Sotheby’s must face Russian billionaire’s lawsuit over art fraud – U.S. judge

By Jonathan Stempel

NEW YORK (Reuters) – A federal judge in New York rejected Sotheby’s bid to dismiss a $380 million lawsuit where Russian billionaire Dmitry Rybolovlev accused the auction house of helping his longtime art dealer’s scheme to overcharge him on dozens of masterworks.

U.S. District Judge Jesse Furman said Sotheby’s failed to establish that the case did not belong in his court because Rybolovlev was already litigating in Switzerland, where much of the key evidence and many witnesses were located, and that principles of international comity justified dismissal.

Furman found no showing that New York was “genuinely inconvenient” and Switzerland was “significantly preferable,” saying the New York case had made more progress and Sotheby’s might save money by defending itself in its home forum.

Sotheby’s has called Rybolovlev’s claims against it baseless. Lawyers for the auction house were not immediately available for comment. A lawyer for Rybolovlev had no immediate comment.

The case is part of a multi-year effort by Rybolovlev, 52, to recoup alleged losses he has blamed on the art dealer, Yves Bouvier, who has denied wrongdoing. Litigation has also ensued in France, Monaco and Singapore.

Rybolovlev, through his companies Accent Delight International Ltd and Xitrans Finance Ltd, accused Bouvier of overcharging him by more than $1 billion on 38 artworks, for which he paid in excess of $2 billion between 2003 and 2015.

According to the New York complaint, Sotheby’s had a hand in 14 of the transactions, and had been “the willing auction house that knowingly and intentionally made the fraud possible” because it knew how much Bouvier was paying the sellers.

The complaint said the artworks included paintings by Amedeo Modigliani, Gustav Klimt and Leonardo da Vinci for which he paid a combined $429.3 million from 2011 to 2013.

Rybolovlev sold the da Vinci, “Salvator Mundi,” for $450.3 million at Christie’s in 2017, making it the most expensive painting ever sold.

Forbes magazine on Tuesday estimated Rybolovlev’s fortune at $6.8 billion, mainly from his 2010 sale of Russian fertilizer producer Uralkali.

Sotheby’s agreed last week to be acquired by French-Israeli telecommunications magnate Patrick Drahi for $3.7 billion.

The case is Accent Delight International Ltd et al v Sotheby’s et al, U.S. District Court, Southern District of New York, No. 18-09011.

(Reporting by Jonathan Stempel in New York; Editing by Lisa Shumaker)