Sotheby’s attorneys rest their case in art fraud trial

MANHATTAN (CN) — Sotheby’s attorneys rested Friday in Russian billionaire Dmitry Rybolovlev’s fraud case against the renowned auction house which he accused of aiding and abetting an art dealer in a price-gouging scheme that cost him millions.

On the final day of testimony, Sotheby’s called Gurr Johns CEO Harry Smith to the stand as an expert witness. Smith acquired the art valuation and advising company in the mid-1980s and specializes in impressionist and modern art.

“It seemed to me Sotheby’s conducted quite a careful valuation,” Smith said Friday. “It was done in a professional way.”

Rybolovlev claimed the auction house aided and abetted Swiss art dealer Yves Bouvier in manipulating the prices of 38 works of art from 2003 to 2015. The Russian billionaire spent a total of $2 billion on these deals.

But in assessing Sotheby’s valuations for art works Bouvier sold to Rybolovlev, Smith said he didn’t find any wrongdoing on the auction house’s part.

Smith was asked about Leonardo da Vinci’s “Salvator Mundi” painting, which depicts Jesus Christ in a blue frock. Bouvier purchased the work through Sotheby’s for $83 million before selling to Rybolovlev for $127.5 million.

After the sale to Bouvier was finalized, Sotheby’s conducted an insurance valuation on the piece at 100 million euros, roughly $108 million. A draft valuation from Sotheby’s shows it was initially valued at $100 million but was changed to euros at Bouvier’s request.

According to Smith, insurance valuations are often higher than the sale price to replace the work if it were to be lost or damaged. He said he agreed with Sotheby’s valuation and added that he would have valued the price at a higher number. While the auction house’s appraisal represented a 36% markup from the sale price, Smith said he would have valued it at an 80% increase.

“The point of a Leonardo valuation — it’s a work of its own. It doesn’t follow the rules,” Smith said.

Smith also disagreed with Guy Stair Sainty, an expert witness called by Rybolovlev’s attorneys, that Sotheby’s valuation was overestimated.

The Russian billionaire’s attorneys pointed to a line in Sotheby’s valuation that noted the piece was “radically altered by overpainting.” Sainty said in his testimony that the auction house failed to fully address how the painting’s condition would impact its financial value.

“It doesn’t explain the problem of conditions once restoration has it removed,” Sainty said.

Smith said that, even though the painting’s condition is flawed, the rarity of da Vinci’s works makes up for it.

“It’s such an unusual artwork,” Smith said, adding that the painting’s condition is not as much of a hindrance as it would be on artwork from other artists.

In addition to “Salvator Mundi,” Sotheby’s faces claims of aiding and abetting Bouvier in manipulating the prices for Rene Magritte’s “Le Domaine D’Arnheim” and Gustam Klimt’s “Wasserschlangen II” paintings after U.S. District Judge Jesse Furman, a Barack Obama appointee, dismissed the bulk of Rybolovlev’s suit.

Rybolovlev withdrew his claim with respect to Amedeo Modigliani’s limestone sculpture “Tête” on Friday.

Bouvier is not named as a defendant in the lawsuit, which was filed by Rybolovlev’s family trust Accent Delight International. But he has faced criminal charges in France, Monaco and Switzerland, though the last of these charges have been dismissed following a confidential settlement in Geneva.

Closing arguments in this case are set to take place Jan. 29.

Follow @NikaSchoonover

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