Will the Wildenstein Trial Tell us more on the Dark Side of the Art Market?
Next month, several members of the prominent Wildenstein family will go on trial, facing tax fraud and money laundering charges. Wildenstein family is still among the most influential art dealing families in the world and the upcoming trial which will tackle the issue of inheritance tax evasion will surely open some controversial and uncomfortable questions regarding Wildensteins’ business empire, the way their art collection was built and the manner in which dealings were done. Although it is the most recent one, this is not the only legal dispute Wildenstein family was involved in in recent times, and perhaps the upcoming trial will shed some light on other cases as well.
Wildenstein Inheritance, Tax Fraud and Assets Shipping
After the death of Daniel Wildenstein, one of the richest and most powerful art dealers in the world in 2001, his two sons Alec and Guy with a team of Swiss and French business advisors started shipping the family art collection to Switzerland in order to avoid inheritance taxes in France and the US. It is estimated that artworks worth $250 million were sent from the family vaults in New York to Switzerland to avoid an estate tax bill. Guy Wildenstein who is now in charge of the family business and the president of Wildenstein & Company is the primary target, but the accusations also concern three of the family’s advisers, Guy’s sister in law who will face charges of complicity in money laundering, and Guys nephew Alec Jr. charged with tax fraud. The French authorities have reported that Wildenstein family could owe $600 million with fines and taxes.
Wildenstein Art Dynasty
Wildenstein art dynasty was founded in 1875 by Nathan Wildenstein, grandfather of Daniel Wildenstein who has established an art dealership in Paris and when the trade proved out to be successful, he opened two more galleries in New York and London. The family specialized in Old Masters and Impressionist works and has built a fortune in art dealings. However, in years to come, and especially after the World War Two, the acquisition of works by the family has been a subject of many controversies. In 2011, 30 works suspected to be Nazi loot and reported missing by the Jewish families have been discovered at the Wildenstein Institute and they were seized by the authorities. Guy Wildenstein has been charged with harboring the stolen goods the same year. The secrecy attached to Wildenstein family business and art dealings is a subject of great interest and speculation in the art world and French authorities think that the most recent case might shed some light on how the family has built the empire.
As New York Times reports the upcoming trial is the first trial in France that will explore the use of trusts in art dealing business and raise questions about the role of shell companies, Swiss tax havens, even anonymous loans to museums in the international art market. The hiding of the assets as a way of avoiding the French inheritance tax through the use of offshore accounts, which occurred at the time of Daniel Wildenstein death will be the central aspect of the trial and if found guilty this could lead up to 7 years of prison and additional fines for the accused members of the family. However, this might not be the end of the story as I.R.S. might also pursue taxes for artworks shipped out of the US.
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Featured image: Guy Wildenstein. Photo via parismatch.com. All images used for illustrative purposes.