Attorney General James Sues Sotheby’s for Defrauding New York

In 2018, the collector’s company, Porsal Equities, entered into a settlement agreement with the Office of the Attorney General (OAG) in which Porsal admitted it had improperly used resale certificates in violation of the New York False Claims Act[2]. The OAG investigation found that Porsal Equities admitted that it and its owner certified that they were purchasing artwork for resale when, in reality, they were purchasing the artwork for personal purposes — namely, for display and enjoyment at the collector’s private residence. 

Today’s lawsuit — filed in New York County State Supreme Court — alleges that Sotheby’s knew that the collector and his company were not purchasing art for resale as art dealers in the normal course of business, but accepted their resale certificates anyway, and, in fact, facilitated the creation and use of these resale certificates. In 2010, Sotheby’s advised the collector he could use a resale certificate and helped complete the certificate, including adding the false declaration that he was an art dealer even though, in reality, the collector had not told Sotheby’s he was an art dealer and Sotheby’s knew he was actually in the shipping business. Sotheby’s not only accepted this resale certificate, but, by 2015, had accepted three more equally false certificates from Porsal Equities facilitated by Sotheby’s employees, despite overwhelming evidence that the collector and Porsal Equities were not art dealers and were only buying art for personal use.

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