"It's easy for [Bouvier and Rappo] to paint me as the stereotypical Russian oligarch," he says. But if he were so interested in hiding his assets from Elena, he says, why would he announce to the world that he had been the victim of a multibillion-dollar scam, in the process letting it be known how much his trusts had overpaid for each of his artworks?
The anecdote about Steve Cohen’s Modigliani comes straight out of the criminal complaint received on January 12, 2015 by Monaco’s Palais de Justice, and was confirmed by source close to the matter. While Bouvier may not be a household name in the U.S., the accusations and ensuing arrest reverberated across the European art market, where Bouvier runs a set of luxury warehouses across Geneva, Luxembourg, and Singapore where the world’s billionaires store their art, along with jewels, fine wines, and other luxury goods legally in tax-free zones.
At the restaurant Rappo, who speaks eloquent English as well as French, Russian, and her native Bulgarian, chain-smokes throughout the evening, and although she orders champagne, she scarcely touches it, preferring to talk, talk, and talk. Both her husband, a handsome, quiet man, and her lawyer, "Maître Michel," occasionally interrupt, telling her, "Tania, no, don't say that," but clearly Rappo is not a woman who is told what to do.
The police also arrested Tania Rappo, a charismatic Monaco socialite whom officers interrupted in the middle of a massage. Once a member of Rybolovlev's inner circle, Rappo and her husband Olivier, a retired dentist, had dined with the tycoon and his parents only days before. Now facing charges of money laundering, she would later tell me over dinner how the oligarch had plied her with drink as they chatted in his penthouse.
Creating and maintaining hundreds of LLCs to ostensibly do the same thing, like build hotels, condos, and homes, adds millions in bureaucratic overhead from payroll to tax filings. It wouldn’t be an issue if Trump ran a dozen corporations specializing in each vertical of his business, so having multiple companies under one umbrella is not at all unusual. Having so many doing the same things, however, is typically the same kind of warning sign for money laundering as being constantly told to recruit new salespeople is to pyramid schemes.
The Toulouse-Lautrec work, “Au Lit: Le Baiser,” consigned for sale at Sotheby’s in London in 2015, depicts two women embracing on a bed. The Swiss dealer who brought the work to Sotheby’s, Yves Bouvier, signed the standard paperwork surrounding such a sale, which requires the consignor to indicate he or she either owns the painting or is authorized to sell it. After the sale, he was given the proceeds.
The Chinese art market, where regulation is lax, is thought to be particularly prone to money laundering. "The [Chinese] art market has become more and more abnormal," Wang Shouzhi, dean of the Cheung Kong School of Art and Design at Shantou University, told the South China Morning Post in April. "It is saturated with business tricks, fake works and fake prices. … It has become a tool for corruption and money laundering."
Rybolovlev says he did not know what was going to happen to Rappo or Bouvier. "I didn't know the police would arrest them then," he says in answer to their accusations of a sting at Rybolovlev's apartment. The police had asked him to act normal, he claims, but "I needed vodka to get through it." Rappo, he says, was her usual, effervescent self, chattering about the beauty of the Rothko and pressuring Rybolovlev to buy it.
Scott has lectured and presented extensively regarding cybersecurity and corporate espionage at numerous conferences around the globe. He has recently overseen the development of several cell phone detection tools used to enforce a “no cell phone policy” in correctional, law enforcement, and secured government facilities. He is regularly interviewed for leading national publications, and major network television stations including Fox, Bloomberg, Good Morning America, CNN, CCTV, CNBC, & MSNBC. He is the author of "Hacked Again" and writes, "In a modern digital world no one is safe from being hacked, not even a renown cybersecurity expert."
Like most laundering cases involving art in the United States, this one was uncovered when the work was illegally transported into the country. In 2004 Mr. Ferreira’s financial empire, built partly on embezzled funds, collapsed, leaving $1 billion in debts. A court in São Paulo sentenced him in 2006 to 21 years in prison for bank fraud, tax evasion and money laundering, a conviction he is appealing. Before his arrest, however, more than $30 million of art owned by Mr. Ferreira and his wife, Márcia, was smuggled out of Brazil, Judge De Sanctis said.
The billionaire, who is only 48, has in his lifetime faced down murder attempts, a year's imprisonment in Russia, a divorce ("the world's most expensive") so nasty it involved the arrest of his now ex-wife, and now is embroiled in the art scandal of the year, in which he claims he was duped for well over $1 billion by intermediaries he trusted. This is the case that's riding towards trial in Monte Carlo and in which he's been accused of evidence manipulation. (He denies this.)
Bouvier is accused of fraud and complicity with money laundering along with an accomplice, Tania Rappo, and a third person who hasn’t been immediately identified according to Monaco General Prosecutor Jean-Pierre Dreno, who didn’t respond to Forbes’ requests for comment. The embattled Swiss is out on bail, set at €10 million and to be paid in three installments, and is ready for war.
Tetiana Bersheda warned me that I would find Tania Rappo "captivating." After I meet her in her lawyer's office, atop a creaking staircase in a building near the Fairmont Monte Carlo, and later at dinner, accompanied by her husband and her lawyer, at an outdoor French restaurant, I cannot deny it. Dressed casually in a black halter top, jeans, and heels—as well as big pearl earrings—Rappo looks far younger than her years. One of the first things she tells me—then repeats again and again—is that she and Bersheda never got along. Bersheda was always kept away from the art collection, and one senses how much the rivalry between these two women plays a role in the case.
For the collector who sees his 1961 Petrus not as something to drink but as an asset to hoard and potentially sell, Bouvier offered an invaluable service. Items could not only be stored behind the free port's seven-ton doors, surrounded by laser trip wires and vibration detectors, they could be shown to other collectors there and traded or sold without moving an inch—and taxed only if they left the free port. Perhaps the most attractive aspect of all is that such transactions could take place beyond the prying eyes of a district attorney or a private investigator tracking down assets in a divorce battle. (As a result, many in the art world worry about a tendency for free ports to become "art cemeteries." The world's largest free port, at Geneva Airport, is said to hold as much art as the Louvre.)
Last year, when she found out Elena had been arrested, she says she got nervous; she calls the event a turning point in her relationship with Dmitry. (If so, Rybolovlev says he didn't notice—Rappo still showed up for events he held.) The arrest had taken place during a visit to Cyprus, where Rybolovlev has considerable financial assets, including at one time a large stake in the country's biggest bank. Rappo says Rybolovlev told her, "There are three places in the world I can do whatever I want. One is Cyprus, one is Skorpios, and the other is Monaco." And she claims he had Elena arrested—even though she spent only a short while in custody—to scare her into dropping her lawsuits (filed in several countries) in pursuit of her ex-husband's money.
The data also shows payments to talent agencies, in London and California. The Laundromat was used to book artists on tours of Russia. They include the Florida rock band the Red Jumpsuit Apparatus and Israeli singer-songwriter Yoav. Both played in Moscow and St Petersburg in the autumn of 2013. There is no suggestion the artists were aware of the scheme.
The debate about anonymity in the art world has intensified over the past year, fed in part by the release of the so-called Panama Papers, which detailed the use of corporate veils to conceal ownership, dodge taxes and enable crime, its authors say. Now various expert groups, like the Basel Institute, are coming forward with ways for dealers and auction houses to curb secrecy and combat money laundering. In a significant change, Christie’s said last week it has strengthened its policy in recent months and now requires agents looking to sell a work through the auction house to tell it the name of the owner they represent.
Once purchased, the art can disappear from view for years, even decades. A lot of the art bought at auctions goes to freeports – ultra-secure warehouses for the collections of millionaires and billionaires, ranging from Picassos and gold to vintage Ferraris and fine wine. The freeports, which exist in Switzerland, Luxembourg and Singapore, offer a variety of tax advantages because the goods stored in them are technically in transit. The Economist magazine reported that the freeport near the Geneva airport alone is thought to hold $100-billion (U.S.) of art.
We empirically analyze the illicit trade in cultural property and antiques, taking advantage of different reporting incentives between source and destination countries. We generate a measure of illicit trafficking in these goods by comparing imports recorded in United States' customs data and the (purportedly identical) trade recorded by customs authorities in exporting countries. This reporting gap is highly correlated with corruption levels of exporting countries. This correlation is stronger for artifact-rich countries. As a placebo test, we do not observe any such pattern for US imports of toys. We report similar results for four other Western country markets. (JEL F14, K42, Z11, Z13)
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But what we’re seeing is a pattern of Trump in the midst of wealthy foreigners engaged in money laundering schemes that center around real estate, and not bothering to vet any of them before doing business. Furthermore, there’s also the fact that he proudly claims to be the owner of more than 500 companies with very complex finances, which is a massive red flag in this context.
Morland came out to find most of his profits had been lost. His old friends shunned him and the family firm went bust. So for the next thirty years he became a professional yachtsman-smuggler, plying his trade across the Mediterranean, shifting tons of hash, mixing with everyone from Berber tribesmen to gangland heavies, and alternating between periods of sudden wealth and bleak incarceration. In 1980, 1990 and again in 2000, he was caught and jailed for long terms. Now in his early eighties, he lives in “pretty good poverty” and teaches pottery. This is his amazing story.
In regards to the critical issue of the source of the funds, the AML Guidelines “encourage” art businesses “to decline payments from a third party who is not their client and buyer of record. If there are legitimate reasons why it is justified for the Art Business to accept payment from a third party, before doing so the Art Business should conduct enhanced due diligence on both their buyer of record and the third party payer[.]” The AML Guidelines also articulate a “preference” for art businesses only “to accept payments from reputable banks in jurisdictions subject to AML regulation and supervision. Such reputable banks and financial institutions are generally subject to a high degree of AML regulation. That said[,] Art Businesses should remain vigilent and not rely entirely on the fact that banks and financial institutions will have carried out the necessary checks and verification to be satisfied that the source of funds is clean.”