CrimeSep 20, 2024
Oregon Jeweler Sentenced to 20 Years for Stealing From, Defrauding Customers CrimeNov 20, 2024
Sotheby’s to Pay $6.25M Settlement to NY State for Alleged Tax Fraud
The auction house was accused of helping clients avoid paying taxes on millions of dollars’ worth of art purchased from 2010 to 2020.
Sotheby’s will pay millions of dollars to New York State to settle a tax fraud lawsuit the state filed against it in 2020. (Image courtesy of Wikimedia Commons/ajay_suresh)
New York—Sotheby’s Inc. has reached a $6.25 million settlement with New York State in a now 4-year-old lawsuit that accused the auction house of fraudulently securing tax breaks for clients purchasing artwork.
The auction house allegedly helped clients avoid paying taxes on tens of millions of dollars’ worth of art purchased between 2010 and 2020, New York Attorney General Letitia James said when announcing the settlement last week.
The lawsuit, brought by James’ office in November 2020, claimed Sotheby’s encouraged clients to use tax exemption forms known as resale certificates, which certify that a buyer is exempt from paying sales tax because the purchase is for resale only.
It then accepted these certificates, even though the auction house allegedly knew these clients were buying the art for themselves, not to resell it.
Sotheby’s did not respond to National Jeweler’s request for comment but a Reuters report said the company did not admit or deny wrongdoing, and said it “settled to avoid the time, expense, and distraction of litigation.”
James said one of Sotheby’s clients, referred to as the “Collector,” purchased $27 million worth of art from the auction house between 2010 and 2015 using these forms.
She said Sotheby’s accepted resale certificates from the Collector even though it knew they were not buying art for resale but for a personal art collection, some of which Sotheby’s employees helped to set up for display in the Collector’s home.
James previously had secured a settlement with the Collector’s company, Porsal Equities, requiring it to pay more than $10 million in taxes, penalties, and damages for being in violation of tax laws and the New York False Claims Act.
“No one should be allowed to cheat the system and escape paying the taxes they owe,” she said.
“Sotheby’s intentionally broke the law to help its clients dodge millions of dollars in taxes, and now they are going to pay for it. Every person and company in New York knows they are required to pay taxes, and when people break the rules, we all lose out.”
Related stories will be right here …
The auction house allegedly helped clients avoid paying taxes on tens of millions of dollars’ worth of art purchased between 2010 and 2020, New York Attorney General Letitia James said when announcing the settlement last week.
The lawsuit, brought by James’ office in November 2020, claimed Sotheby’s encouraged clients to use tax exemption forms known as resale certificates, which certify that a buyer is exempt from paying sales tax because the purchase is for resale only.
It then accepted these certificates, even though the auction house allegedly knew these clients were buying the art for themselves, not to resell it.
Sotheby’s did not respond to National Jeweler’s request for comment but a Reuters report said the company did not admit or deny wrongdoing, and said it “settled to avoid the time, expense, and distraction of litigation.”
James said one of Sotheby’s clients, referred to as the “Collector,” purchased $27 million worth of art from the auction house between 2010 and 2015 using these forms.
She said Sotheby’s accepted resale certificates from the Collector even though it knew they were not buying art for resale but for a personal art collection, some of which Sotheby’s employees helped to set up for display in the Collector’s home.
James previously had secured a settlement with the Collector’s company, Porsal Equities, requiring it to pay more than $10 million in taxes, penalties, and damages for being in violation of tax laws and the New York False Claims Act.
“No one should be allowed to cheat the system and escape paying the taxes they owe,” she said.
“Sotheby’s intentionally broke the law to help its clients dodge millions of dollars in taxes, and now they are going to pay for it. Every person and company in New York knows they are required to pay taxes, and when people break the rules, we all lose out.”
The attorney general’s office also claimed that from 2012 to 2020, Sotheby’s improperly accepted resale certificates from at least seven other clients on millions of dollars of purchases despite knowing they were buying art for their personal collections.
In several instances, Sotheby’s did not just accept the false resale certificates, but suggested its clients use them, said James, providing the forms and filling out portions of it for them.
“In this case, a prominent auction house went out of its way to help wealthy clients avoid paying millions of dollars in sales taxes on their art purchases,” said Amanda Hiller, acting commissioner and general counsel of New York State Department of Taxation and Finance.
“Thanks to the diligent efforts of Attorney General James and her staff, this fraudulent activity has been stopped and Sotheby’s is being held accountable.”
In addition to paying $6.25 million, Sotheby’s has to undergo reforms as part of the settlement, including creating new measures to ensure employees are educated properly on New York tax law and reviewing information about whether a client intends to resell the art being purchased.
More on Crime
The Latest
AuctionsSep 18, 2026
7.52-Carat Unheated Paraíba Tourmaline Sells for $1.3M at Sotheby’s The top lot of the auction house’s Hong Kong jewelry sale was an Art Deco Mauboussin necklace with ruby beads, which sold for $2 million.
Policies & IssuesSep 18, 2026
Tariffs, Retail Crime Top of Mind at JA’s Annual Fly-In Retailers and manufacturers headed to the Capitol this week to discuss tariff exemptions for diamonds and gemstones, among other issues.
CollectionsSep 18, 2026
Nanis Transforms Its ‘Boule’ Into a Mirror Our Piece of the Week is a pair of drop earrings from the “Sway” collection featuring Nanis’ first use of mirror-polished gold.
Brought to you by
Meet Gemology’s Next Generation Microscope: GIA® Gemolite® NXT Professional EditionExperience gemstones with greater precision and comfort than ever before.
GradingSep 18, 2026
De Beers Introduces Faster Version of Diamond Screening Machine SynthDetect 2 can scan a full tray in less than five minutes, De Beers said, making it six times faster than its predecessors.
Weekly QuizSep 17, 2026
This Week’s QuizTest your jewelry news knowledge by answering these questions.
AuctionsSep 18, 2026
Noonans To Auction Medieval Gold Seal Ring Recovered By 2 FriendsTwo metal detectorists discovered the ring, which may have belonged to English noblewoman Matilda of Lancaster, in Suffolk.
Policies & IssuesSep 17, 2026
Tariffs on India Could Increase as Russian Sanctions Bill Heads to Trump’s DeskThe bill has a provision that allows the president to raise tariffs on countries that import Russian oil and gas to as much as 100 percent.
Brought to you by
Your Piece Could Be the One Editors Talk AboutSubmit your pieces for a chance to win in this year's competition.
Events & AwardsSep 17, 2026
This Is the Winner of the 2026 Robert M. Shipley AwardThe American Gem Society presented the annual award to a former president of its board.
CollectionsSep 17, 2026
Cynthia Erivo, Zoë Chicco’s Jewelry Collab Is an Ode to TransformationThe “Chrysalis” capsule centers butterfly motifs representing growth, transformation, and the unfolding of who you are.
Events & AwardsSep 17, 2026
Louisiana Retailer Kevin Patton Wins Lifetime Achievement AwardJewelers of Louisiana presented Patton, the third-generation president of Pattons Fine Jewelry, with the award at its annual convention.
PodcastsSep 16, 2026
Episode 9: Remembering Cindy EdelsteinTwo special guests join the podcast to commemorate the 10th anniversary of the designer advocate, mentor, and author’s untimely passing.
CollectionsSep 16, 2026
Jessica McCormack, L’Objet Collab on Homewares CollectionMcCormack brings sea-inspired motifs from her “Beaches” collection to L’Objet’s tableware, vanity pieces, and first-ever cutlery set.
IndependentsSep 16, 2026
Bromberg & Co. Names New PresidentMarlin “Brian” Hood, who has been with the store for 20 years, will succeed Ricky Bromberg, who died earlier this month.
MajorsSep 16, 2026
Midas Chain Releases ‘House of Midas’ Bridal CatalogThe new bridal catalog features the latest jewelry collections and designs from timeless classics to modern silhouettes.
EditorsSep 15, 2026
2026 Emmys Jewelry: An Either/Or Proposition Stars wore either a necklace or earrings at 78th Primetime Emmy Awards but rarely both, Natalie Francisco notes.
ColumnistsSep 15, 2026
The Levels Your Website Must Clear Before AI Recommends YouJennifer Shaheen compares this new era of AI-powered SEO to a video game: your website must clear one level before advancing to the next.
IndependentsSep 15, 2026
Armadani Launches Retail Support Program for Holiday SeasonThe program highlights “Made in Italy” fine jewelry with digital merchandising, sales education, and local marketing support.
EditorsSep 15, 2026
Q&A: Signet Jewelers’ Joan Hilson on Diamond Demand, the HolidaysHilson, Signet’s chief operating and financial officer, discussed Q2, resurgent natural diamond demand, and why Blue Nile is a standout.
ColumnistsSep 14, 2026
Sherry Smith: Stop Waiting for December to Save Your ChristmasThe stores that have a great December are the ones that made good decisions in August, September, and October, Sherry Smith writes.
AuctionsSep 14, 2026
22 Carats of ‘Sunshine’ Are Up for AuctionThe 22.09-carat fancy yellow “Pragnell Kimberley Sunshine Diamond” is part of the fall jewelry sale at Heritage Auctions.
IndependentsSep 14, 2026
Greenwich St. Jewelers to Unveil Photography Exhibition“Adornos: Jewelry, Memory & What We Pass Down” honors the jewelry’s importance to New York City’s Latine communities.
SourcingSep 14, 2026
Gemfields Sells All Lots at First Emerald Auction in 9 MonthsThe company’s managing director of sales said the results demonstrate “continued strong demand for commercial-quality emeralds.”
SourcingSep 14, 2026
Diamonds Do Good Pledges Support for Eye Care ProgramThe nonprofit awarded a grant to the Gift of Sight initiative spearheaded by South African musician Black Coffee.
CollectionsSep 11, 2026
A Sapphire ‘Stardust’ Ring From Greenwich St. Jewelers The Latine-owned New York jeweler is marking two milestones this year: its 50th anniversary and the 25th anniversary of the 9/11 attacks.
MajorsSep 11, 2026
The Wishing Place by JTV OpensThe jewelry retail broadcast network has sponsored a new space for Make-A-Wish East Tennessee on its campus in Knoxville.
Events & AwardsSep 11, 2026
The Edge Awards Scholarships to 2 Young Jewelry ProfessionalsThe recipients were recognized at the 24 Karat Club of the Southeastern United States’ annual banquet.
