Law & Politics
Collector Michael Shvo Charged With Tax Evasion on Art and Luxury Purchases
Shvo pleaded not guilty, and was released on a $500,000 bail.
Eileen Kinsella
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Real estate developer and high-profile art collector Michael Shvo, and related shipping companies, were indicted by the New York district attorney Cyrus Vance yesterday, September 8, on charges of evading more than $1 million in sales and use tax on fine art, jewelry, and luxury sports cars. The indictment does not name specific artworks.
Shvo pleaded not guilty, and was released on a $500,000 bail.
The Getty Station in 2013 with Lalanne sheep conceived of by Michael Shvo. Courtesy of GettyStation.com,
Shvo is perhaps best known in art world circles as the collector who turned a Getty gas station on West 24th street in Chelsea into a temporary Francoix-Xavier and Claude Lalanne “grass station” complete with signature Lalanne sheep placed on “rolling” faux grass hills, back in 2013, before demolishing the station in order to build—yet another—high end, Highline Park condo development.
“As alleged in the indictment, Michael Shvo went to great lengths to defraud New Yorkers out of more than a million dollars in tax revenue, said Vance in a statement. “This indictment puts other purchasers of fine art on notice: the purposeful evasion of New York State and City taxes is a tax crime, and those who scheme to avoid their obligations will be held criminally and civilly accountable.”
In addition to the criminal tax evasion charges, Vance also filed a related civil action to forfeit funds accumulated during the alleged scheme. Bloomberg reports that a temporary freeze has been placed on at least $1.5 million of Shvo’s assets.
As artnet News reported in early 2015, the Manhattan DA launched an investigation into art sales taxes and several Chelsea dealers told us they had received letters seeking information about their business records.
Jerry Boone, the New York state commissioner of taxation and finance, said the arrest of Shvo is “part of a continuous and concentrated effort involving our department,” along with the DA, and other local law enforcement agencies.
According to court documents, between 2010 and and 2016, Shvo “engaged in a long-term scheme to evade payment of state and local sales and use tax” on purchases and “falsely represented that purchases he made would be shipped to an out-of-state address in the Cayman Islands or other overseas destinations.”
Two individuals, Sheridan C.T.S. Hedley and Guy Drori, and their respective shipping companies (Hedley’s and BestGuy Moving), are charged with participating in the scheme by providing auction houses and galleries with shipping documentation that deliberately misrepresented the destination of Shvo’s purchases.
In fact, according to the indictment, Shvo’s purchases were shipped to his office or homes in New York, including an apartment on Columbus Circle and a home in the Hamptons.
Shvo further engaged in a scheme to hide the assets of his company, Shvo Art Ltd, from taxation, according to the DA. He allegedly evaded paying both state and New York City corporate tax on profits made from the company’s sales of fine art and furniture by falsely portraying that the company and its assets were located offshore when they were instead operated out of his offices and homes in Manhattan and the Hamptons.
“Mr. Shvo looks forward to his day in court where he will mount a defense to all charges related to his art business and is confident he will be acquitted. While Mr. Shvo is prominent in the art world he has not committed any crime nor did he act with any criminal intent whatsoever,” said spokesperson Ronn Torossian. “This high-profile campaign to pursue art collectors and dealers for unpaid taxes comes following settlements with Larry Gagosian and Aby Rosen.”
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