In fact Trump named Wilbur Ross, the former vice-chairman of the Bank of Cyprus, as his commerce secretary. That bank was involved in deals involving Putin’s inner circle in 2015, and incidentally, Rybolovlev had a 9.9% stake in the bank until 2013, after which he divested for undisclosed reasons. It’s very possible that Ross actually has no role in any of this as former employees say he actually drove Russian oligarchs from the bank over his tenure, and the offshores were only used for a failed bid to build a casino.
And Sater was far from the only person with shady connections doing business with Trump. In 2008, oligarch and fertilizer magnate Dmitry Rybolovlev bought a Trump property for double what it was worth, which can be a classic money laundering technique meant to bake payments or bribes into what looks like a real estate deal. It seems hard to believe that Rybolovlev would think that a $41 million property more than doubled in value in less than a year.
Regardless of whether this provision ultimately is enacted, the underlying issue will persist. This post discusses some of the general concerns that the art and antiquities world can be misused as a conduit for dirty money. We then discuss the AML Standards for Art Market Operators proposed by the Basel Institute on Governance, and similar standards set forth by the Responsible Art Market, both of which attempt to set forth a framework for those in the business of trading art to mitigate their money laundering risks.…
Rybolovlev, meanwhile, was only getting richer. In 2007 Uralkali floated on the London Stock Exchange and became the most successful Russian IPO ever. Less than a year later the Putin regime—which is notoriously antagonistic toward Russian oligarchs living abroad, particularly ones whose fortunes derive from buying post-Soviet assets on the cheap—summoned him to a meeting in Moscow,
Well, they are. In 2014, Texas business man Phillip Rivkin was charged with 68 counts of fraud after using millions of dollars worth of photographs to launder money. He had made over $78 million through fraudulent schemes involving his biodiesel production companies—which didn’t actually produce any biodiesel. Rivkin spent roughly $16 million dollars on 2,200 fine art photographs by artists like Edward Steichen, Alfred Stieglitz, and Edward Weston. Works included Edward Weston’s Dunes, Oceano, a gelatin silver print that Rivkin purchased from Sotheby’s for $134,500 and another vintage gelatin silver contact print by Alfred Stieglitz, From the Shelton, West. Rivkin wired Camera Lucida, the seller of the photograph, $150,000 to purchase it.
At the same time, Trump partnered with a real estate developer called Bayrock, founded by Soviet-born Tevfik Ariv who set up office in Trump Tower. In 1999, Russian-born former gangster implicated in a Wall Street pump-and-dump scheme and money laundering, Felix Sater, joined Bayrock and would become a top Trump adviser. Sater claimed they would talk often, with him pitching ideas on a regular basis. By 2005, the duo is trying yet again to build a hotel in Moscow to no avail.
The Wolf of Wall Street was a hit when it was released in 2013. Moviegoers all over the world loved the story of excessive wealth and greed. But most people didn’t know that the movie was partially funded by a money-laundering scheme involving famous works of art. Malaysian Prime Minister, Najib Razak, had siphoned part of a $1 billion fortune from the Malaysian sovereign wealth fund into American assets, such as real estate and paintings by Basquiat, Rothko, and Van Gogh.
The problem isn’t their argument that seller’s should reveal themselves. It’s the slapdash evidence and flawed logic they use. The story’s biggest problem begins with the lede where it is argued that real estate sellers are transparent. Several graphs deeper in the story it is revealed that real estate transactions that are on a par with major art transactions are, in fact, not transparent. How do we know that? Because the Times tells us about a pilot program that requires transparency. Here’s the opening graph:
Buried treasure, mysterious deaths, looting, forged documents, secretive Swiss bank vaults and shadowy intermediaries. This is not a description of a Dan Brown thriller. It’s real life: the trade in illegally exported antiquities. As prices soar into the millions of dollars for the top pieces, so does the incentive to dig up treasures in Italy, Greece, Turkey and farther afield, pass them to “runners” who will sneak them illegally across borders, store them in a Swiss vault and then quietly slip them into the trade. The players in this murky world can make a fortune, but this is a dangerous game.
The Art Business should examine the client’s background and purpose behind the contemplated transaction. For example, are the artworks being sold by the client consistent with what is known about the client’s collection? Is the level at which the client is selling or buying consistent with their past transactions and what is known about their professional activities and personal wealth? If not, the Art Business may want to ask the client for further information.