Sotheby’s Defeats Most of Russian Billionaire’s Fraud Suit

Sotheby’s won dismissal of most claims by a Russian billionaire who accused the auction house of helping to defraud him in the purchase of a world-class art collection featuring works by Pablo Picasso, Auguste Rodin, and Henri Matisse.

But Sotheby’s isn’t off the hook yet. U.S. District Judge Jesse Furman on Wednesday allowed two companies controlled by Dmitry Rybolovlev to pursue some claims in a lawsuit alleging that Sotheby’s helped Swiss art broker Yves Bouvier overcharge Rybolovlev for several art pieces, including Salvator Mundi, which is credited to Leonardo da Vinci.

“Judge Furman agreed with much of our description of the facts and the evidence and many of our legal arguments.” Daniel Kornstein, a lawyer for Rybolovlev’s companies said in an email. “Although he dismissed certain of plaintiffs’ claims on technical grounds, the important result is that we are looking forward to trial and presenting our evidence to the jury on the remaining claims, which are quite substantial.”

Despite the ruling, Kornstein said more than $150 million in potential damages may be at stake in the trial. Sotheby’s didn’t immediately respond to a call and email seeking comment on the ruling.

Rybolovlev’s 2018 lawsuit focused on 16 transactions, conducted from April 2011 to January 2015. Furman said many of the claims were filed too late. And most of the fraud claims were thrown out because the companies couldn’t show that Sotheby’s had actual knowledge of Bouvier’s alleged fraud.

But the judge allowed the suit to proceed over Rybolovlev’s claims that Sotheby’s aided Bouvier’s breach of fiduciary duty and fraud in the Salvatore Mundi sale, as well as aiding his fraud in the sales of Rene Magritte’s Le Domaine d’Arnheim and Gustav Klimt’s Wasserschlangen II, and the sale and auction of Amedeo Modigliani’s Tête.

Salvator Mundi was rediscovered after being thought to have been lost or destroyed in the 17th Century. Its attribution to da Vinci is questioned by some experts.

According to the suit, Rybolovlev spent about $2 billion on art between 2002 and 2014. But the tycoon subsequently discovered that Bouvier, whom he’d hired as an art adviser, had purchased the works himself before flipping them to Rybolovlev for millions or tens of millions of dollars more, far above the commission he should have been paid. The discovery spawned international litigation as well as criminal charges against Bouvier.

Bouvier has said that he wasn’t Rybolovlev’s agent, but bought the paintings on his own and resold them to the Russian businessman.

Rybolovlev sought $380 million plus unspecified punitive damages in his suit against Sotheby’s, which he said helped Bouvier acquire the art. Sotheby’s auctioned two of the works for Bouvier and provided him with valuations of five works.

Rybolovlev, who made his fortune from the sale of two fertilizer businesses in Russia, claimed Bouvier committed fraud and violated fiduciary duties as his broker by deceptively inflating the acquisition costs of the paintings. He has been engaging in court battles with Bouvier in courts across Europe as well as New York and Singapore.

The case is Accent Delight International Ltd. v. Sotheby’s, 18-cv-09011, US District Court, Southern District of New York (Manhattan).