A U.S. federal judge in New York ruled that Sotheby's auction house must face claims of fraud in an ongoing dispute between Russian billionaire Dmitry Rybolovlev and Swiss art dealer Yves Bouvier.
Bouvier, who was Rybolovlev’s art agent from 2003 to 2014, allegedly defrauded his client out of $1 billion by inflating the price of 38 works he arranged for Rybolovlev to purchase. For the past seven years, Rybolovlev has pursued charges against the dealer in numerous court cases across the globe, with litigation still ongoing. Rybolovlev has an estimated net worth of $6.6 billion, according to Forbes, largely from his involvement in the fertilizer industry.
In October 2018, Rybolovlev also filed a lawsuit against Sotheby’s through his companies Accent Delight International Ltd and Xitrans Finance Ltd, alleging the auction house provided Bouvier with inflated appraisals and helped him overcharge Rybolovlev on 16 works of art.
In a ruling made public yesterday (March 1), U.S. District Judge Jesse Furman dismissed Rybolovlev’s claims of fraud regarding 11 works, including pieces by Pablo Picasso, Auguste Rodin and Henri Matisse, stating the claims were either filed too late or unable to prove Sotheby’s knowledge of the alleged fraud conducted by Bouvier. However, Furman declared that Sotheby’s must face allegations for four remaining works.
One of these works is Salvator Mundi, which has been attributed to Leonardo da Vinci. Rybolovlev purchased the painting from Bouvier in 2013 for $127.5 million, despite Bouvier reportedly having bought the work for only $75 million. Rybolovlev will also be allowed to pursue fraud charges against Sotheby’s for its role in the transaction of pieces by Gustav Klimt, Amedeo Modigliani and Rene Magritte, according to court filings.
Will Sotheby’s go to trial?
“Sotheby’s will continue to defend this case vigorously and looks forward to prevailing on the remainder of the case at trial,” the auction house said in a statement.
However, Furman suggested that the two parties attempt to settle the issue themselves. “The Court is of the view that the parties should try to settle this case without the need for a trial that would be expensive, risky, and potentially embarrassing to both sides,” read the decision.
This isn’t the only lawsuit Sotheby’s is involved in for allegedly questionable behavior concerning its clients. In November 2020, New York’s Attorney General Letitia James sued the auction house and claimed it defrauding the state by helping an art collector avoid paying taxes on $27 million worth of artwork.
Sotheby’s was accused of facilitating the creation and use of resale certificates, a tax exemption document, for a client identified by the Wall Street Journal as Venezuelan shipping executive Isaac Sultan. James alleged that the auction house was aware the collector was not actually purchasing artwork for resale, but for personal purposes.
While Sotheby’s has denied the allegations, its motion to dismiss the claims was denied in 2020 and the case is still ongoing.
