Photo: ERIC FEFERBERG/AFP/Getty Images
In a surprise verdict on Thursday, a French judge acquitted billionaire art dealer Guy Wildenstein of hiding millions in art and other inherited assets from the country’s tax authorities after his father’s death in 2001. Prosecutors asked the court to sentence the 71-year-old to pay a $250 million fine and serve four years in prison (two suspended) for tax fraud and money-laundering in a case that has thrown a very public spotlight onto the normally reserved and secretive family known in France simply as “Les W.”
Prosecutors laid out their case against Wildenstein in a trial that began in September of last year. Following his father’s death in 2001, Wildenstein and his late brother Alec reported some €40.9 million in inheritance, with a resulting tax bill of €17.7 million. He paid for the bill by dipping into his impressive art collection, providing authorities with bas reliefs originally sculpted for Marie Antoinette. Prosecutors charged that the Wildenstein brothers should have actually declared €616 million, but instead used secretive trusts to move $250 million in art from New York to Switzerland just days after his father, Daniel Wildenstein, died. They also alleged that these trusts were not independent as claimed, instead directly benefiting Wildenstein and his late brother. Details of these arrangements provided a rare glimpse into the complex financial structures and freeports used by some wealthy art-owning individuals to shield themselves from tax laws.
But on Thursday, Judge Olivier Geron found Wildenstein and the family members and associates implicated in the trial not guilty of all charges. As the Telegraph reported, Judge Geron criticized a French law that only starting in 2011 properly clarified how the transmission of trust funds are to be taxed. “It is not the role of the court to take the place of the legislator,” the judge stated in his ruling. He also said that while he found “clear intention” by Wildenstein and others to conceal the extent of their fortune from the state, prosecutors did not go far enough in demonstrating that the so-called independent trusts benefited the family. The acquittal is likely to shock and disappoint those hoping to crack down on tax evasion by the wealthy. While the judge acknowledged this interpretation of his decision, he noted that the law must apply equally to all defendants “be they rich or destitute.”
Wildenstein was not in court for the verdict. However, his lawyer expressed satisfaction and relief with the outcome. “The error was to take this to criminal court. People are too keen to please public opinion but there are some judges who respect the law,” Wildenstein’s lawyer, Hervé Temime, told the Telegraph. During the trial, Wildenstein argued that it was actually his father who began the process of reorganizing the trusts in July, months before he died in October. Further, Wildenstein contended that he simply followed the advice of lawyers and financiers. They allegedly told him that the assets weren’t owned by the family but instead held in independent trusts and thus did not need to be disclosed to tax authorities. In a statement provided to Artsy at the time of the trial, Wildenstein’s attorney also highlighted that prior to 2011 there were no laws requiring the disclosure of assets held in a trust, a fact that proved pivotal in the judge’s ultimate acquittal.
The case was closely followed by the art world and the French public. Wildenstein heralds from a long line of art dealers, going back to the 1870s. His grandfather Georges assembled numerous works during World War II (a process that subsequently garnered allegations of looting). But it was Daniel Wildenstein who amassed one of the largest private art collections in the world. Today, the family has art holdings in New York, Tokyo, and Paris—where the Wildenstein Institute is located and produces exhaustive catalogues raisonnés on some of the most famous Impressionist artists. The compendiums are so authoritative that without inclusion, works by artists like Monet and Gauguin—lacking a “Wildenstein index number”—would drastically lose value.
The case has resulted in a detailed accounting of the works in the Wildenstein collection, a rarity in the art world. This contributed to public interest in the affair. In 1998, Daniel Wildenstein created an offshore trust titled Delta Trust and located in the Bahamas to hold some 2,500 works. The pieces were valued at $1.1 billion and managed by the Royal Bank of Canada (RBC). Roughly 675 works were sold since the trust’s creation to provide $238 million in funds to the family. An RBC representative called to testify in the trial placed the value of the trust at $875 million today, according to the New York Times. No funds have been distributed from the trust since 2013, Bloomberg reported.
Judge Geron, who has authority to recall and question witnesses under the French judicial process, asked Wildenstein about this trust and others created by his father, as well as the sudden movement of assets after Daniel Wildenstein’s death. Wildenstein reportedly asserted that it was in service of “the protection of the heritage,” and that his father was “a man of few words” who did not explain decisions. He made similar assertions in October to Paris Match, claiming, “My father never used to talk to me about his business affairs.”
During proceedings, the judge also highlighted the appearance of unequal treatment of women in the Wildenstein family, likely a tacit reference to the case’s origins. Among those at trial and acquitted along with Guy Wildenstein was his nephew Alec Junior, and Liouba Stoupakova, the widow of Alec Wildenstein. Stoupakova is herself fighting the family over money she said she is owed following the death of her husband in 2008. But the case really began in 2001 with Daniel’s widow, Sylvia Roth Wildenstein, who provided documents to French authorities that eventually resulted in the criminal charges. She was angry that Guy and his brother allegedly coerced her to sign over her husband’s inheritance shortly after his death, lowered her allowance, and took away her horses and other luxuries.
According to the Wall Street Journal, Wildenstein still faces the a separate battle with tax authorities. Prosecutors can also appeal the verdict in this current case.