On Tuesday (30 Jan), one of the longest-running and highest-stakes legal dramas in the fine art market finally came to a close: a ten-member jury cleared Sotheby's of aiding and abetting art fraud in a high-profile lawsuit brought by Russian oligarch Dmitry Rybolovlev.

The trial, which began in Manhattan federal court on 8 January, revolves around allegations that Sotheby's has helped, at least partially, a Swiss art agent bulked up valuations and withheld certain information to conceal large markups in famed pieces of art worth US$2 billion, including the US$450.3-million Salvator Mundi by Leonardo da Vinci. Rybolovlev aimed to seek US$377 million in damages from the auction house. 

Sotheby's said in a statement that the ruling reaffirms their long-standing commitment to upholding the highest standards of integrity, ethics, and professionalism, while highlighting the lack of clear and convincing evidence on the accusations. 

Rybolovlev's side, though losing the case, stated that they "achieved our goal of shining a light on the lack of transparency that plagues the art market."

Between 2002 and 2014, Rybolovlev hired Swiss businessman Yves Bouvier as an art broker to help acquire a US$2-billion world-class art collection comprising 38 masterpieces by the likes of Henri Matisse, Pablo Picasso, and other greats. 

What the Russian billionaire did not realize then was that all the while he had actually been buying art from his own art broker, who quietly bought the works himself for one price and charged them another price – millions or tens of millions of dollars higher. 

Having discovered in The New York Times the true price of a work he previously overpaid, since 2015 Rybolovlev has filed charges against Bouvier in jurisdictions across the globe, from Singapore and Hong Kong, to New York and Geneva. To a surprising twist, the two reached a private settlement last December after eight years of legal battles.

The Russian then turned his focus to Sotheby's, where one-third of the artworks Bouvier purchased for Rybolovlev were sourced from. He accused the auction house of conspiring with Bouvier on the sales of 15 artworks by altering valuations and provenance at the broker's request, but only four were admitted into the trial: Leonardo da Vinci’s Salvator Mundi, Rene Magritte’s Le Domaine d’Arnheim (1962), Gustav Klimt’s Wasserschlangen II (1907), and Amedeo Modigliani’s limestone sculpture Tête (1911-12).

In the case of Salvator Mundi, Samuel Valette, now Sotheby's Head of Private Sales in EMEA, met Bouvier and Rybolovlev at the latter's penthouse on Central Park West for an inspection of the masterpiece in March 2013. 

Weeks later, Bouvier told Rybolovlev that he was "fighting hard and taking as much time as needed" and that the seller had rejected offers of US$90 million, US$100 million, US$120 million, and US$125 million. The ideal number was US$127.5 million. "But these negotiations never happened", according to court papers. 

On 2 May 2013, Bouvier, but not Rybolovlev, purchased the da Vinci for US$83 million through Sotheby's private sales. The next day, he sold it to Rybolovlev for US$127.5 million, a difference of more than US$40 million. 

As for the Modigliani – which the Judge considered to be of stronger evidence of Sotheby's actual knowledge of the fraud – when preparing the provenance section for the auction of the piece in November 2014, Valette instructed an employee: "Maybe better to cover the tracks slightly and designate as: Property from a Private European Collection"; and the actual buyer was Bouvier. Ultimately, the sculpture’s provenance was listed only as "Acquired from the above."

The cases for the other artworks involved followed similar patterns. 

At the core of the trial was whether Sotheby's had knowledge of and "substantially assisted" Bouvier’s alleged deception. 

In the plaintiff's closing arguments, the attorney described the case as a pointillist painting, telling the jury, "All you see is the dots. You have to step back and connect those dots so you can see the whole picture. That is no small task given the magnitude of emails, contracts, and internal Sotheby’s handbooks and guidelines the jury was presented with, from both sides, multiple times."

Sotheby's side argued the reason why they were brought to the case was only that the Russian billionaire wanted someone to blame. They agreed, though, that Rybolovlev was defrauded – but only by Bouvier. 

The house's attorney added that it was unreasonable for such a successful businessman – who amassed a fortune worth between US$6.4 to 11.4 billion through the sale of his fertilizer company – to have forgone any due diligence and documentation of whom he was buying from during the twelve years acquiring art from Bouvier. 

Also, the principal-agent relationship between Bouvier and Rybolovlev was never formalized, and it remained one of the keys to the case: Bouvier has insisted that he had been operating not solely as an art advisor, but as an independent dealer, free to set his own profit margins; Rybolovlev, on the other hand, claimed that Bouvier presented himself as an advisor working for him to fetch the best price. 

Despite the favorable outcome for Sotheby's, much of its internal workings were unveiled during the trial, including rare information on the company's commission scheme. 

According to court papers, Bouvier spent roughly US$316 million on the four artworks through Sotheby's private sales; and the auction house made around US$19 million from those sales, with over US$979,000 going to Valette. 

Notably, during the years in question, from 2011 to 2014, the sales to Bouvier accounted for between 86 and 97 percent of Valette’s business.