The cosily niche books and manuscripts market may be about to be hit by one its biggest scandals in recent years. And Paris’s Musée des Lettres et Manuscrits, as well as its sister organization the Institut des Lettres et Manuscrits, is in the eye of the storm.

Le Point reported that on November 18, France’s anti-fraud brigade raided the museum and the various branches of Aristophil, a company owned by the museum’s founder, Gérard Lhéritier.

The company is suspected by the tax authorities and Tracfin—a public body fighting money laundering and terrorism financing—of “deceptive marketing practices,” and “gang fraud.” At time of writing, the Aristophil website as well as the websites for the museum and the institute appear to have been taken offline.

The implications of the case are far-reaching, and could have significant impact on the rare manuscripts world as a whole. According to Le Parisien, Lhéritier owns five percent of the global books, letters, and manuscripts market, worth an estimated €3 billion a year.

Aristophi’s Aggressive Purchases

For years, Lhéritier’s company Aristophil has been aggressively buying, paying top dollars for pieces including the Marquis de Sade’s The 120 Days of Sodom (see “France Gets Back Original Manuscipt of Marquis de Sade’s Infamous Erotica”) and Napoleon’s Wedding Certificate (see “Napoleon’s Wedding Certificate Fetches €437,500“).

The collection is worth between €400 million and €500 million depending on the source. It has been leveraged via an investment scheme, which the French press have likened to a Ponzi scheme, a type of financial scam made famous by Bernie Maddoff.

Aristophil’s clients are invited to acquire shares in lots of rare manuscripts by the likes of Charles Baudelaire, Marshal Pétain, and Henri Matisse. Although the fund is dedicated to “amateurs and collectors,” Aristophil’s offerings are pure financial products, attracting clients with promises of returns of between six and eight percent. Many went for it. French sources estimate Aristophil has between 15,000 and 18,000 clients. In theory, if those clients want to leave the fund after the minimal period of five years, their initial investment will be refunded, with added interest.

The Musée des Lettres et Manuscrits.
Photo: Courtesy of Quefaire.

A Speculative Bubble

So far, the system has functioned, supported in part by Aristophil’s own acquisition strategy, which has fueled what has been described as a speculative bubble. The value of its purchases is also increased by the display of key pieces in the Musée des Lettres et Manuscripts and in public museum partners, which gives the collection an alluring institutional varnish.

This is how Aristophil justifies the stupendous “value increase” for some of its holdings, including the piece of paper on which Albert Einstein scribbled the theory of relativity, which, according to L’Express, was bought at Christie’s New York in 2002 for $559,000 and is now estimated by the company at $28.5 million.

“Aristophil is out of the market, in a close circuit which never sells outside,” an expert told the French newspaper. “No one would buy their manuscripts at such crazy prices. What would happen if many investors asked to leave at the same time?”

Lhéritier is well-known by the justice system, and not only in France. In the 1990s, he was accused, and cleared, of selling fake Monaco stamps. Aristophil has also come under the scrutiny of the Belgian authorities, which suspect the company of fraud and money laundering via its Brussels outpost. Legal proceedings in France started back in 2010.

It looks like the system is now closing in on Lhéritier. According to Le Point, the ongoing perquisitions are both searching for evidence and seizing assets which could be used to compensate Aristophil’s clients.