Sotheby’s and Rybolovlev’s attorneys paint contrasting footage of culpability in fraud trial’s closing arguments

Precisely three weeks after the civil fraud trial between Sotheby’s and the Russian billionaire Dmitry Rybolovlev kicked off in a Manhattan courtroom, the attorneys for either side delivered their closing arguments right this moment (29 January). The 2 summations, which clocked in at round two and a half hours apiece, advised two largely totally different tales concerning the details of the case and the culpability of its varied characters. Which one will win out, nonetheless, stays an open query for at the least yet one more night time.

The day’s proceedings introduced the protagonists on this drama close to the tip of a protracted, winding highway. Between 2003 and 2014, Rybolovlev paid roughly $2bn to accumulate 38 artworks by way of the Swiss businessman Yves Bouvier. (The precise purchaser in all instances was certainly one of two offshore trusts, Accent Delight Worldwide and Xitrans Finance , technically the 2 plaintiffs within the current lawsuit.) Over time, nonetheless, Rybolovlev discovered that Bouvier, whom the Russian thought he had contracted to behave as an agent on his behalf, had as a substitute acquired and resold these works to his trusts at markups he alleges complete greater than $1bn.

Amongst these 38 works have been 13 that Bouvier purchased in non-public transactions with Sotheby’s. Pretrial rulings winnowed Rybolovlev’s case in opposition to the home down to simply 4 works. Probably the most distinguished of those is the Salvator Mundi (round 1500), controversially reattributed to Leonardo da Vinci, adopted by Gustav Klimt’s 1907 canvas Wasserschlangen II (Water serpents II), Rene Magritte’s Le Domaine d’Arnheim (1938) and the Amedeo Modigliani sculpture Tête (Head).

After pursuing civil and felony fees in opposition to Bouvier in territories starting from Switzerland and Monaco to Hong Kong and Singapore, Rybolovlev settled all issues with Bouvier in all jurisdictions in December 2023. This resolution leaves the civil trial in opposition to Sotheby’s as maybe Rybolovlev’s remaining likelihood for compensation—and right this moment’s proceedings as his attorneys’ remaining likelihood to persuade the jury to award it to him. (Bouvier has maintained from the beginning that Rybolovlev knew him to be appearing as a supplier free to set his personal costs; he has by no means been convicted of any crime wherever.)

‘In on the con’

Zoe Salzman, who dealt with the closing argument for Rybolovlev’s facet, primarily formed her summation round two prongs. The primary was that Samuel Valette, Sotheby’s worldwide chairman of personal gross sales and Bouvier’s major level of contact on the public sale home, was “in on the con” allegedly perpetrated in opposition to the Russian; the second was that Sotheby’s senior management repeatedly regarded the opposite approach in regard to Valette’s purportedly illicit dealings with Bouvier, exactly as a result of these dealings had turn into too profitable for the public sale home to danger slowing down or snuffing out by way of significant oversight.

To this second level, Salzman stated: “They [Sotheby’s] had quite a lot of insurance policies on the books, however they didn’t do something to implement them.” Specifically, she portrayed the home’s appraisal standards—a frequent level of competition all through the case, particularly within the case of the Salvator Mundi—as functioning much less like significant inside rules and “extra like non-obligatory pointers”.

This allegation echoed Rybolovlev’s competition that what led him to damage was the opacity of the artwork market, with Sotheby’s as one of many chief obfuscators. Salzman referred to as again to her consumer’s testimony relating to why he filed this criticism in opposition to the public sale home within the first place: “It’s not solely a matter of cash. It’s necessary for the artwork market to be extra clear, as a result of as I’ve already talked about, when the most important firm on this trade [Sotheby’s] is concerned in actions of this type, shoppers don’t stand an opportunity.”

Salzman additionally break up a number of of the present and former Sotheby’s workers who testified within the case into three classes: those that have been principally sincere professionals doing their jobs honourably, akin to co-chair of Outdated Masters Alexander Bell and former head of valuations Franka Haiderer; these whose worst alleged misdeed was to avoid any info that would constrain the home’s earnings, akin to former chief government William Ruprecht and former chief working officer Bruno Vinciguerra; and in a category of his personal, Valette, who she portrayed as having been “in Bouvier’s pocket” for years.

But in the long run, Salzman argued, the distinctions between these teams have been primarily irrelevant. It was the duty of Sotheby’s, as a worldwide company, to implement inside rules that will justify its sterling popularity within the artwork market, in addition to to watch its workers to make sure these rules have been adopted in all its departments and places of work worldwide. In her telling, the proof confirmed this didn’t occur, whether or not it got here to assessments of honest market worth for the Magritte and Modigliani works, the authenticity and situation of Salvator Mundi or Valette’s function because the “key consumer supervisor” assigned to Rybolovlev.

“Sotheby’s sells belief. You’ll be able to’t blame Mr. Rybolovlev for purchasing it,” she stated to the jury, including that this was exactly what Sotheby’s attorneys have been making an attempt to influence them to do. As a substitute, she proposed another.

“It’s time so that you can inform Sotheby’s that large firms are nonetheless accountable underneath the regulation,” she stated, including in conclusion: “The buck stops now. The buck stops with Sotheby’s.”

‘Bouvier will not be right here’

After a lunch break, it got here time for Marcus Asner, Sotheby’s lead counsel, to make his remaining attraction to the jury. Moderately than instantly contesting the plaintiff’s case, he started on some extent of convergence between the 2 sides.

“There’s one factor we agree about: Bouvier lied to Mr. Rybolovlev repeatedly,” Asner stated. “If there’s a fraud right here,” he added, “that’s the place it was.”

“However Bouvier will not be right here,” he continued, referring to the truth that Bouvier was not a celebration to the lawsuit. As a substitute, Asner alleged, Rybolovlev had determined to sue Sotheby’s in an try and “make someone else pay for what occurred to him”.

Then the lawyer pivoted to a struggle footing. He portrayed Salzman’s closing argument many times as “mud thrown on the wall” to distract from the basic problems with the case, which he largely distilled into two factors.

First, he argued, there was “zero proof that Sotheby’s knew something about Bouvier’s lies”. The public sale home was conscious from the beginning that Bouvier was a supplier, partly as a result of he had carried out scores of transactions with Sotheby’s over time. This meant that Valette and others at all times knew that any info they despatched to Bouvier may very well be utilized in his subsequent efforts to flip works to another person.

However there was nothing mistaken with that, Asner argued; it’s merely how markets work, together with the marketplace for artwork. Simply as necessary, Sotheby’s made no cash in anyway from Bouvier’s resales, whether or not the tip consumer was Rybolovlev or anybody else. This gave the home no incentive to help him in artificially inflating his personal resale costs.

In truth, Valette testified that, in his first transaction with Bouvier, the latter was “very clear” that the sale contract must be drawn up with Blancaflor Investments, one of many firms Bouvier used to purchase artwork (together with among the works he would later resell to Rybolovlev), which “was shopping for this work as a principal”—that’s, an finish purchaser—quite than as an middleman. This turned the association at any time when Bouvier did enterprise with Sotheby’s thereafter.

This level additionally led to one of many harder-hitting moments of Asner’s summation: Rybolovlev acquired 23 artworks from Bouvier earlier than Sotheby’s was ever concerned, suggesting that Bouvier didn’t, in reality, want any help from the public sale home in convincing Rybolovlev to pay his costs. This concept undercut the plaintiff’s competition that it was Sotheby’s, and Sotheby’s alone, that enabled Bouvier’s markups.

The second pillar of Asner’s closing argument revolved round a authorized idea referred to as “cheap reliance”, which successfully asks whether or not it was cheap for a celebration alleging fraud (on this case, Rybolovlev) to have trusted the accused fraudster (Bouvier) in mild of the accessible proof. Asner argued that, right here, it was not—and because it was not cheap for Rybolovlev to have trusted Bouvier within the first place, then from a authorized standpoint, no fraud truly occurred, clearing Sotheby’s of even the potential for wrongdoing.

“These usually are not kids,” Asner stated of Rybolovlev and Mikhail Sazonov, who led Rybolovlev’s household trusts for greater than 15 years, earlier than placing bulleted lists of the 2 males’s in depth academic and enterprise credentials onscreen for the jury. As a substitute, he continued, they’re “subtle businessmen” who “surrounded themselves with attorneys and accountants at each flip”, besides when it got here to doing almost all of their offers with Bouvier. (Notably, Rybolovlev enlisted a significant Swiss regulation agency to execute gross sales contracts for the primary 4 works he acquired by way of Bouvier however then stopped.)

To additional help this level, Asner returned to testimony by Sazonov through which he recalled that Bouvier had advised him and Rybolovlev that each different middleman within the artwork market was crooked; solely Bouvier may very well be trusted. Sazonov and Rybolovlev’s actions counsel they took this grandiose assertion at face worth. Each males admitted on the witness stand that they by no means requested to see any gross sales contracts with the sellers of the works acquired by Accent Delight and Xitrans, and Rybolovlev by no means checked to see if Sazonov had certainly executed a contract with Bouvier to behave as his agent. No less than, not till after he had spent $2bn.

Asner reached the summit of this strategy when he referred to as again to the negotiations for the Salvator Mundi. At one level, Bouvier proposed a technique to deflate the portray’s worth and “break the morale” of the sellers by falsely claiming his then-unidentified Russian consumer was not . Rybolovlev didn’t cease Bouvier from utilizing this tactic, casting doubt on the previous’s competition on the witness stand that he sued Sotheby’s partly to shine a light-weight on the artwork market’s darkish dealings.

By participating on this ruse, Asner argued, Rybolovlev and Sazonov destroyed any declare to cheap reliance they could have had: “They’re enjoying with a con man, they know they’re enjoying with a con man and so they acquired conned.”

We are going to quickly discover out whether or not the six jurors agree. Tomorrow (30 January), Decide Jesse Furman will instruct them concerning the parameters of their pending resolution earlier than sending them off to deliberate in non-public. The artwork commerce will anxiously await their verdict.