The Art Industry and U.S. Policies that Undermine Sanctions/Section 3B
B. Art Advisor Gregory Baltser
In addition to evidence that the Rotenbergs used multiple shell companies to mask involvement in high-value U.S. art transactions, the Subcommittee reviewed evidence that the Rotenbergs attempted to conceal their participation in the U.S. art market by hiding behind a Moscow-based art advisor and dealer, Gregory Baltser.
Background. Gregory Baltser is a naturalized U.S. citizen who resides in Moscow.[1] As a U.S. citizen, he is required to comply with U.S. laws, including U.S. sanctions laws. Mr. Baltser graduated from Moscow State Stroganov Academy of Industrial and Applied Arts.[2] A press release dated March 19, 2019 described Mr. Baltser as "a reputable antique specialist and talented decorator whose reputation extends far beyond the borders of the Russian Federation."[3] One auction house described Mr. Baltser as "the only dealer who buys whole interiors and houses in Europe and brings them to Russia."[4]
Mr. Baltser established the BALTZER Auction Agency and Services in 2014 and the website for the BALTZER Agency states:
The BALTZER Agency is here to be your representative; whether at an auction house, gallery, art dealer, or private sale or purchase. Our specialists are professionals with experience of working in the world's major auction houses, including Sotheby's, Christie's, and Phillips. Our job is to save you time and effort, and protect you from expensive mistakes.[5]
Mr. Baltser has also established the BALTZER CLUB, described in a press release as:
a private club for art collectors, experts, and all those who are fascinated by beautiful things. This exclusive club is a kind of museum that allows the members to enjoy art and antiques in a comfortable and relaxing atmosphere. Besides, the BALTZER CLUB is known for its elegant educational and social events in one way or another related to culture, arts, and collectibles.[6]
The BALTZER Agency website states the BALTZER CLUB "includes events such as recitals, readings, discussion panels, exhibitions of private collections and lectures on various aspects of art and collecting lead by experts."[7] A prior version of the BALTZER website dated 2018 explained how the BALTZER Agency facilitated an individual's "participation at an auction:"
We organize your entire auction process, including registering you for a sale, attending an auction on your behalf and handling all of the subsequent stages of the transactions. Our aim is to save you from the red tape of auctions while protecting you from a false step.[8]
The 2018 website continued explaining how the BALTZER Agency assists a buyer in registering for an auction:
An independent buyer at a sale must register for each new auction separately, going through the tedious verification process again and again. He or she must confirm not only their ability to pay, but also that their funds have not been acquired through unlawful means. Many auction houses have their own requirements regarding documentation, and oftentimes different departments of a single auction house in different cities may require different documents to be submitted. It can take several weeks for this process to be completed. Our clients, however, are freed from this pile of paperwork—our long-standing relationship with many auction houses means that we can simplify the registration process and make it the same for all auctions. By allowing us to handle all of your paperwork, you can even take part in any auction at the last minute.[9]
Notably, the 2018 website also addressed how an individual would participate in an auction, including efforts by BALTZER to provide an individual "complete anonymity:"
How, exactly, would you like to take part in an auction? The most enjoyable option is for us to bring you privately to the main hall of our Club, where you can settle yourself comfortably in front of a video screen and watch a live broadcast of the sales in the auction room. You can take part in the auction yourself, if you wish, by telephone. A personal manager from our agency will assist you. If a visit to our premise is not in your plans, the manager will simply ring you during the auction and tell you how things are progressing over the phone, and pass on your bid to the auction room. Finally, you can place an absentee bid. In this case, we will not bother you while the auction is taking place. Instead, a manager will bid for lots at your instruction, having established a maximum beforehand. This is convenient if the sale you wish to participate in takes place on the opposite side of the world. Working on your behalf, we act professionally and exclusively in your interests. If necessary, we can even give you complete anonymity. We remain level-headed and know the auction process inside out.[10]
1. The Auction Houses Viewed Mr. Baltser as the Principal Buyer
A key issue related to Mr. Baltser and his business is whether he acts as a principal or an agent when buying and selling art. The cumulative evidence, as discussed in more detail below, suggests that Mr. Baltser bought art on multiple occasions on behalf of the Rotenbergs, but never disclosed their involvement. Nor did the auction houses ask for whom Mr. Baltser was purchasing art. Even after the imposition of U.S. sanctions, Mr. Baltser failed to disclose his representation of the Rotenbergs, who were prohibited as a result of those sanctions from doing business with U.S. persons and entities. Mr. Baltser took advantage of rules and practices that allowed him to present himself as the "principal" buyer and avoid naming any client that he might be representing in the purchase or sale. This allowed for Mr. Baltser to provide the "complete anonymity" that his 2018 website promised.
Sotheby's. Sotheby's told the Subcommittee that since Mr. Baltser took title to the purchases he made in his name, Sotheby's did not view Mr. Baltser as an agent; Sotheby's viewed him as the principal buyer.
The Chief Compliance Counsel explained to the Subcommittee during a briefing that Mr. Baltser is considered the principal when he makes a purchase: "He buys it and pays for it."[11] She continued, "There are no third party payments, the money comes from his account at a major bank."[12] She explained that there are some in the art business who Sotheby's knows are buying for someone else or who actually disclose that they are acting as an agent or nominee on behalf of someone else.[13] She contrasted that scenario with Mr. Baltser stating "he's the principal; he's purchasing the art in his own name with funds in his own bank account."[14] She explained that Sotheby's "cannot ask clients to disclose the source of funds in their bank accounts. Sotheby's has no legal authority to demand such information."[15]
An agent, the Chief Compliance Counsel explained, will buy an item, but not take title.[16] She explained to the Subcommittee that, under Sotheby's policy, Mr. Baltser was not an agent, but instead purchased and took title of the artwork.[17] She explained that "Sotheby's does not know and has no legal right to know to whom he may resell the art once he takes title of the art.[18] She also stated that "when Baltser transacts with Sotheby's, he is the person who takes legal ownership and legal risk as the purchaser."[19] She further asserted that "Baltser is taking a risk because his client could turn around and say, 'I don't want to buy this thing anymore.'"[20]
The Chief Compliance Counsel also told the Subcommittee that Sotheby's staff knew Mr. Baltser well and considered him to be a known-quantity and an important Sotheby's client.[21] She could not recall Sotheby's having concerns about transacting with Mr. Baltser prior to the Subcommittee's investigation and said that he transacted with Sotheby's using accounts at major banks. Sotheby's assigns "Tiers" or "Levels" to clients based upon the amount and frequency of purchases. The highest level is 1 and the lowest level is 9.[22] She said that Mr. Baltser was a "Level 1" Sotheby's client.[23] She explained that these clients are the ones who are "wined and dined" and receive "special attention."[24] In some cases, she said an entire team of Sotheby's employees can be assigned to them.[25] The Chief Compliance Counsel stated that Sotheby's was moving away from using client levels.[26]
Christie's. Christie's General Counsel stated in a briefing that Mr. Baltser is known to Christie's as an interior decorator who engaged with the auction house in low value, but high volume transactions.[27] She said he would then sell the items purchased at Christie's to his clients or via his membership club.[28] When describing his purchasing history, Christie's General Counsel stated it was apparent Mr. Baltser engaged in fairly low level purchases that fit within Christie's understanding of his profile and operations.[29] She noted that Mr. Baltser purchased wine, as well as interior decoration items and ceramics.[30]
Bonhams. Bonhams U.S. Counsel and outside Counsel for Bonhams stated in a briefing that Bonhams U.S. does not consider Gregory Baltser to be an agent, but rather a dealer given that he is transacting in his own name and with his own funds and thereby assumes all contractual risks.[31] Bonhams U.S. also understood that Mr. Baltser often subsequently resells a purchased item to someone else.[32] Bonhams U.S. outside counsel noted that it is common in the auction world to have counter-parties and that when Bonhams U.S. sells to a dealer, Bonhams knows that the item may be re-sold.[33] While Bonhams U.S. requires bidders (including dealers) to disclose whether they are acting on behalf of a third-party, and to represent that the third-party is not on the SDN or other sanctions list, it does not require that a dealer disclose the identity of a third-party buyer. Bonhams U.S. views Mr. Baltser as the principal buyer.[34] Bonhams U.S. Counsel said that Bonhams U.S was not aware of who Mr. Baltser represented, nor did it matter, since Bonhams U.S. viewed him as the buyer.[35]
Phillips. While Phillips' General Counsel did not discuss Mr. Baltser directly, he explained during a briefing the legal issues surrounding agents in the art industry.[36] According to him, agents often bid on their own behalf to buy items for stock.[37] These dealers often have a shop and sell art privately.[38] He said auction houses have no way of knowing whether dealers are bidding on behalf of themselves or someone else unless the dealer tells the auction house.[39]
Phillips' General Counsel noted that sometimes after a successful bid at an auction, an agent will inform the auction house that they were actually acting on behalf of someone else.[40] At that point the agent will provide the details of the end purchaser so that Phillips can issue an invoice in the name of the purchaser.[41] According to him this happens for several reasons, including: (1) the agent does not want to pay for the purchased item himself; and (2) agents want any legal liability for the purchase to transfer to the purchaser.[42] Phillips then conducts "know your customer" checks on the actual purchaser.[43]
He acknowledged that there could be circumstances in which an agent may have a principal that pays the agent directly.[44] This would result in what he termed a "back-to-back transaction" whereby the invoice would remain in the name of the agent, and in those instances the auction house would not be aware of the second transaction.[45] He stated that Phillips' preference is to have the person in the room bidding be the person invoiced and responsible for that sale, but sometimes it is not that simple.[46]
2. Mr. Baltser Purchased Art as an Agent for Steamort
Mr. Baltser used a shell company to purchase art, which adds another layer of complexity to the connections between the Rotenbergs and the high-value art market. Prior to the imposition of U.S. sanctions against Arkady and Boris Rotenberg in March 2014, the majority of purchases Mr. Baltser made that the Subcommittee linked to the Rotenbergs were in the name of Steamort Limited ("Steamort"). Steamort was incorporated in Belize on August 28, 2008.[47] Steamort's principal place of business, however, was listed as 10 Great Russell Street; London, England.[48] According to the company's Certificate of Incumbency dated September 12, 2012, Steamort's only director and shareholder is Jason Hughes, a British national residing in Cyprus.[49] The Certificate of Incumbency states that Mr. Hughes holds the company's 50,000 shares.[50] That same Certificate lists ATM Secretaries Limited as the Secretary of Steamort.[51] Steamort has maintained a bank account at Tallinn Business Bank in Estonia since at least April 30, 2009.[52]
Jason Hughes was associated with over 200 companies. According to public reporting, Mr. Hughes is associated with more than 200 companies. In 2012, an investigation by ICIJ and The Guardian uncovered "a network of individuals willing to appear on official records as directors of companies while acting only on the instructions of its real owners, who stay invisible and off-the-books."[53] The investigative report explained:
The nominees play a key role in keeping secret hundreds of thousands of commercial transactions. They do so by selling their names for use of official company documents, using addresses in obscure locations all over the world.[54]
The ICIJ investigation identified Mr. Hughes as a nominee director linked to 210 companies, including 64 BVI companies, 144 UK companies, and 2 Irish companies.[55]
Mr. Baltser contracted with Steamort. According to a document produced by Christie's to the Subcommittee, on October 27, 2008, Steamort entered into a services agreement (the "Steamort Agreement") with Mr. Baltser.[56] That agreement referred to Steamort as the "customer" and Mr. Baltser as the "consultant."[57] The Steamort Agreement called for Mr. Baltser to assist Steamort with the search, valuation, acquisition, shipping, and insurance for works of art and interior items.[58] The Steamort Agreement allowed Mr. Baltser on behalf of Steamort to, in part:
- negotiate terms and conditions of acquisition of works of art and/or interior items;
- participate in auctions (including those of Sotheby's and Christie's), make bids at the auctions; and
- conclude sale and purchase, acquisition and ancillary agreements with sellers.[59]
The Steamort Agreement was signed by Mr. Hughes on behalf of Steamort; Mr. Baltser signed for himself.[60]
According to the Steamort Agreement, Steamort would pay Mr. Baltser $9,500 a month for his services.[61] A review of financial records confirmed that from March 25, 2010 to October 31, 2016, Steamort sent 96 wire transfers to Mr. Baltser's account totaling $907,000.[62] Most of these payments were in increments of $9,500.[63] Almost all of the instructions located in the wire transfer information noted "payment for consulting services in antiques by invoice" followed by a date.[64]
Beginning in 2017, Mr. Baltser began receiving $9,500 payments from two companies other than Steamort, Aester Limited[65] and Sinara Company LP.[66] From March 2, 2017 to April 6, 2018, Aester Limited sent Baltser eight wire transfers in $9,500 increments totaling $76,000.[67] From July 7, 2017 to June 18, 2018, Sinara Company sent Baltser 14 wire transfers in $9,500 increments totaling $133,000.[68] In total, between March 2010 and October 2018, it appears Mr. Baltser received $1,116,000 in fees for his consulting services under the Steamort Agreement.[69]
Christie's questioned Steamort's ownership. Prior to U.S. sanctions in March 2014, Mr. Baltser purchased art from the auction houses in Steamort's name. The Christie's client representative for Mr. Baltser ("Baltser Client Advisor") told the Subcommittee that Mr. Baltser introduced himself as someone who purchased art on behalf of other people.[70] The Baltser Client Advisor explained, "one thing's for sure, he's not buying it for himself."[71]
Christie's requested information on Steamort's UBO from Mr. Baltser. On November 29, 2010, following the registration of Steamort's account, Christie's internally requested information regarding the "confirmation of the directors of the company" and "confirmation of who is the ultimate beneficial owner of the company."[72] The request went unanswered until February 7, 2012.[73]
On February 7, 2012, Christie's compliance department emailed the Business Development Manager Business Development Manager about the documentation requested in 2010 for Steamort's company directors and the ultimate beneficial owner.[74] The email noted that Mr. Baltser was listed as Steamort's owner in the client profile, but additional documentation was required.[75] The Business Development Manager responded that she was unable to reach Mr. Baltser due to the time difference between London and Moscow, explaining:
I have tried to get in touch with the client, but he is probably sleeping as he is supposed to bid very early in the morning our time. Steamort/Grigoriy [sic] Baltser have been regular client of Christies. Just today he participated in a sale in London and is bidding tomorrow as well. He is a very respected businessman and I personally know [him] very well. Is it possible for me to get this documentation to you after the sale. He is bidding on 19 lots![76]
An AML Specialist also from Christie's compliance department responded, "if you could follow up after the sale it would be greatly appreciated."[77]
The next day, on February 8, 2012, the Business Development Manager informed the AML Specialist that she spoke to Mr. Baltser and explained to him that there were "some outstanding registration documents" required for Steamort.[78] She told the AML Specialist that Mr. Baltser informed her that "he can get me a copy of the company's registration card and the contract that he has with Steamort ltd. He cannot get us the name of the beneficial owner of the company as this information is unavailable to him."[79] In response, the AML Specialist asked to be put "in touch with the person who he has entered into agreement with."[80] He also reminded the Business Development Manager that "beneficial ownership is required for all business clients, and this information has been outstanding for nearly two years already."[81] The Business Development Manager forwarded the AML Specialist's email to the Baltser Client Advisor requesting advice. The Business Development Manager stated that Mr. Baltser said he would "not bother the directors of the company with any questions and he cannot provide us with the information on who the beneficiaries are. I am stuck."[82]
On February 21, 2012, the AML Specialist asked the Business Development Manager for an update regarding the required Steamort documentation.[83] The following day, February 22, 2012, the Business Development Manager informed the AML Specialist that Mr. Baltser asserted he would provide everything the next week.[84]
A month later, on March 22, 2012, the Business Development Manager emailed the AML Specialist documents regarding Steamort, including the Baltser/Steamort 2008 Services Agreement and the Belize Certificate of Incorporation dated August 28, 2008.[85] The AML Specialist replied stating that the documents confirmed the agreement between Baltser and Steamort, but did not "confirm ownership of the Belize Company."[86] The AML Specialist once again requested that the Business Development Manager confirm the owner of Steamort, stressing that "this inquiry has been open since the fall 2010 sales."[87] On March 26, 2012, the AML Specialist emailed "we will need to restrict the account from future bidding pending confirmation of beneficial ownership."[88]
That same day, March 26, 2012, the Business Development Manager sought the Baltser Client Advisor's advice; Mr. Baltser wanted to bid in an upcoming auction in New York.[89] The Business Development Manager emailed:
the "beneficiary" issue is still not resolved. [Mr. Baltser] says that even verbally he cannot confirm anything as he himself doesn't know who the ultimate beneficiaries of Steamort are. He is asking if he can still bid in the sale without this document. What can we do?"[90]
The Baltser Client Advisor responded: "let me check, please. As soon as I have some information], I will let you know."[91] The Baltser Client Advisor responded to the AML Specialist:
Christie's London can accept the verbal confirmation of the beneficiary owner of the company (as an exception). This is a very important client of ours who actively buys in various Gold Sale categories. We worked very hard to encourage this client to participate in the sales and we feel it's a shame to lose him now. The additional documents were requested in February 2012, the client provided them at his earliest convenience. Please advise if I should contact any other colleagues of ours to discuss this urgent matter.[92]
The Baltser Client Advisor confirmed to the Subcommittee that on certain occasions Christie's would accept verbal confirmation of the beneficial owner.[93]
The AML Specialist emailed and requested that she "kindly disclose the beneficial owners, and Legal can conduct the checks."[94] On March 27, 2012, the Business Development Manager informed the Baltser Client Advisor that she would contact Baltser and "try to ask him to at least verbally confirm, the beneficiaries."[95] On March 28, 2012, the Business Development Manager emailed Christie's compliance and stated that "the sole beneficiary of Steamort is Mrs. Luisa Brown."[96] The AML Specialist responded that same day: "Luisa Brown is clear, and the client is fine to bid in the upcoming sale on April 4th."[97] The AML Specialist continued: "Going forward, please note we require documentary confirmation of beneficial ownership in accordance with our Legal requirements when opening new business accounts, and without it a risk review would have to be conducted."[98]
When questioned by the Subcommittee, the Baltser Client Advisor stated that she had no knowledge of Mrs. Brown and did not know of any connection between Mrs. Brown and Mr. Baltser.[99] Mr. Baltser never provided documentary evidence that Luisa Brown was the beneficial owner of Steamort.[100]
3. Mr. Baltser Established BALTZER Auction Agency and Club in Moscow
The creation of Mr. Baltser's art agency and private club, called BALTZER Auction Agency and Club, added another layer of complexity to the purchase of high-value art by shell companies linked to the Rotenbergs. The creation of BALTZER is further described below. Notably, Mr. Baltser's last name is spelled with an "s" and his art agency with a "z."
In November 2012, prior to forming his agency and club, Mr. Baltser contacted Christie's and Sotheby's to discuss a business proposal with him through his new private club in Moscow.[101] Mr. Baltser sent a letter to Christie's explaining "we have conceived a definitive idea of creating a new company with transparent and clear ideology, which would be able to solve many problems of auction life, guaranteeing to the participants the clean title of transaction and services."[102] Mr. Baltser indicated his new company's club would be used by "a whole class of contemporaneous collectors" that he had created and who were "the leading Moscow and Russian collectors—the active participants of auction biddings at many world marketplaces."[103]
a. Christie's Partnered with Mr. Baltser
Beginning in late 2012, Christie's and Mr. Baltser began discussing a potential partnership. On December 17, 2012, the Managing Director of Growth Markets for Christie's in London ("Managing Director"), sent an email to Mr. Baltser to inform him that Christie's has "all of the key people internally at Christi[e]'s together to discuss your interesting proposal. We are consolidating a list of questions which we will have with you by the close of business tomorrow evening and looking forward to continuing discussions with you."[104] The following day, Mr. Baltser emailed the Managing Director that he was glad "we are moving forward with the proposal and I expect way more activity going with the auctions as soon as I get this new structure set. . . . and I will be happy to answer and clarify all the questions in a timely manner."[105]
On December 18, 2012, the Managing Director provided Mr. Baltser with a list of questions raised by various members of the Christie's team regarding his proposal, including:
- Do you intend to bid on behalf of [the art club] or on behalf of the third party?
- Will you be able to take on responsibility to obtain all necessary KYC/AML (Know your client and Anti money laundering) checks required? What structures are in place to ensure these protocols are met?
- Will we know the names of the clients or will all details be held by you and the company?[106]
Beginning in early 2013, representatives from Christie's began traveling to Moscow to meet with Baltser and his team regarding the proposal.[107] On January 22, 2013, Mr. Baltser sent the Baltser Client Advisor a reply to the Managing Director's questions, stating:
We are currently in the process of reviewing Russian laws and related legislation pertaining to KYC/AML. One of the key components of the KYC/AML process implies checking the identity of every client and collecting Personally Identifiable Information (PII). According to Russian legislation as well as the Confidentiality Agreement between Company and our clients, [Mr. Baltser's agency] is obligated not to disclose [personally identifiable information] data to any third parties without the Client's consent, except as may be required by law or court order. Considering this, we are ready to accept responsibility for such processes as KYC (know your customer) and AML (anti money laundering).[108]
On March 21, 2013, the Baltser Client Advisor emailed the Managing Director to inform him that she is "in regular contact with Mr. Gregory Baltser regarding various auctions and client purchases" and explained that he:
keeps on asking if we are ready to proceed with our IT advice and further discussions of his proposed project. Unfortunately, Gregory cannot proceed with ordering any technical equipment and his whole project is on hold now. Gregory is very much concerned that he is missing all major auctions in May, June and July (and is under impression we [are] no longer interested in cooperation).[109]
On March 22, 2013, the Managing Director replied that he needed "to get [the President of Christie's Europe] to focus on this and will try and do so today and send an appropriate message to Mr. Baltser."[110] On March 27, 2013, the Baltser Client Advisor emailed the President of Christie's Europe requesting his "thoughts on Gregory Baltser's project discussed yesterday and if we could proceed with it on the IT front."[111] On April 12, 2013, the President of Christie's Europe approved moving forward with the project with Baltser "as long as there is no corporate risk."[112]
On April 24, 2013, Christie's representatives met with Mr. Baltser in Moscow to discuss the partnership between Mr. Baltser's art agency and Christie's.[113] Present at the meeting were Mr. Baltser, the Managing Director, the Business Development Manager, and the Baltser Client Advisor.[114] The meeting resulted in a list of action items to move the partnership forward.[115]
i. Mr. Omelnitski Served as the Money Laundering Reporting Officer for BALTZER LLP
The action items noted that Mr. Baltser "further explained that their Trustee in London was familiar with the [KYC] process and they have a system approved by the Russian government."[116] On June 5, 2013, Mr. Omelnitski emailed the Managing Director, stating that Mr. Baltser asked him "to contact [you] in regards to arranging a meeting for purposes of identifying of required [AML/KYC] compliance procedures and policies."[117]
On August 12, 2013, Mr. Omelnitski emailed corporate documents regarding the "new Baltser structure" to Christie's Senior Compliance Counsel ("Compliance Counsel"), including incorporation records pertaining to the newly created Baltzer entities—Baltzer Limited (Cyprus) and BALTZER LLP.[118] The Shareholders Certificate for Baltzer Limited listed Markom Nominees LTD as shareholder.[119] Baltzer Limited also listed Markom Directors as its Director and Markom Secretaries Limited as its Secretary.[120]
The following day, Mr. Omelnitski emailed Christie’s in-house counsel in London a copy of BALTZER’s Compliance Procedures Manual.[121] The manual stated:
In addition to our existing money-laundering measures, BALTZER ("Agency") has entered into an agreement with Markom Management Limited ("Markom"), whereby Markom will independently check, verify and handle information about the Agency’s clients.[122]
The manual further stated that BALTZER employees "unclear on the [customer due diligence] steps required when engaging a new client please contact Dr. Mark Omelnitski (the [Money Laundering Reporting Officer]), in the first instance for further advice.[123]
Christie's compliance personnel reviewed the Manual, which identified compliance measures. The Manual indicated that BALTZER had entered into an agreement with Markom for Markom to independently check, verify, and handle information about BALTZER clients.[124] The Manual states that BALTZER clients are required to comply with AML legislation, and identifies obligations arising under the UK's 2007 Money Laundering Regulations.[125] The Manual also included BALTZER's customer due diligence measures, including customer identification procedures for individuals and entities, and provided for enhanced due diligence where the client is a politically exposed person.[126] In addition, Christie's compliance personnel noted that Markom was listed on the HMRC-Her Majesty's Revenue & Customs-Supervised Businesses Register of companies that have registered with HRMC under the UK Money Laundering Regulations.[127]
ii. Christie's Agreed to Allow Mr. Baltser to Conduct Anti-Money Laundering and Sanctions Checks on His Own Clients
Mr. Omelnitski represented Mr. Baltser and BALTZER LLP in contract negotiations with Christie's as Mr. Baltser and Christie's exchanged drafts of the agreement.[128] On February 4, 2014, Christie's and BALTZER LLP entered into a letter agreement that established the terms of the two entities' relationship.[129] Mr. Baltser signed on behalf of BALTZER LLP; the Managing Director signed on behalf of Christie's.[130] As part of the agreement, Christie's agreed to supply BALTZER LLP with a number of bidding paddles under one account.[131] As stated in the contract, this enabled BALTZER LLP to "bid in Christie's auctions simultaneously."[132]
Regarding customer due diligence, the agreement established that:
- BALTZER LLP will conduct customer due diligence on its members to the standards required by the EU Money Laundering Directive, consents to Christie's relying on such customer due diligence and will retain for a period of not less than 5 years, the documents and records evidencing the same. Where these documents or records are held outside the UK, copies will be made available to Christie's or relevant enforcement agencies or regulators under court order or relevant mutual assistance procedure.
- BALTZER LLP will further certify to Christie's, at the end of every trading year that it has conducted customer due diligence in accordance with these requirements and that it has no reason to suspect that any of its members are engaged in money laundering activities.[133]
Christie's former Global Head of Compliance explained these provisions mirrored language she previously used as an attorney for a large U.S. financial institution in agreements between financial institutions.[134] She also confirmed to the Subcommittee that this was the first time Christie's allowed another entity to perform these types of customer due diligence checks.[135]
iii. BALTZER LLP Failed to Provide Anti-money Laundering and Sanctions Compliance Certifications Required by the Agreement with Christie's
As stated above, the agreement between BALTZER LLP and Christie's required BALTZER LLP to certify annually that it conducted customer due diligence and did not suspect its clients were engaged in money laundering.[136] Obtaining that certification, as scheduled and with the proper assertions regarding anti-money laundering, became a challenge for Christie's over the course of the relationship due to a lack of responsiveness by Mr. Omelnitski, despite numerous attempts by Christie's to obtain the certification. As explained below, Christie's later revised the agreement with BALTZER, in part because of Mr. Omelnitski's failure to provide the required compliance certifications. The new agreement required Mr. Baltser to identify all winning bidders to the Christie's Legal Department to perform KYC checks.
2014. Christie's Compliance Counsel emailed Mr. Omelnitski on September 26, 2014 requesting “to refresh [Christie's] due diligence in relation to the BALTZER arrangements, particularly around sanctions screening."[137] She confirmed to the Subcommittee she was referring to the increasing number of sanctions imposed by the United States and the European Union on Russian individuals and entities in response to the annexation of Crimea.[138]
On October 15, 2014, the Compliance Counsel emailed Mr. Omelnitski regarding the certification required in the February 2014 Letter Agreement.[139] She explained that "[g]iven the rapidly evolving sanctions landscape in Russia, we are asking all our business partners to certify that they have complied and will continue to comply with relevant AML regulations including ongoing sanctions screening against . . . EU, UN, OFAC, etc. lists."[140] The Compliance Counsel emailed Mr. Omelnitski on October 31, 2014 to again request the report.[141] Mr. Omelnitski responded and assured her that "we are preparing the report . . . I shall have it for you within a week."[142] On November 22, 2014, Mr. Omelnitski emailed the Compliance Counsel stating, "I am really sorry for [the] delay with the report. I am traveling extensively over the last two months. I shall be ready with it next week. Once again apologies for [the] delay."[143]
Mr. Omelnitski provided the certification to the Compliance Counsel on December 2, 2014 titled, "AML Report on behalf of 'Baltzer' for period October 2013 through November 2014."[144] The document stated:
I can confirm that our investigation did not reveal any irregularities, which were concerning. I can further confirm that despite BALTZER having a significant number of Russian clients there were no transactions, which fall under recent sanctions against Russia.[145]
The former Global Head of Compliance told the Subcommittee this language satisfied the certification requirement in the February 14, 2014 Letter Agreement.[146]
2015. A year later, on December 3, 2015, the Compliance Counsel emailed Mr. Omelnitski asking, "could you please let me have a compliance report for this year?"[147] Mr. Omelnitski did not provide the requested compliance report.[148]
2016. The Compliance Counsel emailed Mr. Omelnitski on June 7, 2016 and again asked, "would you please be able to send me a compliance certification again similar to the report you so kindly provided at the end of 2014?"[149] Mr. Omelnitski did not provide the requested report.[150] On June 28, 2016, the Compliance Counsel again requested that Mr. Omelnitski "confirm when we can expect to receive your compliance certification?"[151] Mr. Omelnitski failed to provide the requested compliance report.[152]
2017. On July 13, 2017, the Compliance Counsel emailed Mr. Omelnitski stating, "we will need the compliance certificate from you as per our agreement."[153] On October 9, 2017, Mr. Omelnitski emailed information regarding BALTZER's purchases.[154] Mr. Omelnitski's email stated that for "transactions September 2016-September 2017," Baltzer's agency "had the turnover of £3,269,457.30, Euro 5,775,449.40 and USD 1,402,661.60."[155] The email broke down those amounts between auction houses, clients, and suppliers.[156] The email did not provide any certifications regarding compliance with AML policies as required by the Letter Agreement.[157] In response, the Compliance Counsel alerted Mr. Omelnitski that "we need to talk and review the approach to client due diligence."[158]
The Compliance Counsel asked Mr. Omelnitski to "clarify the relationship between BALTZER and Markom" on October 20, 2017.[159] She raised the fact that "BALTZER is both a client who outsources client due diligence and compliance to Markom Group as well as a related entity due to Markom Group being a director/shareholder."[160] She also addressed the issue of Mr. Baltser's clients and suggested that "the Compliance Department is able to keep the identity of clients securely within a private and confidential file that is not accessible by anyone other than Compliance/Legal."[161] The Compliance Counsel asserted the information would "be provided solely to me in order to enable Christie's to comply with our KYC procedures and relied on solely for this purpose."[162] She explained to the Subcommittee that she never received answers to her questions about the Markom Group's relationship to Mr. Baltser's companies.[163]
2018. The parties negotiated the terms of a new agreement, which was signed on March 19, 2018.[164] The new agreement contained additional requirements, which the former Global Head of Compliance explained gave Christie's additional control and comfort regarding purchases by BALTZER.[165] For purposes of customer due diligence, the new agreement required that, "For all successful bidders, BALTZER will make the customer due diligence documentation (including any originals) promptly available to Christie's for inspection within 10 working days after the auction and in any event, prior to the release of the relevant lot."[166] The new terms also stated that "BALTZER warrants on a continuing basis while this agreement remains in force that:
- any bid on behalf of its Members does not facilitate tax evasion or tax fraud;
- any bid on behalf of its Members does not violate or facilitate a violation of sanctions including those administered or enforced by the US Department of Treasury's OFAC, US Department of State, the UN Security Council, the EU, Her Majesty's Treasury or the Hong Kong Monetary Authority;
- it does not know, and has no reason to suspect that any buyer is under investigation for, charged with or convicted of money laundering, terrorist activities or other crimes; and
- any shipping of lots on which Baltzer has successfully bid will be done in compliance with all applicable export and import laws.[167]
The new agreement was dated March 19, 2018.[168] The former Global Head of Compliance explained that with the new agreement, the BALTZER account was restricted until the company provided Christie's the required customer documentation.[169] She told the Subcommittee that BALTZER complied with the new requirement and provided the customer information, but continued to pay for purchases from his bank account.[170] Therefore, financially, Christie's was unable to look beyond BALTZER's bank account to determine the source of the funds used to make purchases.[171]
b. Sotheby's Declined to Sign an Agreement with BALTZER LLP, but Continued to Transact with Mr. Baltser
Mr. Baltser also approached Sotheby's to enter into an agreement with BALTZER LLP. While Sotheby's considered the proposal, the auction house ultimately declined. According to a document produced by Sotheby's to the Subcommittee, during the course of the negotiations with Mr. Baltser, the Sotheby's account representative for Mr. Baltser ("Baltser Account Representative"), represented to Sotheby's leadership that Mr. Baltser's clients were Russian oligarchs.[172] She also specifically identified Arkady and Boris Rotenberg as two of Mr. Baltser's clients.[173] But when asked by the Subcommittee to confirm that Arkady and Boris Rotenberg were Mr. Baltser's clients, she said she had fabricated the information to encourage Sotheby's to agree to Mr. Baltser's proposal.[174] The Subcommittee questions her truthfulness in her interview, given the Subcommittee traced funds used to purchase art by Mr. Baltser back to shell companies linked to the Rotenbergs.
i. Mr. Baltser Purchased Art from Sotheby's on Behalf of Steamort
As with Christie's, Mr. Baltser purchased art from Sotheby's on behalf of Steamort, signing invoices on behalf of the company as early as 2011.[175] The Baltser Account Representative told the Subcommittee that Mr. Baltser used Steamort to purchase items from Sotheby's.[176] She explained that it was common for purchasers to use various companies when purchasing art.[177] The Baltser Account Representative asserted Steamort preceded BALTZER LLP and she did not believe Steamort existed anymore.[178] She did not know why Mr. Baltser made the switch from Steamort to BALTZER LLP, but she thought that Mr. Baltser created BALTZER LLP around the time that he established his art agency. She also recalled that Mr. Baltser provided BALTZER LLP's incorporation and compliance due diligence documents to Sotheby's.[179]
ii. Mr. Baltser Approached Sotheby's on his Business Proposal with BALTZER LLP
In early 2013, Mr. Baltser also approached Sotheby's about a business proposal with his art agency. On February 11, 2013, the Baltser Account Representative emailed Sotheby's Chief Operating Officer in Europe, and other Sotheby's associates. (in pertinent part):
Level 1, top transacting Russian client, Mr. Gregory Baltser (Steamort Ltd) is setting up a private club in Moscow for his friends and clients, Russian oligarchs. This club's activity will be centered around auction house activities. He wants to involve the club members into buying at auctions.
Some of these clients have already started transacting through him.[180]
The Baltser Account Representative explained to the Subcommittee that Mr. Baltser's club would allow club members to view a live stream of an auction taking place outside of Moscow.[181] She also noted that using the word “oligarch" at the time meant a high net worth Russian individual.[182] She purposefully used the word "oligarch;" it was her job to sell Mr. Baltser's ideas to her superiors.[183]
An internal Sotheby's meeting invitation dated March 25, 2013 explained how Mr. Baltser's club would work:
The client [Mr. Baltser] would have members bid on his account. He could have members bidding against each other but under the same account, on different paddles. He would remain liable to Sotheby's for any bids his members provide—he would control that his end to effectively manage his risk . . . Mostly his members would pay him and he would pay us. His members may wish to be invoiced directly—in which case, if not already known to us, our KYC rules apply and they set up an account and we invoice directly—although in the event of non-payment he knows he can't "excuse himself". . . . We'd have/keep the veto—e.g. would not allow a transfer to a No Bid client.[184]
The Baltser Account Representative explained that Sotheby's invoiced Mr. Baltser directly and would divide his purchases into multiple invoices if he requested.[185] She asserted Mr. Baltser was the client: "That's how he bid and that's how he paid. As far as I'm concerned the client is Greg Baltser."[186] The Baltser Account Representative made clear that she could not register a bid for Mr. Baltser unless the payment would be coming from his company.[187] However, she also explained that Mr. Baltser "would almost never tell us on behalf of who he is bidding for."[188]
The Baltser Account Representative continued to advocate partnering with Mr. Baltser and forwarded several documents from Mr. Baltser to her colleagues regarding his club on May 31, 2013.[189] One of the documents noted that Mr. Baltser would "obtain all the necessary KYC/AML checks required."[190] The document also noted "one of the key components of the KYC/AML process implies checking the identity of every client and collecting personally identifiable information."[191] The Baltser Account Representative recalled there were extensive discussions internally at Sotheby's about Mr. Baltser performing the KYC checks on his own because Sotheby's wanted to know who his clients were for KYC purposes.[192] Sotheby's asked him to reveal the identity of his clients, which "obviously made him very uncomfortable as a dealer would never do this normally."[193] She explained that Mr. Baltser was reluctant to do this, but Sotheby's was unsure how it could satisfy itself that his clients were compliant.[194] She recalled that Mr. Baltser provided additional company and compliance documents to address Sotheby's KYC concerns. She explained that dealers and art galleries never disclose who their clients are. However, she noted that any gallery owner was responsible for running its own client due diligence.[195] She stated that Sotheby's did due diligence on Mr. Baltser as the client, but Mr. Baltser would perform the due diligence on his own clients.[196]
In summer 2013, Mr. Baltser continued to push regarding a partnership between himself and Sotheby's.[197] Through the Baltser Account Representative, Mr. Baltser requested a meeting to "address all the questions and issues we have with" his proposal.[198] In the same June 6, 2013 email, the Baltser Account Representative noted that "this week Gregory has set up a record for a Russian painting at auction buying Nichols Roerich's canvas at Bonhams for [£7.88 million]," referring to Mr. Baltser's purchase of the Madonna Laboris.[199]
iii. The Baltser Account Representative Claims Arkady and Boris Rotenberg were Mr. Baltser's Clients before they were Sanctioned
As part of her continued advocacy on behalf of Mr. Baltser, and his business proposal to Sotheby's, the Baltser Account Representative created a document in advance of a meeting on October 9, 2013 that showed Mr. Baltser's clients included, Arkady and Boris Rotenberg.[200] The Baltser Account Representative sent an email to her assistant that attached Forbes biographies of the men.[201] The Deputy Chairman of Sotheby's Europe and Chairman of Sotheby's Russia ("Chairman of Sotheby's Russia") told the Subcommittee during an interview that when he saw the list that included Arkady and Boris Rotenberg, he thought, "It looked quite impressive to me to have [] oligarchs on the list."[202] He confirmed that he believed the compliance department and the managing director of Sotheby's would have seen the client list at the time, which was before sanctions were imposed on Arkady and Boris Rotenberg.[203]
However, the Baltser Account Representative stated in her Subcommittee interview that Mr. Baltser never represented to her that Arkady and Boris Rotenberg were his clients.[204] She stated she fabricated the fact the Rotenbergs were clients of Mr. Baltser to convince her employer, Sotheby's, there was "significant business potential" in the agreement with Mr. Baltser.[205] She stated she located the two Rotenbergs by googling Russians on the Forbes list.[206] The biographies attached to her email listed Arkady Rotenberg as number 1,153 on the Forbes list and number 30 in Russia.[207] The biography for Boris Rotenberg listed him as number 1,031 on the billionaires list and number 69 in Russia.[208] The Subcommittee questions the truthfulness of Baltser Account Representative's answer given that funds used by Mr. Baltser to purchase art were traced back to shell companies linked to the Rotenbergs.
In order to facilitate a decision on Mr. Baltser's proposal, the Baltser Account Representative and the Chairman of Sotheby's Russia drafted a list of pros and cons.[209] Once they both agreed on the list, they sent the list to the then Managing Director for Sotheby's Europe ("Managing Director") on October 15, 2013.[210] The list included the following positive points they associated with the proposed business arrangement with Mr. Baltser:
- Baltser has a client base that wants to buy in our sales and have already been buying using Baltser's services. We encourage his bids and he pays on time.
- He declared his plans willingly and honestly to us. He is regulated by the Russian authorities and before accepting to deal with any of his potential clients he has to go through KYC and do all due diligence.
- His logistics operation, to make buying in auction houses easy and fun, appeals to a number of wealthy Russians who trust him. Among his clients are Forbes list businessmen.
- On several occasions the identity of his clients has been revealed to us and we set up personal accounts for these clients. Some have already started transacting with us directly.[211]
The list also included "concerns:"
- We do not always know who his clients are. We do however know Baltser well and we have transacted with him for a number of years. He is well known to the dealer community for the last 15 years. We assume we are happy that he transacts as usual, if we decide not to recognize his new plans.
- He can manipulate a market by a ring. There is no evidence at all to support this. Anyway this is not in his interest as the more clients he gets to bid the more fees he can charge.
- His business becomes too powerful and he dictates terms to us. We don't think that will happen as we do not see this business growing into 100s of clients. Exclusivity is important to Russians. Also there are too many factions between the powerful elite who will always use different agents and dealers. There are many more powerful buyers in the market and full [buyer's premium] is paid by all.[212]
The email to the Managing Director continued:
Whilst we must be fully compliant it does seem duplicitous that we allow him to bid today but have worries when he explains his ambitions. Furthermore we allow other European and US agents that bid on behalf of clients and we do not demand to know who their clients are.[213]
The email then asked the question: "Should we be partners?"[214] And concluded, "In our opinion, no. If Baltser has more clients bidding in our sales we benefit anyway. If his business succeeds and we think this is a winning formula we should then consider changing our office model."[215]
As with Christie's, Mr. Omelnitski provided documentation of anti-money laundering and client due diligence policies and procedures to Sotheby's on behalf of Mr. Baltser, including a 50-page BALTZER LLP compliance procedures manual and customer due diligence measures, as well as BALTZER LLP incorporation documents.[216] He also advocated for Mr. Baltser saying "Gregory is really anxious to commence co-operation with Sotheby's" on October 11, 2013.[217]The Baltser Account Representative told the Subcommittee she understood that Mr. Omelnitski was Mr. Baltser's representative in the United Kingdom and that his role appeared mainly to involve helping Mr. Baltser set up BALTZER LLP.[218]
On October 28, 2013, the Chairman of Sotheby's Russia emailed the Managing Director to request a date to meet with Mr. Baltser in Moscow.[219] He responded, "sure but not before I have heard your convincing arguments as to how we protect our position re 'his' clients!"[220] The Chairman of Sotheby's Russia responded referencing his October 15, 2013 email of positive points and concerns and noted "I saw [Mr. Baltser] last week with [the Baltser Account Representative] and he has agreed to reveal the names of his clients."[221]
iv. Sotheby's Declined Mr. Baltser's Business Proposal
Sotheby's corporate headquarters in New York ultimately decided not to sign an agreement with Mr. Baltser.[222] The Chairman of Sotheby's Russia told the Subcommittee that one of the reasons Sotheby's declined Mr. Baltser's business proposal was due to concern over his undisclosed clients.[223] The concerns extended beyond the identity of his clients to their potential to manipulate market prices by coordinating their bids at Sotheby's auctions.[224] He also explained that Sotheby's wanted to have more control over the transactions by directing them to occur directly with Sotheby's, and Mr. Baltser's proposal overall was more advantageous for Mr. Baltser than Sotheby's.[225]
Even though Sotheby's declined Mr. Baltser's proposal, Mr. Baltser continued to bid in auctions and purchase art from the auction house. The Chairman of Sotheby's Russia explained the only difference was that Sotheby's declined Mr. Baltser's business proposal to create a direct cable for broadcasting high quality images of items being auctioned by Sotheby's into Mr. Baltser's private art club.[226]
c. Mr. Baltser Purchased Art with Funds Traced to Rotenberg-linked Shell Companies
The evidence indicates that the Rotenbergs used Mr. Baltser as their art adviser and agent both before and after the imposition of U.S. sanctions in March 2014. Each purchase followed the same pattern. Mr. Baltser purchased the art and took title either through Steamort or later, his own company BALTZER LLP. Then, one of the shell companies highlighted above (Highland Business or Highland Ventures) would wire funds to Steamort to pay for the piece of art. Prior to U.S. sanctions, Mr. Baltser routinely purchased art in the name of Steamort; Steamort would also wire the funds directly to the seller.
Following the imposition of U.S. sanctions, which coincided with the establishment of BALTZER, Mr. Baltser added a step. Steamort generally wired funds to purchase the art to BALTZER LLP. Mr. Baltser would then take title for the purchased artwork in the name of BALTZER LLP and wire the funds to the auction house from his BALTZER LLP account.
There were exceptions to this post-sanctions practice. One such exception documented below involved Highland Ventures taking title to a $7.5 million Magritte painting, while another shell company linked to Mr. Omelnitski (Advantage Alliance) wired the payment directly to the dealer. The Subcommittee traced those funds to a company owned by Arkady Rotenberg.
4. Examples of Pre-Sanctions Art Purchases
Several examples of how the Rotenbergs purchased art pre-sanctions through the services of Mr. Baltser follow.
a. Nicholas Roerich's And We Continue Fishing
| Date of Sale | November 1, 2011 |
| Price | $1,426,500 |
| Auction House | Sotheby's New York |
| Purchaser of Record | Steamort Limited |
Transaction background. On November 1, 2011, Sotheby's held an auction entitled "Important Russian Art."[227] Nicholas Roerich's And We Continue Fishing from the Bolling Family Collection was part of that sale and was projected to sell for between $1.2 million and $1.5 million.[228] The Sotheby's website noted that the painting was "the fourth of six paintings in Roerich's Sancta series."[229] Further, the website stated, "These allegorical paintings are meant to represent a spiritual journey, and they are unique within the artist's 1920s oeuvre for their distinctively Russian setting and imagery."[230]
A non-free image has been removed from this page.
Nicholas Roerich's And We Continue Fishing (Photo Credit: Sotheby's)
Mr. Baltser purchased the painting for $1,426,500 in the name of Steamort.[231] Following the purchase, Sotheby's invoiced Steamort for the net amount of $1,426,500.[232] That amount included the $1,200,000 hammer price as well as the $226,500 buyer's premium.[233]
Origin of funds used for purchase. On November 16, 2011, Highland Business wired $1,496,862.12 from its account with Societe Generale to Steamort's Tallinn Business Bank account.[234] The notes for the wire transfer stated "payment under finder agreement [dated October 26, 2011]."[235] Five days later, on November 21, 2011, Steamort wired $1,415,808.20 from its Tallinn Business Bank account to Sotheby's New York account at JPMorgan Chase.[236] The wire transfer instructions stated "[payment] by statement of account [dated November 2, 2011], Account N 51245607 for subjects of interior."[237]
Owner. When questioned, the Sotheby's Baltser Account Representative told the Subcommittee that she did not know for whom Mr. Baltser purchased this painting, nor did she recall asking him to reveal the identity of the buyer.[238]
b. Pierre-August Renoir's Nature Morte aux Fruits
| Date of Sale | May 14, 2012 |
| Price | $1,750,000 |
| Auction House | Sotheby's New York |
| Purchaser of Record | Steamort Limited |
Transaction background. On May 14, 2012, Mr. Baltser purchased Renoir's Nature Morte aux Fruits for $1,750,000 on behalf of Steamort through a private sale.[239] The invoice noted the sale was for Sotheby's sale number: "NOPT12-2012."[240]
Origin of funds used for purchase. On May 16, 2012, Highland Business wired $1,989,000 from its Societe Generale account to Steamort's Tallinn Business Bank Account.[241] The wire transfer instructions noted that the payment was "according to finder agreement dated [May 14, 2012]."[242] On May 21, 2012, Steamort wired $1,750,000 from its Tallinn Business Bank account to Sotheby's New York account at JPMorgan Chase.[243] The wire transfer instructions noted the payment was for "Sale: NOPT12 -2012, Lot 0128 for subjects of interior."[244]
Owner. When questioned, the Sotheby's Baltser Account Representative told the Subcommittee that she did not know for whom Mr. Baltser purchased this painting, nor did she recall asking him to reveal the identity of the buyer.[245]
Shipment. Art Courier managed the shipment of the painting by Dietl to Germany for storage at the Hasenkamp art storage facility.[246]
c. Pierre-Auguste Renoir's Femmes dans un Paysage
| Date of Sale | June 11, 2012 |
| Price | $2,800,000 |
| Auction House | Sotheby's Hong Kong |
| Purchaser of Record | Steamort Limited |
Transaction background. In May 2012, the Sotheby's Baltser Account. Representative learned of a private sale of Pierre-Auguste Renoir's Femmes dans un Paysage in Hong Kong.[247] The seller wanted $3,300,000 for the painting.[248] On June 7, 2012, the Baltser Account Representative said in an email that her client "seems to be interested however he is not ready to pay 3.3. His offer is 2.7 USD."[249] On June 8, 2012, the Sotheby's representative for the seller in Hong Kong emailed the Baltser Account Representative confirming that "we have a go ahead to sell at $2.8 million."[250] The email continued "we can bill in [Hong Kong] where there is no tax."[251] However, the Baltser Account Representative responded that "the buyer—Steamort Ltd— would like the deal to be done in [New York]."[252] She then emphasized "it is very important to the buyer. The lot will then be shipped to Europe or Russia."[253] The Baltser Account Representative told the Subcommittee she did not recall why it was important for the deal to be done in New York.[254]
On June 11, 2012, Mr. Baltser—on behalf of Steamort—purchased the painting for $2,800,000.[255]
Origin of funds used for purchase. On June 20, 2012, Highland Business wired $3,396,600 from its account at Societe Generale to Steamort's Tallinn Business Bank account.[256] The wire transfer instructions noted: "according to finder agreement."[257] On June 22, 2012, Steamort transferred $2,800,000 from its Tallinn Business Bank to Sotheby's Hong Kong account at HSBC Hong Kong.[258] The payment notes for the wire transfer stated: "for subjects of interior."[259]
Owner. When questioned, the Sotheby's Baltser Account Representative told the Subcommittee that she did not know for whom Mr. Baltser purchased this painting, nor did she recall asking him to reveal the identity of the buyer.[260]
Shipment. Art Courier managed the shipment of the painting by Dietl for "temporary storage at [Cologne]," Germany at the Hasenkamp art storage facility.[261]
d. René Magritte's Le Rendez-Vous and Salvador Dali's Papillons
| Date of Sale | November 7, 2012 |
| Price | $869,000 |
| Auction House | Sotheby's New York |
| Purchaser of Record | Steamort Limited |
Transaction background. On November 7, 2012, at Sotheby's Impressionist & Modern Art Sale, Mr. Baltser purchased René Magritte's Le Rendez-vous and Salvador Dali's Papillons in the name of Steamort.[262] Le Rendez-vous sold for $662,500, which included the hammer price of $550,000 and buyer's premium of $112,500.[263] Papillons sold for $206,500, which included the hammer price of $170,000 and buyer's premium of $36,500.[264] Together the cost of the two paintings totaled $869,000.[265]
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René Magritte's Le Rendez-Vous (Photo Credit: Sotheby's)
Origin of funds used for purchase. On November 13, 2012, Highland Business wired $903,180.11 from its account at Societe General to Steamort's Tallinn Business Bank account.[266] The wire transfer instructions noted: "according to finder agreement."[267] On the same day, Steamort wired $869,000 from its Tallinn Business Bank to Sotheby's New York account at JPMorgan Chase.[268] The wire transfer noted it was "for subjects of interior."[269]
Owner. When questioned, the Sotheby's Baltser Account Representative told the Subcommittee that she did not know for whom Mr. Baltser purchased these paintings, nor did she recall asking him to reveal the identity of the buyer.[270]
Shipment. Art Courier managed the shipment for both the paintings by Dietl to Germany for storage at the Hasenkamp art storage facility."[271]
e. Salvador Dali's Monstruo Blando Adormecido
| Date of Sale | December 13, 2012 |
| Price | $2,350,000 |
| Auction House | Sotheby's London |
| Purchaser of Record | Steamort Limited |
Transaction background. On December 13, 2012, Sotheby's London invoiced Steamort through Mr. Baltser for the purchase of Salvador Dali's Monstruo Blando Adormecido for $2,350,000 in a private sale.[272] The invoice was numbered: 92179804.[273]
In past instances, Mr. Baltser signed the purchase contract on behalf of Steamort. For this purchase, however, the purchase contract was signed by "A. Solovyeva."[274] The Baltser Account Representative emailed Mr. Baltser: "Sorry, this is not your signature. The accountants cannot accept it. Please sign it yourself and send me again."[275] Instead, Mr. Baltser sent a document that listed Alevtina Solovyeva as holding the power of attorney for Steamort.[276] He also provided Ms. Solovyeva's Russian passport.[277]
Origin of funds used for purchase. On December 14, 2012, Highland Business wired $3,113,550 from its Societe Generale account to Steamort's account at Tallinn Business Bank.[278] The wire transfer noted: "according to finder agreement."[279] On December 17, 2012, Steamort wired $2,350,000 from its Tallinn Business Bank to Sotheby's London account at HSBC London.[280] The wire transfer noted: "pmt by invoice 92179804 [dated December 13, 2012] for subjects of interior."[281]
Owner. When questioned, Sotheby's Baltser Account Representative told the Subcommittee that she did not know for whom Mr. Baltser purchased this painting, nor did she recall asking him to reveal the identity of the buyer.[282]
Shipment. A November 29, 2012 letter from Sotheby's London to Mr. Baltser confirmed the export license for the painting and also noted, "The next step is for the painting to be shipped to Cologne as per your discussions with [Sotheby's Baltser Account Representative]."[283] Art Courier managed the shipment of the painting to Germany for storage at the Hasenkamp art storage facility.[284]
f. Lyonel Feininger's Brucke II; Salvador Dali's Sans Titre: New Accessories; and Man Ray's Le Trop-Plein
| Date of Sale | February 4, 2014 |
| Auction House | Christie's London |
| Purchaser of Record | Baltzer Limited |
Transaction background. On February 4, 2014, Christie's London held its Impressionist/Modern Evening Sale.[285] During that sale, Mr. Baltser purchased Lyonel Feininger's Brucke II for £4,786,500.[286] Baltser Limited took title of the painting.[287] In another Christie's sale that same day, The Art of the Surreal, Mr. Baltser purchased Salvador Dali's Sans Titre: New Accessories and Man Ray's Le trop-plein.[288] Baltzer Limited took title for those two paintings as well.[289]
Origin of funds used for purchase. The Subcommittee did not receive wire information regarding the above paintings since Mr. Baltser purchased the paintings in British pounds in London. However, as explained below, it is likely Mr. Baltser purchased these paintings on behalf of the Rotenbergs. On August 30, 2015, an employee of Mr. Baltser emailed a Christie's employee a list of "links of our Client's works."[290] Mr. Baltser's employee explained "If you see any opportunities to promote these works or to make this collection more valuable please let me know."[291] The list of 31 works included Sans Titre, Le Trop-Plein, and Brucke II.[292] The Subcommittee traced funds used to purchase 16 of these paintings to Rotenberg-linked shell companies. Specific to Brucke II, Mr. Baltser's employee noted "The client wants to send this painting to an exhibition. Do you have any ideas? Do you have any news re Brucke 0? Is it possible to make an offer to the owner?"[293]
Owner. The Christie's Baltser Client Advisor told the Subcommittee Mr. Baltser bid for these paintings over the phone with her.[294] She stated someone was with Mr. Baltser during the bidding, but she did not recognize the individual's voice or ask who was with Mr. Baltser.[295] She did not know for whom Mr. Baltser purchased the paintings.[296]
As explained below, Mr. Baltser attempted to sell the Brucke II five years later at an auction at Sotheby's in February 2019.[297] However, prior to the auction, Sotheby's withdrew Brucke II from the auction due to a lack of interest in bidding on the painting.[298]
5. The United States Sanctioned Arkady and Boris Rotenberg on March 20, 2014
As stated above, the United States government imposed sanctions on certain "Russian government officials and members of the inner circle" on March 20, 2014 in response to Russia's annexation of Crimea, including Arkady and Boris Rotenberg.[299] Despite these sanctions, Mr. Baltser's business model did not change. He continued to purchase art just as he did before the United States imposed sanctions on the Rotenbergs and several entities associated with them.[300] This continued despite the auction houses taking actions to block transactions by sanctioned individuals.
Sotheby's. Boris Rotenberg and his wife, Karina, were listed in the Sotheby's client directory.[301] Sotheby's records reflect only one transaction regarding Boris or Katrina Rotenberg, which was Karina's art purchase for approximately £3,000 in May 2012.[302] In February 2014, the month before U.S. sanctions were imposed, the Baltser Account Representative requested that Sotheby's consider Boris and his wife "level 2" collectors.[303] Sotheby's considered clients given this designation "high value clients or collectors" with "a total transaction value greater than or equal to $5 [million], but less than $25 [million] in the last three years" or "a documented collection value of between $5 and 25 [million]."[304]
When asked by a Sotheby's colleague over email about Boris and Karina Rotenberg's collection interests, the Baltser Account Representative replied that they collected "Russian [works of art]" and "Sculpture (bronze)."[305] The Baltser Account Representative told the Subcommittee she could not remember why she requested that Sotheby's upgrade the Rotenbergs to level 2 clients when they had not made any purchases in the past two years before the request.[306] She commented she believed moving them to a level 2 client better reflected their significant potential to purchase artwork because of their wealth, and would give them access to preferred events.[307] The Baltser Account Representative said she never worked directly with Karina or Boris Rotenberg or met them in person.[308]
Internal emails indicate that Sotheby's blocked Boris Rotenberg from purchasing or consigning with the auction house following the March 20, 2014 sanctions.[309] On March 21, 2014, a Sotheby's employee emailed the Baltser Account Representative the list of 16 newly sanctioned Russian individuals from the U.S. Treasury Department that included Arkady and Boris Rotenberg and stated, "There are some familiar names on this list. I hope it won't effect [sic] the rest of our business."[310] In another email to the Baltser Account Representative, another Sotheby's employee noted, "quite a few of our clients are affected by this."[311] According to the Baltser Account Representative, transactions with Boris Rotenberg were subsequently blocked.[312]
Christie's. Christie's General Counsel explained to the Subcommittee that following the imposition of U.S. sanctions on Russia in March 2014, Christie's immediately recognized these sanctions posed a new "high risk" for them.[313] She observed that Christie's has a lot of Russian clients who are high net worth individuals.[314] In response to the imposition of sanctions, Christie's Compliance Manager for the Americas added that Christie's screened their client lists against the revised SDN lists and restricted any accounts they identified in their system.[315] He noted that Christie's increased its scrutiny of Russian art sales in the United Kingdom.[316] Neither Christie's General Counsel nor the Compliance Manager for the Americas were aware of any specific guidance provided to Christie's employees in response to the March 2014 sanctions.[317]
A Christie's employee circulated the U.S. Treasury Department's announcement of the April 28, 2014 sanctions to a group with the note "I thought it might [be] interesting to read."[318] Another Christie's employee responded "not good news unfortunately."[319] Still another Christie's employee, Managing Director of Christie's Russia, on the email chain responded:
No. The message internally though should I think focus on the fact that there is huge amounts of money currently being repatriated to Russia from overseas. This will lead to a lot of money needing to be invested in 'safe' assets which means being able to sell [post sanctions] locally becomes increasing interesting. And hence the need for the new office is crucial. It's also a strong message of support from Senior management that even in this economic climate Christie's is still investing in its Russian operation by going ahead with the new office. So look at the positives.[320]
While another Christie's employee responded that "its just more familiar faces are on the sanctions list," the Managing Director of Christie's Russia agreed, but wrote "I'm just telling you what I'm telling everyone in London . . . to fend off the 'poor you' 'poor russia' chat!"[321]
On May 19, 2014, Christie's blocked Arkady and Boris Rotenberg from Christie's spring exhibition marketing.[322]
6. Examples of Post-Sanctions Art Purchases
Despite blocking Arkady and Boris Rotenberg from buying or selling directly with their businesses, U.S. auction houses continued to do business with Mr. Baltser, even though he was known to be participating in art deals with wealthy Russian oligarchs, who could be subject to U.S. sanctions. In particular, the Sotheby's Baltser Account Representative told Sotheby's management that Arkady and Boris Rotenberg were Mr. Baltser's clients.[323] The Subcommittee also identified transactions with a private dealer and a public gallery based in New York linked to Rotenberg shell companies. In total, the Subcommittee identified $18,405,625 in art purchased in the months following the Rotenbergs being sanctioned by the United States. Examples of post-sanctions transactions facilitated by Mr. Baltser linked back to the Rotenbergs follow.[324]
a. Sotheby's New York Impressionist and Modern Art Day Sale: Multiple Works
| Date of Sale | May 8, 2014 |
| Price | $6,806,125 |
| Auction House | Sotheby's New York |
| Purchaser of Record | BALTZER LLP |
Transaction background. On May 8, 2014, less than two months after the United States imposed sanctions on Russia, Sotheby's New York held its Impressionist & Modern Art Day Sale.[325] The sale brought in $66 million, "marking a new record result for this auction in New York."[326] At that sale, Mr. Baltser purchased the following items listed on invoice number 92320018:[327]
| Description | Hammer Price | Buyers Premium | Total |
| Henry Moore, Figures | $500,000 | $105,000 | $605,000 |
| Marc Chagall, Femme et Enfant | $980,000 | $201,000 | $1,181,000 |
| Lyonel Feininger, Ulla | $170,000 | $39,000 | $209,000 |
| Lyonel Feininger, Yellow Ship on Red Sea | $60,000 | $15,000 | $75,000 |
| Lyonel Feininger, Steile Strasse | $200,000 | $45,000 | $245,000 |
| Georges Braque, Pichet et Journal | $2,500,000 | $465,000 | $2,965,000 |
| Tsuguharu Foujita, Portrait de Jeune Femme (Hanka Zborowska) | $290,000 | $63,000 | $353,000 |
| Maurice de Vlaminck, La Seine à Chatou | $475,000 | $100,000 | $575,000 |
| Tamara de Lempicka, Le Coquillage | $450,000 | $95,000 | $545,000 |
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Tsuguharu Foujita's, Portrait de Jeune Femme/Hanka Zborowska (Photo Credit: Sotheby's)
The invoice number 92320018 reflected the total purchase of art by Mr. Baltser as $6,753,000.[328] Mr. Baltser also purchased Emile Othon Friesz's La sieste for $53,125, which included a hammer price of $42,500 and a buyer's premium of $10,625.[329] Sotheby's numbered the invoice for La sieste as 92320019.[330] Together, both invoices totaled $6,806,125.
The Sotheby's Baltser Account Representative told the Subcommittee that Mr. Baltser had participated in the auction over the telephone with her.[331]
Origin of funds used for purchase. On May 27, 2014, Steamort wired $3,956,825 from its Tallinn Business Bank account to BALTZER LLP's Barclays account.[332] The wire transfer noted it was "part payment by invoice 40 [dated May 16, 2014] for subjects of interior."[333] And on June 3, 2014 Steamort wired $2,965,000 from its Tallinn Business Bank account to BALTZER LLP's Barclays account.[334] That wire transfer stated, "payment by invoice 40 [dated May 16, 2014] for subjects of interior."[335] Together the wires totaled $6,921,825.
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George Braque's Pichet et Journal (Photo Credit: Sotheby's)
On June 3, 2014, BALTZER LLP wired $6,806,125 from its Barclays bank account to Sotheby's New York JPMorgan Chase account.[336] The payment details noted that the wired funds were for invoices "92320018" and "92320019."[337]
Owner. When asked about these purchases, the Sotheby's Baltser Account Representative stated she assumed Mr. Baltser was purchasing these lots on behalf of one or more of his clients.[338] She recalled hearing Mr. Baltser talking to his client on the phone call during the auction and described "another Russian male voice in the background."[339] She did not know, however, with whom Mr. Baltser interacted during the auction.[340]
Shipment. Art Courier managed the shipment of the paintings by Dietl to Germany for storage at the Hasenkamp art storage facility.[341]
b. Works by Yakov Georgievich Chernikhov
| Date of Sale | June 4, 2014 |
| Price | $598,000 |
| Auction House | Bonhams New York |
| Purchaser of Record | BALTZER LLP |
Transaction background. On June 4, 2014, Bonhams held an auction in New York titled, "The Story of the 20th Century."[342] The auction examined "the last century from several angles, including history & politics, art & literature and science & technology, closing with a private collection of materials related to the history of computing."[343] The description of the auction continued: "The Arts & Literature section is anchored by an important graphic archive of Soviet architect and futuristic visionary, Yakov Chernikov, consisting of more than 1,000 original and richly detailed illustrations (estimate $350,000-450,000)."[344] The auction was held in Bonhams' Madison Avenue salesroom in New York.[345]
At the auction, Mr. Baltser purchased Lot 28 for $425,000, which included the $350,000 hammer price and a $75,000 buyer's premium.[346] Lot 28 included architectural drawings and sketches by Chernikhov.[347] Mr. Baltser also purchased Lot 29 for $173,000, which included the $140,000 hammer price and a $33,000 buyer's premium.[348] Lot 29 included Chernikhov's "unpublished journals, sketchbooks, and treatises."[349] Bonhams invoiced BALTZER LLP for both lots.[350] The invoice noted "auction details: BOK14061NY—21652" and the Client number for BALTZER LLP as 20353471.[351]
Origin of funds used for purchase. On June 16, 2014, Highland Ventures wired $612,950 from its Gazprombank account in Moscow to Steamort's Tallinn Business Bank account.[352] The wire transfer noted, "as per invoice 50 [dated June 9, 2014]."[353] On June 20, 2014, Steamort wired this same amount from its Tallinn Business Bank account to BALTZER LLP's Barclays bank account.[354] That wire transfer noted, "payment by invoice 61 [dated June 19, 2014] for subjects of interior."[355]
On July 8, 2014, BALTZER LLP wired $598,000 from its Barclays bank account to Bonhams' account at City National Bank.[356] The wire instructions noted "as per invoice 19146328 for sale BOK14061NY-21652 Client ID 20353471."[357]
Shipment. Art Courier handled the shipment for both Chernikhov lots, which were shipped by Dietl to Germary for storage at the Hasenkamp art storage facility.[358]
c. René Magritte's La Poitrine
| Date of Sale | June 2014 |
| Price | $7,500,000 |
| Private Sale | Private Art Dealer |
| Purchaser of Record | Highland Ventures Group Limited |
Transaction background. Magritte's La Poitrine was sold through a private art dealer located in New York City ("Private Dealer"). The Private Dealer explained to the Subcommittee during her interview that the sale of La Poitrine started like most of her sales, in that the seller's agent reached out to her to ask if she knew anyone interested in buying the painting.[359] Initially, the painting was located in Pittsburgh, Pennsylvania, but was transported to Cirkers Warehouse in New York City where the Private Dealer viewed it.[360] The Private Dealer explained that she did extensive due diligence to ensure the provenance of the painting. That due diligence included researching the artwork using well-established industry resources, viewing the painting herself, confirming based on information available to her and an analysis of the label on the back of the painting that the seller was the owner and the work was authentic, and consulting legal counsel.[361]
The Private Dealer explained to the Subcommittee that she contacted Art Advisor 1 to see if she knew of an interested buyer for La Poitrine because she had known Art Advisor 1 was looking for a Magritte.[362] The Private Dealer told the Subcommittee that she knew Art Advisor 1 from her time previously working for another gallery.[363] The Private Dealer stated that Art Advisor 1 was well known to that gallery, as well as in the industry, and had made a number of purchases there.[364] However, the Private Dealer had never sold a piece to Art Advisor 1 before contacting her regarding La Poitrine.[365]
The Private Dealer emailed Art Advisor 1 on May 9, 2014: "[A]ttached is a poor photo of the Magritte that has been offered to me for $9,500,000. I think it is a very good picture but too expensive. If you have interest I can see if there is flexibility. It is in NYC as well!"[366] Following several emails regarding negotiations on price, the Private Dealer emailed Art Advisor 1 on May 19, 2014: "I believe the owner will take $6,750,000 if payment is fast so we can close at $7.5 if you can get him to agree."[367] Art Advisor 1 emailed the Private Dealer to inform her that she should issue the invoice to:
HIGHLAND VENTURES GROUP LTD
Akara bldg., 24 De Castro str.
Wickhams Cay 1 Road Town
Tortola, BVI[368]
The Private Dealer issued the invoice to Highland Ventures on May 30, 2014.[369]
On June 5, 2014, Art Advisor 1 emailed the Private Dealer and relayed that "[t]he client want[s] the guarantee or certificate that it's exact Magritte from catalogue reasonee. . . . He wants guarantee that [] its exact [ly] this work from catalogue. And he send money."[370] Art Advisor 1 continued, "can we do just certifyed [sic] of the back photos by his lawyer? just easy 2 photos and certify that its original?"[371] In response, the Private Dealer emailed Art Advisor 1 "an image of the back of the painting with the Carnegie Museum label and name of the owner covered" and a picture of "the loan letter from Carnegie (also name of owner covered)."[372]
At the request of the Private Dealer, a New York Law Firm describing itself as "a boutique law firm with a practice focused on art matters," provided an opinion letter on La Poitrine dated June 5, 2014.[373] The New York Law Firm addressed the opinion letter to "Undisclosed Potential Purchaser" at "Undisclosed Address."[374] The opinion letter explained that a client of the law firm "requested that we view and confirm that the painting . . . is located in New York and ready to ship."[375] The letter stated that two attorneys, including the letter's signatory, had viewed the painting and included two pictures of the front of the painting and one of the back (or verso).[376] The letter stated that the attorneys were "provided with what appear to be copies of (i) an invoice reflecting the sale of the Artwork in 1965 (as described in the Catalogue Raisonne excerpt), (ii) 1981 correspondence with the editor of the Catalogue Raisonne, and (iii) museum documents with a name matching that on the verso of the painting."[377] The letter concluded:
While we, as attorneys, cannot provide warranties or legal advice to an undisclosed potential purchaser, we can and do confirm that the facts set forth above based on our personal knowledge are accurate and that we did today view and photograph the painting as described above. We are also advised that the current owner of the painting is, in connection with its sale, prepared to represent and warrant without qualification or reservation of any kind that the painting is an authentic work of art created by Rene Magritte.
On June 10, 2014, the Private Dealer emailed Art Advisor 1 the executed purchase agreement dated May 28, 2014. The purchase agreement listed Highland Ventures Group Limited as the buyer, while the Private Dealer was listed as the agent for the "Undisclosed Owner" for the purchase price of "US$7,500,000 (to be paid in equivalent Euros (€) with rate determined on the date of payment)."[378] The Private Dealer signed on behalf of her company as the Managing Member; Anna Wilkes signed on behalf of Highland Ventures as the company's Director.[379]
The purchase agreement attached wire transfer instructions that stated. $7,500,000 was sent from Advantage Alliance's account at Barclays to the Private Dealer's account at First Republic Bank.[380] On July 7, 2014, the Private Dealer wired Art Advisor 1's mother $400,000 for "[f]ixed agreed introduction commission fees on purchase of the painting by the client" to her LGT Group Bank account.[381]
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René Magritte’s La Poitrine (Photo Credit: Private Dealer)
The Private Dealer kept $237,500 and wired the remaining $6,862,500 to the seller’s agent.[382] The Private Dealer told the Subcommittee she never questioned the involvement of Highland Ventures or Advantage Alliance in the transaction, nor would it occur to her to question the involvement of either entity.[383] She stated she had relied, in part, on the advice of outside legal counsel and the involvement of established financial institutions in connection with the transaction.[384] She explained she also took comfort in the fact that the buyer was represented by a well-known person in the industry who had previous dealings with well-established galleries and art auction houses.[385]
Both the buyer and the seller remained confidential for the duration of the sale.[386] The Subcommittee also interviewed Art Advisor 1, who reported that she did not know the buyer’s identity.[387] Art Advisor 1 told the Subcommittee she was working for Art Advisor 2, who she believed knew the name of the buyer.[388] The Subcommittee interviewed Art Advisor 2 and asked her for the name of the buyer of La Poitrine.[389] Art Advisor 2 declined to give the Subcommittee the name of the buyer without the buyer’s consent; Subcommittee staff asked Art Advisor 2 to request the buyer allow her to provide their name to the Subcommittee.[390] Subcommittee staff also emailed Art Advisor 2 and asked for the name of the buyer.[391] She initially replied that she was still waiting for her client to answer the request to reveal his or her identity.[392] Subcommittee staff emailed Art Advisor 2 again a month later; she did not respond.[393]
Origin of funds used for purchase. The Subcommittee traced the payment for La Poitrine to Senton Holdings Limited ("Senton Holdings").[394] A Barclays's investigation found that Senton Holdings is a company that is ultimately owned by Arkady Rotenberg.[395] The Barclays investigatory memorandum explained that Senton Holdings was an offshore entity operated by AKM Associates Ltd on behalf of Estate Managers (Surrey) Ltd, which is owned by Arkady Rotenberg.[396]
On June 17, 2014, Senton Holdings wired $7,555,000 from its Gazprombank account in Moscow to Advantage Alliance's Barclays account in the United Kingdom.[397] The following day on June 18, 2014, Advantage Alliance sent $7,500,000 from its Barclays bank account to the Private Dealer's account at First Republic Bank with the wire instructions, "as per purchase confirmation [dated May 28, 2014]."[398]
Shipment. A BALTZER employee coordinated the shipment of the painting through Dietl International.[399] The painting was shipped to the Hasenkamp storage facility in Germany.[400]
d. Jean-Paul Riopelle's Ombre d'Espace
| Date of Sale | June 23, 2014 |
| Price | $1,750,000 |
| Private Sale | Public Art Gallery in New York |
| Purchaser of Record | Igor Rotenberg; BALTZER LLP |
Transaction background. In June 2014, a public art gallery located in New York (the "Gallery") exhibited works for sale at the annual Art Basel art fair in Switzerland.[401] The exhibit included a "large canvas by Jean-Paul Riopelle, a leading member of the European Abstract Expressionist movement."[402] The Gallery described Riopelle's Ombre d'Espace as "a thrilling juxtaposition of vivid reds, blues, yellows and greens in a rich, thick impasto. The painting flashes with energy, representing the dynamic action of the painter."[403]
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Jean Paul Riopelle's Ombre d'Espace
On June 17, 2014, representatives from the Gallery met Igor Rotenberg at the Art Basel exhibit in Switzerland.[404] Igor Rotenberg gave the Gallery representative his business card, which indicated he was the Chairman of the Board for NPV Engineering.[405] According to notes taken by the Gallery representative on Mr. Baltser's business card, Mr. Baltser accompanied Igor Rotenberg as his art advisor and translator.[406]
The notes also indicated a city and state where Mr. Baltser lived.[407] Later that day, June 17, 2014, a Gallery representative emailed Igor Rotenberg, "Congratulations on your decision to acquire the extraordinary painting Ombre d'Espace, 1954, by Jean Paul Riopelle for your collection."[408] The email attached the invoice for the painting stating the price of $1,750,000.00 and addressed the invoice to:
Igor Rotenberg
Chairman of the Board of Directors
NPV Engineering
5, B Strochenovsky Pereulok
Moscow 115054 RUSSIA[409]
This was the same address found on Igor Rotenberg's business card.[410]
On June 19, 2014, a Gallery representative emailed Mr. Baltser: "I understand from your conversation with [the Gallery owner] that information for the invoice for the Riopelle painting needs to be changed. Kindly send to us as soon as possible the updated details."[411] Mr. Baltser responded that same day with the updated information, which requested the invoice be changed to BALTZER LLP.[412] Mr. Baltser requested, "Please issue an invoice to BALTZER LLP using our London address."[413] As requested, the Gallery representative updated the invoice with the following address:
BALTZER LLP
Suite 9, 68 South Lambeth Road
London, UNITED KINGDOM[414]
Origin of funds used for purchase. On June 24, 2014, Highland Ventures wired $1,785,000.00 from its Gazprombank account to Steamort's account at Tallinn Business Bank.[415] The associated wire transfer instructions noted: "as per invoice no 65 [dated June 23, 2014]."[416] On June 26, 2014, Steamort wired $1,785,000.00 from its Tallinn Business Bank account to BALTZER LLP's Barclay's account.[417] The wire transfer instructions stated, "payment by invoice 65 [dated June 23, 2014] for subjects of interior."[418] That same day, BALTZER LLP sent $1,750,000 from its Barclay's account to the Gallery's account at Citibank.[419] The wire instructions noted, "invoice 11116 [dated June 17, 2014] client BALTZER LLP."[420]
Shipment. In July 2014, Ombre d'Espace was shipped to the Gallery's warehouse in New York located at Crozier Fine Arts.[421] Internal Gallery emails indicated that Mr. Baltser "asked us to keep the Riopelle in the US for Igor until his home in Italy is finished. He said that they would probably have it delivered in September when the home is ready."[422] On October 20, 2014, a Gallery representative emailed Crozier Fine Arts and requested that Ombre d'Espace be released to Dietl.[423] Dietl, in turn, requested that the painting be released to Tiffany Transport on October 22, 2014.[424] The airway bill indicated that the painting was shipped to the Hasenkamp art storage facility in Germany.[425]
e. Ormond Gigli's Girls in the Windows, New York City, 1960
| Date of Sale | September 29, 2014 |
| Price | $32,500 |
| Auction House | Christie's New York |
| Purchaser of Record | BALTZER LLP |
Transaction background. On September 29, 2014, Christie's New York held a photography auction that included Ormand Gigli's photograph Girls in the Windows, New York City, 1960.[426] At that auction, Mr. Baltser purchased Girls in the Windows for $32,500.[427] That price included a $26,000 hammer amount and a $6,500 buyer's premium.[428] The invoice was issued to BALTZER LLP in Moscow, Russia and was numbered: "DB 14002121."[429] The condition report for the photograph stated:
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Ormond Gigli's Girls in the Windows, New York City, 1960 (Photo Credit: Christie's)
Vibrantly colored chromogenic print on semi-glass paper with margins and flush-mounted on aluminum. Very minor bumps to print corners not affecting image, visible under close inspection only. A beautiful print in excellent condition.[430]
Origin of funds used for purchase. On October 6, 2014, Highland Ventures wired $33,312.50 from its Gazprombank account to Steamort's Tallinn Business Bank account.[431] The wire noted "per request DD October 2, 2014 (Ref. Christie's 20/21 Photographs."[432] On October 30, 2014, BALTZER LLP wired $32,500.00 to Christie's New York account at JPMorgan Chase with the note "invoice no DB 14002121 [dated September 29, 2014]."[433]
Owner. The Christie's Baltser Client Advisor stated that since Christie's New York auctioned the photograph, she was not on the phone with Mr. Baltser when he bid for it.[434] She did not know for whom Mr. Baltser purchased the photo, nor did she ever ask him to reveal the identity of the buyer.[435]
f. Tamara De Lempicka's Un Port Sous La Lune
| Date of Sale | November 6, 2014 |
| Price | $665,000 |
| Auction House | Christie's New York |
| Purchaser of Record | BALTZER LLP |
Transaction background. On November 6, 2014, at Christie's New York Impressionist & Modern Day Sale, BALTZER LLP successfully purchased Tamara De Lempicka's Un port sous la lune for $665,000, which included the hammer price of $550,000 and a buyer's premium of $115,000.[436] Christie's issued an invoice numbered: DB 14005218.[437] The condition report for the painting stated:
Oil on canvas. Wax-lined. There is frame abrasion to the extreme edges with associated losses in the upper corners. There are horizontal and vertical stretcher-bar marks. There are lines of stable craquelure to the canvas. There are surface abrasions to the right of the bird and above the hammer. There are pin-points of paint loss near the center right edge. Examined under ultra-violent light. There are scattered strokes of inpainting, predominantly to the aforementioned stretcher-bar marks and to the wall on the left.[438]
Origin of funds used for purchase. On November 26, 2014, Highland Ventures sent three wires totaling $721,369.98 from its Gazprombank account in Moscow to Steamort's Tallinn Business Bank account.[439] These three wires were in the following increments: $681,685; $15,435; and $24,249.98.[440] All three wires referenced a request or invoice dated November 24, 2014.[441]
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Tamara De Lempicka's Un Port Sous La Lune (Photo Credit: Christie's)
On December 1, 2014, Steamort wired $697,120.00 from its Tallinn Business Bank account to the BALTZER LLP's Barclays bank account.[442] On December 3, 2014, BALTZER LLP wired $665,000 to Christie's New York.[443] The wire noted it was for "invoice [number] DB 14005218 DD [November 6, 2014]."[444]
Owner. When asked, the Christie's Baltser Client Advisor stated she did not know for whom Mr. Baltser purchased the painting, nor did she ask Mr. Baltser to reveal the identity of the buyer.[445]
Shipment. Art Courier managed the shipment of Un port sous la lune by Dietl to the Hasenkamp art storage facility in Germany.[446]
g. Andreas Gursky's James Bond Island I and Niagara Falls
| Date of Sale | November 13-14, 2014 |
| Price | $1,054,000 |
| Auction House | Phillips New York |
| Purchaser of Record | Steamort Ltd |
Transaction background. On November 13, 2014, Mr. Baltser purchased Andreas Gursky's James Bond Island I at the Phillips Contemporary Art auction (Sale NY010714, Lot 14) in New York for $725,000.[447] This amount included the $600,000 hammer price and the $125,000 buyer's premium.[448] The next day, November 14, 2014, Mr. Baltser purchased Gursky's Niagara Falls at the same auction (Sale NY010814, Lot 228) for $329,000.[449] That amount included the $270,000 hammer price and the $59,000 buyer's premium.[450] Phillips originally invoiced BALTZER LLP for both pieces of art on November 19, 2014.[451] The two purchases together totaled $1,054,000.
Origin of funds used for purchase. On November 21, 2014, Highland Ventures wired $743,185 from its Gazprombank account in Moscow to Steamort's Tallinn Business Bank account.[452] The same day, Highland Ventures also wired $337,285 from its Moscow-based Gazprombank account to Steamort's Tallinn Business Bank account.[453] The amounts together totaled $1,080,470.
However, instead of Steamort forwarding the payment to BALTZER LLP, Steamort paid Phillips directly. An employee of Mr. Baltser's emailed Phillips that Mr. Baltser's client wired the money for the paintings to the wrong account.[454] Mr. Baltser's employee asked Phillips to re-invoice to a third party, Steamort.[455] Prior to re-invoicing to Steamort, consistent with Phillip's then-controlling policy, Phillips required Steamort to establish an official account with Phillips. It was within this process that Phillips obtained Steamort's certificate of incorporation and a letter of authorization,[456] which were provided.[457] The letter stated:
STEAMORT LTD, a company incorporated under the laws of Belize under registration number 77,269 on the 28th of August 2008, (hereinafter referred to as the "Company") hereby confirms that the Company has effected the payment of $1,054,000 (one million and fifty four thousand US dollars zero cents) with regard to the purchase of the artworks by BALTZER LLP who was acting as an agent of the Company at Phillips' Contemporary Art auctions held on 13 and 14 November 2014 in New York. The details of the purchased works of are as follows:
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Andreas Gursky's James Bond Island I (Photo Credit: Phillips)Lot No. 14.—Andreas Gursky, James Bond Island I (Invoice No. NY10714/1025/1)
Lot No. 228—Andreas Gurksy, Niagara Falls (Invoice No. NY010814/1109/1).[458]
The letter was electronically signed by Steamort Director Jason Hughes.[459] Phillips changed the purchaser on the invoice to Steamort for both works.[460]
On December 1, 2014, Steamort wired $725,000 and $329,000 from its Tallinn Business Bank account in two separate wires to Phillips' account at Citibank.[461] The wire transfer instructions noted the payment was for "payment by invoice . . . for subject of interior."[462] The instructions specifically referenced NY010714, Lot 14 and NY010814, Lot 228.[463]
Owner. The Phillips Baltser Account Representative stated she did not know for whom Mr. Baltser purchased these photographs or the owner of Steamort.[464]
Shipment. The photographs were separated for shipment. James Bond Island I was shipped to Moscow with Alexander Dobrovskiy listed on the invoice on Phillips letterhead.[465] Niagara Falls was shipped to Hasenkamp art storage facility in Germany with BALTZER LLP listed on the invoice.[466] Art Courier managed the shipments handled by Dietl.[467]
7. Mr. Baltser Shipped Art Purchased by Rotenberg-linked Companies to the Hasenkamp Storage Facility in Germany
A number of pieces of art examined by the Subcommittee were shipped to Hasenkamp in Germany for storage. As such, the Subcommittee requested information from Hasenkamp on the pieces of art maintained there in storage related to Mr. Baltser or BALTZER LLP.[468] In response, a Hasenkamp representative initially stated that he would need Mr. Baltser's consent to release that information.[469] Later, the Hasenkamp representative sent an email indicating that he had determined that Mr. Baltser only managed the art stored at the facility.[470] The name on the contract with Hasenkamp to store the art was Highland Business Limited, which was later replaced by Taide Connoisseur Selection.[471] The Hasenkamp representative could not provide the name of the individual behind Highland Business Limited, since the contract was signed in the company's name.[472]
A website that is no longer publicly available stated, "Taide Connoisseur Selection Limited was incorporated on 5th October 2016 with registration number 2016-00336 and is licensed by Financial Services Regulatory Authority as Private Mutual Fund (number IMF (PF)/025 as characterized by The International Mutual Act 12.16.[473] A tab for "Key Staff" listed only one person: Dr. Mark Omelnitski.[474]
In August 2019, during the course of the Subcommittee's investigation, the Taide Connoisseur Selection account at Hasenkamp was closed and all art stored under the account was shipped to Moscow.[475]
The Subcommittee documented at least one purchase by Taide Connoisseur during the course of its investigation. That purchase was of Joseph Albers's Embedded Linear Construction II.
a. Joseph Albers's Embedded Linear Construction II
| Date of Sale | September 28, 2017 |
| Price | $47,500 |
| Auction House | Christie's New York |
| Purchaser of Record | Baltzer Limited |
Transaction background. Josef Albers's Embedded Linear Construction II was offered for sale on September 28, 2017 as part of Christie's Post-War and Contemporary Art sale in New York, sale number 13892.[476] The work was Lot 17. The condition report provided by Christie's noted that, "The work is structurally sound and in working order. Faint abrasions, small spots of discoloration and minute accretions are visible occasionally to the metal. A few faint handling marks are to the glass."[477] Mr. Baltser bought the work in the name of Baltzer Limited with a hammer price of $38,500 and a buyer's premium of $9,500 for a total of $47,500.[478]
Origin of funds used for purchase. On November 14, 2017, Taide Connoisseur sent $50,129.88 from its Gazprombank account in Moscow to Baltzer Limited's account at Ameriabank.[479] On November 16, 2017, Baltzer Limited sent $47,500 to Christie's account at JPMorgan Chase in New York with the wire instructions "Sale no 13892 [dated September 28, 2017] Lot 17."[480]
A non-free image has been removed from this page.
Joseph Alber's Embedded Linear Construction II (Photo Credit: Christie's)
Shipment. A BALTZER employee emailed Christie's on November 28, 2017 and requested that the auction house "organize shipping of this lot from New York to Frankfurt."[481] The BALTZER employee referred Christie's to an Art-Courier employee who explained that "Christie's will need to organize export from the USA and airfreight to [Frankfurt Airport] airport only, uncleared. We will handle supervision in Germany, collection of the crate from [Frankfort Airport] and local delivery under bond to our bonded warehouse by ourselves."[482] The contact for Christie's at the Frankfort Airport was an employee of Hasenkamp art storage facility located in Cologne.[483] BALTZER paid Christie's the shipping costs of $2,575 on January 12, 2018.[484]
8. Mr. Baltser Attempted to Sell Art Purchased with Funds Traced to Rotenberg-linked Companies
Information provided to the Subcommittee indicates that Mr. Baltser has also sought to sell pieces of art owned by his clients. His efforts in 2015 to generate interest among potential buyers in 31 high-value paintings provides further evidence of Mr. Baltser's business relationship with the Rotenbergs.
a. Mr. Baltser Sent Christie's a List of Works in the Rotenberg's Collection
On August 30, 2015, one of Mr. Baltser's employees emailed Christie's stating: "Please find below the links of our Client's works....If you need any extra information for any of these works, please feel free to ask. If you see any opportunities to promote these works or to make this collection more valuable please let me know."[485] Mr. Baltser's employee continued: "I also have more clients with some [impressionist] works they are ready to sell."[486]
The email listed 31 paintings by Giorgio de Chirico, Salvador Dali, René Magritte, Pierre-Auguste Renoir, Man Ray, Lyonel Feininger, Tsuguharu Foujita, Tamara de Lempicka, Henry Moore, Marc Chagall, Maurice de Vlaminck, Georges Braque, and Yves Tanguy.[487] The list read as stated below and included the following paintings, 16 of which are also highlighted above:[488]
1. Giorgio de Chirico
- Le Muse Inquietanti
- Ettore e Andromatica
2. Salvador Dali
- Nu de Dos, Gala
- Bataille Autour d'un Pissenlit (This work is available for sale)
- Sans Titre
- Ampurdanese Yang and Yin
- Papillons, 1950
- Soft Monster, 1976
3. Renee Magritte
- The Pleasure Principle
- La Generation Spontanee, 1937 (This work is available for sale)
- La Poitrine, 1960.
- Le Renez-Vous
- La Traversee Difficile II
- Le Prince Charmant
- Towards Pleasure
4. Pierre-Auguste Renoir
- Femme dans un paysage
- Still Life with Fruits
5. Man Ray
- Le Trop-plein, 1937
6. Lyonel Feininger
- Brucke II
- The Clients wants to send this painting to an exhibition. Do you have any ideas? Do you have any news re Brucke 0? Is it possible to make an offer to the owner?
- Steep Street
- Ulla
- Sailing ship on Red Sea
A non-free image has been removed from this page.
Marc Chagall's Scene Champetre/Femme et enfant (Photo Credit: Sotheby's)
7. Tsuguharu Foujita
- Hanka Zborowska
8. Tamara De Lempicka
- Le Coquillage, 1939
- Nature Morte avec Lys et Photo
- New York Harbor
- All these three works are in Turin till tomorrow (August 31) and then they move to Verona for the exhibition.
9. Henry Moore
- Three Figures
10. Marc Chagall
- Scène champêtre
11.Maurice de Vlaminck
- La Seine a Chatou, 1909
12. Georges Braque
- Pichet et Journal
- Chagafe
- MAZC
13. Yves Tanguy
- The Speeding Bow
When the Subcommittee showed the email containing the above list of works to her, the Christie's Baltser Client Advisor noted that the email was not addressed to her, and she did not know who owned the collection of works.[489] As explained above, the Subcommittee traced funds used to purchase 16 of the 31 listed paintings back to Rotenberg-linked shell companies suggesting the Rotenbergs were the "client" of Mr. Baltser's who owned the collection.[490]
b. Mr. Baltser Attempted to Sell Brucke II
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Salvador Dali's Battle Around a Dandelion (Photo Credit: Fundacio Gala Salvador Dali)
In late 2018, Mr. Baltser approached Christie's and Sotheby's about selling two works that were part of the collection listed above. Those two works were Salvador Dali's Bataille Autour d'un Pissenlit ("Battle around a dandelion") and Lyonel Feininger's Brucke II.[491] Both auction houses provided estimates for the auction of the paintings and deal terms. Mr. Baltser chose Sotheby's to auction Brucke II, but the painting was ultimately pulled from the auction due to lack of interest. At the time, the Subcommittee was investigating both auction houses and Mr. Baltser.
i. Mr. Baltser Approached Christie's to Sell Brucke II
An employee of Mr. Baltser emailed Christie's Baltser Client Advisor on December 7, 2018 to alert Christie's that one of Mr. Baltser's clients was interested in selling Salvador Dali's Bataille Autour d'un Pissenlit and Lyonel Feininger's Brucke II.[492] The email noted that both of the paintings were located in Germany for storage.[493] She responded to Mr. Baltser's employee on December 21, 2018 that Christie's suggested an offering price for Feininger's Brucke II between £4 million and £6 million and an offering price between £2 million and £3 million for Dali's Bataille Autour d'un Pissenlit.[494]
On January 14, 2019, Christie's Director, Head of Evening Sale for Impressionist and Modern Art emailed Mr. Baltser the terms the auction house would provide if Mr. Baltser chose Christie's to consign and sell Brucke II.[495] The email documented what Christie's would offer with regard to "Sale date and Context:
- Our Impressionist & Modern Art Evening Sale will be held on the 27th February.
- The market for German art is incredibly strong at the moment, so now is a very good time for your client to offer the work. Your work would be a highlight of the German section of the sale.
- You will recall the work was acquired from us by your client, so it is a work we know very well, and we also know the under-bidders of the work when it was sold to your client. This is a unique knowledge advantage that Christie's has.
- This February sale season will be one of the strongest ever at King Street—we have an incredible single owner collection 'Hidden Treasures' which will be before the Evening Sale, and a number of masterpieces confirmed for the Evening Sale. I attach an overview of these works, and also the related press releases. As a result, all top Impressionist & Modern collectors will be at Christie's this season.
- These works already consigned are very complementary to your work—and nothing we have consigned will compete with your work."[496]
The email also described the marketing Christie's would offer stating, "We can provide the following:
- Feature window banner at King Street
- Frontispiece detail inclusion in the Impressionist & Modern Art Evening Sale
- Tour to New York as part of February's sale preview (early February)
- Eight pages in the catalogue including a fold-out illustration
- Inclusion in Christie's Magazine as a highlight of the Impressionist & Modern Art Evening Sale
- Inclusion in the Chinese language sale ebrochure
- Online highlight of the sale
- Postcard at front of House"[497]
Financially, Christie's offered "an enhanced hammer of 106%."[498] Regarding timing, Christie's noted, "We will be printing the catalogue around the 31st [of] January, so we have around two weeks to finalise everything. The timing will be tight, but it is all possible."[499]
Two days later, on January 16, 2019, Christie's offered to increase the hammer level to 107.5 percent explaining, "This is beyond our normal level for this value but we are keen to work with you on this project and to work again with this fantastic picture."[500]
The Baltser Client Advisor explained that Christie's was eager to have the Brucke II for the evening sale, but the consignment was very competitive.[501] She noted that Mr. Baltser was also talking to Sotheby's about selling the painting.[502] Ultimately, Mr. Baltser consigned Brucke II with Sotheby's to sell, but the Baltser Client Advisor stated that Mr. Baltser did not make the decision.[503] She explained that Mr. Baltser told her the lawyer for his client who owned the painting made the decision to consign the painting to Sotheby's.[504]
ii. Sotheby's Agreed to Sell Brucke II
Mr. Baltser also contacted the Baltser Account Representative at Sotheby's about consigning and selling Brucke II. She emailed Mr. Baltser that Sotheby's estimated the painting would bring between £4 million and £6 million at auction.[505] In an internal Sotheby's email, she confirmed that "the estimate was fine (around the same as offered by other auction houses)."[506] She also noted, "this client has an important collection which might be potentially for sale in the future:
- 4 works by Magritte
- 3 works by Dali
- several De Chirico(s)
- several De Lempicka"[507]
Brucke II was added to Sotheby's Impressionist and Modern Art Evening Sale in London scheduled for February 26, 2019.[508] Two versions of the contract to consign and sell the painting existed. The first contract was dated January 15, 2019.[509] The terms of the contract made clear that Sotheby's estimated Brucke II would sell for between £4,000,000 and £6,000,000 at auction.[510] The contract also established that Sotheby's would pay Mr. Baltser "7.5 [percent] of the hammer price achieved for the [Brucke II]."[511] Mr. Omelnitski signed on behalf of BALTZER LLP, but Sotheby's did not execute this version.[512]
Sotheby's did sign a version of the contract with the same terms dated January 18, 2019.[513] However, this version was not signed by Mr. Omelnitski on behalf of Mr. Baltser. Instead, Markom Directors (Cyprus) LTD signed the January 18, 2019 version of the contract on behalf of Mr. Baltser.[514] The Baltser Account Representative did not know why there were two versions of the contract, or why Sotheby's only signed the January 18, 2019 version of the contract.[515] Following the execution of the contract, the Baltser Account Representative coordinated the shipment of Brucke II from Cologne to London.[516]
Sotheby's requested information related to sanctions compliance. In light of the Subcommittee's ongoing investigation, Sotheby's sent due diligence questions to Mr. Baltser regarding the proposed transaction and his general compliance program.[517] In the email attaching the questions, the Baltser Account. Representative explained to Mr. Baltser, "There is additional scrutiny being placed on transactions with clients in certain regions and we are therefore asking for this additional information."[518] The Baltser Account Representative told the Subcommittee this was the first time she had seen Sotheby's request such information from a client.[519]
Sotheby's questioned Mr. Baltser regarding the February 2014 purchaser of Brucke II. As part of Sotheby's due diligence questions to Mr. Baltser regarding the Brucke II proposed consignment, Sotheby's requested that Mr. Baltser respond to a series of questions regarding compliance with sanctions laws entitled, "Sotheby's Sanctions Questionnaire."[520] Sotheby's asked: "When you purchased Lyonel Feininger, Brucke II, from Christie's on 4 February 2014, were you acting as a bidding or buying agent on behalf of another individual or entity? If yes, on whose behalf were you acting?"[521] Mr. Baltser responded:
The purchase was made on May 14, 2014. Yes, we were acting on behalf of our client, the legal entity. However, our Finder agreement with the client contains a non-disclosure provision, which legally prohibits us to disclose the client's identity to anyone without the client's consent. Further to the below explanations, please note that after all appropriate checks by us at that time, we are able to confirm absence of any sanctions of any country in relation to that client.[522]
The Subcommittee subsequently requested that Sotheby's provide it with a copy of those due diligence questions and answers and told Sotheby's that it had no objection to Sotheby's notifying Mr. Baltser at that time of the Subcommittee's request for those documents. After the Subcommittee reviewed those materials, which disclosed the identity of the company and individual Mr. Baltser stated currently owned Brucke II; it did not disclose the name of the previous owner who purchased Brucke II at a Christie's auction on February 4, 2014 due to a non-disclosure agreement. The Subcommittee requested that Sotheby's ask Mr. Baltser to request that his previous client consent to disclosing his or her name to Sotheby's.[523] Sotheby's requested the information, but as of the publishing of this report, Sotheby's has been unable to obtain the requested consent.[524]
In addition, recognizing the disparity in the public sale date and the sale date provided by Mr. Baltser in his response to Sotheby's due diligence questions, the Chairman of Sotheby's Russia emailed Mr. Baltser on April 1, 2019 and pointed out "the Christie's sale occurred in February, and not in May."[525] Mr. Baltser responded, “My apologies, you are indeed correct and the sale date was on 4 February 2014."[526]
Mr. Baltser did not provide the name of the February 2014 purchaser. As stated above, Mr. Baltser asserted that he could not reveal the name of the individual or entity that purchased the Brucke II on February 4, 2014 due to a non-disclosure provision in the relevant contract. 1044 Mr. Baltser stated, however, "Yes, we have identified the ultimate beneficial owner of the purchasing entity, and determined that neither the entity nor the ultimate beneficial owner of the entity were on any sanctions list or blocked persons list in any jurisdiction."[527]
Sotheby's also asked Mr. Baltser: "Are you now selling on behalf of another individual or entity or does any other individual or entity have a financial interest in the sale?"[528] Mr. Baltser responded to that question, "Yes, we are selling on behalf of our current client (who is different from, and not associated with, the previous client), whose details are presented below."[529] The attachments asserted that the Brucke II now belonged to a company incorporated in the Marshall Islands.[530] In response to further questioning by Sotheby's, Mr. Baltser confirmed ultimate beneficial owner of the Marshall Island company and provided a Russian passport for that individual.[531] He continued, "We confirm that appropriate sanctions checks have been done for [the UBO] and [the UBO] is not subject to sanctions in any jurisdiction."[532]
Sotheby's also questioned Mr. Baltser about his other clients and asked, "Have you done all appropriate checks to ensure that none of the individuals or entities on whose behalf you have acted for in prior transactions with Sotheby's were subject to any sanctions by the U.S., UK, EU or other country?"[533] In response, Mr. Baltser stated, "Yes, we have done such checks and none of these check found any sanctions applicable to the persons on whose behalf we have acted for in prior transactions with Sotheby's."[534]
Brucke II was in storage at Hasenkamp art storage facility in Germany.[535] The transport of the painting to London was managed by Art Courier.[536] The Baltser Account Representative explained that the Brucke II was removed from the auction because Sotheby's was not able to identify any potential bidders before the day of the sale.[537]
9. Mr. Baltser Did Not Cooperate with the Subcommittee's Investigation
During the course of its investigation, the Subcommittee asked to interview Mr. Baltser.[538] Through his counsel, Mr. Baltser declined the interview request and stated that he was in Moscow with no plans to return to the United States. On August 23, 2019, Mr. Baltser's counsel wrote to the Subcommittee on behalf of Baltzer Limited (the "August 2019 Letter") following a discussion of the Subcommittee's findings. The August 2019 letter stated, in part:
Baltzer [Limited], a Cyprus company, is one of many art dealerships that offer services to individuals and entities who wish to purchase or sell fine art in private sales or at auctions. Some of Baltzer [Limited]'s clients are Russian nationals and entities, and Russian law allows such individuals and entities to engage Baltzer [Limited] on a basis which affords them confidentiality and prohibits Baltzer [Limited] from disclosing their identities without their consent under pains of administrative, civil, or criminal penalties. As such, Russian law severely limits the information that Baltzer [Limited] would be able to provide your Subcommittee.
Baltzer [Limited] can confirm, however, that it has never, at any time, represented or transacted in any way with Boris or Arkady Rotenberg. Baltzer [Limited] strongly denies any suggestion to the contrary.[539]
In another letter from his attorney on July 13, 2020 letter (the "July 2020 Letter"), Mr. Baltser stated that BALTZER LLP was dissolved in 2017, but never dealt with Arkady or Boris Rotenberg.[540] The July 2020 Letter also stated that Mr. Baltser's agreement with Steamort required him to maintain the confidentiality of Steamort's clients, but he "has personal knowledge that he was never involved in any transaction involving Steamort Ltd. that constituted any transaction with any person or entity that appear on the OFAC list at the time of the transaction."[541] The July 2020 Letter also stated that Mr. Baltser could not confirm whether he ever dealt with Igor Rotenberg due to Russian law.[542]
Neither letter addressed whether Highland Business or Highland Ventures were clients of Baltzer Limited, BALTZER LLP, or Steamort. Despite ICIJ publishing information surrounding the Panama Papers since the spring of 2016, the July 2020 Letter stated that Baltzer Limited had:
no access to or knowledge of the Panama Papers and is unaware of anyone who does. Accordingly, Baltzer has and must reasonably rely on the U.S. Department of Treasury's own determination through the OFAC list. That list—the government's own official position—confirms that Highland [Business and Highland Ventures are] not sanctioned. Additionally, the most widely-accepted commercial sanctions list check services, Visual Compliance and Thompson Reuters World-Check, do not list Highland entities as owned by Boris or Arkady Rotenberg.[543]
As noted above, Barclays used the information found in the Panama Papers to conduct an extensive investigation of its accounts related to Mr. Omelnitski. This investigation determined that Mr. Omelnitski and his company "created shell companies for sanctioned individual [Arkady] Rotenberg . . . intentionally structured to be opaque in order to hide the identity of the true beneficiaries."[544] The investigation led to the bank closing all Mr. Omelnitski's accounts, including accounts related to Mr. Baltser.[545]
10. During the Course of the Subcommittee's Investigation Phillips, Christie's, and Sotheby's Stopped Transacting with Mr. Baltser
During the Subcommittee's investigation Phillips, Christie's, and Sotheby's reported that the auction houses would no longer transact with Mr. Baltser or BALTZER LLP due to the Subcommittee's investigation. Counsel for Phillips told the Subcommittee it stopped transacting with Mr. Baltser when it received the Subcommittee's initial request.[546] Christie's stopped transacting with Mr. Baltser during the course of the Subcommittee's investigation.[547] And counsel for Sotheby's reported the auction house added Mr. Baltser to its "all transactions blocked" list, which requires an analysis of each transaction before it is executed.[548] Counsel for Sotheby's reported the auction house made this determination after reviewing documents from another auction house used by Subcommittee staff during its interview of a Sotheby's employee.
Counsel for Baltser Limited addressed the auction houses blocking Mr. Baltser in his August 2019 Letter response to the Subcommittee:
Despite Baltzer's innocence, the inquiries posed by this Subcommittee to the art dealership and auction community have already severely impacted Baltzer's ability to conduct the legitimate business in which it has engaged for several decades. This has done substantial collateral damage to Baltzer and its employees, and has forced Baltzer to largely suspend operations.[549]
Counsel for Bonhams U.S. reported that the auction house has continued to transact with the BALTZER Agency in a limited capacity.[550] Specifically, Bonhams U.S. has accepted bids from the BALTZER Agency, but has not accepted consignments.[551] With respect to each bidding registration, the BALTZER Agency has been asked to confirm, prior to bidding, whether they are acting as an agent or principal.[552] If the BALTZER Agency has responded that it is acting as an agent, it must provide (and has provided) as a condition of being permitted to bid: (i) the full name, address and date of birth of the principal; (ii) a copy of the passport of the principal; (iii) a letter of authorization from the principal; and (iv) a completed bidding registration form, signed by the principal.[553]
- ↑ SOT-000350.
- ↑ Gregory Baltser—Antique Expert, Collector & Decorator, Fine Art Shippers (Mar. 15, 2019), https://fineartshippers.com/gregory-baltser-antique-expert-collector-decorator/.
- ↑ Ilya Kushnirskiy, Introducing BALTZER—Your Personal Guide to Art Collecting, Fine Art Shippers (Mar. 19, 2019), https://www.einpresswire.com/article/479578592/introducing-baltzer-your-personal-guide-to-art-collecting.
- ↑ Christies-PSI-00000048-49.
- ↑ Baltzer: Your Personal Guide to the World of Art & Collecting, Baltzer LLC (2020), https://baltzer.com/en/about.
- ↑ Ilya Kushnirskiy, Introducing BALTZER—Your Personal Guide to Art Collecting, Fine Art Shippers (Mar. 19, 2019), https://www.einpresswire.com/article/479578592/introducing-baltzer-your-personal-guide-to-art-collecting.
- ↑ Baltzer: Your Personal Guide to the World of Art & Collecting, Baltzer LLC (2020), https://baltzer.com/en/about.
- ↑ Baltzer, Participation at an Auction (2018), document on file with the Subcommittee.
- ↑ Id.
- ↑ Id.
- ↑ Subcommittee Briefing with Sotheby's Employees (Oct. 25, 2018).
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Subcommittee Briefing with Christie's Employees (Feb. 8, 2019).
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Subcommittee Briefing with Bonhams U.S Counsel (Feb. 22, 2019).
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Subcommittee Briefing with General Counsel for Phillips (Dec. 11, 2018).
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Christies-PSI-00005647.
- ↑ Christies-PSI-00005647; Christies-PSI-00005637-46.
- ↑ Christies-PSI-00083483-84; Christies-PSI-00083535-36.
- ↑ Christies-PSI-00083483-84.
- ↑ Id.
- ↑ Christies-PSI-00020892.
- ↑ James Ball, Offshore secrets revealed: the shadowy side of a booming industry, Guardian (Nov. 25, 2012), https://www.theguardian.com/uk/2012/nov/25/offshore-secrets-revealed-shadowy-side.
- ↑ Id.
- ↑ Id.
- ↑ Christies-PSI-00005637-46.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ DBAG0000011; BOFA-40684 (wires from 2010 were not available).
- ↑ Id.
- ↑ Id.
- ↑ Aester Limited was incorporated on December 7, 2016, in England and Wales, with a registered office address of 13 John Princes Street, Second Floor, London, England. See Certificate of Incorporation of a Private Limited Company, Company No. 10514112 (Dec. 7, 2016), https://beta.companieshouse.gov.uk/company/10514112. According to its filing history, on March 16, 2018, ATM Secretaries Limited, the same Secretary of Steamort, was appointed as the Secretary of the company. See Appointment of Corporate Secretary, Company No. 10514112 (Mar. 16, 2018), https://beta.companieshouse.gov.uk/company/10514112. On January 1, 2018, Oleksandr Baksaliar, a Ukrainian national, was listed as a "person with significant control" of the company. See Notice of Individual Person with Significant Control, Company No. 10514112 (Jul. 3, 2018), https://beta.companieshouse.gov.uk/company/10514112. According to the company's confirmation statement filed on December 28, 2018, Aester Limited's principal activity is the "wholesale of furniture, carpets and lighting equipment; wholesale of electronic and telecommunications equipment and parts; wholesale of wood, construction materials, and sanitary equipment; and wholesale of hardware, plumbing and heating equipment and supplies." See Confirmation Statement, Company No. 10514112 (Dec. 28, 2018), https://beta.companieshouse.gov.uk/company/10514112.
- ↑ Sinara Company LP was registered in the United Kingdom as limited partnership ("LP") on January 16, 2017. Just like Aester Limited, the principal place of business was listed as 13 John Princes Street, 2nd Floor, London, England. See Application for Registration of a Limited Partnership, Company No. LP17803 (Jan. 16, 2017), https://beta.companieshouse.gov.uk/company/LP017803. The general nature of the business was listed as "tourism and ticketing services." See Application for Registration of a Limited Partnership, Company No. LP17803 (Jan. 16, 2017), https://beta.companieshouse.gov.uk/company/LP017803. The partners of Sinara Company LP were listed as Portervale Trading Company and Reox Limited. See Application for Registration of a Limited Partnership, Company No. LP17803 (Jan. 16, 2017), https://beta.companieshouse.gov.uk/company/LP017803. On March 30, 2019, Sinara Company LP was dissolved; Portevale Trading Company signed the dissolution document. See Statement specifying the nature of a change in the limited partnership, Company No. LP17803 (Mar. 30, 2019), https://beta.companieshouse.gov.uk/company/LP017803.
- ↑ BOFA-40684.
- ↑ Id.
- ↑ Id.
- ↑ Subcommittee interview of Christie's Baltser Client Advisor (Jul. 15, 2019).
- ↑ Id.
- ↑ Christies-PSI-00059124-27.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Christies-PSI-00041928.
- ↑ Id.
- ↑ Christies-PSI-00041976-87.
- ↑ Id.
- ↑ Id.
- ↑ Christies-PSI-00042009.
- ↑ Christies-PSI-00035437.
- ↑ Id.
- ↑ Id.
- ↑ Christies-PSI-00042041.
- ↑ Subcommittee interview of Christie's Baltser Client Advisor (Jul. 15, 2019).
- ↑ Christies-PSI-00099753.
- ↑ Christies-PSI-00099719.
- ↑ Christies-PSI-00099753.
- ↑ Christies-PSI-00099787.
- ↑ Id.
- ↑ Subcommittee interview of Christie's Baltser Client Advisor (Jul. 15, 2019).
- ↑ Subcommittee interview of Christie's former Global Head of Compliance (Jul. 15, 2019).
- ↑ Christies-PSI-00016692-94; SOT-005728-30.
- ↑ Christies-PSI-0016692-00016694.
- ↑ Id.
- ↑ Christies-PSI-00000649.
- ↑ Christies-PSI-00000651.
- ↑ Christies-PSI-00000653-54.
- ↑ Christies-PSI-00000694.
- ↑ Christies-PSI-00020853-56.
- ↑ Christies-PSI-00036515-16.
- ↑ Id.
- ↑ Christies-PSI-00036540.
- ↑ Christies-PSI-00037583-85.
- ↑ Christies-PSI-00000725-31.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Christies-PSI-00000764.
- ↑ Christies-PSI-00005845-76.
- ↑ Id.
- ↑ Id.
- ↑ Christies-PSI-00001179−1237.
- ↑ Id.
- ↑ Id.
- ↑ See Christies-PSI-00001190.
- ↑ See Christies-PSI-00001194.
- ↑ See Christies-PSI-00001194−95.
- ↑ See Letters from Counsel for Christie’s to Subcommittee staff (Mar. 5, 2019 and Jul. 22, 2020).
- ↑ Christies-PSI-00001516-21.
- ↑ Christies-PSI-00000032-34.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Subcommittee interview of Christie's former Global Head of Compliance (Jul. 15, 2019).
- ↑ Id.
- ↑ Christies-PSI-00000032-34.
- ↑ Christies-PSI-00098744.
- ↑ Subcommittee interview of Christie's former Global Head of Compliance (Jul. 15, 2019).
- ↑ Christies-PSI-00098749-52.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Christies-PSI-00088125.
- ↑ Christies-PSI-00035361-62.
- ↑ Id.
- ↑ Subcommittee interview of Christie's former Global Head of Compliance (Jul. 15, 2019).
- ↑ Christies-PSI-00098858.
- ↑ Subcommittee interview of Christie's former Global Head of Compliance (Jul. 15, 2019).
- ↑ Christies-PSI-00098961.
- ↑ Subcommittee interview of Christie's former Global Head of Compliance (Jul. 15, 2019).
- ↑ Christies-PSI-00098976.
- ↑ Subcommittee interview of Christie's former Global Head of Compliance (Jul. 15, 2019).
- ↑ Christies-PSI-00093620-23.
- ↑ Christies-PSI-00093885-87.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Christies-PSI-00094167-68.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Subcommittee interview of Christie's former Global Head of Compliance (Jul. 15, 2019).
- ↑ Christies-PSI-00005015-27.
- ↑ Subcommittee interview of Christie's former Global Head of Compliance (Jul. 15, 2019).
- ↑ Christies-PSI-00099306-14.
- ↑ Id.
- ↑ Id.
- ↑ Subcommittee Interview of Christie's former Global Head of Compliance (Jul. 15, 2019).
- ↑ Id.
- ↑ Id.
- ↑ SOT-015933.
- ↑ SOT-018689-93.
- ↑ Subcommittee interview of Sotheby's Baltser Account Representative (Jun. 27, 2019).
- ↑ SOT-000406-07; SOT-006167.
- ↑ Subcommittee interview of Sotheby's Baltser Account Representative (Jun. 27, 2019).
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ SOT-015933.
- ↑ Subcommittee interview of Sotheby's Baltser Account Representative (Jun. 27, 2019).
- ↑ Id.
- ↑ Id.
- ↑ SOT-115602.
- ↑ Subcommittee interview of Sotheby's Baltser Account Representative (Jun. 27, 2019).
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ SOT-172699-711.
- ↑ Id.
- ↑ Id.
- ↑ Subcommittee interview of Sotheby's Baltser Account Representative (Jun. 27, 2019).
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Subcommittee interview of Sotheby's Baltser Account Representative (Jun. 27, 2019); SOT-172576-78.
- ↑ SOT-172576-78.
- ↑ Id.
- ↑ SOT-018689-93.
- ↑ SOT-018689-93.
- ↑ Subcommittee interview of the Deputy Chairman of Sotheby's Europe and Chairman of Sotheby's Russia (May 30, 2019).
- ↑ Id.
- ↑ Subcommittee interview of Sotheby's Baltser Account Representative (Jun. 27, 2019).
- ↑ Id.
- ↑ Id.
- ↑ SOT-018689-93.
- ↑ Id.
- ↑ SOT-051481-82.
- ↑ SOT-018663-64.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ SOT-005232-82.
- ↑ SOT-004597-99.
- ↑ Subcommittee interview of Sotheby's Baltser Account Representative (Jun. 27, 2019).
- ↑ SOT-018624.
- ↑ Id.
- ↑ Id.
- ↑ SOT-201809-11; SOT-01893; Subcommittee interview of the Deputy Chairman of Sotheby's Europe and Chairman of Sotheby's Russia (May 30, 2019).
- ↑ Subcommittee interview of the Deputy Chairman of Sotheby's Europe and Chairman of Sotheby's Russia (May 30, 2019).
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Important Russian Art, Sotheby's (Nov. 1, 2011), https://www.sothebys.com/en/auctions/ecatalogue/2011/important-russian-art/lot.18.html; SOT-000299-301.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ SOT-000406-07.
- ↑ Id.
- ↑ Id.
- ↑ SGA_PSI_00506-29, transaction no. 19453397.
- ↑ Id.
- ↑ DBAG0000024, line 256; JPMorgan Chase (Nov. 7, 2018), SB981623-F1 US Wire Search, Steamort, line 62.
- ↑ Id.
- ↑ Subcommittee interview of Sotheby's Baltser Account Representative (Jun. 27, 2019).
- ↑ SOT-006167.
- ↑ Id.
- ↑ SGA_PSI_00506-29, transaction no. 20892304.
- ↑ Id.
- ↑ DBAG0000024, line 320; JPMorgan Chase (Nov. 7, 2018), SB981623-F1 US Wire Search, Steamort, line 72.
- ↑ Id.
- ↑ Subcommittee interview of Sotheby's Baltser Account Representative (Jun. 27, 2019).
- ↑ Dietl Production (Jun. 28, 2018) (409911 Air Export JFK to FRA).
- ↑ SOT-043264-67.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Subcommittee interview of Sotheby's Baltser Account Representative (Jun. 27, 2019).
- ↑ SOT-006071; SOT-002387-91.
- ↑ SGA_PSI_00506-29, transaction no. 21173983.
- ↑ Id.
- ↑ DBAG0000024, line 339.
- ↑ Id.
- ↑ Subcommittee interview of Sotheby's Baltser Account Representative (Jun. 27, 2019).
- ↑ SOT-041359-60; SOT-041364.
- ↑ SOT-000402-05.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ SGA_PSI_00-00506-29, transaction no. 22320799.
- ↑ Id.
- ↑ DBAG0000024, line 394; JPMorgan Chase (Nov. 7, 2018), SB981623-F1 US Wire Search, Steamort, line 87.
- ↑ Id.
- ↑ Subcommittee interview of Sotheby's Baltser Account Representative (Jun. 27, 2019).
- ↑ DIETL 409911 (Air Export JFK to FRA).
- ↑ SOT-005674-76.
- ↑ Id.
- ↑ SOT-005630-31.
- ↑ SOT-005690.
- ↑ SOT-005686-87.
- ↑ SOT-5681-82.
- ↑ JPMorgan Chase (Nov. 7, 2018), SB981623-F1 US Wire Search, Highland Business Group, line 15.
- ↑ Id.
- ↑ DBAG0000024, line 409.
- ↑ Id.
- ↑ Subcommittee interview of Sotheby's Baltser Account Representative (Jun. 27, 2019).
- ↑ SOT-015974
- ↑ SOT-005713-14.
- ↑ Sale 1505: Impressionist/Modern Evening Sale, Christie's (Feb. 4, 2014), https://www.christies.com/salelanding/index.aspx?intsaleid=24583&saletitle=.
- ↑ Christies-PSI-00046436; see also Sale 1505: Impressionist/Modern Evening Sale, Lot 36, Christie's (Feb. 4, 2014), https://www.christies.com/lotfinder/lot/lyonel-feininger-5766388-details.aspx?from=salesummery&intobjectid=5766388.
- ↑ Christies-PSI-00046436.
- ↑ Christies-PSI-00046433-35.
- ↑ Id.
- ↑ Christies-PSI-00062223-26.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Subcommittee interview of Christie's Baltser Client Advisor (Jul. 15, 2015).
- ↑ Id.
- ↑ Id. Counsel for Christie's explained that this is consistent with historic practice for an auction house not to routinely ask dealers for the identity of dealers' clients because of concerns that auction houses would poach dealers' clients. See Letter from Counsel for Christie's to the Subcommittee (Jul. 22, 2020).
- ↑ SOT-202107-09.
- ↑ Subcommittee interview of Sotheby's Baltser Account Representative (Jun. 27, 2019).
- ↑ Press Release, U.S. Dep't of Treasury, Treasury Sanctions Russian Officials, Members of the Russian Leadership's Inner Circle, and An Entity for Involvement in the Situation in Ukraine, (Mar. 20, 2014), https://www.treasury.gov/press-center/press-releases/pages/j123331.aspx.
- ↑ Subcommittee interview of Sotheby's Baltser Account Representative (Jun. 27, 2019); Subcommittee interview of Christie's Baltser Client Advisor (Jul. 15, 2019).
- ↑ Subcommittee interview of Sotheby's Baltser Account Representative (Jun. 27, 2019).
- ↑ SOT-38579-85; SOT-038569-70.
- ↑ SOT-061223.
- ↑ SOT-059764-65.
- ↑ SOT-061223.
- ↑ Subcommittee interview of Sotheby's Baltser Account Representative (Jun. 27, 2019).
- ↑ Id.
- ↑ Id.
- ↑ SOT-202066-69.
- ↑ SOT-202071-74.
- ↑ SOT-202066-69.
- ↑ Subcommittee interview of Sotheby's Baltser Account Representative (Jun. 27, 2019).
- ↑ Subcommittee Briefing with Christie's Employees (Feb. 8, 2019).
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Christies-PSI-00035164-69.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Christies-PSI-00101137-74.
- ↑ As explained above, in June 2019, the Sotheby's Account Representative told the Subcommittee she fabricated this information in an effort to convince Sotheby's management to accept Mr. Baltser proposal. See infra, pgs. 101-103.
- ↑ While art is the focus of this report, the Subcommittee also reviewed transactions related to Mr. Baltser purchasing wine through the auction houses. In one instance, Mr. Baltser facilitated Christie's shipment of wine directly to a residence linked to Igor Rotenberg after Igor was sanctioned by the United States. In August 2018, an employee of Mr. Baltser requested that Christie's ship $32,000 worth of wine to the following address: Case dell'Olmo in Monte Argentario, Italy. See Christies-PSI-00080314. Public information suggests this residence belongs to Igor Rotenberg. See Enea LandArt LLC Invoice, Mr. and Mrs. Rotenberg, Casa dell Olmo, Monte Argentario, Italy, https://novayagazeta.ru/storage/b/2014/09/26/Dok4.pdf.
- ↑ Impressionist & Modern Art Day Sale, Sotheby's (May 8, 2014), https://www.sothebys.com/en/auctions/2014/impressionist-modern-art-day-sale-n09140.html.
- ↑ Id.
- ↑ SOT-028595-98.
- ↑ Id.
- ↑ SOT-028593-94.
- ↑ Id.
- ↑ Subcommittee interview of Sotheby's Baltser Account Representative (Jun. 27, 2019).
- ↑ DBAG0000024, line 559; BARC_006850, line 10.
- ↑ Id.
- ↑ DBAG0000024, line 561; BARC_006850, line 11.
- ↑ Id.
- ↑ JPMorgan Chase (Nov. 7, 2018), SB981623-F1 US Wire Search, Baltser, Line 11; BARC_006850, line 12.
- ↑ Id.
- ↑ Subcommittee interview of Sotheby's Baltser Account Representative (Jun. 27, 2019).
- ↑ Id.
- ↑ Id.
- ↑ DIETL 45253 (Air Export JFK to CGN).
- ↑ Press Release, Bonhams, The Story of the 20th Century (Jun. 4, 2014), https://www.bonhams.com/press_release/16539/.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ BON000569.
- ↑ Lot 28, Yakov Georgievich Chernikhov, Bonhams (Jun. 4, 2014), https://www.bonhams.com/auctions/21652/lot/28/?category=list&length=186&page=1.
- ↑ BON000569.
- ↑ Lot 29, Yakov Georgievich Chernikhov, Bonhams (Jun. 4, 2014), https://www.bonhams.com/auctions/21652/lot/29/?category=list&length=12&page=3.
- ↑ BON000569.
- ↑ Id.
- ↑ DBAG0000024, line 565.
- ↑ Id.
- ↑ DBAG0000024, line 568; BARC_006850, line 20.
- ↑ Id.
- ↑ BARC_006850, line 28.
- ↑ Id.
- ↑ DIETL 458323 (Air Export JFK to FRA).
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ DEALER000002-04.
- ↑ DEALER000007.
- ↑ DEALER0000018.
- ↑ DEALER0000026.
- ↑ DEALER000030.
- ↑ DEALER000033.
- ↑ DEALER000034-37.
- ↑ DEALER000040-43.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Private Dealer Production on file with the Subcommittee (Apr. 11, 2018).
- ↑ Id.
- ↑ Id.
- ↑ Id.; Subcommittee interview of Private Dealer (Sept. 7, 2018).
- ↑ Subcommittee interview of Private Dealer (Sept. 7, 2018).
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Subcommittee interview of Art Advisor 1 (Jun. 14, 2019).
- ↑ Id.
- ↑ Subcommittee interview of Art Advisor 2 (Jul. 12, 2019).
- ↑ Id.
- ↑ Email to Art Advisor 2 from Subcommittee Staff (Jul. 22, 2019).
- ↑ Email from Art Advisor 2 to Subcommittee Staff (Sept. 6, 2019).
- ↑ Email from Subcommittee Staff to Art Advisor 2 (Oct. 10, 2019).
- ↑ BARC_000002, lines 24 and 25.
- ↑ BARC_006912-15.
- ↑ Id.
- ↑ BARC_000002, line 24.
- ↑ BARC_000002, line 25.
- ↑ DEALER 000055; DEALER000070.
- ↑ DIETL 456047 (Air Export JFK to FRA).
- ↑ Website on file with the Subcommittee.
- ↑ Id.
- ↑ Id.
- ↑ GALLERY PSI 0029
- ↑ GALLERY PSI 0054
- ↑ Id.
- ↑ Id.
- ↑ GALLERY PSI 0045-47
- ↑ Id.
- ↑ GALLERY PSI 0054
- ↑ GALLERY PSI 0073.
- ↑ GALLERY PSI 0075-76. The updated BALTZER LLP information for the invoice was on Markom Management letterhead.
- ↑ GALLERY PSI 0089-90.
- ↑ GALLERY PSI 0125-26. According to public filings, this was the same address for Markom Management Ltd at this time. Markom Management Ltd, Company No. 05291280, Annual Return, (Feb. 13, 2014), https://beta.companieshouse.gov.uk/company/05291280.
- ↑ DBAG0000024, line 571.
- ↑ Id.
- ↑ DBAG0000024, line 572.
- ↑ Id.
- ↑ BARC_006850, line 22; CITI 0000628, 1811141 wires, Baltzer LLP, line 1 (Nov. 15, 2018).
- ↑ Id.
- ↑ GALLERY PSI 0218-20.
- ↑ GALLERY PSI 0223.
- ↑ GALLERY PSI 0257.
- ↑ GALLERY PSI 0265.
- ↑ GALLERY PSI 0306.
- ↑ Lot 119: Girls in the Windows, Christie's (Sept. 29, 2014), https://www.christies.com/lotfinder/Lot/ormond-gigli-b-1925-girls-in-the-5827326-details.aspx.
- ↑ Id.
- ↑ Christies-PSI-00034727-29.
- ↑ Id.
- ↑ Christies-PSI_00040866.
- ↑ DBAG0000024, line 587.
- ↑ Id.
- ↑ BARC_006850, line 41; JPMorgan Chase (Nov. 7, 2018), SB981623-F1 US Wire Search, Baltzer, line 27.
- ↑ Subcommittee interview of Christie's Baltser Client Advisor (Jul. 15, 2019).
- ↑ Id. As noted above, Counsel for Christie's stated this was consistent with historic industry practice for an auction house not to routinely ask dealers for the identity of their clients because of concerns that auction houses would poach dealers' clients. See Letter from Counsel for Christie's to the Subcommittee (Jul. 22, 2020).
- ↑ Christies-PSI-00071575-76.
- ↑ Id.
- ↑ Christies-PSI-00041703.
- ↑ DBAG0000024, lines 600, 601, and 602.
- ↑ Id.
- ↑ Id.
- ↑ DBAG0000024, line 605; BARC_006850, line 54.
- ↑ BARC_006850, line 55; JPMorgan Chase (Nov. 7, 2018), SB981623-F1 US Wire Search, Baltzer, line 35.
- ↑ Id.
- ↑ Subcommittee interview of Christie's Baltser Client Advisor (Jul. 15, 2019).
- ↑ DIETL 46653 (Air Export JFK to FRA).
- ↑ PHILLIPS-00441.
- ↑ Id.
- ↑ PHILLIPS-00442.
- ↑ Id.
- ↑ PHILLIPS-08282-84.
- ↑ DBAG0000024, line 598.
- ↑ DBAG0000024, line 597.
- ↑ PHILLIPS-08266-68; PHILLIPS-08280.
- ↑ Id.
- ↑ Id.
- ↑ PHILLIPS-08255-60.
- ↑ Id.
- ↑ Id.
- ↑ PHILLIPS-00441−42.
- ↑ DBAG0000024, lines 603, 604.
- ↑ Id.
- ↑ Id.
- ↑ Subcommittee interview of Phillips Baltser Account Representative (Apr. 4, 2019).
- ↑ DIETL 465442 (Air Export JFK to MOW). While Phillips created invoices listing both BALTZER LLP and Steamort as the owner of James Bond Island I, Dietl's shipping records included the invoice on Phillips letterhead indicating Alexander Dobrovskiy had purchased and taken title for the painting. After an internal investigation, Phillips found no record of this version of the invoice in its files, nor were any Phillips employees aware of the invoice listing Mr. Dobrovskiy as the owner of James Bond Island I. See Letter from Counsel for Phillips to Subcommittee staff (May 6, 2019).
- ↑ DIETL 46653 (Air Export JFK to FRA).
- ↑ DIETL 465442 (Air Export JFK to MOW); DIETL 46653 (Air Export JFK to FRA).
- ↑ Email from Subcommittee staff to Hasenkamp representative (Jun. 25, 2019).
- ↑ Email from Hasenkamp representative to Subcommittee staff (Jun. 28, 2019).
- ↑ Email from Hasenkamp representative to Subcommittee staff (Jul. 16, 2019).
- ↑ Id.
- ↑ Email from Hasenkamp representative to Subcommittee staff (Jul. 26, 2019).
- ↑ Screenshots of website on file with the Subcommittee.
- ↑ Id.
- ↑ Email from Hasenkamp representative to Subcommittee staff (Jul. 23, 2020).
- ↑ Christies-PSI-00026831.
- ↑ Christies-PSI-00026828.
- ↑ Christies-PSI-00058908-09.
- ↑ CITI000628, 1811141 wires, Baltzer Limited, line 6 (Nov. 15, 2018).
- ↑ JPMorgan Chase (Nov. 7, 2018), SB981623-F1 US Wire Search, Baltzer, line 166.
- ↑ Christies-PSI-00078529.
- ↑ Christies-PSI-00078545-50.
- ↑ Christies-PSI-00078604-11.
- ↑ Christies-PSI-00079041-61.
- ↑ Christies-PSI-00062223-26.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Subcommittee interview of Christie's Baltser Client Advisor (Jul. 15, 2019).
- ↑ The 16 paintings the Subcommittee traced funds used to purchase the paintings to Rotenberg-linked shell companies include: (1) Salvador Dali's Papillons and (2) Soft Monster (Monstruo Blando Adormecido); (3) Renee Magritte's Le Rendez-Vouz and (4) La Poitrine; (5) Pierre-Auguste Renoir's Femme dans un paysage and (6) Still life with fruits (Nature Morte aux fruits); (7) Lyonel Feininger's Steep Street (Steile Strasse), (8) Ulla, and (9) Sailing ship on Red Sea; (10) Tsuguharu Foujita's Hanka Zborowska (Portrait de Jeune Femme); (11) Tamara de Lempicka's Le Coquillage and (12) New York Harbor (Un Port Sous la Lune); (13) Henry Moore's Three Figures; (14) Marc Chagall's Scene Champetre (Femme et Enfant); (15) Maurice de Vlaminck's La Seine a Chatou; and (16) Georges Braque's Pichet et Journal.
- ↑ As noted above, Dali's Battle around a dandelion (Bataille Autour d'un Pissenlit) was included in the list of 31 works sent by Mr. Baltser's employee to Christie's. See Christies-PSI-00062223-26. The provenance provided by Mr. Baltser to Christie's stated the current owner purchased the painting in July 2013 at ARTEXPO SA. Christies-PSI-0073512-13. Financial records provide support for this purchase. On July 11, 2013, Steamort sent $7,000,000 from its Tallinn Business Bank account to ARTEXPO SA's UBS account in Geneva, Switzerland. DBAG0000024, line 462. The wire instructions stated: "Payment by invoice GB-130702 [dated July 4, 2013] for subject of interior." Id. The fact that Christie's only estimated the painting would sell for between £2 million and £3 million explains why the painting was not considered for auction.
- ↑ Christies-PSI-00081879-83.
- ↑ Id.
- ↑ Christies-PSI-00096106-26.
- ↑ Christies-PSI-00082059-66.
- ↑ Id. (emphasis in original).
- ↑ Christies-PSI-00082059-66.
- ↑ Id. (emphasis in original).
- ↑ Id.
- ↑ Christies-PSI-00065736.
- ↑ Subcommittee interview of Christie's Baltser Client Advisor (Jul. 15, 2019).
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ SOT-202506.
- ↑ SOT-202405.
- ↑ Id.
- ↑ A Century of Bauhaus: School of Modernity, Sotheby's (Feb. 12, 2019), https://www.sothebys.com/en/articles/a-century-of-bauhaus-school-of-modernity.
- ↑ SOT-202176-78.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ SOT-202107-09.
- ↑ Id.
- ↑ Subcommittee interview of Sotheby's Baltser Account Representative (Jun. 27, 2019).
- ↑ SOT-202532-33.
- ↑ SOT-202154-55.
- ↑ Id.
- ↑ Subcommittee interview of Sotheby's Baltser Account Representative (Jun. 27, 2019).
- ↑ SOT-202045-89.
- ↑ Id.
- ↑ Id.
- ↑ Email from Subcommittee Staff to Counsel for Sotheby's (Jul. 18, 2019).
- ↑ Email from Counsel for Sotheby's to Subcommittee Staff (Jul. 18, 2019).
- ↑ SOT-202045-89.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id. (including a Russian passport for the named UBO at SOT-202083).
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ SOT-202710-11; SOT-202727-28.
- ↑ SOT-202727-28.
- ↑ Subcommittee interview of Sotheby's Baltser Account Representative (Jun. 27, 2019).
- ↑ Subcommittee conference call with David Vicinanzo, Counsel for Baltzer Limited (Jul. 23, 2019).
- ↑ Letter from David Vicinanzo, Counsel for Baltzer Limited to the Subcommittee (Aug. 23, 2019).
- ↑ Letter from David Vicinanzo, Counsel for Baltzer Limited to the Subcommittee (Jul. 13, 2020).
- ↑ Id. (noting that Nixon Peabody, Mr. Vicinanzo's firm, did not represent BALTZER LLP or Steamort Ltd.).
- ↑ Id.
- ↑ Letter from David Vicinanzo, Counsel for Baltzer Limited to the Subcommittee (Jul. 13, 2020).
- ↑ BARC_006752-761.
- ↑ BARC_005547-51; BARC_007036.
- ↑ Email to Subcommittee staff from Counsel for Phillips (Mar. 6, 2020).
- ↑ Conference call with Counsel for Christie's (Mar. 18, 2020).
- ↑ Conference call with Counsel for Sotheby's (Mar. 23, 2020).
- ↑ Letter from David Vicinanzo, Counsel for Baltzer Limited to the Subcommittee (Aug. 23, 2019).
- ↑ Email from Counsel for Bonhams to Subcommittee staff (Jul. 25, 2020).
- ↑ Id.
- ↑ Id.
- ↑ Id.