Trump’s $125 million asking price for the so-called House of Friendship should’ve scared off any potential buyers, never mind get an offer at $95 million for a house in which the owner would never set foot and tear it down while doing absolutely nothing with it for eight years. Would he not get suspicious about the Russian billionaire wildly overspending on real estate?

But his suspicion was not triggered until Bouvier came to Rybolovlev in 2013 and 2014 to shop two paintings, first Salvator Mundi, a recently discovered Leonardo for which he wanted $127 million, and then No. 6 (Violet, Green and Red), a prized Rothko for which he requested $140 million. Rybolovlev told Bouvier that the family trusts would pay for the Rothko only in installments while Bouvier sold other works, including a Modigliani sculpture Rybolovlev had owned since 2012. Bouvier seemed to have trouble finding a buyer for the Modigliani—or "anything!" Rybolovlev says.

Most of the billions vanished into a twilight world of offshore companies. The scheme cleverly mingled fake transactions with real ones. Some of it was spent on luxury items: furs, diamonds, Swiss watches, German industrial equipment, fashionable children’s clothes, plus hotel suites in Alpine ski resorts used by Russian oligarchs. It also went to a pro-Kremlin thinktank in Poland.
But Scotland Yard were onto him, and he was arrested while awaiting delivery of large importation. He skipped bail and fled abroad, fitted out a wooden ketch, loaded it with a ton-and-a-half of cannabis resin and crossed the Atlantic, using a sextant and dead reckoning. He eventually sailed up the Hudson and unloaded to a New York distributor, only to be caught in chase through the streets of Manhattan and sentenced to six years in a penitentiary.
The Russian investigation into Laundromat has been cursory. One investigator admitted his probe into RZB had stalled. Two FSB agents visited their counterparts in Moldova and collected documents. There are suspicions the FSB’s real goal was merely to find out how much investigators knew. In March, Moldova complained that in recent months Russian agents had been harassing Moldovan diplomats arriving in Russia.

The Italian and other governments are becoming far more aggressive in seeking the repatriation of looted antiquities. Italy in particular waged a long legal battle against Getty curator of antiquities, Marion True, for acquiring illicitly exported pieces, although the case finally exhausted the statute of limitations. And in recent years numerous American museums – including the Metropolitan Museum of Art in New York, Boston’s Museum of Fine Art and the Getty in Los Angeles – have been forced to return looted antiquities to their host countries. These include the famed Etruscan Euphronios krater (wine bowl) dating from 515 BC and which was bought by the Met in 1972 for $1.2m. It turned out that this had also been handled by Medici, and the museum gave it back to Italy in 2006. Just this month, the Getty said it was returning a 12th-century Byzantine illuminated New Testament to the Greek Dionysiou monastery – from which it had disappeared more than 50 years ago.
The AML Standards for Art Market Operators (“AML Standards”) are set forth by the Basel Institute on Governance, an independent not-for-profit organization.  Not surprisingly, the AML Standards adopt a “risk based” approach to establishing measures to mitigate money laundering risks, and further note that “[s]mall businesses may not have the resources to address money-laundering risks in the same way that large auction houses or major dealers and galleries will have, and may have a different risk exposure.”  The AML Standards are intended to apply to everone trading in art objects, and intermediaries between buyers and sellers.  They also suggest that service industries supprting the trade in art objects that are already subject to AML laws, like financial institutions, should identify their clients and customers in the art trade “as higher risk as long as there are no internationally applicable standards.”
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.
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.
Rybolovlev ultimately invited me to La Belle Epoque because he has a story to tell, or rather explain. For the last year he has been at the center of the most astonishing scandal in the art world in years, an alleged billion-dollar fraud that has dealers, artists, and collectors sweating. At stake may be not just the money of an angry and very powerful man intent on recouping his losses but the thing the art world values more than anything: the freedom to operate in darkness.
You always have to be a step ahead of them. Most of them you could pay off, but some you couldn't. I was cocky. I would show off in their faces sometimes. It was stupidity, but I saw the news of my smuggling in the papers and I liked it, it showed them I could still do it even though they were after me. Also I'd travel on fake passports and change my appearance. Instead of blue eyes I'd change them to brown with contacts, I'd dye my hair blonde... all those corny tricks. At that time they worked.
In this light Trump’s sprawling empire with deep ties to corrupt Russians looks less like a thriving real estate business, but something a bit more nefarious. Deniability was so built into the way he operated that his lawyers didn’t want him signing his own financial disclosures. The Donald’s Sergeant Schultz cavalier approach to business and political conflicts of interest mirror Russian oligarchs. In 2015, as Trump began to eat up air time on American political talk shows in the same way that a starving man eats his first meal in days, Putin may have sensed an opportunity…
But his suspicion was not triggered until Bouvier came to Rybolovlev in 2013 and 2014 to shop two paintings, first Salvator Mundi, a recently discovered Leonardo for which he wanted $127 million, and then No. 6 (Violet, Green and Red), a prized Rothko for which he requested $140 million. Rybolovlev told Bouvier that the family trusts would pay for the Rothko only in installments while Bouvier sold other works, including a Modigliani sculpture Rybolovlev had owned since 2012. Bouvier seemed to have trouble finding a buyer for the Modigliani—or "anything!" Rybolovlev says.

You always have to be a step ahead of them. Most of them you could pay off, but some you couldn't. I was cocky. I would show off in their faces sometimes. It was stupidity, but I saw the news of my smuggling in the papers and I liked it, it showed them I could still do it even though they were after me. Also I'd travel on fake passports and change my appearance. Instead of blue eyes I'd change them to brown with contacts, I'd dye my hair blonde... all those corny tricks. At that time they worked.


In March 2014, Bonhams withdrew a 2,000-year old Assyrian stele estimated at £600,000-£800,000  ($1m-$1.3m) and which was slated for auction on 3 April. The broken stone slab depicting a praying king – and containing a curse in cuneiform which would fall on anyone removing it from its site – was suspected of being looted from eastern Syria at an unknown date. The top half of the slab has been in the British Museum since the late 19th Century. Bonhams says that its piece was withdrawn for “further study”.
Their money leaves Russia to be laundered, usually through Cyprus and then on to the British Virgin Islands, where offshore companies are set up, often owned by offshore trusts based in places such as Gibraltar. Thoroughly washed, it arrives in London to be invested in the property market, with Russians often prepared to pay well above the odds for a prestigious property.
Initially, the oligarchs used intelligence officers as their personal security guards but Vladimir Putin flipped the system when he came to power in 2000, so that the intelligence services now controlled the oligarchs. The men who had made their fortunes through the privatisation of Russia’s infrastructure and natural resources now faced a choice – to share their cash with Putin’s circle or face the consequences.
Still swirling around the market are persistent rumours that there is even more to the treasure than the known 14 pieces. Archaeologists claim that such finds always include spoons and coins, which were missing when the pieces started coming onto the market. Many believe they are still languishing in Swiss bank vaults, with the owner(s) waiting for the provenance issues to be cleared up entirely. It is to be ardently hoped that one day the whole hoard, in all its magnificence, will be returned to Hungary to be displayed together once again.

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And then Rybolovlev found out about a New York Times article he had missed from months earlier reporting that the Leonardo he had purchased for $127.5 million had been sold not long before for only $75 million to $80 million. The piece also stated that many experts thought the work had been done by an assistant in Leonardo's studio, not the artist himself.

On April 2nd, the New Directions in Anti-Kleptocracy Forum, organized by the Harriman Institute at Columbia University, will identify emerging issue areas relating to kleptocracy. I am excited to be serving as a co-panelist on the forum’s Art Market as a Node of Kleptocracy panel, which will discuss beneficial ownership and the luxury art market. Money Laundering Watch recently addressed the relationship between art and money laundering, a topic of growing interest.

Further, and as noted, other traditional vehicles for laundering money have become less attractive, thereby driving those who need a mechanism to launder large sums into the arms of the art world.  As we repeatedly have blogged, one of the most time-honored and relatively convenient vehicles for laundering — real estate — is under intense scrutiny and now is subject in the U.S. to the Financial Crimes Enforcement Network (“FinCEN”)’s ongoing Geographic Targeting Orders (these require U.S. title insurance companies in many parts of the U.S. to identify the natural persons behind legal entities used in purchases of residential real estate involving $300,000 or more and performed without a bank loan or similar form of external financing).
Finally, he also failed to vet his partner in Trump Scion hotel opening soon in Dallas, who has deep ties in money laundering from Kazakhstan and Russia, and opened two offshores in Cyprus in 2008, which, again, is the favorite destination for Russian oligarchs’ exported cash. (The Scion deal ultimately fell apart due to public opposition to the project.)
It was, but things changed later when I went to the Jos Plateau in Nigeria. I saw these incredible Nok terracotta heads that they bury in the graves for their ancestors. They were potentially million-dollar pieces and I was there to buy them. But then I met the people-the Jos Plateau is very cold at night so we sat around campfires-and they hardly had anything to eat, yet they sit up all night to protect their ancestor's culture from vultures who want to come and dig and steal and kill to get the terracottas. That touches your heart. You can't deal with those things. You don't want to have people dying for art. It was all just a game, but then I was on top of that hill and suddenly confronted with reality. If that doesn't change you, you aren't a human being.

Of course, beyond AML-related process concerns, any art dealer — just like any business person — always must remember that just about any financial transaction that involves proceeds known to have originated from illegal activity represents a criminal money laundering offense.  Stated otherwise, even if the BSA is not expanded to include dealers in art and antiquities, those in the U.S. art industry still need to bear in mind, in extreme examples, the omnipresent federal criminal code.  Sometimes, the provenance of the funds can be more critical than the provenance of the art.
Of course that’s why money laundering exists. One of the simplest ways to do it is to create a web of offshore companies strategically located in countries that don’t ask a lot of questions about where the money came from, but are just happy to take their cut. Many are the usual suspects in the Caribbean, but other favorites include the Seychelles, Cook Islands — which are now being called the Crook Islands by the natives thanks to their sudden surge in popularity as an offshore destination — and of course, Cyprus, which is heavily favored by Russians.
Oh fuck yes! Look, I'm not a conspiracy theorist, but the art market is a billion-dollar industry. If it [smuggling] is not tolerated on certain levels, the banks would never reach their peaks. I had people on my payroll at customs... it was barely even necessary to smuggle because you could bring it in almost officially so long as you pay a little bit to the right people.
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 Italian and other governments are becoming far more aggressive in seeking the repatriation of looted antiquities. Italy in particular waged a long legal battle against Getty curator of antiquities, Marion True, for acquiring illicitly exported pieces, although the case finally exhausted the statute of limitations. And in recent years numerous American museums – including the Metropolitan Museum of Art in New York, Boston’s Museum of Fine Art and the Getty in Los Angeles – have been forced to return looted antiquities to their host countries. These include the famed Etruscan Euphronios krater (wine bowl) dating from 515 BC and which was bought by the Met in 1972 for $1.2m. It turned out that this had also been handled by Medici, and the museum gave it back to Italy in 2006. Just this month, the Getty said it was returning a 12th-century Byzantine illuminated New Testament to the Greek Dionysiou monastery – from which it had disappeared more than 50 years ago.

Rybolovlev's suspicion lingered, which is why when Sandy Heller mentioned the Modigliani in St. Bart's a month later, Rybolovlev asked him how much he had sold it for, something he ordinarily might have been reluctant to ask. (He says Bouvier asked that their transactions be kept confidential for fear that combining art dealing with art storage would be seen as a conflict of interest, a practice the art dealer Larry Gagosian has indeed criticized.) As he sat there stunned in the Eden Rock din- ing room, he says, realizing how much he had overpaid, his first reaction was, "I wanted to call Tania and ask her, 'Do you know what Yves is doing?' "
While pretty much all art could be scandalized, some are more susceptible to scheming than others. Digital artist Daniel Temkin points out that digital art, which doesn’t need to be shipped or stored because it has no physical manifestation, is particularly ripe for your risky business. To make it easy for you, Temkin has created an "online auction house, offering net art by internationally renowned artists and their impersonators" called NetVVorth. The art experiment/tongue-in-cheek criminal resource hosts a series of counterfeit works created by legitimate net artists. “The collection is offered to expose net art as a viable investment to serious collectors by establishing a shadow market, proving its ability to hide illicit profits and transfer them easily around the globe. All works are supplied with provenance papers. All sales are in Bitcoin. The true counterfeiter is identified only to the owner of the piece.” The collection includes roughly 35 works. Pick your favorite. (And if you hate digital art, like most collectors, you can always hire an art consultant who can help you pick out some “reeeeeal” art.)
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