but the liquid gold was a multimillion-pound con

Stored in oak sherry barrels to give it a sweeter taste, Grandtully Single Malt was of such quality and investment potential that its buyers were told it was "liquid gold". But the whisky, sold in barrels to more than 2,000 eager investors, was revealed yesterday to be a liquid con trick after a jury convicted its seller of operating a £4m fraud by selling fine wines and spirits at inflated prices.

Stored in oak sherry barrels to give it a sweeter taste, Grandtully Single Malt was of such quality and investment potential that its buyers were told it was "liquid gold". But the whisky, sold in barrels to more than 2,000 eager investors, was revealed yesterday to be a liquid con trick after a jury convicted its seller of operating a £4m fraud by selling fine wines and spirits at inflated prices.

Stephen Jupe, 50, a former stockbroker with no experience in the whisky trade, claimed that the single malt produced at his Grandtully Distillery Ltd in the Highlands was an investment of "exceptional growth potential with very few risks".

But the Grandtully Distillery did not exist and its grand Edinburgh headquarters consisted of nothing more than a brass name plate at a mail forwarding agency and an answering machine. Customers who called a telesales centre set up by Jupe to take orders for the whisky - contained either in 110-gallon sherry butts costing £1,750 each or a 55-gallon hogshead for £930 - were buying a single malt unwittingly supplied to the conman by an Invernesshire distillery.

Jurors sitting at Southwark Crown Court during a 10-week trial heard that the mark-up between the cost price to Jupe and the amount he was selling it to his victims for was as high as 146 per cent. The court heard that the investors, who bought the whisky in the 1990s, were then in effect stuck with for life with their barrels- containing up to 800 bottles per cask - because the whisky market never deals in quantities less than the equivalent of thousands of gallons.

A spokesman for the Serious Fraud Office said: "It was a brazen and cynical fraud conducted over a period of years. Jupe was a very arrogant man - he more or less doubled the cost price. Investors will never be able to get that back. Many bought single barrels and the blending market does not deal in such trivial quantities. They are therefore unsellable."

Jupe, of Kingston upon Thames, south-west London, was convicted of three charges of fraudulent trading and one of trading while insolvent after being forced to wind up his business in 1996. He will be sentenced on 21 May.

The fraudster promised in promotional material that his whisky, named after a defunct distillery, was newly produced and could be kept in bonded warehouses while it dramatically increased in value as it matured over 10 years.

He even managed to get his scam publicised in a national newspaper, telling The Mail on Sunday: "With strictly limited supply, outstanding quality and growing worldwide demand, malt whisky offers exceptional growth potential with few risks."

The sales patter proved persuasive. Marshall Wineries took orders from more than 2,000 customers, some of the buying four or five casks at a time. The income was about £4m.

He also offered a premium champagne, Trouillard, at £380 per case, claiming investors would make vast profits by taking advantage of demand at the Millennium. A Grandtully hogshead bought for £930 in 1993 had an actual market value of £425. The champagne was a mediocre brand, much of which was never even delivered.

The court heard that Jupe raided the company's funds for his personal use, taking £128,000 to buy a house. He also gave £45,000 to an evangelical Christian organisation, Uket.