Russian-Jewish oligarchs circumvent U.S. sanctions by laundering millions through art

SAINT PETERSBURG, RUSSIA—Russian President Vladimir Putin (L) and billionaire Arkady Rotenberg (R) attend the funeral of his former judo trainer Anatoly Rakhlin on August 9, 2013 in Saint Petersburg, Russia. Rahklin died on August 7 at 75 years old. (Photo by Sasha Mordovets/Getty Images)

By Kelly Crow
The Wall Street Journal
July 30, 2020 Anno Domini

Two months after the U.S. imposed sanctions on Russian construction bil- lionaires Arkady and Boris Rotenberg in March 2014, the brothers sent their art adviser on a shopping spree, according to a Senate investigation report released Wednesday. At a Sotheby’s auction that month in New York, the Rotenbergs, who are life-long friends of Russian President Vladimir Putin, paid $6.8 million for 10 works of art, including a cubist still life by Georges Braque and a swirling tableau by Marc Chagall, the report said.

Days later, the Rotenbergs again added to their collection, paying a private U.S. dealer $7.5 million for “Chest,” René Magritte’s 1961 painting of a colorful pile of buildings, according to the report. When Senate investigators later asked the art dealer if she had vetted the buyers’ identities to make sure they weren’t blacklisted, she said she never asked. When it comes to due diligence, the report said, “She relies on her gut.”

Who is buying art these days? Such disclosure details in art deals like these are being scrutinized following a two-year investigation by the Senate Permanent Subcommittee on Investigations, which alleges art is increasingly being used as a tool by blacklisted individuals to evade sanctions. The report directed sharp criticism at auction houses and art dealers for doing little to screen or stop sanctioned people from trading art in the U.S.

Companies based in the U.S. are forbidden by law from having any financial dealings with sanctioned individuals. Americans caught transacting with the Rotenbergs or any sanctioned individual can face steep fines or even jail terms. The seller of a painting isn’t required to ask or know the identity of the buyer to close a deal, though, because blue-chip art isn’t subject to the same anti-money-laundering disclosure laws that govern U.S. banks.

The art world has installed its own disclosure protocols, but has long struggled to enforce them. Collectors prize discretion and don’t always want their identities or income sources shared. Dealers likewise tend to be tight-lipped about their major clients, and no one wants to cede business to rivals willing to ask less and sell more. This helps explain why so many catalogs brim with works whose only ownership clue is “private collection.”

“I know the auction houses and dealers don’t always want to know who they’re selling to because they’re making significant money, but we also have a national-security interest in making sure sanctions work,” said Sen. Rob Portman (R., Ohio) who led the bipartisan report with Tom Carper (D., Del.). “Secrecy is the problem,” Sen. Portman added.

Even after meeting with Senate investigators in 2018, Sotheby’s and Christie’s competed last year for the chance to auction Lyonel Feininger’s “Bridge II,” a painting investigators said the Rotenbergs likely owned. Christie’s said later it didn’t know the work’s true seller at the time. When Sotheby’s won the consignment, it asked the Rotenbergs’ alleged adviser for the work’s owner and was told it belonged to a Marshall Islands company. The house gave the painting a $5 million estimate and included it in its February 2019 London sale. Just before the auction, the house pulled the work; Sotheby’s told investigators the work hadn’t elicited any potential bidders.

Altogether, the report alleges the Rotenbergs used U.S. dollars to spend or move around funds totaling $91 million, including $18.4 million in art and antiques, since sanctions were imposed.

Sen. Portman said he and Sen. Carper launched the investigation two years ago to research the efficacy of U.S. sanctions imposed on members of President Vladimir Putin’s inner circle in March 2014, weeks after Russia annexed the Crimean Peninsula and launched a covert military operation in eastern Ukraine.

SOCHI, RUSSIA—Russian President Vladimir Putin (R) and billionaire Arkady Rotenberg (L) attend judo training at Yug Sport complex February 14, 2019 in Sochi, Russia. Putin is in Sochi to meet with the Belarussian, Turkish and Iranian presidents. (Photo by Mikhail Svetlov/Getty Images)

Arkaday Rotenberg, a St. Petersberg native and industrialist who befriended Mr. Putin when they joined the same judo club as children, was among those sanctioned. His brother Boris was added shortly thereafter. But after more sanctions were imposed on a wider circle of Russian oligarchs in 2018, Sen. Portman said he and other legislators “wanted to figure out why the sanctions didn’t appear to be working.”

Senate investigators who briefed The Wall Street Journal on the report’s findings said they started looking broadly at blacklisted Russians but soon focused on Arkady Rotenberg’s art-collecting activity. Eventually, they expanded their investigation to art bought by his brother and son, Igor, who is also sanctioned. Investigators said the family offers a case study in how some blacklisted Russians are using the opaque art market to circumvent financial restrictions.

Christie’s, Sotheby’s and the smaller London houses, Phillips and Bonhams, are all named in the report for doing business with the Rotenbergs. Spokespeople for each said they had zero tolerance for evasion of sanctions and were willing to work with the U.S. govern- ment on this issue. The houses also said they didn’t know the Rotenbergs were bidding through an alleged art adviser, Gregory Baltser, until investigators informed them of the connection. All said they stopped allowing him to bid after Senate investigators came asking questions.

“I was shocked when I found out,” Phillips’ Chief Executive Edward Dolman said.

VLADIVOSTOK, RUSSIA – SEPTEMBER 12, 2018: SMP-Bank Board Chairman Arkady Rotenberg, China National Petroleum Corporation Chairman Wang Yilin, and Rosneft President and Management Board Chairman Igor Sechin (L-R) ahead of the plenary session titled “The Far East: Expanding the Range of Possibilities” as part of the 2018 Eastern Economic Forum at the Far Eastern Federal University (FEFU) on Russky Island in Vladivostok. Alexander Ryumin/TASS Host Photo Agency (Photo by Alexander RyuminTASS via Getty Images)

Mr. Baltser, a naturalized U.S. citizen who lives in Russia, confirmed that his company, Baltzer LLP (the misspelling is intentional), has aided Russian collectors in the past but through his lawyer denied that he ever bid on behalf of the Rotenbergs. His lawyer, in a statement, said the investigation has “done substantial collateral damage to Baltzer and its employees, and has forced Baltzer to largely suspend operations.”

A representative for the Rotenbergs called the Senate allegations “totally absurd” and said they never used any tools, including art, to launder money or circumvent sanctions. “All transactions with works of art made by Rotenberg family members or on their behalf were made openly, strictly with lawful personal purposes and always on market terms,” the statement said.

In 2018, the European Union amended its anti-money-laundering regulations to require businesses to verify the identities of sellers and buyers of art valued over €10,000.

The Senate report recommended ways to alter U.S. laws to compel more disclosure in art sales, but so far two bills that could potentially address the issue are stalled.

Arkady Rotenberg, now 68 years old, built a nearly $3 billion fortune, according to Forbes, overseeing infrastructure companies. His brother Boris and son have made fortunes in industries like energy and real estate.

Until now, little was known about the composition or extent of the Rotenberg collection. The brothers have been seen at judo and ice hockey matches in Russia but seldom attend gallery dinners or make buzzy purchases. The report alleged that for at least a decade the brothers have been collecting modern art, particularly surrealists like Salvador Dalí and Giorgio de Chirico.

Unlike the Rotenbergs, Mr. Baltser appeared to seek the art spotlight, opening a Moscow hangout called the Baltzer Club where he invited Russia’s newly wealthy art lovers to watch global auctions and bid, ideally through him. His website offered to help collectors bid with “anonymity,” according to the report.

Investigators tracked payments in Russia to a company incorporated in Belize called Steamort that sent $9,500 monthly payments to Mr. Baltser for years, surpassing $1.1 million. The report said it couldn’t name the owner of this account. Mr. Baltser confirmed he had been paid by the account but said his contract forbade him from disclosing its clients’ identities.

In January, Mr. Baltser wrote a column for Forbes Russia where he said the art market should prepare to divulge more ownership details in art deals. “I would call these changes revolutionary,” he wrote.

2 comments

  1. Fedor Emelianenko, widely considered the best heavyweight mma fighter in history, admitted that he used steroids till 2006 (of course, he used them in his entire career). His period till 2006 is marked by domination in PRIDE Fighting Championships, Japanese MMA firm held by yakuza and russian mobsters (all khazars of course), where riggings were always used and in some fights, blatantly obvious, as well as rampant steroid usage. In 2007 Fedor ducked UFC and fought in Japan, where he fought against middlweight-turned heavyweight Matt Lindland (but still thick, steroids again) and a can Choi Hong Man with the record of 1-0 entering into the fight. In 2008 – 2009 he fought for Afflicition, a Trump run organization which was all centered around Fedor (KGB-Russian mafia-Soviet-talmudic ties). In Strikeforce, where riggings obviously weren’t in favour of Fedor, he shcoked his fans with following:
    – First Strikeforce fight – Fedor beats Rogers, but greatly struggled against him in the first round where he was almost finished. Ducks then-current Strikeforce Heavyweight Champion Alistair Overeem (roided to the gills and all rigged), but didn’t mind fighting in Japan where all are roided.
    – Second Stikeforce fight – “invincible MMA GOAT” Fedor loses to Werdum, first time in 10 years, with a submission just over a minute heading into the fight, from an opponent which he chose. Rigged fight as all his fights.
    – Third Strikeforce fight – Fedor loses to Antonio Silva who ragdolls him, causing doctor stoppage.
    – Fourth Strikeforce fight – Fedor losses to then current Strikeforce LIGHT Heavyweight Champion and middleweight-turned Heavyweight Dan Henderson by a KO in the first round.

    However, as soon as Fedor went to Russia and Japan, he amassed a 3 fight win streak and once again seemed invincible. He then retired, only to return, defeat another fighter in Japanese circuit in dominant fashion and look like old self once again. However, as soon as he went to Bellator (Russian-controlled opposition of UFC, UFC and all other also owned), he lost the Matt Mitrione just over a minute heading into the first round, then entered into the Bellator HW GP tournament despite a loss and rigged his way to the final where he lost to Bader just 36 seconds into the first round. Then they give him another old man to beat.

    Conclusion: Fedor built a trone of lies thanks to his Khazar-talmudic managers, Russian mafia, KGB and other things, and by the way, he became the minister of sports during the reign of Putin, so much for fedor being “clean”. He also supported annexation of Crimea and called Ukraininans fascits who want to kill Russians simply because they are russians. Newest Russian robot is called Fedor. Coincedence? Hardly.

    Peace be with you.

  2. Fedor was also famous for his duckings. List goes like this:
    – Ducked a rematch with Nogueira for 1 and a half year, caused “accidental headbutt” (actually slammed his head intentionally because he was losing a ground fight against Nogueira who would have submitted him and returned the belt) and No Contest (yakuza intervened instead of disqualifying him for intentional headbutt).
    – Ducked a rematch with Mirko Cro Cop who gave him a very tough first fight. Mirko also got a yellow card for inactivity, but Fedor laid on top of him entire time and stalled the fight?! Fedor was also saved when Mirko rocked him by referee to look on his injury.
    – Never fought Josh Barnett, ducked him.
    – Never fought Wanderlei Silva (although Silva was a light heavyweight, he fought against Cro Cop and Mark Hunt, both heavyweights)
    – Never fought Sergei Kharitonov. They should have fought in 2004 PRIDE HW GP, but then happened something which never happened before or after in PRIDE GP’s – they switched Kharitonov for the easier japanese fighter.due to “fan voting”?!
    – Ducked PRIDE FC 2006 OWGP tournament.
    – Ducked UFC
    – Ducked Overeem constantly, for 2 and a half years refused to fight him.
    – Said he would never fight Arlovski again. Although Arlovski is a former UFC Heavyweight Champion, look at Arlovski total record in UFC and that will tell you everything.

    Fedor was also gifted his win against Ricardo Arona and Fabio Maldonado. His win against Maldonado is especially questionable, due to Russian judge literallity saving Fedor from Maldonado in the first round when he should have finished him. Fight was in Russia, by Russian organisation, judge by Russian judges whom Fedor was the president?!

    In 2001, during RINGS tournament, Bobby Hoffman refused to fight Fedor in the finals claiming injury, allowing Fedor to win the tournament. Fedor’s nuthuggers are saying: “See, Fedor was so terrible that Hoffman refused to fight him”, however I have a far better explanation: KGB-Russian mafia probably intimidated Hoffman and told him to throw a fight against their puppet.

    Fedor was also famous for sacrificing his teammates in order to pierce through his opponent’s strategies and fight them when he throughly analysed them. For instance, he sent his brother Alexander Emelianenko and his teammate Magomedov to fight Cro Cop before he did on order to analyse Cro Cop’s fighting style. Fedor also ducked Cro Cop in 2003, where he twice REFUSED to defend his title against Cro Cop, and instead fought lower-quality opponents. Noguiera claimed that Fedor was stripped and that he will fight Cro Cop for the real belt, but when Nogueira defeated Cro Cop he instead only became interim champion (KGB-Russian mafia intervened again to save Fedor). During the time when Nogueira fought the best, Fedor fought against the bunch of cans and 1 good fighter in Gary Goodridge, but still remained the champion.

    Peace be with you.

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