The art dealer Guy Wildenstein should be sentenced to four years in prison—with two years suspended—and pay a penalty of €250 million ($275 million) for acts of alleged tax evasion and money laundering, prosecutors urged France’s high court for financial crimes on Thursday.
Two other members of the Wildenstein clan, Alec Jr. and Liouba Stoupakova (the widow of Guy’s brother), were recommended suspended prison sentences of 6 months and one year, respectively, in what prosecutor Monica D’Onofrio called “the most sophisticated fraud of the 5th Republic.”
The Wildensteins are accused—along with two offshore banks, two lawyers, and a notary—of using a complex system of trusts and shell companies to hide the vast majority of their family’s wealth from French tax authorities.
French tax authorities say they were shortchanged by the Wildensteins by an estimated half billion euro in estate taxes following the 2001 death of Daniel Wildenstein. The ultimate amount of underpaid taxes and interest owed by the family will be determined in a separate civil procedure.
Prosecutors say that the Wildensteins and their associates have continued to create fictional loans and secret agreements to transfer money to foreign accounts in order to keep revenues from the trusts from appearing on the books of French tax authorities.
This is the first time offshore financial institutions have been tried in France for helping clients to hide their wealth in tax havens.
Prosecutors say that the family never ceased to exercise control over thousands of paintings, a stable of racehorses, and immense real estate holdings that were formally owned by offshore trusts.
Prosecutor Mireille Venet recommended fines of €187,500 for both Guernsey’s Northern Trust and The Royal Bank of Canada Trust Company (Bahamas) for actively assisting the Wildensteins by “furnishing the structures that allowed the family to no longer own their belongings” on paper.
Prosecutors recommended a 3-year sentence—with one year of hard prison time—and a penalty of €1 million for the Swiss lawyer Peter Altorfer for helping manage the family’s system of offshore trusts and for advising them in the use of fictional loans to keep revenues off the books.
Altorfer had attempted during the trail to exculpate himself from potentially incriminating remarks in his correspondence with the Wildensteins and their advisors by citing an incomplete grasp of the French language.
Monica d’Onofrio read one such email aloud to the court, saying: “There are few errors here and I would even say that his French is, in fact, remarkable.”
The prosecution urged the court to serve another of the family’s lawyers, Olivier Riffaud, with one year of hard prison, one year suspended sentence, and a three-year ban from practicing law.
As a specialist in tax law, Riffaud “was conscious of the legal risk” of the Wildenstein’s offshoring scheme, and behaved like “pyromaniac fireman,” according to prosecutor Venet. “At no moment did he say, ‘I think we’re going too far.”
The prosecutors recommended two-years suspended sentence for the retired notary Rober Panhard, whom they accuse of “cooking up” the allegedly fraudulent tax declaration for Daniel Wildenstein’s estate.
“This is shameful,” said Ms. D’Onofrio. “Daniel and Alec [Guy’s father and brother] both ended their days, very sick, in Paris—where the hospitals are paid for by our taxes.”
Lawyers for the Wildensteins and their associates will be given the chance to defend their clients before the court during the three remaining sessions of the trial, which ends next Thursday.
A date has not yet been set for the court’s final ruling.