Friday, August 25, 2023

Wildenstein And The Underbelly Of The Global Art Market: "The Inheritance Case That Could Unravel an Art Dynasty"

From the New York Times Magazine, August 23:

How a widow’s legal fight against the Wildenstein family of France has threatened their storied collection — and revealed the underbelly of the global art market. 

Twenty years ago, a glamorous platinum-blond widow arrived at the Paris law office of Claude Dumont Beghi in tears. Someone was trying to take her horses — her “babies” — away, and she needed a lawyer to stop them. 

She explained that her late husband was a breeder of champion thoroughbreds. The couple was a familiar sight at the racetracks in Chantilly and Paris: Daniel Wildenstein, gray-suited with a cane in the stands, and Sylvia Roth Wildenstein, a former model with a cigarette dangling from her lips. They first met in 1964, while she was walking couture shows in Paris and he was languishing in a marriage of convenience to a woman from another wealthy Jewish family of art collectors. Daniel, 16 years Sylvia’s senior, already had two grown sons when they met, and he didn’t want more children. So over the next 40 years they spent together, Sylvia cared for the horses as if they were the children she never had. When Daniel died of cancer in 2001, he left her a small stable.

Then, one morning about a year later, Sylvia’s phone rang. It was her horse trainer calling to say that he had spotted something odd in the local racing paper, Paris Turf: The results of Sylvia’s stable were no longer listed under her name. The French journalist Magali Serre’s 2013 book “Les Wildenstein” recounts the scene in great detail: Sylvia ran to fetch her copy and flipped to the page. Sure enough, the stable of “Madame Wildenstein” had been replaced by “Dayton Limited,” an Irish company owned by her stepsons. That’s when she called Dumont Beghi.

To the lawyer’s surprise, Sylvia showed up to their meeting with no proof of ownership for the horses and no information on her late husband’s estate. “She didn’t have any — any — documents at all,” Dumont Beghi says. Sylvia mentioned that she signed some papers shortly after her husband’s death, but she didn’t know what they said, nor did she have copies. “I put that in the corner of my mind,” Dumont Beghi says.

Why would a widow draped in diamonds and furs have no records from her wealthy husband’s estate? Dumont Beghi got the feeling there was more going on than a dispute over horses. But she went ahead and gave Sylvia the good news: She could simply decline to transfer the horses to her stepsons. Dumont Beghi sent a letter, halting the transaction.

Dumont Beghi recalls an almost instant kinship with Sylvia, who discovered that they were both Scorpios and lived in the same building complex in the posh 16th Arrondissement. After Dumont Beghi saved her horses, Sylvia trusted her completely, and she began to explain to Dumont Beghi the complexity of the situation. Daniel had fallen into a coma for 10 days before he died, and while he was under, his sons, Alec and Guy, showed up at the hospital along with lawyers from Switzerland, the United States and France. She recounted how, a few weeks after the funeral, her driver took her to the family’s 18th-century hôtel particulier, which housed an art research center, the Wildenstein Institute. Her stepsons told her she needed to hear something important. They had reviewed their father’s estate and discovered that he died in financial ruin. As his next of kin, Sylvia was about to inherit debts so large they would ruin her too. 

Sylvia was stunned. She had never heard anything about money troubles from her husband. For 40 years, she had lived with chefs and chauffeurs, in at least five homes on three continents. But what did she know? She never signed the checks. Daniel, intellectual and rigid, ran the business, while Sylvia, who was light and cheerful, played the nurturer in the family. She was known to dote on Alec and Guy’s six children, whom she considered her grandkids. She trusted her stepsons completely, so when they told her that she must renounce her inheritance at once or face “catastrophe,” she didn’t blink. “I signed all the papers they presented to me. I signed, signed, signed” — even the ones written in Japanese, she later told Serre. They promised to take care of her financially and even offered to pay her 30,000 euros a month out of their own pockets. Sylvia was grateful. 

But then, over the next few months, the reality of what she had done set in. Sylvia told Dumont Beghi how movers came to her apartment and took a beloved Pierre Bonnard painting off the wall. Then they came back for the furniture, because, she was told, it belonged to her husband’s business, which was now run by his sons. A letter came notifying her that Daniel’s 69 thoroughbreds were now owned by Guy and Alec’s stable. Her household staff stopped being paid. Soon, her stepsons told her she would have to move from her home on Avenue Montaigne to another apartment. (Alec died in 2008; Guy declined a request for an interview, though a representative answered some questions provided by The Times.)

She stopped receiving invitations to celebrate holidays and birthdays at the family’s ranch in Kenya or their castle in France. Guy shipped back her clothes and belongings from their British Virgin Islands compound, where she had vacationed for years with Daniel and their chef and pastry chef. As Sylvia spoke, two things became increasingly apparent to Dumont Beghi: One, Sylvia had renounced her inheritance. “She had no freedom.” she says, and “no proof. Not a shred of evidence.” No bank account, no income, no independence. It was as if “she died at the same time as her husband,” Dumont Beghi says.

The other thing that struck her was that the Wildensteins were more than merely rich.
“When she first came to me, I didn’t know anything about the family,” Dumont Beghi told me when I visited her this past winter at her office in Paris. To my left, a bronze bust of a panther stared from a pedestal at eye level. Behind her glass desk hung a print of a leopard prowling in a tree. Dumont Beghi is also the personal attorney for President Ali Bongo Ondimba of Gabon, who is widely considered a strongman, and often describes herself as a lone warrior woman in a jungle of male adversaries. She had never heard of the Wildenstein dynasty of art dealers. In fact, outside elite niches of the art world, few had, which was how Daniel wanted it. Dumont Beghi was about to find out why. 

First, she drew up a list of known assets, which soon zigzagged into a chart of far-flung bank accounts, trusts and shell corporations. Over the course of several years, she would fly around the world to tax havens and free ports, prying open the armored vaults and anonymous accounts that mask many of the high-end transactions in the $68 billion global art market. Multimillion-dollar paintings can anonymously trade hands without, for example, any of the requisite titles or deeds of real estate transactions or the public disclosures required on Wall Street. She would learn that the inscrutability of the trade has made it a leading conduit for sanction-evading oligarchs and other billionaires looking to launder excess capital. The Wildensteins were not just masters of this system — they helped pioneer it.

Over 150 years, the family has amassed an art collection estimated to be worth billions by quietly buying up troves of European masterpieces that would be at home in the Louvre or the Vatican, holding their stock for generations and never revealing what they own. When Sylvia realized the magnitude of her stepsons’ deception, she devoted the rest of her life to unraveling the family’s financial machinations, and even left a will asking that Dumont Beghi continue her fight from beyond the grave.

Sylvia and her lawyer were never able to win the settlement they thought she deserved while she was alive. From the start, in 2004, a judge rejected Dumont Beghi’s attempt to cancel Sylvia’s renunciation of the inheritance; a few years later, a court rejected a subsequent claim that she was entitled to €450 million worth of art and assets, a figure the judge called “pharaonic.” The representative for Guy notes that, early on, Sylvia was awarded approximately €15 million, based on the value of Daniel’s French estate. “Dumont Beghi continued to litigate for several years, seeking to have certain trusts settled by Daniel Wildenstein included in the estate,” the representative says. “During this protracted litigation, Dumont Beghi made numerous, unsubstantiated allegations, but the court ultimately ruled against her client.”

Now, more than a decade after Sylvia’s death, their efforts have landed the Wildensteins before France’s highest court. The evidence she and Dumont Beghi brought forth has persuaded prosecutors that the Wildensteins are a criminal enterprise, responsible for operating, as a prosecutor for the state once put it, “the longest and the most sophisticated tax fraud” in modern French history.

 A trial this September will determine if the family and their associates owe a gargantuan tax bill. The last time prosecutors went after the Wildensteins, several years ago, they sought €866 million — €616 million in back taxes and a €250 million fine, as well as jail time for Guy. The consequences could do more than topple the family’s art empire. The case has provided an unusual view of how the ultrawealthy use the art market to evade taxes, and sometimes worse. Agents raiding Wildenstein vaults have turned up artworks long reported as missing, which fueled speculation that the family may have owned Nazi-looted or otherwise stolen art, and spurred a number of other lawsuits against the family in recent years. Financial distortions have saved the family hundreds of millions of dollars, prosecutors allege, but their treatment of Sylvia could cost them far more — and perhaps lead to the unraveling of their dynasty.....


....Then Dumont Beghi made perhaps the most important stop of her tour: the Metropolitan Museum of Art, where she stood before a painting she loved, Caravaggio’s late masterpiece “The Lute Player,” labeled on loan from a “private collection.” She searched the New York State Department’s records to see whether Wildenstein & Co. had ever borrowed money using works in its collection as collateral. Dozens of names were listed — Cézanne, David, Degas, Manet, Monet, Matisse, Rembrandt, Picasso and Rodin among them. And then there it was: “The Lute Player,” valued at upward of $100 million.
At that point she realized, “The company is titanic.”....

The picture of the paintings in the Geneva Free Port has to be seen to be believed. There are 2000 in toto, the pic only captures fifty or so and just that bit is worth more than most mid-sized museum collections. 

Previously on the Wildensteins:

The Economics of Art Galleries Suck (unless your name is Wildenstein)

Wildenstein: The Art World's Most Powerful Dealer Family insular art-dealing dynasty whose $5 billion fortune, Gulfstream IV, racing stable, private Virgin Island compound, and 66,000-acre Kenya ranch cannot erase the rancorous legacy handed down from father to son to son.... 
Commercialism As The Last 'ism' in Art: "Q4 Global Auction Report and Year in Review"

“Making money is art, and working is art and good business is the best art.”
-Andy Warhol

 I stole the 'ism' line from dealer Michael Finley's 2012 book The Value of Art.
Just as Duveen hit one of his dealing career high points with Gainsborough's 'Blue Boy' Finley can lay claim to putting together the deal that transferred van Gogh's Portrait of Dr. Gachet.

House for Sale, Manhattan, Upper Bracket
Art Money: "Wildenstein Family’s Limestone Mansion Is Back On The Market With a $100M Price Tag"
Related: Art Dealer Guy Wildenstein Caught Up In €600 Million Tax Evasion Case 

If interested, the New Yorker series on Duveen is the story of a similar romp in the Gilded Age.