Guy Wildenstein, patriarch of the art family, found guilty in tax trial

Guy Wildenstein, the international art dealer, was found guilty of massive tax fraud in France on Tuesday, the latest twist after years of legal entanglements that have unraveled the secrecy that once surrounded his powerful family dynasty.

Mr. Wildenstein, 78 years old, the French-American patriarch of the family and president of Wildenstein & Co. in New York, was sentenced by the Court of Appeal in Paris to a prison term of four years, half of which was conditional and the other half conditional. to be served under house arrest with an electronic bracelet. The court also ordered him to pay a fine of one million euros, or approximately $1.08 million.

He was accused of hiding significant portions of his family’s art collection and other assets in a maze of trusts and shell companies when his father, Daniel, died in 2001, and after his brother, Alec, died in 2008.

Prosecutors had said he was trying to avoid hundreds of millions of euros in inheritance taxes. That was the case during the trial, which was held in the fall requested a slightly milder prison sentence for Mr. Wildenstein, but they also asked for a much higher fine of €250 million, or about $270 million.

The Wildensteins, a family of French art dealers spanning five generations, were historically secretive about the exact details of their collection, which included works by Caravaggio, Fragonard, and many other leading artists.

Prosecutors said the family was responsible for “the longest and most sophisticated tax fraud” in modern French history, hiding art and other assets under complex foreign trusts and shielding works of art worth millions of dollars in tax havens. By doing so, prosecutors said, the family grossly underestimated its vast wealth when it came time to pay estate taxes.

The Wildenstein family’s defense was that they did not have to disclose artworks to the tax authorities if they were technically owned by trusts and not by the family itself.

But the court disagreed, saying the family was responsible for a fraud of virtually unprecedented “magnitude” and “sophistication.”

Pascale Cladiere, one of the court’s three judges who read the verdict, said Wildenstein had “knowingly” underestimated his wealth and “systematically opted for opacity.”

“He presented himself as an art dealer who could not understand the legal consequences at stake,” Mr. Cladiere said. “The evidence shows the opposite,” he added.

Mr Wildenstein had previously been acquitted of tax fraud and money laundering in 2017. An acquittal was subsequently upheld by a higher court.

At the time, judges had ruled that the family had shown clear intentions to hide its wealth, but that its actions had either exceeded the statute of limitations or fallen into a legal gray area, before France passed a law in 2011 requiring foreign trusts to be protected. declared to the authorities.

But in 2021, Mr. Wildenstein’s acquittal occurred in a stunning reversal overturned by France’s highest court of appealwhich ordered the latest trial and sought clarification as to whether the family had actually transferred ownership of its assets to the trusts – determining whether or not they should be declared to French tax authorities for inheritance purposes.

Mr Wildenstein was not present at the court hearing on Tuesday. But he testified in September that for years he was unaware of the complexities of trusts and how they function, even as his family used them liberally to structure their wealth.

“I knew there were trusts,” he told the court. “I had absolutely no idea how they worked.”

He also argued that he spent much of his time outside France and did not closely follow tax matters there. The Wildenstein family has galleries in New York and Tokyo, as well as a prestigious research institute in Paris.

When asked in September whether his father, Daniel, had told him about the trusts before his death, Mr. Wildenstein said that “it may be strange, but he didn’t tell me anything.”

“We were not consulted or informed,” Mr Wildenstein told the court.

But prosecutors said the family never actually gave up ownership of the assets placed in the trusts, which were merely a “façade” to hide vast wealth – ranging from masterpiece paintings to luxury real estate and thoroughbred horses – from taxes. authorities.

The Wildenstein family remains a leading authority on Old Masters and Impressionists and has published definitive catalogs on painters, among others Monet And Gauguingiving them almost the final say on some authentication questions.

But repeated legal entanglements since the 2000s have gradually cast a harsh light on their business, often with lawsuits filed by women in the family who were cut out of the vast fortune during messy divorces and inheritance disputes.

Seven other defendants – who had also previously been acquitted – were charged alongside Mr Wildenstein.

Among them were Mr. Wildenstein’s cousin, Alec Jr., and his estranged sister-in-law, Liouba Stoupakova, who had been married to his brother Alec and had also complained that the Wildensteins had cut her off from her share of the family’s wealth . Several Swiss and French legal and financial advisors, as well as foreign trust companies, were also on trial.