Sotheby’s must face Russian billionaire oligarch’s art fraud lawsuit

By Jonathan Stempel

NEW YORK (Reuters) – A U.S. judge said Sotheby’s must face part of Russian billionaire oligarch Dmitry Rybolovlev’s lawsuit accusing the auction house of helping his former art dealer overcharge him by hundreds of millions of dollars on 15 pieces of world-class art.

In a 76-page decision on Wednesday, U.S. District Judge Jesse Furman said Sotheby’s must face fraud-related claims related to “Salvator Mundi,” a depiction of Christ attributed to Leonardo da Vinci, and works by Gustav Klimt, Rene Magritte and Amedeo Modigliani.

Furman also let Rybolovlev pursue an aiding and abetting claim over “Salvator Mundi,” while dismissing fraud-based claims over works by Pablo Picasso, Auguste Rodin, Henri de Toulouse-Lautrec and others.

The Manhattan judge also encouraged a settlement, saying a trial “would be expensive, risky, and potentially embarrassing to both sides.”

Since 2015, Rybolovlev, 56, has litigated in New York, France, Monaco, Singapore and Switzerland over disputes with Yves Bouvier, an art dealer who helped him buy 38 artworks for about $2 billion over 12 years.

Rybolovlev said Bouvier charged hidden markups that led to more than $1 billion of overcharges, and Sotheby’s knowingly advanced the fraud on artworks it handled. He sued through his companies Accent Delight International and Xitrans Finance.

Sotheby’s said it had no knowledge of fraud. It also said that for most transactions it did not give Bouvier “substantial assistance,” and Rybolovlev sued too late.

In allowing the “Salvator Mundi” claims, Furman cited evidence that Sotheby’s knew Bouvier bought the painting for Rybolovlev, and its client manager worked with Bouvier to “adjust its valuation–over the objection of Sotheby’s own Old Masters expert.”

Rybolovlev eventually sold “Salvator Mundi” at Christie’s in 2017 for $450.3 million, a record price for a painting.

Sotheby’s and its lawyers did not immediately respond to requests for comment. Rybolovlev’s lawyer Dan Kornstein said: “We are looking forward to trial.”

Bouvier is not a defendant and has denied wrongdoing. A Swiss court last year reinstated a criminal investigation of him, following a request from Rybolovlev.

Forbes magazine estimates Rybolovlev’s fortune at $6.6 billion, mainly from Russian fertilizer producer Uralkali.

The case is Accent Delight International Ltd et al v Sotheby’s et al, U.S. District Court, Southern District of New York, No. 18-09011.

(Reporting by Jonathan Stempel in New York; Editing by David Gregorio)