French Court acquits art dealer Wildenstein of tax fraud

12 January 2017, a French court acquitted art dealer Guy Wildenstein and seven others in a case which the prosecution claimed was “the most sophisticated and longest” case of tax fraud in postwar France. It had requested a €250 million fine and a four-year jail sentence, two suspended.

The French tax authorities launched a criminal prosecution against Guy Wildenstein, president of Wildenstein & Co. in New York, together with his nephew and sister-in-law, and a number of advisers and financial institutions, claiming they had evaded inheritance taxes by under-reporting the size of the estate at the death of his father Daniel in 2001 and his elder brother Alec in 2008.

Guy and Alec Wildenstein together declared just €40.9 million for inheritance tax purposes in 2002 and then understated the family’s wealth in estate tax returns filed between 2002 and 2008. Prosecutors alleged that they schemed to hide art and assets in trusts based in the Bahamas, Guernsey and the Cayman Islands.

However presiding judge Olivier Géron acquitted the defendants of tax fraud and “aggravated” money laundering. Accepting that the verdict might be “misunderstood”, he said that while there a “clear intention” on the Wildenstein family’s part to hide their wealth, gaps in the investigation and grey areas in French tax law made it impossible to pronounce a guilty verdict.

No French law detailed how the transmission of trust funds had to be taxed until 2011, the court said. “It is not the role of the court to take the place of the legislator,” said Géron. He understood the French people would probably struggle to accept the ruling given the wealth of the defendant, but justice had to treat everybody equally, “be they rich or destitute”.

The two other family members, a notary, two lawyers and two trusts, the Northern Trust Fiduciary Services in Guernsey and the Royal Bank of Canada Trust Company, were also acquitted.

The French financial prosecutor’s office said there were valid grounds for an appeal given that “the case had shown a clear intention to evade paying tax”, even if the final ruling had been to acquit the defendants. The French tax authorities claim the Wildenstein’s owe some €550 million in back taxes, which is the subject of a separate civil case.