Criminal Trial of Price Fixing by Sotheby's


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.


Art World Scandal Heads To Court, Daily News, 11/04/2001.

Trial Beginning For Ex-Chairman In Sotheby's Case, New York Times, 11/08/2001.

Taubman Datebooks Cited In Sotheby's Collusion Trial, New York Times, 11/14/2001.
Ex-Executive of Christie's Tells of Collusion Scheme, New York Times, 11/15/2001.
Chief Witness Accuses Former Boss at Sotheby's, New York Times, 11/20/2001.

A World Where Ethics Are Sold to the Highest Bidder, New York Post, 11/20/2001.

DeDe Did It, Claim Taubman Lawyers, New York Post, 11/21/2001.
Ex-CEO Says She Fixed Prices:  Testifies She Agreed to Arrange Sotheby's-Christie's Deal, Daily News, 11/21/2001.
Conspiracy Trial Questions Honesty of Ex-Sotheby's Chief, New York Times, 11/21/2001.
Prosecution Rests in Sotheby's Conspiracy Trial, New York Times, 11/22/2001.
Auction Drama Unfolds:  Sotheby's Trial Boasts Intrigue, Movie Star, Daily News, 11/25/2001.
Sotheby's Trial Witnesses Attest to Chief's Integrity, New York Times, 11/27/2001.

Witness Says Price-Fixing For Auctions Began Earlier, New York Times, 11/28/2001.
Sotheby's Case Ends on Issue of Character, New York Times, 12/04/2001.
Artful Dodger's Success Tale Was a Masterpiece, Daily News, 12/06/2001.
Ex-Chief of Sotheby's Is Convicted of Price Fixing, New York Times, 12/06/2001.


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.]