Seeking damages: Rybolovlev claims that Sotheby’s has defrauded him out of tens of millions of dollars, and that he knew nothing of wrongdoing by an art buyer who advised him. — AP
NEW YORK: Sotheby’s abused its “privilege, power and reputation” to help dupe a Russian billionaire out of millions of dollars as he amassed a world-class art collection, a lawyer for the businessman argues in a closely watched trial here.
But the auction house said billionaire Dmitry Rybolovlev partly has himself to blame for allowing his old friend and Swiss art dealer Yves Bouvier to overcharge him for four rare works, including “Salvator Mundi”, a painting attributed to Leonardo da Vinci that set a record for the most expensive artwork ever sold in 2017.
The trial in Rybolovlev’s lawsuit against Sotheby’s began on Monday before US District Judge Jesse Furman in Manhattan. The billionaire is seeking more than US$232.5mil in damages.
“But money is not the only issue,” Rybolovlev’s attorney, Daniel Kornstein, said. “This is about public interest, it’s about people who are not just wealthy. Anyone could be a victim.”
The case will offer a rare glimpse into an often-opaque industry where middlemen broker art transactions between ultra-wealthy buyers and sellers who don’t always know each other’s identities.
It also marked one of the final chapters in a long line of legal challenges Rybolovlev has launched around the world, attempting to hold Bouvier liable for defrauding him.
In its defence, Sotheby’s argued it had no idea Bouvier was lying to Rybolovlev about protracted negotiations with sellers in a bid to inflate the prices Rybolovlev would pay for artworks, including US$184mil for Klimt’s “Water Serpents II” painting.
“He has good reason to be angry at himself for what happened to him,” said Sara Shudofsky, an attorney for Sotheby’s.
While Rybolovlev had amassed immense wealth running profitable companies, when it came to purchasing art, he didn’t take basic steps to protect his interests, she added.
That included trusting that Bouvier was acting as his agent without putting the terms in writing.
As a result, Rybolovlev claims he didn’t know Bouvier was buying artworks through Sotheby’s and then turning around to sell them to him at significant markups.
On top of the US$6.4mil commission Bouvier made in relation to the four artworks at the heart of this case, Bouvier also pocketed US$164mil from secret markups, Kornstein said.
The legal saga began in February 2015 when Bouvier arrived at Rybolovlev’s residence in Monaco, thinking he was completing a deal for Mark Rothko’s “No. 6 (Violet, Green and Red)”, which the billionaire had purchased for €140mil in August 2014.
Instead, he was arrested on a complaint from the oligarch accusing Bouvier of overcharging him by about US$1bil for works by da Vinci, Rene Magritte and others.
In the “Salvator Mundi” case, a company controlled by Bouvier bought the piece for US$83mil and two days later, he sold it to Rybolovlev for US$127.5mil.
The piece set the art world on fire in 2011 when it was publicly revealed at the National Art Gallery in London, several years after it was discovered at an estate sale in New Orleans. The story became the subject of the documentary The Lost Leonardo.
The two men tangled in court proceedings in New York, Singapore and Switzerland over the next eight years before resolving their dispute last month.
The criminal charges against Bouvier in Monaco were eventually 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.
Two companies controlled by Rybolovlev sued Sotheby’s in October 2018 in federal court in New York, contending that it “materially assisted the largest art fraud in history”.
The auction house in March won dismissal of most of the billionaire’s suit but still faces claims that it aided and abetted fraud in the purchase of five works, including the da Vinci.
“The question here that has broader implications beyond this case is whether an art adviser is the fiduciary of a collector,” said Judith Wallace, a partner at Carter Ledyard and chairperson of the firm’s art practice.
“That’s often an issue that, if poorly defined, can lead to misunderstandings after the fact.”
Several well-known New York art dealers, including Nicholas Acquavella, Warren Adelson and Sandy Heller, are expected to testify, along with Samuel Valette, who was Bouvier’s relationship manager at Sotheby’s. — Bloomberg
