Real estate developer and art collector Michael Shvo will pay $3.5 million after pleading guilty to tax evasion.
The commercial art world’s two least favorite words might be “tax probe.” Manhattan prosecutors indicted Shvo for fraud in 2016, alleging the collector failed to pay $1 million in state and city taxes due on purchases of luxury goods, artworks, and a Ferrari. Shvo plead not guilty at the time, but prosecutors announced on Friday that he changed his plea to guilty and is required to pay $3.5 million as part of the plea agreement. Shvo admitted to making false representations of where art and other goods should be shipped and also came clean about providing auction houses and galleries out-of-state addresses to avoid New York taxes.
“Michael Shvo’s brand of tax evasion was an art form unto itself,” Manhattan District Attorney Cyrus R. Vance, Jr. said in a statement. But Shvo is not the only collector ensnared by recent investigations into the non-payment of sales tax related to art purchases. Around the same time Shvo was first charged, New York attorney general Eric T. Schneiderman secured settlements in a pair of similar tax investigations, with collector Aby Rosen paying $7 million and Gagosian gallery paying $4.2 million as part of settlements tied to the cases. The lesson here: understand (and pay) sales and use tax.