Yes, really!
You really don't think there's an incentive to forge cheap wines too? It's a hell of a lot easier and they would have never been caught if not for the French wine bureaucracy finally noticing that the region exported more than it produced.

By volume, the scale of this potential fraud is enormous compared to a few counterfeit bottles of Bordeaux. The amounts mentioned in the Decanter article point to the equivalent of at least 15 million bottles being involved.

Since 2004 and Sideways, we all know that Pinot Noir has been hot in the US (and around the world). The problem is that there wasn't much of it planted in the Pays d'Oc until very recently. Because of its relative rarity and the difficulty in producing it (it's much harder to grow in the warm Languedoc than say, Syrah, and its hard to grow acceptable quality Pinot Noir at high yields), Pinot Noir commanded a price premium - as much as double the price of other reds.

So it's not surprising that somehow someone along the line pawned off some red wine as VdP Pinot Noir. It's doubtful that the wine was Pinot Noir from another region (Ardeche?) because there weren't large quantities of PN just sitting around waiting for buyers. More likely it's some doctored up mixture of Grenache, Carigan and other grapes to produce a suitably Pinot-like wine.

To be fair, it is still unknown at what level the fraud took place: winegrowers? co-ops? negociants? exporters?
This is just what the poor Languedoc needs, a massive scandal to erode its flagging reputation even more!