The New York attorney general’s office said it had found evidence that at least 10 clients were involved in an alleged tax fraud scheme led by Sotheby’s.
The investigation, which began in 2020, initially centered around a private collector who obtained a fake resale certificate. Now, AGO claims that the condition of this collector was not exceptional.
The fake resale certificate allowed the anonymous individual from the initial investigation to pose as a fraud as an art dealer. Doing so may have allowed the collector to avoid paying millions of dollars in sales tax revenue.
The new allegations were announced in a Manhattan court on Wednesday by a lawyer working for the government agency, according to A Report From Law 360.
Related Articles
This complaint relates to a 2018 lawsuit in which Sotheby was accused of state tax fraud on $27 million in artwork purchased through a Porsal Equities offshore account. The original complaint claimed that the auction house’s employees knew the client was a private collector purchasing the artwork for his personal possessions. Under New York City law, only dealers who plan to resell artwork are eligible for city and state sales tax exemptions.
Assistant Attorney General Derek Borchardt said at a hearing Wednesday that his office uncovered multiple fraudulent uses of resale certificates. Sotheby’s allegedly distributed resale certificates to customers who explicitly stated that the art would be present in their residences after purchase. According to Borchardt, the enforcement agency plans to fire a total of 12 clients.
The auction house said it should not be held liable for the misuse of resale certificates handed out by low-ranking employees.
Sotheby’s has previously argued that the AGO did not adequately undertake any violations of tax law and sought to dismiss the case. Last September, a judge dismissed the house’s attempt to dismiss the complaint, saying there was sufficient probable evidence that senior Sotheby’s employees “willfully turned a blind eye” to the fraudulent distribution of resale certificates. The appeals court confirmed the judge’s decision in April.
Sotheby’s did not respond to a request for comment.
[ad_2]
