the money comes from his account at a major bank."[1] She explained that there are some in the art business who Sotheby's knows are buying for someone else or who actually disclose that they are acting as an agent or nominee on behalf of someone else.[2] She contrasted that scenario with Mr. Baltser stating "he's the principal; he's purchasing the art in his own name with funds in his own bank account."[3] She explained that Sotheby's "cannot ask clients to disclose the source of funds in their bank accounts. Sotheby's has no legal authority to demand such information."[4]
An agent, the Chief Compliance Counsel explained, will buy an item, but not take title.[5] She explained to the Subcommittee that, under Sotheby's policy, Mr. Baltser was not an agent, but instead purchased and took title of the artwork.[6] She explained that "Sotheby's does not know and has no legal right to know to whom he may resell the art once he takes title of the art.[7] She also stated that "when Baltser transacts with Sotheby's, he is the person who takes legal ownership and legal risk as the purchaser."[8] She further asserted that "Baltser is taking a risk because his client could turn around and say, 'I don't want to buy this thing anymore.'"[9]
The Chief Compliance Counsel also told the Subcommittee that Sotheby's staff knew Mr. Baltser well and considered him to be a known-quantity and an important Sotheby's client.[10] She could not recall Sotheby's having concerns about transacting with Mr. Baltser prior to the Subcommittee's investigation and said that he transacted with Sotheby's using accounts at major banks. Sotheby's assigns "Tiers" or "Levels" to clients based upon the amount and frequency of purchases. The highest level is 1 and the lowest level is 9.[11] She said that Mr. Baltser was a "Level 1" Sotheby's client.[12] She explained that these clients are the ones who are "wined and dined" and receive "special attention."[13] In some cases, she said an entire team of Sotheby's employees can be assigned to them.[14] The Chief Compliance Counsel stated that Sotheby's was moving away from using client levels.[15]
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