The Art Industry and U.S. Policies that Undermine Sanctions

by by the Permanent Subcommittee on Investigations

United States Senate
PERMANENT SUBCOMMITTEE ON INVESTIGATIONS
Committee on Homeland Security and Governmental Affairs

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Rob Portman, Chairman
Tom Carper, Ranking Member

THE ART INDUSTRY AND
U.S. POLICIES THAT UNDERMINE
SANCTIONS

STAFF REPORT

PERMANENT SUBCOMMITTEE ON
INVESTIGATIONS

UNITED STATES SENATE

THE ART INDUSTRY AND
U.S. POLICES THAT UNDERMINE SANCTIONS

TABLE OF CONTENTS

I.IIEXECUTIVE SUMMARY

1

II.IBACKGROUND

16

A. U.S. Sanctions Enforcement

16

1. The U.S. Treasury Department

16

2. Sanctions Following the Russian Federation’s Invasion of Crimea

20

B. The Art Market

33

1. Money Laundering in the Art Market

35

2. The Art Industry is the Largest Legal, Unregulated Market in the United States

36

3. The Applicability of the Berman Amendment to High-value Art

38

4. Shell Companies

39

C. The Four Major Auction Houses

41

1. Sotheby’s

41

2. Christie’s

43

3. Phillips

45

4. Bonhams

46

5. Online Auctions during the COVID-19 Pandemic

46

D. Art Dealers, Art Galleries, and Art Fairs

47

E. Voluntary Anti-Money Laundering and Sanctions Programs in the Art Industry

49

1. Sotheby’s

50

2. Christie’s

55

3. Phillips

58

4. Bonhams

59

5. Private Art Dealer

61

III.ROTENBERG CASE STUDY: USING OFFSHORE COMPANIES, LAWYERS, AND ART ADVISORS TO MASK OWNERSHIP

63

A. Attorney Mark Omelnitski and the Markom Group

63

1. The Markom Group Established Rotenberg-linked Shell Companies

67

2. Rotenberg-Linked Shell Companies were Used to Purchase Art

69

B. Art Advisor Gregory Baltser

79

1. The Auction Houses Viewed Mr. Baltser as the Principal Buyer

81

2. Mr. Baltser Purchased Art as an Agent for Steamort

84

3. Mr. Baltser Established BALTZER Auction Agency and Club in Moscow

90

4. Examples of Pre-Sanctions Art Purchases

105

5. The United States Sanctioned Arkady and Boris Rotenberg on March 20, 2014

112

6. Examples of Post-Sanctions Art Purchases

115

7. Mr. Baltser Shipped Art Purchased by Rotenberg-linked Companies to the Hasenkamp Storage Facility in Germany

131

8. Mr. Baltser Attempted to Sell Art Purchased with Funds Traced to Rotenberg-linked Companies

133

9. Mr. Baltser Did Not Cooperate with the Subcommittee’s Investigation

141

10. During the Course of the Subcommittee’s Investigation Phillips, Christie’s, and Sotheby’s Stopped Transacting with Mr. Baltser

142

IV.ADDITIONAL U.S. DOLLAR TRANSACTIONS BY ROTENBERG-LINKED SHELL COMPANIES

144

V.CONCLUSION

147