Sotheby’s was cleared by a New York jury of allegations that it helped a dealer defraud a Russian billionaire, likely ending a nearly decade-old battle over the often murky relationships that surround high-end art deals.
Jurors on Tuesday rejected Dmitry Rybolovlev’s claims that Sotheby’s aided and abetted fraud, following a three-week trial in federal court in Manhattan. The jury of eight women and two men deliberated for just under six hours before siding with the famous auction house on four separate claims.
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The trial has opened a rare window into the mysterious world of high-end art purchases, where buyers and sellers often don’t know each other’s identities and funnel transactions through a series of middlemen, including dealers, galleries and auction houses.
“Today’s ruling reaffirms Sotheby’s long-standing commitment to upholding the highest standards of integrity, ethics, and professionalism in all aspects of the art market," the auction house said in a statement. “We are grateful to the jury for its verdict, which totally vindicates Sotheby’s of any alleged misconduct."
While the case has captured the attention of the industry, it’s unlikely to “affect how people go into art transactions," according to Dean Nicyper, a lawyer and expert on art law who formerly represented Sotheby’s but wasn’t involved in the case.
“The way art is handled in the art market has its own risks," Nicyper said. “Sometimes it’s less transparent than people would like it to be, but that’s how it’s done."
Rybolovlev has been battling art dealer Yves Bouvier and others in courts around the world since 2015, when Bouvier arrived at the billionaire’s Monaco home to complete a deal for a Mark Rothko painting. The oligarch accused Bouvier of overcharging him by about $1 billion for works by Leonardo da Vinci, Rene Magritte and others, leading to the art dealer’s arrest by local authorities.
Rybolovlev, who testified during the trial and monitored the proceedings through a Russian translator, showed little reaction to the jury’s verdict. “It’s life," he said in a courthouse elevator.
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view allBouvier and Rybolovlev fought in court proceedings over the next eight years before resolving their disputes in December. The Monaco criminal charges were thrown out in 2019 by a judge who found that the arrest was tainted, and Rybolovlev was charged with corruption in 2018 by newly appointed prosecutors after friendly messages between the billionaire’s lawyers and authorities were revealed.
Bouvier has said that all allegations against him have been set aside by prosecutors or cleared by courts around the word.
“This case achieved our goal of shining a light on the lack of transparency that plagues the art market," Daniel Kornstein, a lawyer for Rybolovlev, said in a statement. “That secrecy made it difficult to prove a complex aiding and abetting fraud case. This verdict only highlights the need for reforms, which must be made outside the courtroom."
Two companies controlled by Rybolovlev sued Sotheby’s in October 2018, contending that it “materially assisted the largest art fraud in history." The auction house in March 2023 won dismissal of most of the billionaire’s suit, but still faced claims that it aided and abetted fraud in the purchase of several works, including da Vinci’s “Salvator Mundi."
The da Vinci piece, a long-lost work which was bought at an estate sale for less than $10,000, set the art world ablaze when it was unveiled in 2011. A company controlled by Bouvier bought the da Vinci for $83 million in 2013 and sold the painting to Rybolovlev for $127.5 million two days later. Rybolovlev sold the work for $450.3 million at a Christie’s auction in November 2017.
Rybolovlev had contended that he was a mere novice in the world of high-end art sales when he started collecting works and expected Sotheby’s to protect clients from what he described as rogue art dealers.
During the trial, the billionaire testified how he felt betrayed by Bouvier. He teared up when he said why he had placed so much trust in the art dealer.
“When you trust people — and I’m not a person who trusts easily — but when a person is like a member of your family, there’s a point in time at which you begin to completely and utterly trust a person," Rybolovlev said through an interpretor.
But the billionaire probably should have known better, according to Judith Wallace, a partner at Carter Ledyard and chair of the law firm’s art practice.
“The art market is opaque," said Wallace, who wasn’t involved in the case. “Agents might not share information, even with extraordinarily wealthy collectors, unless they are required to do so." Many collectors and sellers “insist on detailed information," and “sometimes deals fall through in the face of obfuscation."
Witnesses who testified at the trial included Samuel Valette, Bouvier’s relationship manager at Sotheby’s; Mikhail Sazonov, a financial adviser to the billionaire; and art adviser Sandy Heller, whose conversation with Rybolovlev at a lunch in St. Bart’s in December 2014 sparked his crusade against Bouvier.
The jury had been asked to determine whether Sotheby’s helped defraud Rybolovlev in four transactions — the 2013 da Vinci deal; the $43.5 million purchase of Magritte’s “The Domain of Arnheim" in 2011; the acquisition of Gustav Klimt’s “Wasserschlangen II" for $183.8 million in 2012; and a sculpture of a goddess head by Amedeo Modigliani, “Tete," which the billionaire bought for 62.5 million euros in 2013.
Rybolovlev’s 2018 lawsuit had originally focused on 16 transactions from April 2011 to January 2015. US District Judge Jesse Furman in March threw out most of Rybolovlev’s claims, finding that many were filed too late, or that the companies couldn’t show that Sotheby’s had actual knowledge of Bouvier’s alleged fraud.
Before the end of the trial, Rybolovlev dropped a claim that Sotheby’s helped defraud him in a November 2014 auction of the Modigliani piece, which the billionaire agreed to hand over as partial consideration for the purchase of a Mark Rothko work in the summer of 2014.
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- FIRST PUBLISHED31.01.2024 | 10:31 AM IST
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