Sotheby’s has agreed to pay $6.25 million to the state of New York and implement several reforms to resolve a tax fraud lawsuit filed by Attorney General Letitia James. The lawsuit accused the auction house of assisting clients in evading sales taxes on millions of dollars’ worth of art purchases.

Announced on Thursday, the settlement addresses allegations that Sotheby’s used fraudulent tax practices to secure tax breaks for at least eight clients between 2010 and 2020. The attorney general first filed the lawsuit in late 2020 following a four-year investigation in which the auction house was asked to provide documentation on high-level clients. Allegedly, the house had allowed these clients to use “resale certificates”, a mechanism by professional art dealers can avoid paying New York sales tax on art they acquire in the course of business dealings.

James claims that these clients included a major collector who purchased $27 million of artwork for their personal collection from Sotheby’s between 2010 and 2015 using resale certificates. Sotheby’s allegedly accepted the certificates from the collector even though it was known that the individual was not buying art for resale; auction house staff even helped install some of the works in the collector’s home, according to the attorney general. The AG previously secured a settlement with the collector’s company requiring them to pay over $10 million in taxes, penalties, and damages.

“No one should be allowed to cheat the system and escape paying the taxes they owe,” said James in a statement. “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.”

Sotheby’s admitted no wrongdoing in connection with the settlement and remains “committed to full compliance with all applicable law,” according to a spokesperson. “These allegations relate to activity from many years ago—in some cases over a decade—and Sotheby’s provided much of the evidence which the AG used to obtain a settlement with the taxpayer referenced in the complaint six years ago.”

In addition to the $6.25 million financial settlement, the auction house has agreed to implement reforms, including a revised policy on the use of resale certificates. Sotheby’s will also provide additional training for its employees in the relevant provisions of New York tax law as well as enhanced coaching to ensure that staff properly assess whether art buyers are purchasing with the intent to resell.

The auction house’s alleged misconduct was further compounded by an earlier case involving Porsal Equities, a company linked to an unnamed client, which settled for $10.75 million in 2018 for similar misuse of resale certificates in New York.

The settlement comes as Sotheby’s finances are facing especially close scrutiny because of the well-known debt woes of its majority owner, French telecom scion Patrick Drahi. The auction house recently finalized a $1 billion deal with Abu Dhabi’s sovereign wealth fund, the majority of which will go toward  paying down its debt load.