Jury Begins Deliberating in Sotheby’s Art Fraud Case

After nearly three weeks of testimony, a jury in New York started its deliberations on Tuesday in the case of a Russian oligarch who has accused Sotheby’s of conspiring with a Swiss art dealer to defraud him out of tens of millions of dollars in high-end art sales.

Lawyers for the oligarch, Dmitry Rybolovlev, have argued in federal court in Manhattan that a Sotheby’s executive, Sam Valette, worked with the dealer Yves Bouvier to help Bouvier sell works of art at wildly inflated prices, using the auction house’s reputation and expertise to befuddle and trick the Russian into paying higher values and then help conceal his fraud. Sotheby’s never reined the executive in, they said, because he was making so much money on commissions for the company.

“This is a company that allowed a greedy low-level manager to climb the ranks without any accountability,” Zoe Salzman, a lawyer for Rybolovlev, said in a final pitch to the 10-person jury during closing statements on Monday. “It chose to sell its reputation, its brand, the trust we all have in companies like that, to make money.”

Sotheby’s, however, said that Valette was a passionate, hardworking and honest art expert who was interested in selling works at the best price for his clients and provided the same services to Bouvier, such as art descriptions and valuations, that he would to any potential buyer.

Its lawyers said Bouvier might have lied to Rybolovlev about the prices of artworks he bought through Sotheby’s, and might have used Sotheby’s documents to persuade the Russian businessman about the purchases, but that those conversations would have had nothing to do with the auction house.

In fact, during nearly three weeks of testimony, they said, Rybolovlev’s legal team had produced no evidence that Valette or other executives knew about actions by Bouvier that Rybolovlev is calling fraud. Lawyers for the auction house said Rybolovlev was pursuing Sotheby’s only because he was unable to sue Bouvier, who lived in Switzerland, and needed someone to blame for the money he had lost.

“We are here in this courthouse in New York City in 2024 because Dmitry Rybolovlev decided to try and make somebody else pay for what happened to him,” Marcus Asner, a lawyer for Sotheby’s, said in his closing arguments.

“His gripe is with Bouvier and not with Sotheby’s,” he added.

Rybolovlev’s suit says Sotheby’s knew that Bouvier was buying art himself and then flipping the works to Rybolovlev with hefty markups. Rybolovlev has accused Bouvier of pretending to act as his agent who was negotiating on his behalf to get the best price.

Bouvier is not a defendant in the case, and he has long insisted he did nothing wrong. He has said that he was always clear that he was operating as an independent dealer who was free to charge the Russian what he would pay.

He has conceded pretending to negotiate with phantom third parties to justify the prices he was charging Rybolovlev but defended this as legitimate art world practice. The two men have engaged in multiple legal disputes in Europe and Asia before reaching a confidential settlement in Geneva late last year.

The jury deliberations follow weeks of testimony from a long list of industry players, whose accounts provided a rare glimpse into the often hidden workings of the art trade.

Valette testified that he knew that Bouvier was reselling art and that at some point he had learned that Rybolovlev was one of Bouvier’s clients. But he told the court he had never known which works in particular Bouvier was selling to Rybolovlev and that whatever he had done constituted accepted practices and courtesies undertaken by specialists selling works to a buyer.

The trial also offered the unusual sight of an oligarch like Rybolovlev testifying — and being cross-examined — in a U.S. courtroom.

He became emotional during his testimony as he described the breakdown of what he said had been a relationship of trust with Bouvier.

Rybolovlev once again sat in court to watch the proceedings on Tuesday, listening through an interpreter as he had throughout the trial.

Overall Rybolovlev spent some $2 billion on 38 works he purchased through Bouvier over 12 years, though only 12 were transactions in which Sotheby’s had any role — a point that Sotheby’s emphasized on Monday.

Judge Jesse M. Furman, of the U.S. District Court for the Southern District of New York, allowed the jury trial to proceed regarding four works: a Magritte, a Klimt, a Modigliani and the “Salvator Mundi,” a depiction of Christ by Leonardo da Vinci.

In his instructions to the jurors, Judge Furman said their decisions had to be unanimous in deciding whether there was an underlying fraud and whether Sotheby’s knew about it and aided it. He also instructed them that, in reporting their verdict, they should also say what, if any, damages Rybolovlev is owed.

Rybolovlev’s side said that he had trained as a doctor and went into business, making his fortune in the fertilizer industry, but that he knew little about the art market.

For each of the four artworks, Rybolovlev’s lawyers described a pattern whereby Valette often created Sotheby’s materials praising the art and suggesting price valuations. Bouvier forwarded these to Rybolovlev, overcoming any doubts the Russian may have had about purchasing and justifying the prices Bouvier charged him, they said.

“Bouvier built a house of cards but Sotheby’s gave it legitimacy,” Salzman said.

But Sotheby’s said that instead of accusing the auction house, Rybolovlev should blame himself and his aides for unreasonably relying on Bouvier’s representations.

They pointed out that Rybolovlev, a man of means with an impressive career, never insisted on putting in writing their presumed relationship of principal and agent and then did not seek documentation from Bouvier to show what prices he was buying the art at.

Asner, the Sotheby’s lawyer, argued that the Russian businessman needed to show that he had acted reasonably to protect himself before he could claim he had been defrauded. Asner said it was also disingenuous for a man like Rybolovlev to complain about a lack of transparency in the art world when he had employed agents and used offshore listed companies to buy his art.

“Dmitry Rybolovlev is a big boy,” Asner said. “You can and you should hold his feet to the fire.”

Sotheby’s also said the case was flawed because many of the transactions were carried out by subsidiaries in Europe, arguing that Rybolovlev had sued the wrong entities.

In the case of the da Vinci, the court heard how in 2013 Valette took the painting to Rybolovlev’s apartment in New York where Rybolovlev and Bouvier inspected it.

Bouvier later purchased the da Vinci for $83 million through Sotheby’s, only to sell it a day later to Rybolovlev for $127.5 million.

In 2015, after Rybolovlev had begun to suspect that he had paid large markups, Bouvier returned to Sotheby’s and asked Valette for a valuation for the da Vinci.

In the document, which was forwarded to Rybolovlev, the insurance valuation of the painting was increased to 100 million euros, or roughly $114 million, despite the initial reservations of a Sotheby’s colleague, according to court papers. The accompanying cover letter was edited to delete a reference to Bouvier’s earlier acquisition of the artwork.

Valette acknowledged on the stand that he had made the changes at Bouvier’s request, but said he had only gone with a valuation that had been approved by other Sotheby’s experts.

Rybolovlev’s side argued that the edits were part of a plan to help Bouvier conceal his quiet purchases and large markups. But Sotheby’s said the valuation, while higher, turned out to be far too low in the end. When Rybolovlev consigned it to Christie’s in 2017, it sold for $450 million, becoming the most expensive painting ever sold at auction and earning the Russian a large return.

“Four hundred and fifty million,” Asner said. “Right there, that number says it all.”

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