Alfred Taubman, a former chairman of Sotheby's, was found guilty of setting in motion a multimillion-dollar price-fixing scheme with the art house's archrival, Christie's.
Taubman, 76, who is the largest shareholder in Sotheby's and one of America's wealthiest tycoons, faces up to three years in prison for his part in a scheme that lasted from 1993 until 1999. He left court last night without comment. He is due to be sentenced in April.
The verdict will send shockwaves through the world's art-selling capitals, including London, which remains the base of both auction houses. The two have dominated the industry since the mid-18th century and still account for about 90 per cent of the market in fine art, jewellery and furniture.
Taubman, who made his fortune building shopping centres in the American Midwest, was convicted of conspiring with his opposite number at the time at Christie's, Sir Anthony Tennant, to fix the commission rates charged to sellers and thus eliminate competitionbetween them.
Sir Anthony, 71, a patrician figure and a longtime presence in the boardrooms of some of Britain's biggest companies, faced similar charges but declined to travel to the United States. The laws on fair competition are not covered by British-American extradition treaties.
Taubman's lawyer, Robert Fiske, said outside court: "We are of course very disappointed in the verdict, but we're going to review our options and decide what to do next." Mr Fiske had tried to portray his client as something of an art-loving bumbler who would glaze over when presented with financial reports and doze off at important meetings. He suggested that the scheme had been dreamed up by Diana "Dede" Brooks, his number two, and the chief executive of Sotheby's.
Brooks, however, appeared at the trial as the prosecution's star witness. She insisted that the instructions to set up the price-fixing arrangements with Christie's had emerged from a meeting between Taubman and Sir Anthony in 1993. She said they agreed that they "were killing each other on the bottom line, and that it was time to do something about it".
Taubman had apparently not endeared himself to Brooks, once considered one of the most powerful people in the art-selling world. He met her as the American authorities were beginning to close in, held up a picture of her in a newspaper and said she would "look good in stripes" – an apparent reference to a prison uniform.
Taubman's lawyers tried to discredit Brooks. They found witnesses who described her as haughty and capable of inventing the scheme behind her boss's back.
More importantly, they urged the jury to discount her testimony because it was given in the hope that she would receive leniency when her sentencing day arrived.
"This whole case comes down to whether you believe Ms. Brooks beyond a reasonable doubt," Mr Fiske said in his closing argument. "She is a walking reasonable doubt. Alfred Taubman is Dede Brooks' get-out-of-jail-free card."
The American government investigated the crime for four years, but the scandal first came into view at the start of last year with the news that Christopher Davidge, chief executive of Christie's at the time, had handed over documents covering the allegations. He promptly resigned. Mr Davidge and Christie's won conditional immunity from prosecution in return for their help in nailing Sotheby's.
The impact of the affair has been profound. Art sellers were outraged and quickly filed civil lawsuits – which have already been settled – against both auction houses. Sotheby's pleaded guilty last year and was fined $45m (£32m). The conviction of its largest shareholder and one-time owner adds a new layer of mud to the facade of a once unimpeachable institution.
The status of the two firms involved, their role in high society and, arguably, their revered place in the history of London commerce, are what have made the scandal so eye-popping. Few businesses are as élite or as insulated from the ordinary as Sotheby's and Christie's. With the verdict, therefore, there will be a sense that greed, with the help of the law, has cut down the arrogant.
This was not lost on the prosecutors. Unimpressed by the portrayals of Taubman as an incompetent, they argued he knew what was going on but cared little about the legality.
John Greene, an assistant US attorney, said Taubman "thought he was above the law" as chairman of the company and a millionaire developer. "You don't become a millionaire without knowing how to read the bottom line."
The early 1990s were a harsh time for Sotheby's. Its profits were in free-fall, from $410m in 1989 to $202m in 1992. In closing arguments, Mr Greene said Taubman, whose personal fortune is estimated to amount to nearly $1bn, "had the motive, capacity, and opportunity to conspire to fix auction rates".
Sotheby's and Christie's charged sellers in the United States at least $400m in commissions in the 1993-1999 period during which the scheme operated.
The art world will now be watching to see what becomes of Brooks and, specifically, whether she will now avoid imprisonment for helping the government to bring down her one-time master.
- The documents referred to in this report originated from Mr Davidge, who had resigned as chief executive of Christie's in 2000. Mr Davidge wishes to make clear that on leaving Christie's, he handed documents to his lawyers who then passed them on to Christie's lawyers, and that what happened to those docuuments subsequently was outside his knowledge and control. He states that his resignation from Christie's was for personal reasons unnconnnected with the price-fixing inquiry.
The bosses accused of running an auctions cartel
A developer known for building shopping centres in the American Midwest. Raised in the Depression, he fought in the Second World War and started his empire with a $5,000 loan. With other investors, he bought Sotheby's for $130m (£90m) in October 1993. Friends say he was motivated partly by a love of art but also by a love of socialising and his snobbery.
Moved from Citibank to bring financial acumen to Sotheby's. She became the first woman to head an international auction house. Strikingly tall, she took the gavel for some important sales, including the estate of Jacqueline Kennedy Onassis. Formerly a resident of Greenwich, Connecticut, she reigns as one of America's best-heeled self-confessed criminals.
Sir Anthony Tennant
An old Etonian and a former Scots Guard, he is regarded as a pillar of British business. Earned a reputation for rescuing large companies by nursing the brewer Guinness back to respectability after a share-rigging scandal in the late 1980s. He was invited to take the helm at Christie's in 1993 when the auction house was facing hard times.
Appointed chief executive of Christie's in 1993. Known behind his back as "The Golden Hamster" for his light hair and stout build, he did not come from the Etonian stock usually preferred at the auction house. He rose through the ranks from the catalogue department. Determined to modernise the firm, he often clashed with the management.Reuse content