Atypical Offshore Account Plea for Art Dealer (9/19/13)

I previously reported the charging and arrest of Glafira Rosales.  See links below.  The USAO SDNY has announced her plea agreement.  See press release here. (The press release has a link to the superseding indictment.)  Her case is an outlier case (outlier with respect to those involving only tax crimes including use of offshore banks to facilitate the tax crimes).  Far more extensive criminal activity was charged, with the tax and related FBAR crimes seemingly there for flavor.  Indeed, she pled to so many counts -- 9 in all, with several 20 year counts each -- that it is clear that the Guidelines sentencing range will likely not nearly reach the maximum 99 years permitted by the number of counts (and for that reason, the number of counts may be viewed as immaterial to sentencing; probably one 20-year count would have sufficed for the sentence she is likely to receive, with all other noncharged activity considered anyway as relevant conduct or grouped to produce the needed sentence, with a downward variance likely in any event).

Here are key excerpts of the press release (bold facing added by JAT):

Preet Bharara, the United States Attorney for the Southern District of New York, announced that art dealer GLAFIRA ROSALES pled guilty today in Manhattan federal court to participating in a scheme to sell more than 60 fake works of modern art to two New York art galleries. Her victims paid more than $80 million for the fake works. ROSALES also pled guilty to conspiracy to sell the fake works, conspiracy to commit money laundering, money laundering, and several tax crimes related to the fake art scheme.  

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ROSALES was an art dealer who, starting in 1994 and continuing through 2009, sold more than 60 never-before-exhibited and previously unknown works of art (the “Works”) that she claimed were by the hand of some of the most famous artists of the twentieth century, such as Jackson Pollock, Mark Rothko, and Robert Motherwell. She sold the Works to two prominent Manhattan art galleries for approximately $33.2 million. The galleries, in turn, sold the Works to victims of ROSALES’s crime for more than $80 million. 

The Works were fakes created by a painter (the “Painter”) who resided in Queens, New York. ROSALES conspired with her long-time companion, identified as a co-conspirator (“CC-1”) in the superseding Indictment, to procure and sell the Works and to launder the proceeds of the fraud. CC-1 first met and befriended the Painter in Manhattan in the 1980s while the Painter was painting on the street. The Painter, who received formal art training at an art school in New York, created the Works for ROSALES and CC-1 at the Painter’s home in Queens. In some instances, the Painter signed the purported artist’s name to the Works, such as Jackson Pollock, but in other cases, CC-1 applied the false signatures. After ROSALES and CC-1 retrieved the Works from the Painter, CC-1 gave the Works the false patina of age by subjecting the Works to a number of different treatments. 

The provenance that ROSALES supplied for the Works was also false. In selling some of the Works, she purported to represent a particular client who was associated with Switzerland, had inherited the paintings and wanted to sell them, but also wished to remain anonymous (the “Purported Swiss Client”). For the remainder of the paintings, ROSALES purported to represent a Spanish collector (the “Purported Spanish Collector”). She further claimed that a portion of the price paid by the Manhattan galleries would be a commission to her for selling the paintings and that the remainder would be passed along to her clients. In truth and fact, the Purported Swiss Client never existed and the Purported Spanish Collector never actually owned any of the Works.

ROSALES also filed tax returns that falsely and fraudulently tended to show that she had not kept all or substantially all of the proceeds from the sale of the Works, when, in fact, ROSALES kept several million dollars of the proceeds. 

ROSALES received most of the proceeds from the sale of the Works in a foreign bank account that she hid from, and failed to report to, the IRS. United States taxpayers are required to report to the IRS 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. 

* * * * 

ROSALES received most of the proceeds from the sale of the Works in a foreign bank account that she hid from, and failed to report to, the IRS. United States taxpayers are required to report to the IRS 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 9

* * * * 

ROSALES, 57, of Sands Point, New York, pled guilty to nine counts, including: one count of conspiracy to commit wire fraud, one count of wire fraud, one count of conspiracy to commit money laundering, and one count of money laundering, each of which carries a maximum sentence of 20 years in prison; three counts of filing false federal income tax returns, each of which carries a maximum sentence of three years in prison; and two counts of willful failure to file Report of Foreign Bank and Financial Accounts, Form TD F 90-22.1, each of which carries a maximum sentence of five years in prison. ROSALES’s total maximum term of imprisonment is 99 years. 

0-22.1.

My prior blogs on Ms. Rosales arrest and charging are:

• New York Art Dealer Previously Arrested on Complaint Is Formally Indicted (Federal Tax Crimes Blog 7/20/13), here.
• Tax Perjury and FBAR Charges Related to Illegal Income Fake Art Case (Federal Tax Crimes Blog 5/22/13), here.

The only foreign bank I have seen identified is Caja Madrid, although even if is not named in the current press release.

Because she is an outlier case and my time is limited, I will try to get her plea agreement but will not likely post anything further about it unless I spot something really exceptional.