Scandal Exposes Massive Fraud in Art Market

Scandal Exposes Massive Fraud in Art Market

Scandal Exposes Massive Fraud in Art Market

A scandal unfolding in the art market in Monaco and Singapore could shed light on the workings of the global market in multimillion-dollar art and possible manipulations by dealers.

The case involves Swiss businessman and art dealer Yves Bouvier, who operates giant storage centers in Switzerland, Luxembourg and Singapore that hold billions of dollars worth of art. Bouvier was arrested in Monaco in February as part of a fraud investigation, according to CNBC. The focus of the case focus is several works purchased by Russian billionaire Dmitry Rybolovlev. Rybolovlev claims Bouvier inflated or misrepresented prices by millions of dollars. A Singapore court has frozen Bouvier’s assets.

Forbes reports that one of the pieces Rybolovlev bought was a Modigliani sold by hedge-fund billionaire Steve Cohen. Bouvier acted as the dealer for Rybolovlev’s purchase. He paid $118 million. Rybolovlev later learned from Cohen’s art adviser that he had sold the painting to Bouvier for $93.5 million. Reports say the case also involves works by da Vinci, Picasso, and Gauguin. Lawyers and art dealers say the case could expand to reach the top galleries and billionaire collectors in New York, London and Hong Kong, and could also involve tax fraud, global money laundering, and possible bribery, according to CNBC.

Bouvier is a major figure in the high-end art market because of his holdings in storage facilities known as freeports. Freeports, maximum-security storage facilities, are often located near airports. Expensive valuables can be stored in these duty-free zones. No customs duty is owed when art is brought into a freeport and no sales taxes applies to a sale inside a freeport, CNBC explains. Taxes and duties could amount to millions for major works of art.

Many collectors say they welcome a case that could illuminate the multibillion-dollar market that remains largely unregulated and offers little disclosure, according to CNBC. “Collectors have no way of knowing what pieces are really being bought or sold for,” said one collector. “Maybe this case will break that open.”



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