Notoriously opaque and unregulated, the art market is susceptible to manias, booms and busts, according to Roubini. "While art looks as if it is all about beauty, as a business it is full of shady stuff," said economist Nouriel Roubini, speaking at the World Economic Forum in Davos, Switzerland last year. Bouvier has denied any wrongdoing and remains free on bail. He says his 2 percent commission simply covered his administrative costs and was never intended to serve as his total compensation. In the interview with Bloomberg Business, Bouvier counters that he was a private "seller" of the paintings - not a broker - and therefore he was entitled to capital gains. In court filings, Rybolovlev claims Bouvier was his trusted advisor and broker, who received a 2 percent commission for negotiating the deals, and was not otherwise entitled to extra proceeds. Rybolovlev's representatives contend that Bouvier milked his behind-the-scenes deals to manipulate his client, and they claim his sensational profits are proof of illegal activity. These maximum-security facilities have become popular places for tax-avoidant collectors to stash artworks, lending a well-placed observer such as Bouvier a valuable perspective on what pieces are quietly entering and exiting the market and which owners might be motivated to sell. He runs a business that operates luxury warehouses in "free ports" in Switzerland, Singapore and Luxemburg, at which art and antiquities can be safely stored for investment purposes and traded without taxation. In this regard, Bouvier occupies a prime position. The art market tends to reward well-positioned players who can capitalize on privileged, nonpublic insights. Several other deals also reportedly resulted in comparable, eye-popping payouts. Previously, Bouvier made more than $25 million on a Modigliani, which he bought for $93.5 million in a private sale in 2014 and promptly sold to Rybolovlev's family trust for $118 million, according to published reports. He acquired the Rothko through an intermediary for $80 million plus commission, after persuading Rybolovlev to pay $180 million for the piece - netting a potential profit of nearly $100 million until the police intervened, according to figures cited by Bloomberg. "He said he would be able to get a better price if people didn't know the acquisition was being made by a trust related to a Russian billionaire." (See "The Billionaire, the Dealer, and the $186 Million Rothko," by Stephanie Baker and Hugo Miller, Bloomberg Business, April 27, 2015.)īouvier allegedly used offshore companies to acquire and sell artwork in a series of blind sales and kept his client in the dark about the details, including the extent of his markups. "He made us believe that we were acquiring the paintings directly from the owners and paying him a commission," Tetiana Bersheda, a lawyer representing the Russian collector, Rybolovlev, told Bloomberg Business. (SeeĪrt: A market laid bare, by Cynthia O'Murchu, Financial Times, April 7, 2015.) Bouvier has been accused of fraudulently inflating the prices of the paintings and pocketing millions in illicit profits. "I was ambushed and put in a gulag," Bouvier complained to the Financial Times, after Monaco's Public Prosecution Department indicted him for criminal charges of fraud and complicity in money laundering. Yet instead of being congratulated and handed a glass of Champagne for closing the deal, Bouvier was handed over to the Monaco authorities and arrested. In February 2015, Bouvier traveled to his client's home in Monte Carlo, expecting to add a new conquest to that list: a Mark Rothko painting known as "No 6 (Violet, Green and Red)" that his client had reportedly agreed to acquire for 140 million euros (around $180 million). Over the past decade, as prices in the international art market soared to record-setting heights, Swiss art dealer Yves Bouvier helped assemble what he described in the Financial Times as "the most beautiful collection of the third millennium." Controlled by a private trust of a Russian oligarch, Dmitry Rybolovlev, the collection has been estimated to be worth $2 billion and includes works from old masters like Leonardo da Vinci plus well-known modernists such as Magritte and Modigliani. Here are details on how fraud examiners can detect and investigate crimes in this murky corner of creative commerce and why circumstances are often in the fraudster's favor. The opaque and unregulated global art market is vulnerable to forgeries, tax fraud, insurance fraud and money laundering.
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