He soon joined Ekaterina and Elena in Geneva. However, in their new home, despite their vast wealth, the Rybolovlevs were isolated. Although Elena eventually learned to speak fluent French, her husband "was always distracted by business. I couldn't clear my mind," he says. One of the first friends they made was Tania Rappo, the wife of their dentist, who happened to mention that his wife spoke Russian. (Rappo comes from Bulgaria, where the language is spoken by about a third of the population.)
If you think that it would be a major oversight to allow people to create plausible deniability just by setting up enough legal entities with limited liability between themselves and their partners, you would be correct. It’s actually illegal under the FCPA, or the Foreign Corrupt Practices Act, which requires basic due diligence prior to making any deals with foreign citizens or in other nations. Domestically, RICO (Racketeer Influenced and Corrupt Organizations Act) goes after opaque arrangements that hide crimes like tax evasion and money laundering to create plausible deniability.
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There is no comparable entity in the art market. But were the same type of program instituted in the art market, it would only require that the auction house, dealer or lawyer know the beneficial owner and be able to reveal that information to federal authorities. It would not require the other side of the transaction to learn the seller (or buyer’s) identity.
“Russia had no institutional instruments for regulating this new commercial environment. The courts didn’t function. They didn’t know what dispute resolution in business actually was. And so everyone engaging in the new commerce had to employ their own security force in order to ensure the integrity of their business contracts. These guys were called privatised law enforcement agencies by sociologists but they are quite simply the Mafia,” he says.
Art Businesses should also consider the form of the transaction, such as whether the transaction is taking place through intermediaries, face to face, entirely via the Internet, over the phone, or by any other similar non face to face means. In some circumstances, depending on the nature, value and/or geographic location of the transaction, enhanced due diligence may be appropriate.

Her tale begins, naturally, with a call at four in the morning from Elena in 2008. "Crying like you cannot imagine, she said, 'Can you please come?' I say, 'Is somebody dead?' She says, 'No, but please come.' So at four I wake up, I get my car, I go to the hotel." There Elena tells her that by accident she came across documents on Dmitry's computer containing the passport information of various guests visiting the Rybolovlev yacht, including many "girls" and Dmitry's mistress at the time. This, Rappo says, was the event that triggered the divorce—Elena filed within weeks. (Inciden- tally, aside from advising Elena to consult a lawyer, Rappo denies hastening the breakup. "I tried for about two years to put them together," she says. It was Dmitry who made reconciliation impossible, she claims: "From the very beginning he said, 'Tell her she will have nothing.' ")

He needed to be bailed out by his father in the 1970s, and then again in the 1980s to stave off bankruptcy. He ended up bankrupting multiple companies anyway and trying to hold banks hostage to forgive many of his debts after the Taj Mahal and Plaza Hotel were in dire straits. In 1995, his one year losses exceeded $916 million. Many of his businesses crashed and burned, and according to his ghost writer for The Art of the Deal, much of his business savvy was little more than bluster.
In the shady world of art, private transactions are amongst the most opaque, which is exactly what this case is about. Bouvier, who takes credit in having built Rybolovlev’s collection into “one of the finest in the world,” admits to having worked with the oligarch for ten years, having sold him forty “major works,” reportedly from artists including Picasso, Gauguin, Degas, and even a controversial Da Vinci. Specifically, Rybolovlev’s family trust (which controls his collection) claims Bouvier defrauded them by taking a broker’s commission of 2% while charging an illegal, and hyperbolic, markup, using offshore companies to disguise his interventions.
The story came to a partial resolution last month, when the Hungarian government announced that it had acquired seven of the 14 pieces from the heirs of Peter Wilson for  €15m (£12.4m). As for the Northampton part of the cache, its fate remains mysterious: Lord Northampton divorced his fifth wife in 2012 with a secret settlement said to be worth £17m: it is not known if she received part of the hoard in the deal.
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.
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.
The cringeworthy part of the story is when the Times trots out the continuing battle between Yves Bouvier and Dimitry Rybolovlev to suggest malfeasance because Mr. Bouvier was allowed to sell a work for Mr. Rybolovlev but not pass the money through to his client. The joke here is that Rybolovlev, a Russian who lives in Monaco and banks in Cyprus while engaging is massive art deals and, separately, massive real estate deals, is a guy with the kind of profile that pops red flags in KYC reviews for more detailed review.
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.
Francis Morland was one of Britain’s most talented young artists, a contemporary of David Hockney and Peter Blake and a leading member of the 1960s “New Generation” movement. At the same time he lived an even more remarkable secret life as the biggest drug trafficker in the UK. He stuffed his abstract sculptures full of Lebanese cannabis to ship to the lucrative American market, moved yachtloads of Moroccan hashish to Europe, and years before Howard Marks, became the country’s first recognised drug baron.

Russian oligarch Dmitry Rybolovlev had decided to send off a tough 2014 in New York City. The Monaco-based billionaire had been in the headlines for all the wrong reasons after a Swiss judge awarded his ex-wife Elena $4.5 billion in their seven-year divorce battle. An avid art collector, Rybolovlev decided to spend New Year’s Eve with Sandy Heller, Steve Cohen’s well-known art adviser. As they exchanged war stories, one particular tale made his jaw drop: it was about a beautiful Nude by Italian artist Amadeo Modigliani that Cohen sold for a juicy $93.5 million to a mystery buyer. What Heller didn’t know was that behind the veil of anonymity stood Rybolovlev, fuming internally on that December 31. Rybolovlev had paid his trusted friend and art broker Yves Bouvier $118 million for the piece, more than $22 million above what he just found out the market value should've been, including the fee. Not one to sit around, the oligarch went for the jugular, filing a criminal complaint in the Principality of Monaco for fraud and money laundering only nine days later. In what promises to be the biggest art scandal of 2015, Bouvier was ambushed by eight police officers who took him into custody this February, tricked by Rybolovlev himself as they were set to discuss payment terms for a masterpiece by Mark Rothko. He’s currently out on bail.
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.

There are no accepted estimates on the amounts of money laundered through the art market, although the general belief is that it is enormous and expanding as regulations on other asset classes, from real estate to foreign exchange, tighten up everywhere. The International Monetary Fund estimated that "the amount available for laundering through the financial system" was worth 2.7 per cent of global gross domestic product in 2009 or $1.6-trillion (U.S.).
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— The United Nations Office on Drugs and Crime estimates the amount of illicit money that is laundered each year to be between “2 - 5% of global GDP, or $800 billion - $2 trillion in current US dollars.” The difficulty of knowing exact figures accounts for the huge margin within estimates. The UN’s estimates specifically cite “Mega-Byte” as an issue, defining the term as “money in the form of symbols on computer screens the can move anywhere in the world with speed and ease.”

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.)
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.

According to former art consultant Beth Fiore, people don’t normally buy art with cash in the US; “Cash payments for art happen in Russia [and the] Middle East” more often. So if you’re keeping your fortune under your mattress and don’t live in either of those places, you’ll need to get your money into a bank account without alerting the authorities. One way to do that is by smurfing. Despite the mental image of a blue cartoon character riding a surfboard that you may have conjured, smurfing means depositing money into a bank account or several bank accounts by breaking it up in to many small amounts that are deposited at different times, by different people. US banks must report any deposits over $10,000 to the IRS, so in order to stay sneaky, you’ll need to make a series of deposits that are less than that amount. You can hire “smurfs” to help you, who are often ordinary people willing to make an extra buck by opening up a joint bank account in their name, that you or your company has access to, and depositing money into it every day.
"To put the mother of your two children in prison just not to give her money—what kind of person is that?" Rappo says. "This is the style of Mr. Rybolovlev, and that's exactly what happened to us. He wants to humiliate people and put such stress on them that they give up." (Rybolovlev brushes all this off and says Elena cannot stand to hear Tania Rappo's name.) I put it to Rappo: Why would Rybolovlev target her and Bouvier if not for the money he says they owe him?
Former Russian presidential placeholder, and current prime minister, Dmitry Medvedev could teach a master class in how these advanced schemes work. Using non-profits and LLCs run by his friends from law school, he was able to secure three massive compounds in Russia, a pair of yachts, run a secret mega-farm, an exclusive vineyard, turn an 18th century palace in his hometown of St. Petersburg into ultra-luxury condos, acquire a pair of yachts, and buy a castle and wine-making operation in Tuscany.
I'm trying to think of the creative way to do this. I mean, as you may know, you know, most of these transactions are cleared through New York. And the other sort of central place for information is SWIFT in Brussels. But I would go for the clearing banks in New York that cleared the transactions, you know. And there's—again, it's these sort of intermediary entities that have no real interest in protecting the information, and all you have to do is ask for it and they just sort of produced by rote. So we've done a lot of money laundering investigations where we go to the trust companies and the clearing entities. And so, you know, all dollar transactions are generally cleared through New York. So, you know, the main thing you have to do is identify the banks that were used.

The room is oval and intimate. He sits in an armchair, back to flung-open French doors, the yacht-filled harbor of La Condamine beyond. Curiously, since Rybolovlev is the owner of one of the world's most valuable art collections, not a single work of art is on view. However, books, mainly on business and soccer, line the shelves. When I point out one by Donald Trump, he laughs. "I've never read it," he says. "It was put there by the Candy brothers." I sit on the sofa close to Bersheda, who is going to translate. Rybolovlev's trust in the glamorous, brainy 31-year-old lawyer is obvious. They met six years ago in Geneva, where she worked for a law firm that he had retained. He asked her to work for him and she refused, but subsequently she set up her own firm, of which he is now a major client. She and I met last summer at Art Basel, where she gauged whether he should talk to me.


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.”
Sotheby’s declined to comment on whether it believed Mr. Bouvier to be the owner. But it says it knew him very well as a customer and that he had represented to them that he had the legal right to sell the property. As to its policy of learning the identity of ultimate owners, Sotheby’s said it takes a risk-based approach — sometimes requiring disclosure depending on the specific facts and circumstances of each situation.
Tucked behind Kensington Palace and protected by armed police at checkpoints on either end is the street known as Billionaire’s Row, the most expensive in London and perhaps the world. A private road owned by the Crown Estates, traffic is light and slow here, and a prohibition on photography is enforced by the private security guards who watch over every other house.
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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,

We empirically analyze the illicit trade in cultural property and antiques, taking advantage of different reporting incentives between source and destination countries. We thus generate a measure of illicit trafficking in these goods based on the difference between imports recorded in United States' customs data and the (purportedly identical) trade as recorded by customs authorities in exporting countries. We find that this reporting gap is highly correlated with the corruption level of the exporting country as measured by commonly used survey-based indicies, and that this correlation is stronger for artifact-rich countries. As a placebo test, we do not observe any such pattern for U.S. imports of toys from these same exporters. We report similar results for four other Western country markets. Our analysis provides a useful framework for studying trade in illicit goods. Further, our results provide empirical confirmation that survey-based corruption indicies are informative, as they are correlated with an objective measure of illicit activity.


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.

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.
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"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?

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.
Keep in mind that Kislyak is the same Russian ambassador who routinely met with numerous members of Trump’s campaign throughout 2016, discussing sanctions, Syria, and Crimea. If Trump really didn’t know what was going on, why is his son-in-law meeting with a bank that has spent years trying to avoid sanctions for laundering money for Putin’s inner circle and controlled by the Russian President himself? If we believe he was that oblivious, Trump’s ignorance of his own business operations would beggar belief.
Of all the questions surrounding Trump and Russia, the question of whether the Kremlin could have laundered money through the Trump Organization in order to blackmail Trump has not often held the spotlight, obscured behind more direct connections, like discussions between Russian officials and Trump campaign officials like Donald Trump Jr. or George Papadapoulos, or more lurid ones from the Trump dossier.
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.

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.
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Open a foreign bank account in a tax haven like Switzerland or the Cayman Islands. Banks in these countries are not required by law to hand over information about your account to anyone without your consent. If you open what's called a “numbered account” in a private Swiss bank like Union Bank of Switzerland or Credit Suisse Group, a number or code name will be associated with the account, rather than your name. To open a numbered account, you will most likely need to travel to Switzerland to do it, though if this is impossible, there are firms that help people set up off-shore bank accounts that can help you. You will most likely need to make an initial deposit of at least $100,000 to open the account, which will cost roughly $300 a year to maintain.
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