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Criminal Trial of Price Fixing by Sotheby's
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Sotheby's and Christie's were charged with
being "the
masterminds behind a conspiracy to fix prices and cheat more
than 130,000 customers over six years." They settled
those charges by the federal government
by agreeing to
pay more than half a billion dollars.
But there was still the criminal trial for
price fixing. (Sir Anthony Tennant, the chairman of Christie's,
could not be extradited from England to the US and therefore
did not stand trial.)
This Tab includes
articles on the criminal trial against Sotheby's. |
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Art
World Scandal Heads To Court, Daily News, 11/04/2001. |
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Trial Beginning For
Ex-Chairman In Sotheby's Case, New York Times, 11/08/2001. |
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Taubman
Datebooks Cited In Sotheby's Collusion Trial, New York
Times, 11/14/2001. |
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Ex-Executive
of Christie's Tells of Collusion Scheme, New York Times,
11/15/2001. |
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Chief
Witness Accuses Former Boss at Sotheby's, New York
Times, 11/20/2001. |
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A World Where Ethics
Are Sold to the Highest Bidder, New York Post, 11/20/2001. |
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DeDe
Did It, Claim Taubman Lawyers, New York Post, 11/21/2001. |
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Ex-CEO
Says She Fixed Prices: Testifies She Agreed to Arrange Sotheby's-Christie's
Deal, Daily News, 11/21/2001. |
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Conspiracy
Trial Questions Honesty of Ex-Sotheby's Chief, New York Times, 11/21/2001. |
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Prosecution
Rests in Sotheby's Conspiracy Trial, New York Times, 11/22/2001. |
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Auction
Drama Unfolds: Sotheby's Trial Boasts Intrigue, Movie Star, Daily News,
11/25/2001. |
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Sotheby's
Trial Witnesses Attest to Chief's Integrity, New York Times, 11/27/2001. |
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Witness
Says Price-Fixing For Auctions Began Earlier, New York
Times, 11/28/2001. |
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Sotheby's
Case Ends on Issue of Character, New York Times,
12/04/2001. |
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Artful
Dodger's Success Tale Was a Masterpiece, Daily News, 12/06/2001. |
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Ex-Chief
of Sotheby's Is Convicted of Price Fixing, New York
Times,
12/06/2001. |
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Art
World Scandal Heads To Court, Heidi
Evans,
Daily News, 11/04/2001, pp. 40-1.
Ms. Evans wrote that "the truth be
told, the $4 billion auction business, long dominated by
Sotheby's and Christie's,
is driven by what the cognoscenti call the three D's death, divorce
and debt." And "Now, in a Manhattan trial set
to begin Thursday, a fourth D deceit will be on display."
She continued that the corporate leaders
of Sotheby's and Christie's art auction houses were indicted
in May by federal prosecutors
as "the masterminds behind a conspiracy to fix prices and
cheat more than 130,000 customers over six years. The two
houses have paid $512 million to clients — $256 million
apiece as part of a class-action lawsuit."
She quoted a former employee as saying, "You
have a group of intelligent people on top of the art world
who didn't need
to cheat, but they couldn't help themselves. They brought
the whole house of cards down on themselves."
The accused practices were described
as "classic
collusion and price fixing," and "a violation of
the Sherman antitrust law, the same law that brought down
Standard Oil and
John D. Rockefeller in 1991."
The well-known Manhattan art dealer,
Richard Feigen, was quoted saying, "'Sotheby's and Christie's
were two houses in competition for a small supply of food like
a bunch of hyenas fighting over
a gobbet of flesh. They decided they were hemorrhaging
and the only way they could compete was by cutting commissions
and making
a deal.'"
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Trial
Beginning For Ex-Chairman In Sotheby's Case,
Ralph Blumenthal and Carol Vogel, New York Times,
11/8/2001, pp. E1&5.
Continuing their reporting,
Mr. Blumenthal and Ms. Vogel wrote, "Four years after
federal prosecutors began peeling back layers of secrecy in
the global art market, eventually
exposing a huge price-fixing scheme at the world's two dominant
auction houses, a final phase begins today in a Manhattan federal
courtroom, where one of the most powerful figures in the art
world goes on trial on charges of antitrust conspiracy."
They described how the former chairman
of Sotheby's and largest stockholder, Alfred Taubman, is accused
of "colluding with
this one-time counterpart at Christie's over five years to fix
commissions charged to auction customers."
Mr. Taubman was"a Detroit shopping
center magnate who bought Sotheby's in 1983" and he
had pleaded not guilty. The article reported that Mr. Taubman's
lawyers claimed that others, principally
Sotheby's former chief executive and president, Diana D. Brooks,
were responsible for any wrongdoing. Ms. Brooks had already
admitted participating in the wrongdoing and was a prime witness
against
Mr. Taubman.
Customers in a class action suit against
Sotheby's and Christie's had already agreed to a settlement
of $512 million. However
that settlement did not resolve the issue of the criminal liability
of the participating individuals.
The Times continued, reporting how the
case had become increasingly more involved, casting a dark
shadow over even the integrity
of touring art exhibitions: "The other main government
witness is expected to be Christopher M. Davidge, Christie's
former chief
executive, who, upon resigning in December 1999, turned over
a trove of internal memos and documents that the government maintains
chronicle not simply price fixing but collusion on everything
from staffing to touring art exhibitions."
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Taubman
Datebooks Cited In Sotheby's Collusion Trial,
Ralph Blumenthal,
New York Times, 11/14/2001, p. D3.
The Times reported that: "He
was listed as an unnamed 'gentleman.' He was also listed
as 'Sir A.,' 'Anthony'
and 'Tony.' Once he was mentioned by no name or word at
all, just four asterisks. And other times he was named
in full: Sir Anthony Tennant."
The article detailed how evidence was presented
at the trial showing the name of Sir Anthony, the former chairman
of Christie's
auction house, in the datebooks and appointment schedules of
A. Alfred Taubman over a dozen times from 1993 to 1996. But
these are counterparts of ostensibly rival art auction houses!
The Times continued that the evidence
recorded "a string
of private meetings at which prosecutors contend they plotted
a scheme to bilk their customers out of hundreds of millions
of dollars."
The article reported the meetings as being "far
more extensive than previously alleged" and occurring at
Mr. Taubman's London flat, at his Fifth Avenue apartment, and
at his office in New
York. Justice Department antitrust prosecutor, Patricia
Jannaco characterized the appointment notations as "coded."
Mr. Taubman's lawyers were reported as
characterizing the meetings as innocent in Mr. Taubman's defense. But
the Times reported that one reluctant government witness, Mr.
Taubman's executive assistant,
testified that "she had a purpose in leaving out Sir Anthony's
name and listing him only as a 'gentleman' in her diary of Mr.
Taubman's appointments of April 30, 1993."
"I considered it private it could have
been misconstrued," the
assistant was quoted as testifying. And she testified that
it was her job "to protect Mr. Taubman's privacy" and
that "these two were chairmen of competing auction houses. Fairly
gossipy people could be talking about this. It should
be kept private."
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Ex-Executive
of Christie's Tells of Collusion Scheme,
Ralph Blumenthal, New York Times, 11/15/2001, pp.
D1-2.
Here the Times reported that Christopher
M. Davidge, an ex-executive of Christie's, testified that "the
former chairmen of Christie's and Sotheby's masterminded a
scheme to squelch competition and
boost profits and deployed him and a high-level Sotheby's deputy
to carry it out."
He testified that the illegal cooperation between the two rival
companies set matching fees, exchanged confidential lists of
clients and deal terms, and promised not to raid each other's
employees. He said that the collusion saved the two companies
up to $33 million a year.
The article also explained that the chairman of Christie's,
Sir Anthony, was the former chairman of Guiness, the giant brewing
company.
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Chief
Witness Accuses Former Boss at Sotheby's,
Ralph Blumenthal and Carol Vogel, New York Times,
11/20/2001, pp. A1, D4.
This article reported further on the price-fixing
trial of A. Alfred Taubman of Sotheby's, and wrote about the
testimony of
Mr. Taubman's former chief executive, Diana D. Brooks, that Mr.
Taubman drafted her for a conspiracy with arch rival Christie's
and that Mr. Taubman sought to conceal that conspiracy until
the very end."
Mr. Blumenthal and Ms. Vogel wrote, "It
was the most dramatic confrontation to date in the seven-day-old
trial in federal court
in Manhattan the two former partners at the top of one of the
world's auction giants pointing fingers at each other in one
of the art world's biggest scandals."
Mrs. Brooks worked at Sotheby's for more
than 20 years before widespread disclosures from a federal
investigation forced her
ouster and a guilty plea. The Times wrote that she testified
that Mr. Taubman "directed her to meet her counterpart at
Christie's to set up a joint schedule of higher prices and coordinate
other business practices and that he congratulated her when the
scheme was carried out."
She testified that after the scheme fell
apart, she said she would meet with Mr. Taubman only in the
presence of a Sotheby's
lawyer. She continued that Mr. Taubman told her, "Just don't
act like a girl."
After pleading not guilty, Mr. Taubman, accused
Mrs. Brooks and Mr. Davidge formerly of Christie's of colluding
without
his knowledge.
The government has also charged the former chairman of Christie's,
Sir Anthony Tennant, with antitrust conspiracy. Sir Anthony has
denied wrongdoing, has declined to come to the U.S. for trial,
and he cannot be extradited from England by the U.S. prosecutors
The article also reports on "one of the
prosecution's most striking disclosures," that Mr. Taubman
and Sir Anthony held a dozen private meetings from 1993 to 1996. It
reports on Mrs. Brooks' testimony that Mr. Taubman told her about
the meetings
and how the two chairmen of the rival companies "agreed
we were both killing each other over the bottom line and it was
time to do something about it.'
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A
World Where Ethics are Sold to the Highest Bidder,
Steve Dunleavy,
New York Post, 11/20/2001, p. 3.
In this report, Mr. Dunleavy wrote that "In
Manhattan federal court yesterday, Diana 'DeDe' Brooks, the protégé of
Sotheby's millionaire Alfred Taubman, started to blow the lid
off an alleged price-fixing scam between rival auction houses
Sotheby's and Christie's." He detailed how thousands
of innocent buyers and sellers were "stuck for millions" over
a six year period and how Sotheby's and Christie's reached a
settlement
in a class-action suit for more than half a billion dollars.
Referring to the upcoming criminal prosecution
that could send Taubman to prison he wrote that "Brooks
was singing an aria against him."
"Brooks, his CEO who made $1.2 million
a year, described meetings with Christopher Davidge, who represented
Christie's,
as something out of a spy movie. They met in airport parking
lots, private apartments in London and in New York fixing prices
and screwing the public."
And Mr. Dunleavy added, "What a lovely
lot."
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DeDe
Did It, Claim Taubman Lawyers, Devlin
Barrett, New
York Post, 11/21/2001, p. 7.
The Post reported on the court testimony
about the 1997 TV interview Brooks gave when she "was
still the most powerful woman in the art world."
"Our integrity is all we have. I feel very strongly about
that," the Post quoted her testifying.
Reporter Barrett continued that, "The
51-year old disgraced executive seemed stunned by the clip,
her voice choking up as
she admitted she was knee-deep in a criminal conspiracy when
she made the comments."
The article reported that "Brooks
also claimed the price-fixing scheme with archrival Christie's
which helped each company make
an extra $15 million a year didn't hurt customers."
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Ex-CEO
Says She Fixed Prices: Testifies She Agreed to Arrange Sotheby's-Christie's
Deal, Robert Gearty,
Daily News, 11/21/2001,
p. 6.
Here the Times reported how former Sotheby
CEO Diane Brooks testified yesterday she claimed she was skittish
about her actions,
but nonetheless "intentionally participated in a price-fixing
conspiracy with an executive at Christie's auction house."
It quoted Ms. Brooks testifying, "I was
nervous about it, but I agreed to do it willingly." And "I
convinced myself it was in the best interest of the business
and clients
that we were doing it."
During the questioning of Ms. Brooks,
the Times reported that a 1997 videotape was played, showing
the public television program, "Wall
Street Week with Louis Rukeyser."
The Times wrote: "On a large screen,
the jury saw Rukeyser ask Brooks about a scandal in Italy then
rocking the art world. She said Sotheby's ethics were beyond reproach 'because our integrity
is all we have.'"
The Times' article continued, describing
how Brooks's image on the TV screen was then dramatically frozen
while she was asked
on the witness stand, "At the time you said that, you were
in the middle of a price-fixing conspiracy."
The Times described that Ms. Brooks choked
up and answered, "Yes,
I was."
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Conspiracy
Trial Questions Honesty of Ex-Sotheby's Chief,
Ralph Blumenthal and Carol Vogel, New York Times,
11/21/2001, 2001, p. D6.
This article reported on how, on the one
hand, Diana D. Brooks, the former Sotheby's chief executive
admitted under cross-examination
that she had repeatedly lied to conceal her own willing role
in the conspiracy between the two rival art auction houses to
work together on pricing and other financial matters.
On the other hand, the article also reported
on how Ms. Brooks, said "she was telling the truth when
she swore she was carrying out Mr. Taubman's orders in furthering
the scheme, which cost
customers of both houses tens of millions of dollars since 1995."
It wrote that Ms Brooks had previously
pled guilty to "colluding
with the chief executive of Christie's to set up a joint schedule
of higher non-negotiable fees and coordinate other business practices
to curb competition and boost lagging profits."
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Prosecution
Rests in Sotheby's Conspiracy Trial,
Ralph Blumenthal,
New York Times, 11/22/01, p. D3.
Here Mr. Blumenthal wrote that, "And
on the ninth day, the government rested."
He briefly recapped the case and reported
that "The departure
of Ms. Brooks and to a lesser extent, her admitted co-conspirator
and predecessor on the stand, Christopher M. Davidge, Christie's
former chief executive, deprives the case of some of its celebrity
luster. But necks craned yesterday again as Sigourney Weaver,
who plans to play Ms. Brooks in a prospective HBO movie, settled
into a spectators' pew."
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Auction
Drama Unfolds: Sotheby's Trial Boasts Intrigue, Movie Star,
Don Singleton, Daily News,
11/25/2001, p. 16.
The Daily News described the trial as: "With
their fancy catalogues and bidding paddles and foreign accents,
the Justice
Department alleges, executives of both Sotheby's and rival Christie's
engaged in a conspiracy sort of 'Upstairs, Downstairs' meets
'Goodfellas.'"
Mr. Singleton quoted David Yudain, an
executive producer of the movie that will star [Sigourney]
Weaver. "Put all these
people together and what you get is 'rats in a drainpipe.'"
That's very different from the image
Brooks tried to project on 'Wall Street Week with Louis Rukeyser,
the Daily News wrote. It too quoted Ms. Brooks on the program saying "After all,
our integrity is all we have."
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Sotheby's
Trial Witnesses Attest to Chief's Integrity,
Ralph Blumenthal and Carol Vogel, New York Times,
11/27/2001, p. D3.
Here, Mr. Blumenthal and Ms. Vogel reported
on the defense case in the price-fixing trial of A. Alfred Taubman. He
was the controlling shareholder and former chairman of Sotheby's. The
defense started with testimony from friendly witnesses who vouched
for his integrity
and disputed his main accuser and longtime chief executive, Diana
D. Brooks.
The defense seemed aimed at portraying
Mr. Taubman "as
an honest man and an upstanding member of the Detroit community,
who could not have committed the crimes charged."
The article reported that one of the
character witnesses, Judge [Damon J.] Keith, sits on the federal
Court of Appeals for the
Sixth Circuit in Michigan. He testified that he worked with Mr.
Taubman on various civic initiatives in Detroit and that Mr.
Taubman's "reputation for truthfulness and honesty is impeccable."
The article also wrote that the government
attorney asked Judge Keith if "Mr. Taubman had ever told
him about his private meetings with Sir Anthony in London and
New York." The article
continues, reporting that the witness, Judge Keith said, "No."
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Witness
Says Price-Fixing For Auctions Began Earlier,
Ralph Blumenthal and Carol Vogel, New York
Times,
11/28/2001, p. D2.
The Times continued to report on the tawdry facts that came
to light in this trial. This time, the Times reported that there
was testimony that two executives of Sotheby's and Christie's
initiated their own scheme to fix rates for auction buyers as
early as 1992.
That was a year earlier than the government
claimed the two executives' bosses "hatched their own
top-level conspiracy to fix fees charged to auction sellers."
John D. Block, the head of Sotheby's
jewelry department during the early 1990's, testified about
this. The Times wrote that "It
threw an unflattering new light on a multibillion dollar auction
industry already tarnished by evidence that tens of thousands
of auction sellers had been bilked and that the heads of Christie's
and Sotheby's had covered up the cheating."
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Sotheby's
Case Ends on Issue of Character,
Ralph Blumenthal and Carol Vogel, New York Times, 12/4/2001,
pp. D1&6.
In this article, the Times reported on
the summations of the trial as it proceeds to be left to the
jury. The Times wrote
that the lead prosecutor portrayed Mr. Taubman as "a devious
price fixer who cut an illegal deal with Christie's, the archrival
auction house" and that the defense called Mr. Taubman the "innocent
dupe of a scheming deputy desperate to avoid prison."
This was the climax of the four-year
investigation the Times wrote "unearthed one of the biggest
art scandals in recent history and exposed a pattern of cozy,
lucrative and often illegal
dealings between two houses that had often been portrayed as
cutthroat competitors."
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Artful
Dodger's Success Tale Was a Masterpiece,
Paul H.B. Shin, Daily News, 12/6/2001, pp. 6-7.
The Daily News reported that Alfred Taubman
had earned a reputation as "an investment whiz after edging
out Mobil in a deal to buy the 77,000-acre Irvine Ranch in
Southern California one
of the largest real estate deals of the century."
Mr. Shin described that in 1977 Mr. Taubman and a group of his
rich friends bought the property for $337 million. When they
sold the property six years later, they more than doubled their
money, reaping a profit of more than $400 million.
"That was the cash source that allowed him to buy Sotheby's," the
Daily News explained. "Taubman quickly deflated the aristocratic
pretensions of the 240-year-old auction house with his unapologetic
commercialism," the article continued, adding, Mr. Taubman "once
compared peddling fine art to marketing root beer."
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Ex-Chief
of Sotheby's Is Convicted of Price Fixing,
Ralph Blumenthal and Carol Vogel, New York Times,
12/6/2001, pp. A1, D6.
Here the Times reported that "A.
Alfred Taubman, who dipped into a billion-dollar fortune from
shopping centers to become
principal owner of Sotheby's, was found guilty yesterday of conspiring
with its rival, Christie's, to fix fees charged to auction house
sellers."
The article reiterated that "The
price-fixing scheme, which violated federal antitrust law by
eliminating competitive choice
and costing customers millions of dollars, was admitted by both
companies, but Mr. Taubman's role in the six-year collusion,
starting in 1993, was the issue at this 16-day trial in federal
district court in Manhattan."
This was one of the biggest scandals
in the art world in recent times and the case "exposed
a seamy underside of a business that long prided itself on
upper-class panache and English roots,
besmirching both Sotheby's, founded in 1744, and Christie's,
founded in 1766."
The Times reported that from the comments
of the jurors, the jury was very concerned about the 12 private
meetings Mr. Taubman
held in this London and New York apartments with his Christie's
counterpart, Sir Anthony Tennant, from 1993 to 1996, discovered
in the diaries and calendars subpoenaed from
Mr. Taubman. These sessions "acquired an additional
whiff of illegality because Mr. Taubman concealed them from his
closest
associates."
The Times quoted the jury's foreman saying "You
get together 12 times with somebody, use your common sense."
[The attention
contemporary art receives in academic and curatorial research
seems to have significant parallels with commercial market
prices.
The next Tab
includes articles on the federal criminal sentencing for
price fixing by Sotheby's, the world famous art auction
house.]
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