Bonhams and Christie’s were also forced to pull smaller objects from their March sales this year, after they were alleged to have passed through the hands of two notorious antiquities smugglers, Giacomo Medici and Gianfranco Becchina. Both had been convicted of trafficking in looted objects, for which Medici was sentenced to 10 years in prison and paid a 10m euro fine – the largest ever imposed for such a crime by Italian prosecutors. Polaroid photos of an immense cache of objects in his Swiss warehouse apparently identified a second or first century BC jug offered for £4,000-£6,000 ($6,700-$10,000) at Christie’s, and a third century pottery pyxis (cosmetic pot) offered for £3,000-£5,000 ($5,000-$8,400) at Bonhams. Earlier this year, the US government seized a $4m (£2.4m) ancient Roman statue in a New York warehouse – it too had passed through Becchina’s hands.
Around the same time, a lawsuit against Sater and Bayrock is gaining steam, accusing the two key Trump partners in evading taxes on $250 million through various real estate projects the trio would work on. Officially, Sater is no longer an advisor to Trump and says the two just sporadically kept in touch, although in 2016 he would max out contributions to Trump’s presidential campaign and praise him in American and Russian media.
Though there are no hard statistics on the amount of laundered money invested in art, law enforcements officials and scholars agree they are seeing more of it. The Basel Institute on Governance, a nonprofit research organization in Switzerland — the site of the world’s premier contemporary and Modern art show — warned last year of the high volume of illegal and suspicious transactions involving art. But regulation has been scattershot and difficult to coordinate internationally.
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.
The theory is that both sides would have something to gain. For Russian oligarchs and mobsters, there’s a need to launder money. “Generally speaking, the patterns of activity that we thought might be suggestive of money laundering were, you know, fast turnover deals and deals where there seemed to have been efforts to disguise the identity of the buyer,” Simpson told the committee in November. Trump, meanwhile, was in need of liquidity, because many banks were unwilling to do business with him after a corporate bankruptcy, and Russian buyers could provide quick infusions of cash. In other cases, the Trump Organization has appeared to have gone out of its way to avoid doing due diligence on business partners.
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These offshore companies can cross borders, invest and transfer cash between each other, and after creating a frustrating enough web of transfers and exchanges, as many of them as vague and anonymous as possible mid-transit, they can invest in money-making ventures. Over time, they build small empires in their target destinations, which for Russians are often Switzerland and the UK, particularly London. But that’s fairly basic. The real pros are a lot sneakier than that, using charitable organizations and nonprofits as their identity shields.
Mr. Ellis serves as Director of Business Development and Marketing of AML RightSource. He has over 15 years of experience in business development, marketing, and professional consulting within the healthcare and financial services industries. Mr. Ellis earned his undergraduate degree from Bowling Green State University and obtained his juris doctor from Cleveland State University – Cleveland-Marshall College of Law.
However, probably the most dramatic case of looted antiquities concerns the notorious £100m ($167m) Sevso treasure, a magnificent cache of late Roman silver dating from the fourth or fifth Century AD and comprising inlaid platters, ewers and bowls, which was unearthed in the 1970s, almost certainly in Hungary. The finder, a Hungarian soldier, was later found hanged in a cellar, and two of his friends died in unexplained circumstances. The silver – contained in a giant copper cauldron which he had buried in the cellar – had disappeared.
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The wealthy figured this out in a big way back in the 1980s, giving rise to ‘art stars’ valued in the millions. And with the increasing popularity and geographical scope of biennials and art fairs in the 1990s, rich people all over the world now have access to seas of multi-million dollar investments that can be rolled up and stored just about anywhere.
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.
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Most of these industries have checks. Real estate titles and deeds at least require a name. Mortgage brokers, stockbrokers, casinos, banks and Western Union must report suspicious financial activity to the federal Financial Crimes Enforcement Network. Banks must report all transactions of $10,000 or more. Altogether, the network logs more than 15 million currency transactions each year that can be used to track dirty money, said Steve Hudak, a spokesman for the agency. The art market lacks these safeguards. Roll up a canvas and it is easy to stash or move between countries; prices can be raised or lowered by millions of dollars in a heartbeat; and the names of buyers and sellers tend to be guarded zealously, leaving law enforcement to guess who was involved, where the money came from and whether the price was suspicious.
But while Simpson saw disturbing patterns, he was unable to nail anything down, because he couldn’t get the relevant records from banks and other financial institutions. Schiff posed an interesting question: Simpson didn’t have subpoena power, but the committee did. Who should it subpoena if it wanted to learn more? Simpson laid out a roadmap for Schiff:
Two of the transactions specifically singled out in the complaint are the Modigliani and Leonardo Da Vinci’s Salvator Mundi painted around 1500. While Bouvier is accused of illegally pocketing nearly $25 million on Steve Cohen’s Modigliani, with the Da Vinci—which he’s accused of buying for $75 to $80 million before flipping it to Rybolovlev for $127.5 million including fees—he’s said to have personally received as much as $52.5 million. “I’ve never been a broker,” Bouvier defended himself, “my company was the seller […] and the alleged commissions are not commissions but administrative costs,” he says, adding that in ten years, he’d only spoken to Rybolovlev “five times directly […] he was never a friend.”
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.
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