Sotheby's Cleared Of Art Fraud In Russian Billionaire's Lawsuit

(MENAFN- Swissinfo) Sotheby's has been cleared of liability in a lawsuit brought by Russian billionaire Dmitry Rybolovlev, who had accused the famed auction house of participating in an alleged scheme to overcharge him for works of art.

After a trial that lasted nearly four weeks, jurors in Manhattan federal court deliberated just five hours before finding in Sotheby's favour on multiple counts of aiding and abetting fraud.

The nearly month-long trial captivated the fine art world, not just because of the four masterpieces that were in contention, including one of Gustav Klimt's“Water Snakes”, a Rene Magritte“Le Domaine D'Arnheim” and a sculpture by Modigliani.

The proceedings also offered rare glimpses into high-value private sales, one of the most shrouded corners of the art market. Evidence presented at trial shone a light into the internal workings of the auction house, where private transactions are brokered between affluent clients and discretion is tantamount.

“This has been a long ordeal for Sotheby's,” said Marcus Asner, lead counsel for the auction house, after the verdict.“We were vindicated in the end. We knew that we acted at all times completely legally and ethically. We are delighted to put this chapter behind us.”

Rybolovlev's lawyers argued Sotheby's knew, or should have known, that Swiss art dealer Yves Bouvier was“flipping” art to Rybolovlev for far more than he paid for it, without disclosing that he was not an agent but in fact the true owner of the works. During trial his lawyers pointed to documents sent to Bouvier by the auction house that emphasised high valuations for certain works, including a painting by Leonardo da Vinci,“Salvator Mundi”.

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Rybolovlev – the owner of the AS Monaco football club, who amassed a fortune worth more than $7 billion (CHF6.03 billion) through the sale of his fertiliser company – was a constant presence in the courtroom, testifying and following the proceedings with the help of a Russian interpreter.

Sotheby's lawyers maintained the auction house was just doing its job: selling art.“That's what auction houses do [...] that's how the business works,” Asner said during closing arguments.

The auction house fired back at Rybolovlev's claims that he had been duped because documents provided to him from Sotheby's lent credibility to Bouvier, portraying him as a sophisticated businessman capable of conducting his own due diligence.

“Rybolovlev has a gripe. He does. But his gripe is with Bouvier and not Sotheby's,” Asner said during closing statements.

“Caveat emptor,” he added.

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In a statement after the trial, the auction house said the verdict“totally vindicates Sotheby's of any alleged misconduct. Throughout the trial, there was a glaring lack of evidence presented by the plaintiff and, as has been clear from the beginning, Sotheby's strictly adhered to all legal requirements, financial obligations, and industry best practices during the transactions of these artworks.”

Rybolovlev's lead lawyer, Daniel Kornstein, said:“This case achieved our goal of shining a light on the lack of transparency that plagues the art market. That secrecy made it difficult to prove a complex aiding and abetting fraud case.”

Bouvier was not a party to the New York lawsuit. He and Rybolovlev have clashed in other forums, however. All of those cases have either been dismissed or settled, and Bouvier has maintained he did nothing wrong.

Copyright The Financial Times Limited 2023

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