Sotheby’s inflated the price of artworks by tens of millions of pounds to help to defraud a Russian billionaire, court documents allege.
A New York judge overseeing a $380 million lawsuit by Dmitry Rybolovlev, the Russian investor, has rejected the auction house’s attempt to keep details of the complaint confidential.
The unredacted documents outline the alleged negotiations between executives at Sotheby’s and Yves Bouvier, the art adviser, over his purchase of paintings in private sales through the auction house. Mr Bouvier is said to have sold them on to Mr Rybolovlev with enormous mark-ups.
Court documents say that Mr Rybolovlev thought that Mr Bouvier was working solely as his adviser for a 2 per cent commission on any purchase. Mr Bouvier has stated previously, however, that he had always been acting as a dealer. The 2 per cent charge represented administrative fees and not commission.
The court complaint alleges that Mr Bouvier defrauded Mr Rybolovlev of more than $1 billion during the purchase of 38 artworks and had been “aided and abetted” by Sotheby’s, whose conduct was “wilful, wanton, reckless and intentional”.
The documents claim that the auction house provided Mr Bouvier with materials “designed to induce [Rybolovlev] to pay inflated, fraudulent prices” and then lent a “veneer of legitimacy and expertise” by providing “inflated appraisals on demand”.
It is accepted by Sotheby’s that Mr Bouvier bought Leonardo’s Salvator Mundi through them for about $80 million and sold it 24 hours later to Mr Rybolovlev for $127 million.
It has said in separate court filings that it did not know Mr Rybolovlev had bought the painting until two years after it was sold to Mr Bouvier.
The unredacted documents claim that Mr Bouvier bought Wasserschlangen by Gustav Klimt through Sotheby’s for $126 million in September 2012. Mr Rybolovlev is then said to have paid Mr Bouvier $183.8 million for the artwork.
The following year Der Standard, the Austrian newspaper, reported that Sotheby’s had sold it for $120 million in 2012, an article that Mr Bouvier allegedly told Mr Rybolovlev was false.
In October 2014 Samuel Valette, a Sotheby’s executive, is said to have sent Mr Bouvier a formal valuation of the work in a document that was addressed to “Mr Confidential Client One Hundred and Thirty Four”.
The paper put it at $180 million, allegedly a $54 million increase on its own valuation of the work in only two years. The documents state that it also “omitted the $126 million sale to Bouvier from the transaction history”.
During discussions over the sale of Tête by Modigliani in July 2012 Mr Valette is said to have emailed Mr Bouvier saying that the work was “worth between €70 million to €90 million” or “maybe more”.
The next day Mr Valette allegedly upgraded his valuation to between €80 million and €100 million.
The court documents say that in September 2012 Mr Valette sent Mr Bouvier a contract of sale for the work for €31.5 million.
Mr Rybolovlev’s claim states: “It is notable that Sotheby’s and Valette were willing to sell to Bouvier for a fraction of what they had told him they estimated the work to be worth, suggesting again either that the valuation was false or that Sotheby’s was willing to violate its duty to its sellers and shareholders to maximise the sale price of the artworks it sold.”
The documents say that in total Mr Bouvier acquired 38 masterworks for Mr Rybolovlev between 2003 and 2015 at a cost of $2 billion. The documents claim that Sotheby’s “materially assisted the largest art fraud in history”.
Sotheby’s said yesterday: “Our comments and court filings on this topic have been consistent — Mr Bouvier purchased works of art from Sotheby’s as a principal. While generally aware that Mr Bouvier may have been purchasing works for himself or other parties, Sotheby’s had no knowledge whatsoever of what transpired between him and Mr Rybolovlev. Sotheby’s had no insight into the prices at which Mr Bouvier hoped to sell works of art he acquired from Sotheby’s, if he indeed decided to sell those works of art at all.”
It declined to respond to questions about whether its executives had omitted sales to Mr Bouvier in its appraisals of work nor if Mr Valette had amended estimates within 24 hours because it was engaged in litigation with Mr Rybolovlev. It said that “his allegations that Sotheby’s somehow was complicit in some scheme to defraud are baseless, and we are confident that Sotheby’s ultimately will prevail on the merits of this dispute”.
