An alleged effort by Sotheby's to help wealthy art collectors avoid paying sales tax on purchases for their homes was "far more extensive and serious than previously known," New York's attorney general said.
The state's 2020 lawsuit against Sotheby's for allegedly helping a wealthy shipping executive use a false resale certificate to dodge taxes has expanded to include seven additional collectors and numerous Sotheby's employees from across the organization, including its tax department, New York Attorney General Letitia James said Friday in a filing in Manhattan.
Documents that were recently handed over to state investigators during the litigation revealed that the alleged tax dodge by the shipping executive was "only the tip of the iceberg," James said in the filing.
James is seeking court permission to conduct almost two dozen more depositions of people involved in the alleged practice, including a Missouri art gallery owner who allegedly used resale certificates improperly to buy untaxed jewelry from Sotheby's for his wife, and a New York-based interior designer who deployed the practice to avoid taxes on jewelry and a handbag he bought from Sotheby's for Mother's Day gifts. James is also seeking to depose Sotheby's employees who signed off on the paperwork.
None of the clients are identified in the court filing and none are named as defendants in the suit. According to the filing, James's team is still trying to identify the Sotheby's employee who filled in the business description line on a resale certificate to falsely state: "I am in the business of art dealer and principally sell art work."
Neither Sotheby's media office nor the company's lawyer immediately responded to messages seeking comment on the weekend. Sotheby's has previously denied wrongdoing in the matter.
Fishing expedition
Sotheby's
"Once the Court ordered Sotheby's to produce them, they in fact showed that Sotheby's misconduct was far more extensive and serious than previously known," the attorney general said in a footnote of her filing.
According to the filing, the other clients involved in the alleged scheme include a former Sotheby's employee who is married to a then-senior employee in its contemporary art department; a real estate developer and private art collector who created a special-purpose vehicle that had an account at Sotheby's; the owner of a commercial printing company and a private collector of Judaica and Tiffany lamps who "improperly used the printing company's resale certificate to avoid sales tax" on Sotheby's purchases; and an art dealer with a home in Miami who used resale certificates improperly to avoid taxes on purchases that were gifts for family members.
