The NY federal Agents are after Galleries, Private Art Dealers, and Clients for FRAUD

 

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Dennis Koslowski, former head of Tyco, one of the biggest crooks of all time gets caught in former NYC art sting

The Manhattan District Attorney’s Office has recently embarked on another of its periodic investigations into galleries and private art dealers—and their clients—in connection with possible violations of New York State and City sales tax regulations.

The last time the DA’s Office launched a similar large-scale effort in this area was in 2003. Many prominent galleries and art dealers were ensnared in that investigation, which resulted in numerous felony pleas and over $26 million in fines and tax restitution. To give you a sense of the penalties assessed, according to published reports at the time, Berry-Hill Galleries paid $750,000 in fines; Otto Naumann Ltd. paid $500,000; Bob P. Haboldt & Co. paid $400,000; the Chinese Porcelain Company paid $275,000; Art Advisory Services, Inc. paid $250,000; Macklowe Gallery paid $95,000; and S.J. Shrubsole paid $75,000, to name just a few. All apparently pled guilty to felonies.

There is no indication that the DA’s Office is going to be any less aggressive this time around. In fact, given the super-heated art market and the prominent role of some newly minted global players, the DA may even be looking to cast a wider net in its current investigations.

That’s good news for the City’s coffers (and some defense lawyers), but certainly not encouraging for those caught in the DA’s crosshairs. It is important to note, however, that in the past not all sales tax investigations resulted in either a fine or a criminal conviction

 

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