A jury in a civil trial in New York decided in favor of Sotheby’s on Tuesday, rejecting a Russian oligarch’s claim that the auction house had helped a Swiss dealer who he said defrauded him out of tens of millions of dollars in high-end art sales.
The oligarch, Dmitry Rybolovlev, had accused Sotheby’s of being in on a plot in which, he said, the dealer Yves Bouvier posed as an art adviser negotiating sales on Rybolovlev’s behalf when, in reality, he was secretly acting as an art dealer, buying works at Sotheby’s before flipping them to his client. In the resales, Bouvier at times increased the prices by tens of millions of dollars.
But the 10-person federal jury sided with Sotheby’s, which said that it was unaware of any scheme and that all of its executives’ efforts were focused on selling art at as high a price as possible to the buyer, whom they believed to be Bouvier. Whatever the dealer did with the art after he bought it was none of the auction house’s business, the Sotheby’s lawyers had argued.
If anyone were to blame for buying overpriced art, it was Rybolovlev himself, according to Sotheby’s lawyers, who said the Russian businessman was at fault for not protecting himself against the dealer’s actions.
Sotheby’s reacted to the verdict in a statement that said the jury’s decision had reaffirmed the auction house’s commitment to the highest standards of integrity, ethics and professionalism. “Throughout the trial,” the statement said, “there was a glaring lack of evidence presented by the plaintiff.”
The jury sitting in the U.S. District Court for the Southern District of New York came to its decision on the first day of deliberations. The panel had heard nearly three weeks of testimony by Sotheby’s executives and other prominent art world figures in a trial that provided a rare glimpse into the inner, often secretive functioning of the art trade.
The trial also offered the sight of a Russian oligarch testifying from the stand in an American courtroom, though the parties agreed beforehand that Rybolovlev would not be identified by the “oligarch” term during the proceedings.
Daniel J. Kornstein, a lawyer for Rybolovlev, said in a statement that despite the jury’s verdict, the lawsuit had achieved its goal, which was to shed light “on the lack of transparency that plagues the art market.”
“That secrecy,” the statement continued, “made it difficult to prove a complex aiding and abetting fraud case.”
Rybolovlev, a Russian businessman who made his fortune in potash fertilizer after the collapse of the Soviet Union, spent $2 billion between 2002 and 2014 building an impressive collection of some 38 artworks with the assistance of Bouvier. A dozen of the works were bought by Bouvier through Sotheby’s, and the trial focused on the transactions involving four: paintings by Gustav Klimt, Leonardo da Vinci and René Magritte, and a sculpture by Amedeo Modigliani. The jury rejected Rybolovlev’s claims on all of them.
The relationship between the two men broke down after Rybolovlev’s chance encounter with another art adviser in St. Barts in 2014, in which he discovered the first gleanings that he may have overpaid for the art by about $1 billion compared with the prices Bouvier had paid for them himself.
Bouvier has long denied any wrongdoing. He was not a defendant, and he has long insisted that he was clear that he was operating not solely as an adviser but as an independent dealer who was free to charge his client what he wanted.
He has conceded making up phantom negotiations with fictional sellers that he reported to Rybolovlev to support the prices the Russian was paying for the artworks. He defended the strategy as a legitimate business practice in the art world.
Rybolovlev has pursued Bouvier in legal actions in Europe and Asia since 2015, but they have not led to the sanctions he sought. Rybolovlev and Bouvier reached a confidential settlement late last year, and the Geneva prosecutor’s office said it was closing its case against Bouvier after Rybolovlev’s lawyers withdrew a criminal complaint there.
That left the civil case in New York against Sotheby’s. Even though his claims ultimately failed, the trial gave Rybolovlev a platform to further air his grievances against Bouvier over several days of detailed testimony.
Rybolovlev said Sotheby’s had helped Bouvier because he had become a valuable client whose business had brought the company lucrative commissions.
Rybolovlev’s lawyers said, for example, that Sotheby’s had created inflated valuations for the artworks that served to conceal Bouvier’s markups.
Sotheby’s argued that Rybolovlev had unreasonably relied on what Bouvier was telling him without putting the terms of their relationship in writing or asking for any documents as proof of the prices Bouvier said he was paying to acquire the art for him.
“Mr. Rybolovlev, are you familiar with the term ‘the buck stops here’?” Marcus Asner, a lawyer for Sotheby’s, asked on the stand.
Lawyers for Rybolovlev focused on the role played in the sales by Samuel Valette, a Sotheby’s expert who dealt with Bouvier in the transactions. Valette’s mind-set — what he knew or did not know in his dealings with Bouvier about his intentions to resell works to Rybolovlev and at what prices — was at the heart of the trial.
“Together, Valette and Sotheby’s helped plunder many millions of dollars from the plaintiff,” said Kornstein, Rybolovlev’s lawyer.
The evidence showed, Kornstein said, that “Sotheby’s was in on it.”
And so the trial heard how in 2013, in his effort to sell the da Vinci, a depiction of Christ known as “Salvator Mundi,” Valette took the painting to a Central Park West apartment owned by Rybolovlev. Bouvier and Rybolovlev viewed the artwork there, which Rybolovlev’s lawyers said was evidence that Sotheby’s knew he was the true final buyer.
Bouvier purchased the da Vinci for $83 million, only to sell it a day later to Rybolovlev for $127.5 million.
Two years later, Valette provided an insurance valuation for the da Vinci that he sent to Rybolovlev’s lawyer, increasing its estimated worth despite the initial reservations of another Sotheby’s expert, and deleting a reference to Bouvier’s earlier acquisition of the artwork. Rybolovlev’s lawyers argued this was evidence that Sotheby’s was helping Bouvier conceal a scheme.
But Valette testified that, though he recognized Rybolovlev at the apartment, he had no idea Bouvier was buying on anyone else’s behalf, and said that he only issued a valuation after it had been agreed upon by other Sotheby’s specialists.
Rybolovlev later sold the work for $450 million, the highest price ever paid for a painting at auction.
In the case of another artwork, “Tête,” a sculpture by Modigliani, Valette had told Bouvier in a 2012 email that the sculpture was worth at least €70 million to €90 million, “perhaps even more.” Less than 12 hours later, after talking to Bouvier, he revised that estimate to €80 million to €100 million, and Bouvier forwarded the new valuation to Rybolovlev’s aides. Bouvier acquired the statue through Sotheby’s for €31.5 million and months later sold it to Rybolovlev for twice that amount.
Valette said he had changed the valuation after Bouvier had asked him to be more precise, that he was disappointed himself by the amount Bouvier ended up paying, and that he had known nothing about the later sale.
