Saturday, July 20, 2013

New York Art Dealer Previously Arrested on Complaint Is Formally Indicted (7/20/13)

USAO SDNY has announced the indictment of Glafira Rosales, art dealer, "For Massive Art Fraud, Money Laundering, And Tax Scheme," here.  The opening of the release succinctly summarizes the charges:
filing of a seven-count Indictment charging GLAFIRA ROSALES, an art dealer, with participating in a $30 million fraud in which she sold over 60 works of fake art to two Manhattan galleries. ROSALES was also charged with money laundering and tax crimes related to the art fraud scheme. 
I previously reported the filing of a complaint that permitted her expedited arrest.  Tax Perjury and FBAR Charges Related to Illegal Income Fake Art Case (Federal Tax Crimes Blog 5/22/13), here.  The complaint alleged only tax charges - Tax Perjury (3 counts); Failure to file FBAR (4 counts).  The indictment now expands the charges to the heart of the criminal case -- fraud related charges of wire fraud and money laundering.

Key Elements:

Defendant:  Glafira Rosales
Charges:  Wire Fraud (1 count - 20 years); money laundering (1 count - 20 years); Tax Perjury (3 counts - 3 years each count; 9 years total)); and FBAR violations (2 counts - 5 years each count; 10 years total).
Maximum sentence:  59 years.
Tax Loss:  $3.5 million (See oringal blog entry per link above)
Bank:  Caja Madrid (see original blog entry per link above)
Entities:  Yes (see original blog entry per link above)
Court:  DC NY
Judge:  Katherine Polk Failla (Wikipedia entry here)

The gravamen of this case is massive fraud perpetrated against individuals and companies, with tax related counts added.  Accordingly, I will include her in the spreadsheet but indicate that the case is not a typical case so that it will be eliminated from certain of the statistical reports.

Other Key Excerpts:
The indictment depicts a complete circle of fraud perpetrated by Glafira Rosales – fake paintings sold on behalf of non-existent clients with money deposited into a hidden bank account. The one thing about this story that is true is that this alleged fraud will be prosecuted.” 
* * * * 
Starting in 1994 and continuing through 2009, ROSALES sold more than 60 never-before exhibited and previously unknown works of art that she claimed were painted by some of the most famous artists of the 20th century, including Jackson Pollock, Mark Rothko, and Willem de Kooning. ROSALES sold these works of art to two prominent Manhattan galleries for approximately $33.2 million. In selling some of the paintings to the two galleries, she purported to represent a client with ties to Switzerland who had inherited the paintings and wanted to sell them, but who also wished to remain anonymous (the “Purported Swiss Client”). For the remainder of the paintings, she purported to represent a Spanish collector (the “Purported Spanish Collector”). ROSALES also claimed that a portion of the price paid by the Manhattan galleries would be her commission for selling the paintings and that the remainder would be passed along to her clients. 
In contrast to the claims made by ROSALES, as alleged in the Indictment: 
  • the paintings ROSALES sold were fake, that is, not by the hand of the artists that she represented them to be;  
  • ROSALES knew that the paintings were counterfeit and that the statements she made about their provenance were false;
  • the Purported Swiss Client on whose behalf she purported to sell most of the paintings to the Manhattan galleries never existed;
  • the Purported Spanish Collector on whose behalf she claimed to sell the remainder of the paintings to the Manhattan galleries never owned the paintings;
  • instead of passing along a substantial portion of the proceeds of the sale of the various paintings, she kept all or substantially all of the proceeds, and transferred substantial portions of the proceeds to an account maintained by her then-boyfriend; and
  • ROSALES concealed and disguised the nature, location, source, ownership, and control of the proceeds of sales of the fake works by causing the Manhattan galleries to transfer substantial portions of the proceeds of the sales to foreign bank accounts, and by transferring, and causing to be transferred, proceeds of the sales from foreign bank accounts to accounts maintained in the United States. 
ROSALES filed tax returns that falsely claimed she had not kept all, or substantially all of the proceeds from the sale of the purported clients’ paintings, when, in fact, she kept all or nearly all of the proceeds. In total, she failed to report the receipt of at least $12.5 million of income for the years 2006 through 2008. 
In addition, ROSALES received most of the proceeds from the sale of the paintings in a foreign bank account that she hid from, and failed to report to, the IRS. U.S. taxpayers are required to report the existence of any foreign bank account that holds more than $10,000 at any time during a given year by the filing of a Report of Foreign Bank and Financial Accounts, Form TD F 90-22.1 (“FBAR”). ROSALES failed to file FBARs for the years 2010 and 2011.

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