MANHATTAN (CN) — Famed British auction house Sotheby's isn't on the hook for a Russian billionaire's civil fraud claims that the auction house helped an art dealer overcharge him, according to a New York jury that swiftly returned a verdict after five hours of deliberation on Tuesday
Billionaire fertilizer tycoon Dmitry Rybolovlev claimed in a 2018 lawsuit that Sotheby's defrauded two British Virgin Islands trusts he controls by helping art dealer Yves Bouvier in overcharging him by tens of millions of dollars on 38 artworks he purchased for $2 billion between 2003 and 2015 — while collecting a 2% commission fee on the eight- and nine-figure deals.
Five years later, Rybolovlev’s civil case against Sotheby’s stood trial in the Southern District of New York across three weeks in January, but only in connection to four specific artworks sold to his trusts through the worldwide auction house and fine art broker: Leonardo da Vinci’s "Salvator Mundi;” Rene Magritte’s “Le Domaine d’Arnheim;” Gustav Klimt’s “Wasserschlangen II;” and Amedeo Modigliani’s limestone sculpture “Tête."
The jury’s verdict form asked if they unanimously found Sotheby’s aided and abetted Bouvier’s fraud on Rybolovlev’s purchases of each artwork individually, and if so, had tasked them with assigning compensatory and punitive damages for each count.
Returning a unanimous verdict shortly before 3:00 pm on Tuesday, the ten-person jury ultimately did not award any damages to Rybolovlev, and instead found that he had not proven by clear and convincing evidence that Sotheby's facilitated Bouvier's fraud.
A spokesperson for the auction house said the verdict "totally vindicates Sotheby’s of any alleged misconduct."
“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 company wrote in a statement on Tuesday afternoon. "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 attorney Daniel Kornstein said Tuesday, the verdict “only highlights the need for reforms, which must be made outside the courtroom."
“This case achieved our goal of shining a light on the lack of transparency that plagues the art market,” the Emery Celli Brinckerhoff Abady Ward & Maazel attorney said. “That secrecy made it difficult to prove a complex aiding and abetting fraud case.”
U.S. District Judge Jesse Furman, the Obama-appointed judge presiding over the case, repeatedly reminded the two parties, before and during trial, that they could still settle the remaining claims outside of court, noting in an opinion that a trial “would be expensive, risky and potentially embarrassing to both sides.”
In May 2013, the Swiss dealer Bouvier purchased da Vinci’s "Salvator Mundi” from Sotheby’s for $83 million in a private sale brokered by Sotheby's, New York.
He flipped the painting to Rybolovlev for $127.5 million, some 50% higher than he paid in the Sotheby’s sale, and millions of dollars higher than the 2% commission Bouvier was supposed to receive as Rybolovlev's art agent.
During closing arguments on Monday, Rybolovlev’s attorney Zoe Salzman told jurors Sotheby’s netted $3 million in compensation from just the $44.5 million secret markup, along with the price Rybolovlev paid to buy “Salvator Mundi,” while Bouvier took $1.27 million off just the inflated price at which he flipped the painting.
“That’s double dipping,” she said. “That’s fraud.”
Sotheby’s lawyers maintained throughout the trial that the auction house had no knowledge of Bouvier’s fraud on Rybolovlev as he amassed the $2 billion art collection for the billionaire.
“If he thinks he paid too much, he can, and should, take it up with Yves Bouvier,” Sotheby's attorney Marcus Asner in the defense’s closing summation on Monday.
Bouvier is not named as a defendant in the civil suit at trial in Manhattan federal court, but he has separately faced criminal charges in France, Monaco and Switzerland, though the last of these charges have been dismissed following a confidential settlement in Geneva.
Rybolovlev later sold the “Salvator Mundi” painting at Christie's in 2017 for a record-setting $450 million.
In 2016, Sotheby’s filed suit in an effort to recoup monies from the da Vinci art sale and also to absolve itself of any blame in the dispute. The auction house, which made $3 million on the sale, argued it was owed more since the artwork ultimately was sold for $127 million instead of the $80 million reported to the auction house.
"Salvator Mundi” spent half a century in obscurity before it resurfaced in Louisiana in 2005, where it was sold to a pair of art dealers for less than $10,000 in an estate sale in New Orleans after its owner died.
The painting was later purchased in 2017 by an unnamed bidder, who was later identified as a Saudi royal who purportedly purchased it on behalf of the Louvre Abu Dhabi. It was supposed to have been unveiled a year later at the museum, but the exhibition was delayed indefinitely and the work hasn't been seen in public since.
The renaissance painting’s saga was the subject of the 2021 documentary "The Lost Leonardo”.
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