United States Senate 

PERMANENT SUBCOMMITTEE ON INVESTIGATIONS 

Committee on Homeland Security and Governmental Affairs 

Rob Portman, Chairman 

Tom Carper, Ranking Member 

THE ART INDUSTRY AND 

U.S. POLICIES THAT UNDERMINE 

SANCTIONS 

STAFF REPORT 

PERMANENT SUBCOMMITTEE ON 

INVESTIGATIONS 

UNITED STATES SENATE 
i 

THE ART INDUSTRY AND 

U.S. POLICES THAT UNDERMINE SANCTIONS 

TABLE OF CONTENTS 

I. EXECUTIVE SUMMARY .................................................................................. 1

II. BACKGROUND ................................................................................................ 16

A. U.S. Sanctions Enforcement ........................................................................ 16

1. The U.S. Treasury Department ................................................................ 16

2. Sanctions Following the Russian Federation’s Invasion of Crimea ....... 20

B. The Art Market ............................................................................................... 33

1. Money Laundering in the Art Market ..................................................... 35

2. The Art Industry is the Largest Legal, Unregulated Market in the 

United States ............................................................................................ 36

3. The Applicability of the Berman Amendment to High-value Art ........... 38

4. Shell Companies ........................................................................................ 39

C. The Four Major Auction Houses ................................................................ 41

1. Sotheby’s .................................................................................................... 41

2. Christie’s .................................................................................................... 43

3. Phillips ....................................................................................................... 45

4. Bonhams .................................................................................................... 46

5. Online Auctions during the COVID-19 Pandemic ................................... 46

D. Art Dealers, Art Galleries, and Art Fairs ................................................. 47

E. Voluntary Anti-Money Laundering and Sanctions Programs in the 

Art Industry ......................................................................................... 49

1. Sotheby’s ........................................................................................................ 50

2. Christie’s .................................................................................................... 55

3. Phillips ....................................................................................................... 58

4. Bonhams .................................................................................................... 59

5. Private Art Dealer ..................................................................................... 61
ii 

III. ROTENBERG CASE STUDY: USING OFFSHORE COMPANIES, 

LAWYERS, AND ART ADVISORS TO MASK OWNERSHIP ............................ 63

A. Attorney Mark Omelnitski and the Markom Group .............................. 63

1. The Markom Group Established Rotenberg-linked Shell Companies .... 67

2. Rotenberg-Linked Shell Companies were Used to Purchase Art ........... 69

B. Art Advisor Gregory Baltser ....................................................................... 79

1. The Auction Houses Viewed Mr. Baltser as the Principal Buyer ........... 81

2. Mr. Baltser Purchased Art as an Agent for Steamort ............................. 84

3. Mr. Baltser Established BALTZER Auction Agency and Club in Moscow

 ................................................................................................................... 90

4. Examples of Pre-Sanctions Art Purchases ............................................ 105

5. The United States Sanctioned Arkady and Boris Rotenberg on March 20, 

2014 ......................................................................................................... 112

6. Examples of Post-Sanctions Art Purchases ........................................... 115

7. Mr. Baltser Shipped Art Purchased by Rotenberg-linked Companies to 

the Hasenkamp Storage Facility in Germany ....................................... 131

8. Mr. Baltser Attempted to Sell Art Purchased with Funds Traced to 

Rotenberg-linked Companies ................................................................. 133

9. Mr. Baltser Did Not Cooperate with the Subcommittee’s Investigation

 ................................................................................................................. 141

10. During the Course of the Subcommittee’s Investigation Phillips, 

Christie’s, and Sotheby’s Stopped Transacting with Mr. Baltser ......... 142

IV. ADDITIONAL U.S. DOLLAR TRANSACTIONS BY ROTENBERGLINKED SHELL COMPANIES ............................................................................. 144

V. CONCLUSION ................................................................................................ 147

 
1 

THE ART INDUSTRY AND 

U.S. POLICIES THAT UNDERMINE SANCTIONS

I. EXECUTIVE SUMMARY 

The United States government imposes economic sanctions on foreign 

adversaries in attempt to change their behavior. In theory, sanctions are simple. 

U.S. persons and companies are prohibited from doing business with sanctioned 

persons and entities. This prohibition should bar access to the world’s largest 

economy. The United States imposes sanctions for a wide range of reasons. For 

example, the United States has imposed sanctions on Russia for election 

interference, human rights abuses, providing support to Venezuela and Syria, but 

mainly in response to Russia’s invasion of Ukraine. 

This report focuses, in particular, on a case study documenting how certain 

Russian oligarchs appear to have used transactions involving high-value art to 

evade sanctions imposed on them by the United States on March 20, 2014 in 

response to Russia’s invasion of Ukraine and annexation of Crimea. 

Specifically, the Subcommittee traced 

purchases of high-value art back to anonymous 

shell companies linked to sanctioned individuals 

Arkady and Boris Rotenberg, two Russian 

oligarchs, and Arkady’s son, Igor. It appears the 

Rotenbergs continued actively participating in 

the U.S. art market by purchasing over $18 

million in art in the months following the 

imposition of sanctions on March 20, 2014. Shell 

companies linked to the Rotenbergs also 

transferred over $120 million to Russia during a 

four-day window between President Obama’s 

March 16, 2014 executive order stating that the 

U.S. would be sanctioning certain Russian 

individuals and the Treasury Department 

specifically naming the Rotenbergs as 

sanctioned on March 20, 2014. In addition, certain Rotenberg-linked shell 

companies continued transacting in the U.S. financial system long after Arkady and 

Boris Rotenberg were sanctioned. The Subcommittee determined these Rotenberglinked shell companies engaged in over $91 million in transactions post-sanctions.

While Russia-related sanctions, including those against the Rotenbergs, were 

set to expire in March 2020, President Trump extended them for another year. The 

effectiveness of these sanctions, however, is in question. To date, Russia has not 

withdrawn from Crimea and has even expanded its military operations in 

Arkady Rotenberg and Vladimir Putin 

(Photo Credit: The New Yorker)
2 

surrounding waters. The Subcommittee sought to understand why the sanctions 

have not been more effective and, after reviewing a number of suspect transactions, 

launched a narrow investigation into high-value art. If wealthy Russian oligarchs 

can purchase millions in art for personal investment or enjoyment while under 

sanction, it follows that their businesses or hidden resources could also continue 

accessing the U.S. financial system. 

* * * * * * * * * * * 

The Subcommittee’s investigation uncovered a complex set of facts involving 

shell companies with hidden owners, intermediaries who mask purchasers and 

sellers, and lax money laundering safeguards in the U.S. art industry. 

The art industry is largely unregulated. The art industry is considered the 

largest, legal unregulated industry in the United States. Unlike financial 

institutions, the art industry is not subject to Bank Secrecy Act’s (“BSA”) 

requirements, which mandate detailed procedures to prevent money laundering and 

to verify a customer’s identity. While the BSA does not apply to art transactions by 

art dealers and auction houses, sanctions do. No U.S. person or entity is allowed to 

do business with a sanctioned individual or entity. 

The art industry has been enjoying a boom. According to the 2019 Art Basel 

and UBS Global Art Market Report, world-wide art sales hit $64.1 billion in 2019. 

That report found the United States was the world’s largest art market comprising 

44 percent of global sales, or around $28.3 billion. The art industry is generally 

divided into sales at public auctions and by private dealers. In 2019, sales at 

auction houses made up 42 percent of total art sales, while the remaining 58 

percent of sales were through private dealers. The four biggest auction houses by 

sales—Sotheby’s, Christie’s, Phillips, and Bonhams—are selling art for sizeable 

amounts. In November 2017, Leonardo da Vinci’s Salvator Mundi sold at auction at 

Christie’s in New York for over $450 million. In May 2019, Christie’s New York 

sold Jeff Koon’s Rabbit for over $91 million, the highest price ever paid for a piece 

by a living artist. Even during the COVID-19 pandemic, an online auction at 

Sotheby’s brought in $234.9 million in total sales, including $84.55 million for 

Triptych Inspired by the Oresteia of Aeschylus by Francis Bacon. In turn, the 

auction houses report large annual sale numbers. Sotheby’s reported $4.8 billion in 

sales for 2019, while Christie’s reported $2.8 billion in sales for just the first six 

months of 2019. 

Investors have taken notice. Deloitte’s 2019 Art and Finance Report noted 

that “artnet’s Index for Top 100 Artists produced an 8 percent Compound Annual 

Growth Rate between 2000 and 2018, compared with 3 percent for the S&P 500.” 

For example, Banksy’s Devolved Parliament sold at Sotheby’s in London on October 
3 

3, 2019 for around $12.2 million; the artist’s previous record for a painting sold at 

auction was $1.87 million for Keep It Spotless in 2008.

Secrecy is pervasive in the art industry. While the art market is not regulated 

by the BSA, it is governed by unwritten rules. A large number of art sales happen 

through intermediaries referred to as “art advisors” who can represent both 

purchasers and sellers. In a typical transaction, a purchaser may not ask who owns 

the piece of art they are purchasing; the seller may not ask for whom it is being 

purchased or the origin of the money. And in general an art advisor would be 

reluctant to reveal the identity of their client for fear of being cut out of the deal and 

losing the business. 

Auction houses have voluntary AML polices. Because the art industry is not 

subject to BSA requirements, when a piece of art is sold, there is no legal 

requirement for the selling party to confirm the identity of the buyer or that the 

buyer is not laundering money through the purchase. While the four biggest 

auction houses have voluntary anti-money laundering (“AML”) programs, the 

employees who facilitated art purchases in the Subcommittee’s case study said they 

never asked the art advisor the identity of his client. Instead, the auction houses 

considered the art advisor the principal purchaser and performed any due diligence 

on the art advisor, even when it was well-known that the ultimate owner was 

someone else. With regard to the funds used to purchase art, the auction houses 

told the Subcommittee they rely on financial institutions to ensure the integrity of 

the funds, even though the auction houses interact directly with the buyer. But 

these voluntary AML policies are just for sales through the auction houses. As 

stated above, the majority of art sales are private transactions. A private dealer 

interviewed by the Subcommittee stated she had no written AML policies, tries to 

work with people she knows and trusts, looks for red flags, and relies on her gut. 

She also explained that her practices have significantly changed over the years and 

that she also relies on advice from AML lawyers. 

Secrecy, anonymity, and a lack of regulation create an environment ripe for 

laundering money and evading sanctions. 

Tracing the ownership of anonymous shell companies, including those 

involved in high-value art transactions, is difficult. That difficulty continues even 

though corporate secrecy suffered a blow in the spring of 2016 when the 

International Consortium of Investigative Journalists (“ICIJ”) shocked the world by 

releasing information on 214,488 offshore entities from the Panamanian law firm 

Mossack Fonseca (the “Panama Papers”). One email chain included among the 

Panama Papers and made public described links between nine offshore companies 

to the Rotenbergs. The email chain listed Boris Rotenberg as the ultimate 

beneficial owner (“UBO”) of Highland Ventures Group Limited (“Highland 

Ventures”) and Arkady Rotenberg’s son Igor as the UBO of Highland Business 
4 

Group Limited (“Highland Business”). The email copied London-based attorney 

Mark Omelnitski, who used his firm the Markom Group to establish and maintain 

shell companies for the Rotenberg family. 

The true ownership of the listed shell companies was not, however, as 

straightforward as the Panama Papers email chain suggested. For example, based 

on financial information reviewed by the Subcommittee during its investigation, 

Arkady Rotenberg appeared to be the UBO of Highland Ventures, not his brother 

Boris. That information included non-public wire transfers showing multi-million 

dollar transfers from a company owned by Arkady Rotenberg to Highland Ventures. 

In 2012 and 2013, that company—Milasi Engineering—transferred over $124 

million marked as annual dividends to Highland Ventures. The December 31, 2014 

Financial Report for Milasi Engineering listed Arkady Rotenberg as its UBO, 

making it clear that Highland Ventures received its funding from a company owned 

by an individual the U.S. would later sanction. Milasi Engineering also held shares 

in Stroygazmontazh, a gas pipeline company sanctioned in April 2014 by the United 

States due to its ownership by Arkady Rotenberg. 

Arkady Rotenberg transferred his business interests to his son, Igor. In July 

2014, four months after the United States sanctioned Arkady, Mr. Omelnitski’s 

firm, the Markom Group, executed paperwork that appeared to transfer Arkady’s 

interest in Milasi Engineering to his son, Igor, who was not sanctioned at the time. 

Milasi Engineering was owned by two other holding companies. The Markom 

Group transferred the ownership of those two companies to Highland Ventures, 

which it asserted had always been owned by Igor. Therefore, from July 2014 to 

April 2018, when Igor was finally sanctioned by the United States, Milasi 

Engineering was owned on paper by an unsanctioned individual. A report by a 

bank investigator produced to the Subcommittee determined the transfer of Milasi 

Engineering from Arkady to Igor was done solely to evade sanctions, and the 

Markom Group “intentionally structured [the ownership of these shell companies] 

to be opaque in order to hide the identities of true beneficiaries.” In response, the 

bank closed all accounts associated with the Markom Group. This included closing 

accounts held by art advisor Gregory Baltser. 

Art advisor Gregory Baltser facilitated purchases for the Rotenbergs. 

Intermediaries played a central role in the Rotenbergs’ art purchases in the United 

States. As previously explained, Mr. Omelnitski and his company, the Markom 

Group, established and maintained shell companies for the Rotenbergs to mask 

their identities. The Rotenbergs also employed art advisor Gregory Baltser, who 

facilitated the purchase and sale of high-value art both before and after sanctions 

without disclosing the names of his clients. 

Mr. Baltser is a U.S. citizen, who must comply with U.S. sanctions laws, but 

his business is based in Moscow. Prior to sanctions, funds Mr. Baltser used to 
5 

purchase art linked to the Rotenbergs followed a unique and recognizable financial 

path: Mr. Baltser bid on specific artworks at auction, purchased the art, and then 

assigned the title to the art to a Belize company named Steamort Limited 

(“Steamort”). Steamort paid for the art using funds the Subcommittee traced back 

to Highland Business. 

Mr. Baltser, however, was not the owner of Steamort; he had a contract with 

Steamort to serve as a consultant to purchase art on behalf of the company. A copy 

of that contract was produced to the Subcommittee by Christie’s. Both the contract 

and financial records showed that Steamort paid Mr. Baltser $9,500 a month for his 

services. In total, between March 2010 and October 2018, financial records show 

Mr. Baltser received $1,116,000 in fees for his consulting services under the 

Steamort Agreement. 

Company documents obtained by the Subcommittee listed Steamort’s only 

director and shareholder as Jason Hughes. According to a report by ICIJ, Mr. 

Hughes was associated with over 200 other companies as a nominee director—an 

individual who masks the true UBO of a shell company. 

The owner of Steamort remains unknown. In 2012, Christie’s questioned Mr. 

Baltser about who owned Steamort, and asserted that Mr. Baltser could no longer 

bid at auctions until he provided Steamort’s UBO. Initially, Mr. Baltser responded 

that he did not know who owned Steamort. When pressed and threatened with 

missing the opportunity to bid at an upcoming auction, Mr. Baltser verbally told 

Christie’s that Steamort was owned by “Luisa Brown.” Christie’s accepted this 

verbal assertion, conducted AML checks on Ms. Brown, found no derogatory 

information, and cleared Mr. Baltser to continue bidding at auctions. Mr. Baltser 

never provided any documentary evidence of Steamort’s ownership by Ms. Brown. 

The Subcommittee was unable to confirm if an individual named Luisa Brown was 

the UBO for Steamort, or if she even existed at all. 

Mr. Baltser opened an 

auction agency and club in 

Moscow. In late 2012, Mr. 

Baltser announced he was 

planning to open BALTZER 

Auction Agency and Club. The 

agency would be located in 

Moscow and its members would 

be “the leading Moscow and 

Russian collectors – the active 

participants of auction biddings 

at many world marketplaces.” Mr. Baltser proposed to partner with both Christie’s 

and Sotheby’s. As part of the proposed agreement, Mr. Baltser stated that he would 

BALTZER Auction Agency and Club (Photo Credit: BALTZER)
6 

bid at auctions on behalf of his clients under an account in the name of BALTZER. 

This allowed Mr. Baltser to guarantee on his website that “we can give you 

complete anonymity.” Under the proposed agreement, Mr. Baltser pledged to 

conduct all AML and sanctions checks on his clients and provide an annual 

certification to the auction houses that no member of BALTZER was engaged in 

money laundering. Mr. Omelnitski served as BALTZER’s chief AML officer and 

represented Mr. Baltser in contract negotiations with the two auction houses. To be 

clear, Mr. Baltser put the same attorney who established and maintained shell 

companies to mask the Rotenbergs’ ownership in charge of his new venture’s AML 

compliance.

Christie’s partnered with BALTZER. Christie’s accepted Mr. Baltser’s 

proposal and signed the agreement with BALTZER on February 4, 2014. At the end 

of 2014, Mr. Omelnitski certified to Christie’s that “despite BALTZER having a 

significant number of Russian clients there were no transactions, which fall under 

recent sanctions against Russia.” Mr. Omelnitski failed to provide another such 

certification for the next three years, despite repeated requests from Christie’s to 

provide the annual certificate promised in the agreement. In 2018, Christie’s 

renegotiated its agreement with BALTZER to require client due diligence 

documents after each purchase. 

A Sotheby’s employee identified Arkady and Boris Rotenberg as Mr. Baltser’s 

clients. Sotheby’s also considered Mr. Baltser’s business proposal, but ultimately 

declined. During negotiations, a Sotheby’s employee represented to Sotheby’s 

management that Mr. Baltser had told her that his clients included Russian 

oligarchs. In fact, she told Sotheby’s management that Mr. Baltser had identified 

Arkady and Boris Rotenberg as two of his clients (five months prior to U.S. 

sanctions). During her Subcommittee interview, however, the same Sotheby’s 

employee said Mr. Baltser had never told her that Arkady and Boris Rotenberg 

were his clients. Instead, she asserted she fabricated this information in an effort 

to convince Sotheby’s to accept BALTZER’s proposal. Despite declining the 

proposal, Sotheby’s continued to conduct business as usual with Mr. Baltser and his 

new company, BALTZER, and never questioned whether Arkady and Boris 

Rotenberg were his clients. The Subcommittee independently traced post-sanction 

purchases by BALTZER to shell companies linked to the Rotenbergs, suggesting the 

Sotheby’s employee was not truthful in her Subcommittee interview. 

Mr. Baltser continued to purchase art with funds linked to the Rotenbergs 

even after March 2014 sanctions. Following the imposition of sanctions by the 

United States on Arkady and Boris Rotenberg in March 2014, the funds Mr. Baltser 

used to purchase works of art at auction houses continued to follow the same 

general financial path as before sanctions. By this time, BALTZER provided 

another layer of anonymity for the funds used to purchase art. After Mr. Baltser 

successfully bid at auction, funds were wired from Highland Ventures to Steamort, 
7 

just as they had arrived from Highland Business before sanctions. Steamort then 

wired funds to BALTZER, which paid the auction house and took title of the 

purchase. All four auction houses considered Mr. Baltser the principal purchaser, 

rather than an agent for a buyer, and never asked for whom he was purchasing the 

art. Any client due diligence was performed only on Mr. Baltser and not his 

undisclosed clients, satisfying the voluntary AML policies at the auction houses. 

Highland Ventures purchased a painting through a private art dealer. The 

funds used to purchase René Magritte’s La Poitrine for $7.5 million in May 2014 

through a private art dealer followed a different path. In this transaction, Highland 

Ventures took title to the painting and was listed on the invoice as the buyer. Anna 

Wilkes, an employee of Mr. Omelnitski’s Markom Group, signed on behalf of 

Highland Ventures as its Director. The funds used to pay for the painting were 

wired to the private dealer from a company named Advantage Alliance. The 

Subcommittee traced those funds to a company called Senton Holdings. An 

investigation by a financial institution–produced to the Subcommittee–determined 

Senton Holdings was owned by Arkady Rotenberg, linking him through the chain of 

wire transfers to the purchase of the painting. 

Art was shipped to Germany for storage. La Poitrine, like much of the art 

traced to companies linked to the Rotenbergs, was shipped to a storage facility in 

Germany called Hasenkamp. The Subcommittee contacted Hasenkamp and was 

told the art was originally stored there under the name Highland Business; no 

individual was named. Later, a company named Taide Connoisseur Selection took 

over the contract to store the art at Hasenkamp. The only individual named on 

Taide Connoisseur Selection’s website was Mr. Omelnitski. 

In August 2019, during the course of the Subcommittee’s investigation, the 

Taide Connoisseur Selection account at Hasenkamp was closed and all art stored 

under the account was shipped to Moscow. 

Art purchases linked to the Rotenberg shell companies totaled millions of 

dollars. In total, the Subcommittee traced funds for over $18 million in art 

purchased in the United States from March 2014 to November 2014, both at auction 

houses and through private sales back to shell companies that appeared to be 

funded or owned by the Rotenbergs. 

Sotheby’s agreed to sell Brucke II for Mr. Baltser during the Subcommittee’s 

investigation. Mr. Baltser also sold paintings owned by his clients. In late 2018, he 

attempted to sell Lyonel Feininger’s Brucke II. Brucke II was originally purchased 

through Mr. Baltser on February 4, 2014 at an auction at Christie’s in London. The 

painting later appeared on a list of 31 paintings sent to Christie’s by a BALTZER 

employee, who stated that the list represented the collection of one of Mr. Baltser’s 

clients. The Subcommittee traced 16 paintings on the list purchased in the United 
8 

States back to suspected Rotenberg shell companies. This suggests that all 31 

paintings were owned by the Rotenbergs. 

When Mr. Baltser 

attempted to sell Brucke II in late 

2018, both Christie’s and 

Sotheby’s expressed interest in 

having the painting at their 

auctions. Ultimately, Mr. 

Baltser’s client chose Sotheby’s to 

sell Brucke II at auction in 

February 2019. At the time, the 

Subcommittee was actively 

investigating the auction house 

and Mr. Baltser. Sotheby’s 

requested Mr. Baltser provide the 

name of the UBO of the painting, 

including whether that individual 

was currently sanctioned. Mr. 

Baltser said Brucke II had been resold since it was purchased at Christie’s in 

February 2014 and now belonged to a company incorporated in the Marshall 

Islands and provided a Russian passport for the company’s UBO. The 

Subcommittee asked Sotheby’s to request the name of the February 2014 purchaser 

of the painting; Mr. Baltser declined to disclose the name of that purchaser due to a 

non-disclosure agreement. Sotheby’s ultimately pulled the painting from the 2019 

auction due to a lack of interest. 

The Subcommittee asked to interview Mr. Baltser, but through his attorney, 

he declined the request and stated he was in Moscow and had no plans to return to 

the United States. Through his attorney, Mr. Baltser stated that: he has never 

represented or transacted with Arkady or Boris Rotenberg; Highland Business and 

Highland Ventures were not listed as sanctioned by the Treasury Department; and 

he did not have access to the Panama Papers. 

A delay between the 2014 announcement and imposition of sanctions created a 

window to send U.S. dollars to Russia. On March 16, 2014, President Obama 

signed an executive order authorizing the Treasury Department to impose sanctions 

on individuals for Russia’s annexation of Crimea. But the Treasury Department did 

not name the specific individuals sanctioned under the executive order until March 

20, 2014. During this four-day window, Rotenberg-linked shell companies 

transferred over $120 million through the United States to Russia. On March 18, 

2014, Highland Ventures transferred over $39.5 million from its account at The 

Pictet Group in Switzerland through the U.S. financial system to its account at 

Gazprombank in Moscow. That same day, Culloden Properties transferred over $82 

Lyonel Feininger's Brucke II (Photo Credit: Christie's)
9 

million from its Pictet Group account in Switzerland through the U.S. financial 

system to its account in Moscow at the Gazprombank. Both the Panama Papers 

and documents produced to a financial institution by the Markom Group—and 

subsequently provided to the Subcommittee—identify Boris Rotenberg as the owner 

of Culloden Properties. 

Rotenberg-linked shell companies transacted in U.S. dollars post-sanctions. 

Shell companies linked to the Rotenbergs continued conducting transactions 

through the U.S. financial system even after the imposition of sanctions in March 

2014. For example, including its art purchases, Highland Ventures was involved in 

transactions worth over $16 million. Advantage Alliance was involved in 

transactions worth over $29 million. And while the UBO of Steamort remains 

hidden, the company served as an intermediary between Rotenberg-linked shell 

companies and BALTZER in the purchase of art. Following the imposition of 

sanctions in March 2014, Steamort was a part of transactions totaling over $22 

million. In total, the Subcommittee identified over $91 million in transactions by 

Rotenberg-linked shell companies after sanctions were imposed on the Rotenbergs 

in March 2014.

The Subcommittee’s Investigation 

 The Subcommittee initiated its investigation after reviewing a number of 

suspicious transactions that appeared to involve art purchased through auction 

houses and private dealers. Funds used in these transactions originated at entities 

linked to the Rotenberg family through the Panama Papers and other public 

information. As part of its investigation, the Subcommittee reviewed over one 

million documents from the four major auction houses, a private art dealer, an 

independent public gallery, and seven financial institutions. The Subcommittee 

interviewed current and former employees of Sotheby’s, Christie’s, Phillips, and 

Bonhams. The Subcommittee also interviewed a private dealer based in New York 

and two art advisors located overseas who were all involved in the same multimillion dollar transaction. All entities cooperated with the Subcommittee’s 

requests, except for Mr. Baltser. Through his attorney, Mr. Baltser declined to be 

interviewed by the Subcommittee and stated he was in Moscow with no plans to 

return to the United States. 

 
10 

FINDINGS OF FACT AND RECOMMENDATIONS 

Findings of Fact 

(1) The art market is the largest legal, unregulated market in the United 

States. The art industry is not subject to the BSA and is not required under 

U.S. law to maintain AML and anti-terrorism financing controls for 

transactions. However, all U.S. persons and entities are prohibited from 

transacting with sanctioned individuals or entities as determined by the U.S. 

Treasury Department Office of Foreign Asset Control (“OFAC”). 

(2) Sotheby’s, Christie’s, Phillips, and Bonhams all have voluntary AML 

controls in place. Despite no legal requirement to do so, the four auction 

houses reviewed by the Subcommittee had established voluntary AML policies. 

(3) Private art dealers are not subject to AML requirements. One private 

dealer told the Subcommittee she had no written AML or sanctions policies and 

instead relied on her gut and worked with people she knew. She also explained 

that questioning the identity of the buyer and the source of funds in an art 

transaction was not done in the art industry, nor would the dealer for the 

purchaser want to provide that information. During an interview with the 

Subcommittee, she explained that her practices have changed over the years and 

that she relies on the advice of lawyers with expertise in AML and related areas 

and looks for potential red flags in transactions. 

(4) The auction houses treated an art agent or dealer as the principal 

purchaser of art, even if they had reason to believe they were working 

with an undisclosed client. This practice enables the auction house to 

perform due diligence on the art agent or dealer instead of identifying and 

evaluating the undisclosed client, creating a significant AML vulnerability. 

(5) The United States sanctioned members of the Rotenberg family in 

March 2014. On March 16, 2014, President Obama signed Executive Order 

13661 imposing sanctions on Russia due to its annexation of Crimea. Arkady 

and Boris Rotenberg were among the Russian citizens specifically sanctioned on 

March 20, 2014 due to their close ties to Russian President Vladimir Putin, 

which included awards of large government contracts to companies they owned. 

The U.S. Treasury Department later sanctioned specific Rotenberg-owned 

companies (on April 28, 2014), Boris Rotenberg’s son Roman (on June 30, 2016), 

and Arkady Rotenberg’s son Igor (on April 6, 2018). Both Roman and Igor 

Rotenberg were sanctioned due to their financial ties to their sanctioned fathers. 
11 

(6) Information released in 2016 from the law firm of Mossack Fonseca—

known as the “Panama Papers”—linked the Rotenbergs to certain shell 

companies involved in high-value art purchases reviewed by the 

Subcommittee. The Panama Papers included an email chain made public that 

listed nine shell companies in the British Virgin Islands (“BVI”) linked to 

Arkady, Boris, and Igor Rotenberg. That email copied attorney Mark Omelnitski 

and identified Igor Rotenberg as the UBO for Highland Business Group Limited 

(“Highland Business”) and Boris Rotenberg as the UBO for Highland Ventures 

Group Limited (“Highland Ventures”). 

(7) Mark Omelnitski is a London-based attorney linked to the Rotenbergs 

and art advisor Gregory Baltser. Mr. Omelnitski—through his company the 

Markom Group—assisted the Rotenbergs in establishing and maintaining shell 

companies. He also assisted art advisor Gregory Baltser in establishing his art 

agency BALTZER in Moscow. In discussions Mr. Baltser had with Sotheby’s and 

Christie’s about partnering with BALTZER, Mr. Omelnitski served as Mr. 

Baltser’s attorney and also represented that he administered Mr. Baltser’s AML 

and sanctions policies as his Money Laundering Reporting Officer. 

(8) Both Highland Business and Highland Ventures received funding from 

companies linked to Arkady Rotenberg. Highland Business received 

funding from Advantage Alliance Ltd (“Advantage Alliance”), which an internal 

bank investigation linked to Arkady Rotenberg. Highland Ventures received 

over $124 million in funding from Milasi Engineering Limited. The 2014 Milasi 

Engineering Financial Statement listed Arkady Rotenberg as the ultimate 

beneficial owner of the company. 

(9) Gregory Baltser is a Moscow-based art advisor who facilitated art 

purchases linked to the Rotenbergs. Mr. Baltser purchased art in the 

United States with funds that the Subcommittee traced back to Highland 

Business and Highland Ventures. Prior to the implementation of sanctions on 

Arkady and Boris Rotenberg in March 2014, the funds Mr. Baltser used to 

purchase certain art followed a pattern: Highland Business wired the funds to 

purchase the art to Steamort Ltd (“Steamort”). Steamort then wired the funds 

from its bank account in Estonia to the auction house and took title to the art. 

(10) Steamort’s UBO remains unknown. In 2012, Christie’s questioned Mr. 

Baltser about the ownership of Steamort, a company formed in Belize. Mr. 

Baltser told Christie’s that he did not know and could not provide the name of 

the owner. After Christie’s threatened Mr. Baltser would be unable to bid at an 

auction unless he identified the owner of Steamort, Mr. Baltser told Christie’s 

the UBO for Steamort was “Luisa Brown.” Christie’s accepted this verbal 

assertion and cleared Mr. Baltser to bid in the auction. Mr. Baltser never 
12 

provided any documentation that Luisa Brown was the owner of Steamort. The 

Subcommittee was unable to determine Steamort’s UBO or if Ms. Brown existed. 

(11) Mr. Baltser established a private art agency and club called BALTZER 

in Moscow in 2013. Mr. Baltser used BALTZER to take title and purchase art 

for his clients. This change altered the payment pattern outlined above to 

include BALTZER as the entity paying the auction houses for art Mr. Baltser 

purchased. In addition, following the imposition of sanctions on the Rotenbergs 

by the United States in March 2014, the Subcommittee traced funds to purchase 

art to Highland Ventures. Highland Ventures would wire the funds to Steamort; 

Steamort would wire the funds to BALTZER; and BALTZER would wire funds to 

the auction house and take title for the art. 

(12) Christie’s partnered with BALTZER, including allowing Mr. Omelnitski 

to conduct AML and sanctions checks on BALTZER clients. In the 

February 2014 agreement, Christie’s agreed to rely on BALTZER to conduct due 

diligence on clients and provide an annual AML compliance certification. Mr. 

Omelnitski provided the first AML compliance report in December 2014 and 

confirmed that no BALTZER clients were sanctioned. Mr. Omelnitski did not 

provide another report until October 2017 when he emailed the amounts 

associated with BALTZER art purchases; he provided no certification regarding 

AML or sanctions compliance. Christie’s renegotiated the agreement in March 

2018 and required BALTZER to produce customer due diligence to the auction 

house within 10 days of every purchase. 

(13) Sotheby’s declined the BALTZER proposal, but continued business as 

usual. While considering Mr. Baltser’s proposal, the Sotheby’s Baltser Account 

Representative told Sotheby’s management that Mr. Baltser’s clients included 

Russian oligarchs, specifically Arkady and Boris Rotenberg before they were 

sanctioned by the United States. During her Subcommittee interview, the 

Baltser Account Representative stated that Mr. Baltser never told her that 

Arkady and Boris Rotenberg were his clients. Instead, she fabricated this 

information to convince Sotheby’s to agree to the proposal with BALTZER. 

(14) Despite having voluntary AML and sanctions policies, auction houses 

failed to ask basic questions of Mr. Baltser, including for whom he 

purchased art. This allowed Mr. Baltser to continue to purchase art despite 

the imposition of sanctions by the United States on the Rotenbergs, completely 

undermining any action taken by the auction houses to block transactions by 

sanctioned individuals. 
13 

(15) Mr. Baltser purchased over $18 million in art from May to November 

2014 using funds traced to Rotenberg-linked shell companies. These 

transactions included a $7.5 million private sale of René Magritte’s La Poitrine

in which Highland Ventures took title to the painting, and Advantage Alliance 

wired the purchasing funds. The Subcommittee traced those funds from 

Advantage Alliance to Senton Holdings Ltd, which one financial institution 

determined was owned by Arkady Rotenberg. An employee of Mr. Omelnitski’s 

signed the contract for sale on behalf of Highland Ventures. 

(16) Mr. Baltser sought to sell art linked to the Rotenbergs. In August 2015, 

an employee of BALTZER sent Christie’s a list of 31 artworks, including 16 

works the Subcommittee linked to Rotenberg-related shell companies. The 

BALTZER employee indicated the 31 pieces belonged to the same collection and 

sought “any opportunities to promote these works or to make this collection more 

valuable.” That list included René Magritte’s La Poitrine and Lyonel Feininger’s 

Brucke II. 

(17) In February 2019, Sotheby’s and Christie’s competed to sell Lyonel 

Feininger’s Brucke II; Sotheby’s was selected to sell the painting. Both 

Sotheby’s and Christie’s provided enhanced deal terms to sell the painting at 

auction. Sotheby’s planned to auction the painting at its February 26, 2019 

Modern Art Evening Sale in London. The painting was estimated to sell for 

between £4 million and £6 million. Prior to the auction, however, Sotheby’s 

stated it pulled the painting due to a lack of interest. 

(18) When questioned by Sotheby’s, Mr. Baltser declined to provide the 

February 2014 purchaser of Brucke II. Brucke II was purchased by Mr. 

Baltser on behalf of an undisclosed client at a Christie’s auction in February 

2014. In April 2019, Sotheby’s asked Mr. Baltser to reveal the name of the 

February 2014 buyer. Mr. Baltser did not reveal the name, but asserted the 

February 2014 buyer no longer owned Brucke II. Instead, he stated the painting 

now belonged to a Marshall Islands company and provided a Russian passport 

for the UBO of the company. 

(19) During the course of the Subcommittee’s investigation, Sotheby’s, 

Christie’s, and Phillips stopped transacting with Mr. Baltser and 

BALTZER. 

(20) Rotenberg-linked companies continued to move at least $91 million 

through the U.S. financial system following the imposition of U.S. 

sanctions in March 2014. The Subcommittee determined that companies 

linked to the Rotenbergs continued to have access to the U.S. dollar and the U.S. 

financial system despite the imposition of sanctions against Arkady and Boris 

Rotenberg. 
14 

RECOMMENDATIONS 

(1) Congress should amend the Bank Secrecy Act to add businesses 

handling transactions involving high-value art. The art industry is 

currently not subject to AML requirements under the BSA. The European 

Union recently required businesses handling art transactions valued at €10,000 

or more to comply with AML laws, including verification of the identity of the 

seller, buyer, and UBO of the art. 

(2) Congress should require the Treasury Department to collect beneficial 

ownership information for companies formed or registered to do 

business in the United States. This information should be available to law 

enforcement for investigatory purposes. Beneficial owner information 

maintained by the Treasury Department should include appropriate privacy and 

security protections. 

(3) When imposing sanctions on an individual, the Treasury Department 

should consider routinely imposing sanctions on the individual’s 

immediate family members. While the U.S. sanctioned Arkady and Boris 

Rotenberg in March 2014, for example, it did not sanction the brothers’ children 

until later dates. The Treasury Department stated it imposed sanctions on Igor 

Rotenberg in 2018 because he “acquired significant assets from his father, 

Arkady Rotenberg, after OFAC designated [Arkady] in March 2014.” This 

allowed Arkady and Boris Rotenberg to evade U.S. sanctions by transferring 

their interests in companies to their children while maintaining operational 

control. 

(4) The Treasury Department should implement and announce sanctions 

concurrently. While President Obama announced sanctions for Russia’s 

annexation of Crimea on March 16, 2014, the Treasury Department did not 

officially impose sanctions on specific individuals and entities until March 20, 

2014. During this four-day window, millions of dollars were transferred through 

the United States and back to Russia. The Treasury Department should take 

necessary actions to both announce and implement sanctions to avoid creating a 

window of opportunity for individuals to evade sanctions. 

(5) The Treasury Department should lower or remove the ownership 

threshold for blocking companies owned by sanctioned individuals. 

According to guidance by the Treasury Department, a company is blocked if it is 

majority owned by a sanctioned individual. If the sanctioned individual has a 

minority ownership in a company, that company is not blocked, even if the 

sanctioned individual owns 49 percent of the company. 
15 

(6) The Treasury Department should maximize its use of suspicious 

activity reports (“SARs”) filed by financial institutions. Under the BSA, 

financial institutions are required to file SARs with the Treasury Department’s 

Financial Crimes Enforcement Network. These reports document financial 

transactions that appear to involve money laundering or terrorist financing, 

among other illicit activities. The Treasury Department should more effectively 

mine SARs for information related to Specially Designated Nationals and add 

these entities to the Specially Designated Nationals and Blocked Persons List or 

alert other financial institutions of the risks of transacting with the entities. 

This would increase the effectiveness of imposing sanctions. 

(7) OFAC should issue comprehensive guidance on the steps auction 

houses and art dealers should take to ensure they are not doing 

business with sanctioned individuals or entities. That guidance should 

clarify what steps auction houses and art dealers should take to determine 

whether a person is the principal seller or purchaser of art or is acting on behalf 

of an undisclosed client, and which person should be subject to a due diligence 

review.

(8) OFAC should issue guidance interpreting the informational exception 

to the International Emergency Economic Powers Act related to 

“artworks.” That guidance should interpret the artworks exception narrowly to 

encompass matters with informational content, while excluding typical works of 

art such as paintings, etchings, and sculpture.

 
16 

II. BACKGROUND 

A. U.S. Sanctions Enforcement 

Sanctions are a critical tool for combatting national security threats and 

advancing foreign policy objectives.1 Sanctions as a U.S. foreign policy tool have 

grown in recent years, with presidents using sanctions to target terrorist 

organizations, punish foreign governments, and encourage adversaries to enter 

negotiations with the United States without resorting to military action.2 In fact, 

during his first year in office, President Trump designated approximately 1,000 

individuals and entities.3 This is triple the number listed by President Obama 

during his first year, and 30 percent more than his last year in office.4

1. The U.S. Treasury Department 

In 1789, Congress established the Treasury Department (“Treasury” or the 

“Department”) to promote economic prosperity and ensure financial security.5 

Treasury’s mission is to “maintain a strong economy and create economic and job 

opportunities by promoting the conditions that enable economic growth and 

stability at home and abroad, strengthen national security by combatting threats 

and protecting the integrity of the financial system, and manage the U.S. 

Government’s finances and resources effectively.”6 This multi-faceted mandate 

reflects its central role in the U.S. economic and financial system.7

A key part of the Department’s mission involves the implementation of 

economic sanctions against foreign actors and entities.8 Established in 2004, the 

Department’s Office of Terrorism and Financial Intelligence (“TFI”) is responsible 

 

1 Jack Lew, Secretary, U.S. Dep’t of Treasury, Remarks on the Evolution of Sanctions and Lessons 

for the Future at the Carnegie Endowment for International Peace (Mar. 30, 2016), 

https://www.treasury.gov/press-center/press-releases/pages/jl0398.aspx. 2 Kathy Gilsinan, A Boom Time for U.S. Sanctions, ATLANTIC (May 3, 2019), 

https://www.theatlantic.com/politics/archive/2019/05/why-united-states-uses-sanctions-somuch/588625/. 

3 Carol Morello, Trump administration’s use of sanctions draws concern, WASH. POST (Aug. 5, 2018), 

https://www.washingtonpost.com/world/national-security/trump-administrations-use-of-sanctionsdraws-concern/2018/08/05/36ec7dde-9402-11e8-a679-b09212fb69c2_story.html. 

4 Id. 

5 U.S. DEP’T OF TREASURY, Act of Congress Establishing the Treasury Department, 

https://www.treasury.gov/about/history/Pages/act-congress.aspx; U.S. DEP’T OF TREASURY, Role of the 

Treasury, https://home.treasury.gov/about/general-information/role-of-the-treasury. 

6 U.S. DEP’T OF TREASURY, Role of the Treasury, https://home.treasury.gov/about/generalinformation/role-of-the-treasury.

7 Id. 

8 Id. 
17 

for enforcing economic sanctions as well as developing policy, strategies, and 

guidance to combat terrorist funding.9 

The Office of Foreign Assets Control (“OFAC”), a division of TFI, reports 

directly to the Undersecretary for Terrorism and Financial Crimes.10 OFAC’s 

sanction authority stems from“[p]residential national emergency powers, as well as 

authority granted by specific legislation, to impose controls on transactions and 

freeze assets under U.S. jurisdiction.”11 Specific sanctions authorities include the 

Trading with the Enemy Act (“TWEA”), the International Emergency Economic 

Powers Act (“IEEPA”), and the Global Magnitsky Human Rights Accountability Act 

(“Magnitsky Act”) as described below. OFAC is the office specifically tasked with 

the administration and enforcement of economic and trade sanctions developed by 

the President.12 

 The sanction authority tied to presidential emergency power dates back to 

the TWEA, which prohibits transactions with enemy persons and powers.13 During 

the Cold War, TWEA was used “to block international financial transactions, seize 

U.S.-based assets held by foreign nationals, restrict exports, modify regulations to 

deter the hoarding of gold, limit foreign direct investment in U.S. companies, and 

impose tariffs on all imports into the United States.”14

 Since its enactment in 1977, IEEPA has also served as an important sanction 

authority that the president may exercise “to deal with an unusual and 

extraordinary threat with respect to . . . a national emergency” that “has its source 

in whole or substantial part outside the United States.”15 IEEPA has been 

amended several times since its enactment, but the change most relevant to the art 

market is the “Berman Amendment” passed in 1988.16 This amendment exempted 

 

9 31 U.S.C. § 312. 

10 Id.; U.S. DEP’T OF TREASURY, About: Terrorism and Financial Intelligence, 

https://www.treasury.gov/about/organizational-structure/offices/Pages/Office-of-Terrorism-andFinancial-Intelligence.aspx. 

11 Id. 12 U.S. DEP’T OF TREASURY, Terrorism and Financial Intelligence: Office of Foreign Assets Control 

(OFAC), https://www.treasury.gov/about/organizational-structure/offices/Pages/Office-of-ForeignAssets-Control.aspx.

13 Trading with the Enemy Act of 1917, Pub. L. No. 65-61, 40 Stat. 411, codified as amended at 50 

U.S.C. § 4303 (2018). 

14 CHRISTOPHER A. CASEY ET AL., CONG. RESEARCH SERV., R45618, THE INTERNATIONAL EMERGENCY 

ECONOMIC POWERS ACT: ORIGINS, EVOLUTION, AND USE SUMMARY (2019), 

https://www.crs.gov/reports/pdf/R45618.

15 International Emergency Economic Powers Act of 1977, Pub. L. No. 95-459, 91 Stat. 1626, codified 

as amended at 50 U.S.C. § 1701 (2018).

16 Omnibus Trade and Competitiveness Act of 1988, Pub. L. No. 100-418, 102 Stat. 1107, codified at 

50 U.S.C. § 1702 (2001); See Bruce Craig, Sleeping with the Enemy? OFAC Rules and First 

Amendment Freedoms, PERSPECTIVES ON HISTORY (May 1, 2004), 

https://www.historians.org/publications-and-directories/perspectives-on-history/may-2004/sleepingwith-the-enemy-ofac-rules-and-first-amendment-freedoms. 
18 

information and informational materials from presidential sanction authority under 

IEEPA and TWEA.17 The Berman amendment specifically exempted the authority 

to regulate or prohibit “publications, films, posters, phonograph records, 

photographs, microfilms, microfiche, tapes, compact disks, CD ROMs, artworks, and 

new wire feeds.”18

Additional sanctions authority available to the President is found in the 

Magnitsky Act.19 Passed in 2016, the law authorizes the President to impose 

sanctions on any foreign person “who is responsible for extrajudicial killings, 

torture, or other gross violations of internationally recognized human rights” 

committed against individuals seeking to expose corruption or promote human 

rights.20 President Trump has used this authority to designate individuals for 

offenses including wrongful detention, the denial of medical treatment for 

detainees, and the expropriation of businesses for personal gain.21

OFAC implements its sanction authorities in ways “expected to generate the 

most impact in achieving [U.S.] national security and foreign policy goals.”22 In a 

2017 hearing before the House Subcommittee on Monetary Policy, then-OFAC 

Director John Smith explained that “[w]hen deployed strategically and with 

precision, sanctions are a highly effective way of pressuring regimes and malign 

actors to change their behavior.”23 Director Smith further asserted: 

[B]y freezing the assets of illicit actors, cutting them off from the U.S. 

financial system, and restricting their ability to interface with the 

international financial system, the choice to them becomes clear: either 

modify your behavior or accept the isolation and negative economic 

effects of remaining on our financial blacklist.24

In addition to sanctions, OFAC also designates individuals or entities as 

Specially Designated Nationals (“SDN”).25 The SDN list contains the names of 

“individuals and companies owned or controlled by, or acting on behalf of, targeted 

 

17 Omnibus Trade and Competitiveness Act of 1988, Pub. L. No. 100-418, 102 Stat. 1107, codified at 

50 U.S.C. § 1702 (2001). 

18 Id. 19 National Defense Authorization Act of 2017, Pub. L. No. 114-328, 130 Stat. 2000, codified at 22 

U.S.C. § 2656. 

20 Id. 21 DIANNE E. RENNACK, CONG. RESEARCH SERV., IF10576, THE GLOBAL MAGNITSKY HUMAN RIGHTS 

ACCOUNTABILITY ACT (2018), https://www.crs.gov/reports/pdf/IF10576. 22 Press Release, U.S. Dep’t of Treasury, Testimony of John E. Smith, Director of the Office of 

Foreign Assets Control, (Nov. 30, 2017), https://www.treasury.gov/press-center/pressreleases/Pages/sm0226.aspx.

23 Id. 24 Id. 

25 James Kostiw, OFAC Launches New SDN Search Tool, U.S.DEP’T OF TREASURY, (Mar. 13, 2013), 

https://www.treasury.gov/connect/blog/Pages/OFAC-Launches-New-SDN-Search-Tool.aspx. 
19 

countries.”26 The list is not limited to state actors and contains non-country specific 

individuals, groups, and entities.27 Currently, the list contains approximately 6,400 

companies and individuals.28

Persons can be added to the SDN list in several ways. In some cases, the 

President issues an executive order directing the Secretary of the Treasury, in 

consultation with the Secretary of State, to identify individuals or entities that 

should be added to the list.29 In other cases, the President directly identifies 

individuals or entities to designate as SDNs.30 Once on the list, U.S. persons and 

businesses are prohibited from obtaining goods, services, or technology from SDNs, 

or otherwise transacting with them.31 This prohibition extends to business 

conducted through third-party intermediaries.32 Indeed, “[i]nclusion on the SDN 

List generally prohibits U.S. banks from maintaining accounts for those listed and 

U.S persons could face civil or criminal penalties for engaging in business dealing 

with them.”33 

Under Treasury Department guidance, a sanctioned individual may own a 

minority interest in a company and still access the U.S. financial system. OFAC’s 

“50 percent rule,” states that “any entity owned in the aggregate, directly or 

indirectly, 50 percent or more by one or more blocked persons is itself considered to 

be a blocked person.”34 This is significant because an entity meeting this standard 

incurs SDN restrictions even if the entity itself is not named on the SDN list.35 

 

26 U.S. DEP’T OF TREASURY, Specially Designated Nationals and Blocked Persons List (SDN) Human 

Readable Lists, (Jan. 21, 2020), https://www.treasury.gov/resource-center/sanctions/SDNList/Pages/default.aspx. 27 Id.

28 U.S. DEP’T OF TREASURY, Basic Information on OFAC and Sanctions, 

https://www.treasury.gov/resource-center/faqs/Sanctions/Documents/faq_all.html. 

29 Exec. Order No. 13,685, 79 Fed. Reg. 77,357 (Dec. 19, 2014); See also Exec. Order No. 13,662 31 

C.F.R. § 589 (2014). 

30 Exec. Order No. 13,661 31 C.F.R. § 589 (2014). 

31 U.S. person means “any United States citizen or alien admitted for permanent residence in the 

United States, and any corporation, partnership, or other organization organized under the law of 

the United States.” 22 U.S.C. § 6010; U.S. DEP’T OF TREASURY, REVISED GUIDANCE ON ENTITIES 

OWNED BY PERSONS WHOSE PROPERTY AND INTERESTS IN PROPERTY ARE BLOCKED (2014), 

https://www.treasury.gov/resource-center/sanctions/Documents/licensing_guidance.pdf. 

32 U.S. DEP’T OF TREASURY, REVISED GUIDANCE ON ENTITIES OWNED BY PERSONS WHOSE PROPERTY 

AND INTERESTS IN PROPERTY ARE BLOCKED (2014), https://www.treasury.gov/resourcecenter/sanctions/Documents/licensing_guidance.pdf. 

33 James Kostiw, OFAC Launches New SDN Search Tool, U.S. DEP’T OF TREASURY, (Mar. 13, 2013), 

https://www.treasury.gov/connect/blog/Pages/OFAC-Launches-New-SDN-Search-Tool.aspx. 

34 U.S. DEP’T OF TREASURY, REVISED GUIDANCE ON ENTITIES OWNED BY PERSONS WHOSE PROPERTY 

AND INTERESTS IN PROPERTY ARE BLOCKED (2014), https://www.treasury.gov/resourcecenter/sanctions/Documents/licensing_guidance.pdf.

35 Id. 
20 

2. Sanctions Following the Russian Federation’s Invasion of Crimea 

In 2014, President Obama issued a series of Executive Orders (“EO”) that 

authorized Treasury to sanction individuals, assets, and companies in the Russian 

Federation (“Russia”) following Russia’s annexation of Crimea. On March 6, 2014, 

President Obama issued EO 13660 instructing Treasury to sanction any individual 

who “[undermined] democratic processes and institutions in Ukraine.”36 On March 

16, 2014, President Obama authorized additional sanctions on “persons 

contributing to the situation in Ukraine” through EO 13661.37 Under the authority 

of EO 13661, on March 20, 2014, Treasury designated 16 Russian government 

officials and four members of President Putin’s inner circle, which included Arkady 

and Boris Rotenberg.38 The European Union imposed similar restrictions in 

response to what it perceived as Russia’s “deliberate destabilization of Ukraine.”39

a. The Russian Invasion of Crimea 

In early 2014, Russia invaded Crimea following a period of political turmoil 

in Ukraine.40 This turmoil stemmed from Ukrainian President Viktor 

Yanukovych’s November 2013 refusal to sign a “political association and free trade 

agreement with the European Union.”41 By February 22, 2014, the Ukrainian 

parliament voted unanimously to remove President Yanukovych.42

After his removal, Yanukovych fled to Russia.43 Shortly thereafter, Moscow 

deployed forces to Crimea and declared the region as part of the Russian 

Federation.44 This invasion was significant not only because of Crimea’s 

 

36 Exec. Order No. 13,660 31 C.F.R. § 589 (2014). 

37 Exec. Order No. 13,661 31 C.F.R. § 589 (2014). 

38 Press Release, U.S. Dep’t of Treasury, Treasury Sanctions Russian Officials, Members Of The 

Russian Leadership’s Inner Circle, And An Entity For Involvement In The Situation In Ukraine, 

(Mar. 20, 2014), https://www.treasury.gov/press-center/press-releases/Pages/jl23331.aspx. 

38 Id.

39 EU restrictive measures in response to the crisis in Ukraine, COUNCIL OF THE EUROPEAN UNION

(Dec. 19, 2019), https://www.consilium.europa.eu/en/policies/sanctions/ukraine-crisis/. 

40 Steven Lee Myers & Ellen Barry, Putin Reclaims Crimea for Russia and Bitterly Denounces the 

West, N.Y. TIMES (Mar. 18, 2014), https://www.nytimes.com/2014/03/19/world/europe/ukraine.html. 41 Vladimir Isachenkov and Maria Danilova, Roots and Consequences of Ukraine’s Violence, 

ASSOCIATED PRESS (Feb. 20, 2013), 

https://web.archive.org/web/20140221000303/http://hosted.ap.org/dynamic/stories/E/EU_UKRAINE_

NEWS_GUIDE?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT. 

42 William Booth, Ukraine’s parliament votes to oust president; former prime minister is freed from 

prison, WASH. POST (Feb. 22, 2014), https://www.washingtonpost.com/world/europe/ukrainesyanukovych-missing-as-protesters-take-control-of-presidential-residence-inkiev/2014/02/22/802f7c6c-9bd2-11e3-ad71-e03637a299c0_story.html?utm_term=.af74a8230f13. 

43 Andrew E. Kramer, Ukraine’s Ex-President Is Convicted of Treason, N.Y. TIMES (Jan. 24, 2019), 

https://www.nytimes.com/2019/01/24/world/europe/viktor-yanukovych-russia-ukraine-treason.html. 44 CORY WELT, CONG. RESEARCH SERV., R45008, UKRAINE: BACKGROUND, CONFLICT WITH RUSSIA, AND 

U.S. POLICY, 9 (2019), https://www.crs.gov/reports/pdf/R45008. 
21 

strategically important geographic location, but also because it “violated the terms 

of a diplomatic agreement to respect Ukraine’s borders, and placed Russia on a war 

footing with one of the few states in the post-Soviet world that has managed to hold 

free elections.”45 The Crimean parliament then voted to secede from Ukraine and 

join Russia, scheduling a referendum for ten days later.46 When the referendum 

was held, 97 percent voted in favor of secession.47 Two days later, Russian 

President Vladimir Putin signed a treaty of accession with the new leaders of 

Crimea.48 Putin delivered an address in conjunction with the signing, asserting 

that Crimea was a part of Russia and confirming his disregard for an international 

border that was recognized for 23 years.49 The United States, European Union, and 

Ukraine refused to recognize the annexation.50 While maintaining that the 

annexation was illegal, the Ukrainian government withdrew military personnel and 

their families from Crimea.51

Since that time, Russia “has significantly increased its military presence in 

Crimea and suppressed local dissent.”52 Ukrainian officials now estimate 30,000 

Russian troops are stationed in the region.53 During the Russian occupation, the 

Office of the United Nations High Commissioner for Human Rights “documented 

‘multiple and grave’ human rights violations in Crimea and said that minority 

Crimean Tatars, who are generally opposed to Russia’s occupation, have been 

‘particularly targeted.’”54

 

45 Catherine Boyle, Crimea referendum: Why it’s so important, CNBC (Mar. 14, 2014), 

https://www.cnbc.com/2014/03/14/crimea-referendum-why-its-so-important.html; Charles King, 

Crimea, the Tinderbox, N.Y. TIMES (Mar. 1, 2014), 

https://www.nytimes.com/2014/03/03/opinion/crimea-the-tinderbox.html?searchResultPosition=4. 

46 Alissa de Carbonnel & Luke Baker, Crimea votes to join Russia, Obama orders sanctions, REUTERS 

(Mar. 5, 2014), https://www.reuters.com/article/us-ukraine-crisis/crimea-votes-to-join-russia-obamaorders-sanctions-idUSBREA1Q1E820140306. 

47 Steven Lee Myers & Ellen Barry, Putin Reclaims Crimea for Russia and Bitterly Denounces the 

West, N.Y. TIMES (Mar. 18, 2014), 

https://www.nytimes.com/2014/03/19/world/europe/ukraine.html?module=inline. 

48 Id. 

49 Id. 

50 Id. 

51 David Herszenhorn & Andrew Kramer, Ukraine Plans to Withdraw Troops From Russia-Occupied 

Crimea, N.Y. TIMES (Mar. 19, 2014), https://www.nytimes.com/2014/03/20/world/europe/crimea.html. 

52 CORY WELT, CONG. RESEARCH SERV., R45008, UKRAINE: BACKGROUND, CONFLICT WITH RUSSIA, AND 

U.S. POLICY, 9 (2019), https://www.crs.gov/reports/pdf/R45008. 

53 Id. 

54 Id. at 9−10. 
22 

b. U.S. and E.U. Sanctions Following the Invasion of Crimea 

In response to Russia’s invasion of Crimea, both the United States and the 

European Union imposed sanctions against several key Russian individuals.55 

Since these Crimea-related sanctions, the United States has imposed additional 

sanctions on Russia for a range of offenses, including human rights abuses, election 

interference, cyberattacks, weapons proliferation, trade with North Korea, support 

for the Syrian government, and use of a chemical weapon.56 As of July 2020, the list 

of individuals and entities sanctioned by the U.S. government related to Russia’s 

annexation of Crimea stood at 701.57

On March 6, 2014, the United States imposed sanctions on Russia, when 

President Obama issued an executive order under IEEPA and announced 

coordinated sanctions with the United Kingdom in response to Russia’s “violation of 

Ukraine’s sovereignty and territorial integrity.”58 That EO 13660 did not 

specifically reference Russia by name, but it did target those whose “actions or 

policies...undermine democratic processes or institutions in Ukraine.”59 President 

Obama further noted that the planned referendum would violate the Ukrainian 

constitution, as well as international law, and noted that the Ukrainian government 

must be included in any discussion of Crimea’s future.60 

Following Crimea’s referendum, the White House issued a statement saying, 

“the international community will not recognize the results of a poll administered 

under threats of violence and intimidation from a Russian military intervention 

that violates international law.”61 President Obama then signed EO 13661 on 

March 16, 2014, finding that Russia’s deployment of military forces to Crimea 

undermined the “democratic processes and institutions in Ukraine; threaten its 

peace, security, stability, sovereignty, and territorial integrity; and contribute to the 

 

55 Aleksandar Vasovic & Adrian Croft, U.S., EU set sanctions as Putin recognizes Crimea 

“sovereignty”, Reuters (Mar. 16, 2014), https://www.reuters.com/article/us-ukraine-crisis/u-s-eu-setsanctions-as-putin-recognizes-crimea-sovereignty-idUSBREA1Q1E820140317. 

56 CORY WELT ET. AL, CONG. RESEARCH SERV., R45415, U.S. SANCTIONS ON RUSSIA, 7 (2020), 

https://www.crs.gov/reports/pdf/R45415. 

57 U.S. DEP’T OF TREASURY, Sanctions List Search, https://sanctionssearch.ofac.treas.gov/. 

58 Dan Roberts & Ian Traynor, US and EU impose sanctions and warn Russia to relent in Ukraine 

standoff, THE GUARDIAN (Mar. 6, 2014), https://www.theguardian.com/world/2014/mar/06/us-eusanctions-obama-russia-ukraine-crimea; See also U.S. DEP’T OF TREASURY, Ukraine/Russia-Related 

Sanctions Program 3 (2016), https://www.treasury.gov/resourcecenter/sanctions/Programs/Documents/ukraine.pdf. 

59 Exec. Order No. 13,660 31 C.F.R. § 589 (2014). 

60 Alissa de Carbonnel and Luke Baker, Crimea votes to join Russia, Obama orders sanctions, 

REUTERS (Mar. 5, 2014), https://www.reuters.com/article/us-ukraine-crisis/crimea-votes-to-joinrussia-obama-orders-sanctions-idUSBREA1Q1E820140306. 

61 Press Release, The White House, Statement by the Press Secretary on Ukraine, (March 16, 2014), 

https://obamawhitehouse.archives.gov/the-press-office/2014/03/16/statement-press-secretary-ukraine. 
23 

misappropriation of its assets, and thereby constitute an unusual and extraordinary 

threat to the national security and foreign policy of the United States.”62 

EO 13661 authorized sanctions against several specifically listed Russian 

government officials and instructed OFAC to identify additional individuals who 

“have materially assisted, sponsored, or provided financial, material, or 

technological support for, or goods or services to or in support of a senior official of 

the Government of the Russian Federation.”63 Pursuant to the order, on March 20, 

2014, OFAC designated 16 Russian government officials and 4 members of 

President Putin’s inner circle, including Arkady and Boris Rotenberg.64 President 

Obama later issued additional executive orders on March 20, 2014 and December 

19, 2014, expanding the scope of the sanctions.65

In addition to executive branch actions, Congress passed two laws 

sanctioning Russian individuals and entities in 2014: (1) Support for the 

Sovereignty, Integrity, Democracy, and Economic Stability of Ukraine Act and (2) 

Ukraine Freedom Support Act.66 These laws permitted sanctions against any 

person “the President determines has perpetrated, or is responsible for ordering, 

controlling, or otherwise directing, significant acts of violence or gross human rights 

abuses in Ukraine.”67 They also included “potentially wide-reaching secondary 

sanctions against foreign individuals and entities that facilitate significant 

transactions for Russia sanctions designees, help them to evade sanctions, or make 

significant investments in certain oil projects in Russia.”68 

Like the United States, the European Union also issued economic sanctions 

against Russia for its invasion of Ukraine.69 These restrictions included bans on 

“goods originating in Crimea . . . unless they have Ukrainian certificates,” and 

export prohibitions on “[g]oods and technology for the transport, 

 

62 Exec. Order No. 13,661 31 C.F.R. § 589 (2014). 

63 Id. 

64 Press Release, U.S. Dep’t of Treasury, Treasury Sanctions Russian Officials, Members Of The 

Russian Leadership’s Inner Circle, And An Entity For Involvement In The Situation In Ukraine, 

(Mar. 20, 2014), https://www.treasury.gov/press-center/press-releases/Pages/jl23331.aspx. 

65 Exec. Order No. 13,662, 31 C.F.R. § 589 (2014); Exec. Order No. 13,685, 79 Fed. Reg. 77,357 (Dec. 

19, 2014). 

66 Support for the Sovereignty, Integrity, Democracy, and Economic Stability of Ukraine Act of 2014, 

Pub. L. No. 113-95, 22 U.S.C. §8901; Ukraine Freedom Support Act of 2014, Pub. L. No. 113-272, 22 

U.S.C. § 8921. 

67 Support for the Sovereignty, Integrity, Democracy, and Economic Stability of Ukraine Act of 2014, 

Pub. L. No. 113-95, 22 U.S.C. §8901; CORY WELT ET. AL, CONG. RESEARCH SERV., R45415, U.S.

SANCTIONS ON RUSSIA, 13 (2020), https://www.crs.gov/reports/pdf/R45415. 

68 CORY WELT ET. AL, CONG. RESEARCH SERV., R45415, U.S. SANCTIONS ON RUSSIA, 13 (2020), 

https://www.crs.gov/reports/pdf/R45415.

69 EU restrictive measures in response to the crisis in Ukraine, COUNCIL OF THE EUROPEAN UNION

(Dec. 19, 2019), https://www.consilium.europa.eu/en/policies/sanctions/ukraine-crisis/. 
24 

telecommunications and energy sectors.”70 The European Union’s sanctions also 

froze the assets and imposed travel restrictions against persons who “undermined 

Ukraine’s territorial integrity, sovereignty, and independence.”71

c. U.S. Sanctions Targeting Russian Oligarchs 

The U.S. and E.U. sanction regimes did not target the entire Russian 

economy.72 Instead, the sanctions designated key individuals, including several 

Russian oligarchs, and entities associated with important Russian policymakers.73 

The term “oligarch” was popularized during the privatization of the Russian 

economy following the collapse of the Soviet Union.74 Oligarchs are individuals who 

used political power to obtain control over former state assets in industries like oil, 

gas, timber, aluminum, and other natural resources.75 Oligarchs formally assumed 

control over former state-owned companies through government auctions and “loans 

for shares” schemes.76 Russians reportedly began referring to privatization as 

“prikhvatizatsiya” or “grabification,” to describe a process whereby state authorities 

handed well-connected businesspersons and bankers control of previously 

government-controlled assets.77

 

70 The EU non-recognition policy for Crimea and Sevastopol: Fact Sheet, EUROPEAN UNION EXTERNAL 

ACTION (Dec. 12, 2017), https://eeas.europa.eu/headquarters/headquarters-Homepage/37464/eu-nonrecognition-policy-crimea-and-sevastopol-fact-sheet_en. 71 EU restrictive measures in response to the crisis in Ukraine, COUNCIL OF THE EUROPEAN UNION

(Dec. 19, 2019), https://www.consilium.europa.eu/en/policies/sanctions/ukraine-crisis/. 

72 CORY WELT, CONG. RESEARCH SERV., R45008, UKRAINE: BACKGROUND, CONFLICT WITH RUSSIA, AND 

U.S. POLICY, 36 (2019), https://www.crs.gov/reports/pdf/R45008. 

73 Id.; Andrew Higgins, Oleg Matsnev, & Ivan Nechepurenko, Meet the 7 Russian Oligarchs Hit by 

the New U.S. Sanctions, N.Y. TIMES (Apr. 6, 2018), 

https://www.nytimes.com/2018/04/06/world/europe/russian-oligarchs-sanctions.html. 

74 Z. Byron Wolf, Russia’s oligarchs are different from other billionaires, CNN (Apr. 6, 2018), 

https://www.cnn.com/2018/04/06/politics/oligarch-russia-billionaires-government-putinsanctions/index.html. 

75 Id. 

76 Adam Taylor, How the 2003 Arrest of the Richest Man in Russia Changed Everything—And What 

Happens Next, BUSINESS INSIDER (Oct. 24, 2013), https://www.businessinsider.com/ten-years-aftermikhail-khodorkovskys-arrest-2013-10. Under the “loans for shares” plan, Kremlin-favored banks 

would lend the government money in exchange for the opportunity to buy cheap shares in 

government assets. The banks would hold the shares in trust, giving the government the opportunity 

to repay the loan. In most cases, the banks would sell the shares within two years on the open 

market, creating windfall profits. Alessandra Stanley, Russian Banking Scandal Poses Threat to 

Future of Privatization, N.Y. TIMES (Jan. 28, 1996), 

https://www.nytimes.com/1996/01/28/world/russian-banking-scandal-poses-threat-to-future-ofprivatization.html?pagewanted=all&src=pm. 

77 Alessandra Stanley, Russian Banking Scandal Poses Threat to Future of Privatization, N.Y TIMES

(Jan. 28, 1996), https://www.nytimes.com/1996/01/28/world/russian-banking-scandal-poses-threat-tofuture-of-privatization.html?pagewanted=all&src=pm. 
25 

 Following Vladimir Putin’s election to the Russian presidency in 2000, 

existing power structures began to shift, facilitating the rise of a new generation of 

oligarchs.78 Prior to becoming president, Putin promised to dismantle the existing 

class of oligarchs who prospered under his predecessor Boris Yeltsin.79 In 2003, 

under Putin’s direction, the government began to acquire some of Russia’s 

wealthiest companies.80 True to his word, Putin replaced the older generation of 

oligarchs with men from his inner circle and offered them valuable government 

contracts.81 Loopholes in Russian law used to limit competition enabled these 

oligarchs to “build themselves into the state system,” as they continued to gain 

access to state contracts.82 

d. Arkady and Boris Rotenberg are Sanctioned by the United 

States 

Brothers Arkady and Boris Rotenberg are among the oligarchs who have 

received billions of dollars from Putin-enabled government contracts.83 Four days 

after President Obama’s March 16, 2014 EO 13661 sanctioning “any individual or 

entity that is owned or controlled by, that has acted for or on behalf of, or that has 

provided material or other support to, a senior Russian government official,” OFAC 

officially designated Arkady and Boris Rotenberg.84 OFAC described Arkady and 

Boris Rotenberg as “members of the Russian leadership’s inner circle.”85 This 

position made them both beneficiaries of a Russian economy that frequently 

enriched Putin loyalists.86 That designation highlighted their close personal ties to 

President Putin. The Treasury announcement specifically stated: 

 

78 Andrew Meier, Who Fears a Free Mikhail Khodorkovsky?, N.Y. TIMES (Nov. 18, 2009), 

https://www.nytimes.com/2009/11/22/magazine/22khodorkovsky-t.html. 

79 Steven Meyers, Jo Becker & Jim Yardley, Private Bank Fuels Fortunes of Putin’s Inner Circle, N. 

Y. TIMES (Sept. 27, 2014), https://www.nytimes.com/2014/09/28/world/europe/it-pays-to-be-putinsfriend-.html?module=inline. 

80 Andrew Meier, Who Fears a Free Mikhail Khodorkovsky?, N.Y. Times (Nov. 18, 2009), 

https://www.nytimes.com/2009/11/22/magazine/22khodorkovsky-t.html. 

81 Steven Meyers, Jo Becker & Jim Yardley, Private Bank Fuels Fortunes of Putin’s Inner Circle, N. 

Y. TIMES (Sept. 27, 2014), https://www.nytimes.com/2014/09/28/world/europe/it-pays-to-be-putinsfriend-.html?module=inline. 

82 Joshua Yaffa, Putin’s Shadow Cabinet and The Bridge to Crimea, NEW YORKER (May 22, 2017), 

https://www.newyorker.com/magazine/2017/05/29/putins-shadow-cabinet-and-the-bridge-to-crimea. 

83 Id. 

84 Id.; See also Exec. Order No. 13,661 31 C.F.R. § 589 (2014). 

85 Press Release, U.S. Dep’t of Treasury, Treasury Sanctions Russian Officials, Members Of The 

Russian Leadership’s Inner Circle, And An Entity For Involvement In The Situation In Ukraine, 

(Mar. 20, 2014), https://www.treasury.gov/press-center/press-releases/pages/jl23331.aspx. 

86 Steven Meyers, Jo Becker & Jim Yardley, Private Bank Fuels Fortunes of Putin’s Inner Circle, N. 

Y. TIMES (Sept. 27, 2014), https://www.nytimes.com/2014/09/28/world/europe/it-pays-to-be-putinsfriend-.html?module=inline. 
26 

Arkady Rotenberg and Boris Rotenberg have provided support to 

Putin’s pet projects by receiving and executing high price contracts for 

the Sochi Olympic Games and state-controlled Gazprom. They have 

made billions of dollars in contracts for Gazprom and the Sochi 

Olympic Winter Olympics awarded to them by Putin. Both brothers 

have amassed enormous amounts of wealth during the years of Putin’s 

rule in Russia. The Rotenberg brothers received approximately $7 

billion in contracts for the Sochi Olympic Games and their personal 

wealth has increased by $2.5 billion the last two years alone.87

Arkady Rotenberg directly benefited from the annexation of Crimea, including 

through his companies receiving multi-million dollar contracts to build the Kerch 

Bridge and a railway linking Russia to the annexed region of Ukraine.88 The 

Treasury Department imposed additional sanctions on Rotenberg-related entities 

under EO 13661 on April 28, 2014.89 These sanctions included the following 

entities: 

InvestCapitalBank and SMP Bank [which] are controlled by Arkady 

and Boris Rotenberg who were designated on March 20, 2014 pursuant 

to E.O. 13661 for acting for or on behalf of or materially assisting, 

sponsoring, or providing financial, material or technological support 

for, or goods and services to or in support of, a senior official of the 

Government of the Russian Federation. 

Stroygazmontazh (SGM Group) [which] is a gas pipeline construction 

company owned or controlled by Arkady Rotenberg. Rotenberg created 

SGM Group in 2008 after acquiring multiple Gazprom contractors.90

On July 30, 2014, the European Union added Arkady Rotenberg to the E.U. 

sanctions list.91 In September 2014, Italy’s financial law enforcement agency seized 

 

87 Press Release, U.S. Dep’t of Treasury, Treasury Sanctions Russian Officials, Members Of The 

Russian Leadership’s Inner Circle, And An Entity For Involvement In The Situation In Ukraine, 

(Mar. 20, 2014), https://www.treasury.gov/press-center/press-releases/pages/jl23331.aspx. 

88 Id.; see also Christopher Harress, Moscow to Build Bridge From Russian Mainland to Crimea 

Across Kerch Strait, INT’L BUS. TIMES (Jun. 30, 2015), https://www.ibtimes.com/moscow-build-bridgerussian-mainland-crimea-across-kerch-strait-1990907. 

89 Press Release, U.S. Dep’t of the Treasury, Announcement of Additional Treasury Sanctions on 

Russian Government Officials and Entities (Apr. 28, 2014), https://www.treasury.gov/presscenter/press-releases/Pages/. 

90 Id. 91 2014 O.J. (L 226) 17, https://eur-lex.europa.eu/legalcontent/EN/TXT/PDF/?uri=OJ:L:2014:226:FULL&from=EN#page25. As a Finnish citizen, Boris 

Rotenberg avoided inclusion on the European list. Anne Kauranen & Jussi Rosendahl, Russian 

oligarch under U.S. sanctions files suit against Nordic banks, REUTERS (Oct. 22, 2018), 

https://www.reuters.com/article/us-finland-russia-sanctions/russian-oligarch-under-u-s-sanctionsfiles-suit-against-nordic-banks-idUSKCN1MW1AJ. 
27 

almost $40 million of Arkady Rotenberg’s assets, “including a luxury hotel in Rome 

and two villas in Sardinia.”92 Following the seizure, the Russian government 

endorsed legislation that would reimburse those whose overseas assets were seized 

by foreign authorities.93 However, that legislation, known as “the Rotenberg law,” 

never became law.94

i. Arkady Rotenberg 

Arkady Rotenberg first met Vladimir Putin at the age of twelve, when they 

joined the same judo club.95 After Arkady Rotenberg finished college, he worked as 

a judo trainer and continued to practice judo with Putin and others from the class.96 

Arkady Rotenberg then started a cooperative that organized sporting competitions 

and later became the general director of a professional judo club in St. Petersburg, 

where Putin served as vice-mayor of the city.97 After Putin became President of 

Russia, Arkady and Boris Rotenberg invested in companies that serviced Gazprom, 

the major Russian gas company which is majority-owned by the Russian 

government.98 The Rotenberg brothers also founded SMP Bank, which they used 

“to acquire stakes in construction, gas, and pipe companies.”99 

In 2008, Gazprom sold Arkady Rotenberg five construction and maintenance 

companies, which he merged into one company he named Stroigazmontazh (“SGM”). 

SGM became the chief contractor for Gazprom.100 The company earned more than 

$2 billion in revenue during its first year of operations.101 It handled construction 

work for the oil and gas industry, including onshore and offshore pipeline 

construction.102 

Three years later, in March 2011, Gazprom sold Gazprom Burenie to Milasi 

Engineering Limited (“Milasi Engineering”), a Cypriot company owned by Arkady 

 

92 James Politi & Courtney Weaver, Italy seizes Putin ally Arkady Rotenberg’s property assets, FIN.

TIMES (Sept. 23, 2014), https://www.ft.com/content/f1293172-4340-11e4-be3f-00144feabdc0; See also

Italy Freezes Assets of Sanctioned Russian Billionaire Arkady Rotenberg, MOSCOW TIMES (Sept. 23, 

2014), https://themoscowtimes.com/articles/italy-freezes-assets-of-sanctioned-russian-billionairearkady-rotenberg-39683. 

93 Italy Freezes Assets of Sanctioned Russian Billionaire Arkady Rotenberg, MOSCOW TIMES (Sept. 23, 

2014), https://themoscowtimes.com/articles/cabinet-wants-to-compensate-russian-victims-of-illegalasset-seizures-abroad-40020. 

94 Joshua Yaffa, Putin’s Shadow Cabinet and The Bridge to Crimea, NEW YORKER (May 22, 2017), 

https://www.newyorker.com/magazine/2017/05/29/putins-shadow-cabinet-and-the-bridge-to-crimea. 

95 Id. 

96 Id. 

97 Id. 

98 Id. 

99 Id. 

100 Id. 

101 Id. 

102 SMG Group of Companies, STROYGAZMONTAZH, http://www.ooosgm.com/company/structure/. 
28 

Rotenberg.103 Gazprom Burenie subsequently became Gazprom’s main drilling 

contractor and is currently one of the largest drilling contractors in Russia. 104 

Gazprom Burenie’s operations focus on oil and gas wells construction, including 

drilling, geological exploration, well construction, well overhaul, and inactive well 

recovery services.105 

 The Russian government awarded Gazprom Burenie and SGM several highprofile projects in Russia. For example, it contracted with SGM to build portions of 

the $12 billion Nord Stream undersea gas pipeline; the Russian government paid 

the Arkady Rotenberg-controlled company a profit margin of 30 percent for its work 

on the project.106 The Russian government also awarded SGM a contract to build a 

110-mile gas pipeline around the Russian city of Sochi, as part of the Russian 

government’s 2014 Winter Olympics construction program.107 The gas pipeline cost 

five times its original budget.108 One estimate stated that 15 percent of the total 

Olympics budget went to Rotenberg-led projects.109 In defending his personal 

relationship with President Putin, Arkady Rotenberg has argued “unlike a lot of 

other people, I don’t have the right to make a mistake.”110 He has also asserted, “I 

have great respect for Putin and I consider him sent to our country from God.”111

Gazprom Burenie has also played an important role in the Russian energy 

industry. Between 1997 and 2013, Gazprom Burenie completed the construction of 

3,669 wells, drilling through more than 7 million meters of rock.112

In January 2015, the Russian government announced that Arkady 

Rotenberg, through SGM, would build the bridge connecting the Russian-annexed 

 

103 GAZPROM, FINANCIAL REPORT 2011: REACHING NEW HORIZONS 58 (2011), 

https://www.gazprom.com/f/posts/43/588793/financial-report-2011-eng.pdf. 

104 Company Profile: Gazprom Bureniye, Russian Drilling Company, GAZPROM BURENIYE, 

https://www.burgaz.ru/landing/. 

105 Id. 

106 Gleb Bryanski, Putin’s judo partner jumps in Russia’s rich list, REUTERS (Feb. 13, 2011), 

https://www.reuters.com/article/russia-rich/putins-judo-partner-jumps-in-russias-rich-listidUSLDE71C02X20110214; Aviezer Tucker, The New Power Map, FOREIGN AFFAIRS (Dec. 19, 2012), 

https://www.foreignaffairs.com/articles/north-america/2012-12-19/new-power-map. 

107 Thomas Grove, Special Report: Russia’s $50 billion Olympic gamble, REUTERS (Feb. 21, 2013), 

https://www.reuters.com/article/us-russia-sochi/special-report-russias-50-billion-olympic-gambleidUSBRE91K04M20130221; Dzhubga−Lazarevskoe−Sochi gas pipeline, STROYGAZMONTAZH, 

http://www.ooosgm.com/projects/construction/gazoprovod-dzhubga-lazarevskoe-sochi/. 

108 Anna Pukas, Sochi: Is it Russia’s disaster Winter Olympics?, EXPRESS (Feb. 3, 2014), 

https://www.express.co.uk/news/world/457632/Sochi-Is-it-Russia-s-disaster-Winter-Olympics. 

109 Neil MacFarquhar & Ivan Nechepurenko, Putin’s Bridge to Crimea May Carry More Symbolism 

Than Traffic, N.Y. TIMES (Nov. 11, 2017), 

https://www.nytimes.com/2017/11/11/world/europe/vladimir-putin-russia-crimea-bridge.html. 

110 Joshua Yaffa, Putin’s Shadow Cabinet and the Bridge to Crimea, NEW YORKER (May 22, 2017), 

https://www.newyorker.com/magazine/2017/05/29/putins-shadow-cabinet-and-the-bridge-to-crimea. 111 Id. 112 History of the Company, GAZPROM BURENIE, http://www.burgaz.ru/company/about/history/. 
29 

Crimean Peninsula to the Russian mainland.113 In May 2018, the 12-mile bridge 

opened for traffic at a final cost of $3.7 billion.114 According to news reports, the 

bridge opened six months ahead of schedule. The bridge reportedly can “carry up to 

40,000 cars per day [and] its span is greater than that of Vasco da Gama in 

Portugal, previously the longest in Europe.”115 President Putin was on site to open 

the bridge to traffic.116

In September 2019, a news article stated that Gazprom had purchased 100 

percent of SGM for 70 billion to 95 billion rubles, the equivalent of $1.1 billion to 

$1.5 billion.117

Forbes has estimated that Arkady Rotenberg is worth $2.8 billion.118 

ii. Boris Rotenberg 

Boris Rotenberg is also a childhood friend of Vladimir Putin.119 Along with 

his brother Arkady, Boris Rotenberg and Putin have “sparred and trained in the 

same gym since they were teenagers in the 1960s.”120 Their former judo coach, 

Anatoly Rakhin, commented on the friendship between the brothers and Putin 

saying, “[Putin] didn’t take the Petersburg boys to work with him because of their 

pretty eyes, but because he trusts people who are tried and true.”121

In 2001, Boris and Arkady Rotenberg founded SMP Bank. 122 The brothers 

then used the bank to acquire interests in important industries such as 

construction, gas, and gas pipelines.123 By the mid-2000s, these acquisitions 

allowed them to become one of Russia’s “main suppliers of large-diameter gas 

pipes.”124

 

113 Joshua Yaffa, Putin’s Shadow Cabinet and the Bridge to Crimea, NEW YORKER (May 22, 2017), 

https://www.newyorker.com/magazine/2017/05/29/putins-shadow-cabinet-and-the-bridge-to-crimea. 114 Andre Roth, Putin opens 12-mile bridge between Crimea and Russian mainland, GUARDIAN (May 

15, 2018), https://www.theguardian.com/world/2018/may/15/putin-opens-bridge-between-crimea-andrussian-mainland. 

115 Id. 

116 Id. 

117 Bne IntelliNews, Russia’s Gazprom Buys Out its Biggest Subcontractor, THE MOSCOW TIMES

(Sept. 27, 2019), https://www.themoscowtimes.com/2019/09/27/russias-gazprom-buys-out-its-biggestsubcontractor-a67475. 

118 Real Time Net Worth, No. 877, Arkady Rotenberg, FORBES, https://www.forbes.com/profile/arkadyrotenberg/#671573b62baa. 

119 Simon Shuster, Putin’s Powerful Friends Rally Around Russian President Despite Sanctions, TIME

(Mar. 27, 2014), https://time.com/38632/putin-friends-rally-around-him/. 

120 Id. 121 Id. 122 Joshua Yaffa, Putin’s Shadow Cabinet and the Bridge to Crimea, NEW YORKER (May 22, 2017), 

https://www.newyorker.com/magazine/2017/05/29/putins-shadow-cabinet-and-the-bridge-to-crimea. 

123 Id. 124 Id. 
30 

When Boris Rotenberg’s ex-wife, Irene Lamber, was asked to comment on the 

business impact of Putin’s friendship with the Rotenberg brothers, she remarked, 

“[t]hey were friendly in childhood, and those relationships were never broken, so 

logically you can presume some sort of advice was given, at a minimum, and 

perhaps help here and there.”125 

Boris Rotenberg holds a Finnish passport and therefore “is not subject to 

European sanctions over Russia’s role in Ukraine.”126 Boris Rotenberg secured 

Finnish citizenship after moving to the country with his ex-wife Irene in the late 

1990s.127 Although he is not directly subjected to the E.U’s sanctions, several 

Nordic banks refused to process his payments because “European banks must 

comply with . . . U.S. sanctions in order to do business with American banks.”128 In 

response, Boris Rotenberg filed a discrimination suit against Nordea, Danske Bank, 

Handelsbanken, and OP Bank for violation of “his right to equal treatment as an 

EU citizen.”129 A Finnish court rejected the suit on January 13, 2020.130

Forbes estimates that Boris Rotenberg’s net worth is $1.2 billion.131

e. Roman and Igor Rotenberg are Sanctioned by the United 

States 

On February 12, 2015, the Wall Street Journal reported that Arkady and 

Boris Rotenberg sold lucrative assets to their children in an apparent effort to avoid 

sanctions by the United States.132 The sales included Arkady selling his 79 percent 

stake in Gazprom Drilling LLC to his son Igor, and Boris’s sale of the Finnish 

 

125 Id. 

126 Anne Kauranen & Jussi Rosendahl, Russian oligarch under U.S. sanctions files suit against 

Nordic banks, REUTERS (Oct. 22, 2018), https://www.reuters.com/article/us-finland-russiasanctions/russian-oligarch-under-u-s-sanctions-files-suit-against-nordic-banks-idUSKCN1MW1AJ. 

127 Joshua Yaffa, Putin’s Shadow Cabinet and the Bridge to Crimea, NEW YORKER (May 22, 2017), 

https://www.newyorker.com/magazine/2017/05/29/putins-shadow-cabinet-and-the-bridge-to-crimea. 

128 Anne Kauranen & Jussi Rosendahl, Russian oligarch under U.S. sanctions files suit against 

Nordic banks, REUTERS (Oct. 22, 2018), https://www.reuters.com/article/us-finland-russiasanctions/russian-oligarch-under-u-s-sanctions-files-suit-against-nordic-banks-idUSKCN1MW1AJ. 

129 Anne Kauranen & Tarmo Virki, Finnish court rejects Rotenberg’s suit against Nordic banks, 

REUTERS (Jan. 13, 2020), https://www.reuters.com/article/finland-russia-sanctions/finnish-courtrejects-rotenbergs-suit-against-nordic-banks-idUSL8N29I260. 

130 Id. 

131 Real Time Net Worth, No. 1941, Boris Rotenberg, FORBES (Feb. 26, 2020), 

https://www.forbes.com/profile/boris-rotenberg/#49cf806c126a. 

132 Rachel Ensign, Russian Asset Sales Muddy Sanction Compliance, WALL ST. J. (Feb. 12, 2015), 

https://www.wsj.com/articles/russian-asset-sales-muddy-sanction-compliance-1423784903. 
31 

Langvik Congress Wellness Hotel to his son Roman.133 The Rotenbergs described 

the sales as nothing more than a long-planned “generational change.”134

i. Roman Rotenberg 

In response to the transfers described above, on July 30, 2015, under EO 

13661, OFAC added Roman Rotenberg to the list of sanctioned individuals.135 A 

Treasury press release noted Roman Rotenberg was “linked to the provision of 

material support” to Boris Rotenberg.136 

ii. Igor Rotenberg 

On April 6, 2018, three years after sanctioning Arkady and Boris Rotenberg, 

OFAC also sanctioned Arkady’s son Igor.137 This round of sanctions targeted 

Russia’s so-called “golden youth” and also included sanctions against Putin’s son-inlaw Kirill Shamalov.138 Just prior to OFAC’s imposition of sanctions, Forbes

included Igor Rotenberg on its list of 259 new billionaires.139 OFAC’s 

announcement of the new sanctions credited Igor’s designation to his activities in 

the Russian energy sector, noting that Igor had acquired significant assets from his 

father post-sanctions.140

From 2002 to 2003, Igor Rotenberg served as the deputy head “of the 

Property Department of the fuel and energy complex of the Ministry of Property and 

 

133 Id.; see also Bill Chappel, U.S. Hits Russian Oligarchs And Officials With Sanctions Over Election 

Interference, NPR (Apr. 6, 2018), https://www.npr.org/sections/thetwo-way/2018/04/06/600083466/u-shits-russian-oligarchs-and-officials-with-sanctions-over-election-interferen. 

134 Rachel Ensign, Russian Asset Sales Muddy Sanction Compliance, WALL ST. J. (Feb. 12, 2015), 

https://www.wsj.com/articles/russian-asset-sales-muddy-sanction-compliance-1423784903. 

135 Press Release, U.S. Dep’t of Treasury, Ukraine-related Designations; Sectoral Sanctions 

Identifications; Dote d’Ivoire Designation Removals; Issuance of an Important Crimea Sanctions 

Advisory, (Jul. 30, 2015), https://www.treasury.gov/resource-center/sanctions/OFACEnforcement/Pages/20150730.aspx. 

136 Press Release, U.S. Dep’t of Treasury, Treasury Sanctions Individuals and Entities Involved in 

Sanctions Evasion Related To Russia and Ukraine, (Jul. 30, 2015), https://www.treasury.gov/presscenter/press-releases/Pages/jl0133.aspx. 

137 Press Release, U.S. Dep’t of Treasury, Treasury Designates Russian Oligarchs, Officials, and 

Entities in Response to Worldwide Malign Activity, (Apr. 6, 2018), 

https://home.treasury.gov/news/press-releases/sm0338. 

138 Anders Aslund, With New Sanctions the US Treasury Goes after Putin’s Inner Circle, ATLANTIC 

COUNCIL, (Apr. 6, 2018), https://www.atlanticcouncil.org/blogs/new-atlanticist/with-new-sanctionsthe-us-treasury-goes-after-putin-s-inner-circle/. 

139 Chase Peterson-Withorn, Meet the World’s 259 Newest Billionaires, FORBES (Mar. 6, 2018), 

https://www.forbes.com/sites/chasewithorn/2018/03/06/meet-the-worlds-259-newest-billionairesfrancois-bettencourt-meyers-lynsi-snyder/#502c52683ee9. 

140 Press Release, U.S. Dep’t of Treasury, Treasury Designates Russian Oligarchs, Officials, and 

Entities in Response to Worldwide Malign Activity, (Apr. 6, 2018), 

https://home.treasury.gov/news/press-releases/sm0338. 
32 

Land Relations” in Russia.141 In 2003, Igor Rotenberg was named head of property 

management and transportation at the Russian Ministry of State Property.142 In 

2004, Igor Rotenberg was named vice-president of JSC Russian Railways, Russia’s 

state-owned railroad company.143

Since 2006, Igor Rotenberg has served as Chairman of the Board of Directors 

for NPV Engineering.144 NPV Engineering provides management and consulting 

services in Russia.145 In 2010, Igor Rotenberg was named Chairman of Mosenergo, 

“the largest regional power generating company in the Russian Federation.”146 He 

was also named chairman of Gazprom Burenie, the key construction company 

beneficially owned by his father.147

After his placement on the U.S. sanctions list in 2014, Arkady Rotenberg 

reportedly transferred certain assets to his son Igor.148 According to reports, Igor 

Rotenberg now owns “79 percent of drilling company Gazprom Burenie; 28 percent 

of road construction company Mostotrest; and 33 percent of TPS Real Estate 

Holding.”149

Forbes estimates that Igor Rotenberg’s net worth is $1.1 billion.150

As explained below, despite the imposition of U.S. sanctions on Arkady and 

Boris Rotenberg in March 2014, Roman Rotenberg in July 2015, and Igor Rotenberg 

in April 2018, evidence suggests that the Rotenbergs continued to do business with 

some U.S. parties. 

 

141 Yevgeny Gusev, The Kings of State Procurement, HENRY JACKSON SOC. 8 (May 2017), 

http://henryjacksonsociety.org/wp-content/uploads/2018/06/1705-The-Kings-of-StateProcurement.pdf. 

142 Id. 

143 Id. 144 Id. at 8−9. 

145 Press Release, U.S. Dep’t of Treasury, Treasury Designates Russian Oligarchs, Officials, and 

Entities in Response to Worldwide Malign Activity, (Apr. 6, 2018), 

https://home.treasury.gov/news/press-releases/sm0338. 

146 Arkady Rotenberg: We live in conditions of tough competition, but it doesn’t scare us, INTERFAX

(Oct. 30, 2014), http://www.interfax.com/interview.asp?id=547794; About the Company, MOSENERGO, 

https://mosenergo.gazprom.com/about/. 

147 2018 Billionares Net Worth, No. 1999, Igor Rotenberg, Forbes (Mar. 6, 2018), 

https://www.forbes.com/profile/igor-rotenberg/#393b87e51ef8. 

148 Rachel Louise Ensign, Russian Asset Sales Muddy Sanction Compliance, WALL ST. J. (Feb. 12, 

2015), https://www.wsj.com/articles/russian-asset-sales-muddy-sanction-compliance-1423784903. 

149 Stephen Grey & Elizabeth Piper, Rising stars among children of Russia’s elite, REUTERS (Nov. 10, 

2015), https://www.reuters.com/article/us-russia-capitalism-sons/rising-stars-among-children-ofrussias-elite-idUSKCN0SZ1DP20151110. 

150 2018 Billionares Net Worth, No. 1999 Igor Rotenberg, FORBES (Mar. 6, 2018), 

https://www.forbes.com/profile/igor-rotenberg/#393b87e51ef8. 
33 

B. The Art Market 

This section describes the global and U.S. art industry; the U.S. art 

industry’s current exemption from legal safeguards aimed at stopping money 

laundering and corruption; and the role of shell companies in purchasing high-value 

art. 

The modern global art market—and its U.S. component—has been enjoying a 

boom. However, critics assert the secrecy found in the art market attracts illicit 

activity and suspect funds.151 In 2019, global art sales reached $64.1 billion.152 In 

addition, the art market has become a source of reliable return on investment.153 

One report found that since 2000, art has delivered average annual returns of 8.9 

percent.154 In 2019, 86 percent of surveyed wealth managers asserted that “they 

thought there was a convincing argument for including art in their wealth 

management service offering.”155 Investors also purchase art to diversify portfolios, 

and some view individual pieces as financial instruments to be traded like stock.156 

Over the last several years, growth was most pronounced at the top end of the 

market, with works priced above $10 million outperforming other parts of the 

market.157 

 

The art market is also now more accessible due to globalization and the 

internet.158 These two factors have transformed the art market into an 

international industry with a customer base located around the world.159 The 

 

151 Samuel Rubenfeld, Art World’s Response to Money-Laundering Concerns Draws Critics, WALL ST. 

J. (Feb. 27, 2017), https://blogs.wsj.com/riskandcompliance/2017/02/27/art-worlds-response-to-moneylaundering-concerns-draws-critics/. 

152 ART BASEL & UBS, The Art Market 2020 17 (2020), 

https://d2u3kfwd92fzu7.cloudfront.net/The_Art_Market_2020-1.pdf; See also Daniel Grant, As Art 

Collections Grow, So Do the Places That Stash Them, N.Y. TIMES (Nov. 13, 2018), 

https://www.nytimes.com/2018/11/13/business/art-storage.html. 

153 Frederik Balfour, Billionaire’s Secrets on How to Make a Bundle in Art, BLOOMBERG (May 7, 

2018), https://www.bloomberg.com/news/features/2018-05-07/top-collectors-reveal-the-secrets-of-howto-invest-in-art. 

154 Id. 

155 DELOITTE, Art and Finance Report 84 (6th ED. 2019), 

https://www2.deloitte.com/content/dam/Deloitte/lu/Documents/financial-services/artandfinance/luart-and-finance-report-2019.pdf. 

156 Cynthia O’Murchu, Art: A market laid bare, FIN. TIMES (Apr. 7, 2015), 

https://www.ft.com/content/a91a1608-d887-11e4-8a23-00144feab7de#axzz3WpTPQ6X2; Michel 

Martin, New Documentary Paints a Picture of the Contemporary Art Market Run Amok, NPR (Nov. 4, 

2018), https://www.npr.org/2018/11/04/658920684/new-documentary-paints-a-picture-of-thecontemporary-art-market-run-amok. 

157 Jeni Fulton, Economist Dr. Clare McAndrew explains why the art market is rebounding, ART 

BASEL, https://www.artbasel.com/news/economist-dr-clare-mcandrew-explains-why-the-art-marketis-rebounding. 

158 ART BASEL & UBS, The Art Market 2020 48 (2020), 

https://d2u3kfwd92fzu7.cloudfront.net/The_Art_Market_2020-1.pdf. 

159 Id. at 262. 
34 

United States continued to lead the market in 2019 with 44 percent of all sales by 

value, with the United Kingdom in second place with 20 percent.160 International 

art fairs gather dealers, artists, and collectors to display art from different regions 

around the world.161 For those unable to travel, the internet enables collectors from 

Europe, the Middle East, and Asia to easily bid on the same pieces of art.162

The art market has attracted criticism because of its lack of transparency. 

Current rules allow sellers to remain anonymous, and purchasers can use offshore 

shell companies to conceal ownership and sources of funds.163 Sellers of artwork at 

auction are often not required to disclose their identity to the buyer; in some cases, 

the auction house does not know the name of the original owner or buyer.164 

Anonymity in the market can make it difficult to track sales transactions, art 

ownership, and determinations regarding authenticity.165 Concealment of buyer 

and seller identity also makes art “an attractive instrument to hide illicit assets . . . 

because the transactions are often private, prices are speculative and an item can 

easily be smuggled to evade authorities.”166 

Deloitte and ArTactic’s Art & Finance Report 2019 found that 77 percent of 

wealth managers and 75 percent of collectors cite the art market’s lack of 

transparency as one of the industry’s key challenges.167 Moreover, 75 percent of art 

professionals identified the market’s lack of transparency as a major concern, 

marking a six percent increase from 2016.168 

 

160 Id. at 37. 

161 Y-Jean Mun-Delsalle, The Art Fair Boom Is Forever Changing the Way the Art Market Does 

Business, FORBES (Apr. 7, 2016), https://www.forbes.com/sites/yjeanmundelsalle/2016/04/07/the-artfair-boom-is-forever-changing-the-way-the-art-market-does-business/#52d8f7af6c64. 

162 Frederik Balfour, Billionaire’s Secrets on How to Make a Bundle in Art, BLOOMBERG (May 7, 

2018), https://www.bloomberg.com/news/features/2018-05-07/top-collectors-reveal-the-secrets-of-howto-invest-in-art. 

163 Graham Bowley & William Rashbaum, Has the Art Market Become an Unwitting Partner in 

Crime, N.Y. TIMES (Feb. 19, 2017), https://www.nytimes.com/2017/02/19/arts/design/has-the-artmarket-become-an-unwitting-partner-in-crime.html. 

164 Id. 

165 Id. 

166 Samuel Rubenfeld, Art World’s Response to Money-Laundering Concerns Draws Critics, WALL ST. 

J. (Feb. 27, 2017), https://blogs.wsj.com/riskandcompliance/2017/02/27/art-worlds-response-to-moneylaundering-concerns-draws-critics/. 

167 DELOITTE, Art and Finance Report 16, 171 (6th ED. 2019), 

https://www2.deloitte.com/content/dam/Deloitte/lu/Documents/financial-services/artandfinance/luart-and-finance-report-2019.pdf.

168 Id. at 207. 
35 

1. Money Laundering in the Art Market 

A large part of the art market operates in secrecy, allowing participants to 

conduct transactions anonymously.169 According to an article quoting Thomas 

Christ, a board member of the Basel Institute of Governance, “[t]he art market is an 

ideal playing ground for money laundering.”170 Michael Martin, head of the forensic 

and anti-money laundering services at Deloitte Luxembourg acknowledged this, 

saying, “art is one of the asset classes that obviously lends itself to money 

laundering.”171 Smugglers, drug traffickers, arms dealers, and others have turned 

to the art market as a means to obscure profits and transfer assets outside the 

reach of financial regulators.172 

In recent years, critics note that “[p]art of the reason art has become an 

attractive vehicle for money laundering is that other channels have been narrowed 

by tighter regulation,” particularly in the financial sector.173 For example, 

mortgage brokers, stockbrokers, casinos, banks, and Western Union are subject to 

federal money laundering statutes requiring them to report suspicious financial 

activity and perform due diligence to deter money laundering activities and “combat 

the financing of terrorism.”174 The same requirements do not apply to buyers and 

sellers of art.175

To provide greater transparency and prevent money laundering activities, 

the European Union adopted its fifth Anti-Money Laundering directive on April 19, 

 

169 Graham Bowley & William Rashbaum, Has the Art Market Become an Unwitting Partner in 

Crime, N.Y. TIMES (Feb. 19, 2017), https://www.nytimes.com/2017/02/19/arts/design/has-the-artmarket-become-an-unwitting-partner-in-crime.html. 

170 Id. 

171 Eric Reguly, The link between art and money laundering, GLOBE AND MAIL (May 15, 2018), 

https://www.theglobeandmail.com/report-on-business/international-business/europeanbusiness/economists-urge-tighter-regulations-to-curb-money-laundering-in-artmarket/article26217852/. 

172 Patricia Cohen, Valuable as Art, but Priceless as a Tool to Launder Money, N.Y. TIMES (May 12, 

2013), https://www.nytimes.com/2013/05/13/arts/design/art-proves-attractive-refuge-for-moneylaunderers.html. 

173 Samuel Rubenfeld, Art World’s Response to Money-Laundering Concerns Draws Critics, WALL ST. 

J. (Feb. 27, 2017), https://blogs.wsj.com/riskandcompliance/2017/02/27/art-worlds-response-to-moneylaundering-concerns-draws-critics/. 

174 Patricia Cohen, Valuable as Art, but Priceless as a Tool to Launder Money, N.Y. TIMES (May 12, 

2013), https://www.nytimes.com/2013/05/13/arts/design/art-proves-attractive-refuge-for-moneylaunderers.html; RENA S. MILLER & LIANA W. ROSEN, CONG. RESEARCH SERV., R44776, ANTI-MONEY 

LAUNDERING: AN OVERVIEW FOR CONGRESS, SUMMARY (2017), 

https://www.crs.gov/reports/pdf/R44776. 

175 Kris Hollington, After Drugs and Guns, Art Theft Is The Biggest Criminal Enterprise in the World, 

NEWSWEEK (Jul. 22, 2014), https://www.newsweek.com/2014/07/18/after-drugs-and-guns-art-theftbiggest-criminal-enterprise-world-260386.html. 
36 

2018.176 This directive compels businesses selling art to verify the identity of 

customers before completing transactions of €10,000 or more.177 Under the 

directive, European Union member states were required to implement this new 

requirement by January 10, 2020.178 The United Kingdom adopted similar rules in 

the weeks before its exit from the European Union on January 31, 2020.179 The 

United States has yet to follow suit.180 

2. The Art Industry is the Largest Legal, Unregulated Market in the 

United States 

Today, the art industry is considered the largest legal, unregulated industry 

in the United States, permitting purchasers to buy pieces without any record of the 

transactions, even when large amounts of cash are involved.181 In effect, buyers and 

sellers can remain anonymous raising the concern that corporate veils are being 

used “to manipulate markets, evade taxes, [and] launder money.”182 

Illegal activity, including money laundering, in the art market is made 

possible, in part, because the art market is generally not subject to the 

transparency requirements of the Bank Secrecy Act (“BSA”).183 The BSA was 

enacted by Congress in the 1970s to protect the United States from money 

laundering and corruption by imposing transparency requirements on many types 

of cash transactions.184 It includes “requirements for reporting, customer 

identification and due diligence, recordkeeping, and the establishment and 

maintenance of BSA/AML compliance programs.”185 The BSA’s reporting 

requirements mandate, for example, that financial institutions file suspicious 

 

176 Anna Brady, European Union tightens anti-money-laundering rules in the art market, ART 

NEWSPAPER (Apr. 30, 2018), https://www.theartnewspaper.com/news/eu-extends-anti-moneylaundering-rules. 

177 Id. 

178 Vera Jourova, Strengthened EU rules to prevent money laundering and terrorism financing, 

EUROPEAN COMMISSION (2018), 

http://ec.europa.eu/newsroom/just/document.cfm?action=display&doc_id=48935. 

179 Scott Reyburn, Britain Moves to Regulate Its Art Trade. Bring Your ID., N.Y. TIMES (Jan. 10, 

2020), https://www.nytimes.com/2020/01/10/arts/design/uk-art-money-laundering.html. 

180 Lawrence Kaye & Howard Spiegler, The Art Market: Would More Regulation Spoil All the Fun, 

ART & ADVOCACY, (Vol. 23 2016), http://www.herrick.com/publications/the-art-market-would-moreregulation-spoil-all-the-fun/. 

181 Kris Hollington, After Drugs and Guns, Art Theft Is The Biggest Criminal Enterprise in the World, 

NEWSWEEK (Jul. 22, 2014), https://www.newsweek.com/2014/07/18/after-drugs-and-guns-art-theftbiggest-criminal-enterprise-world-260386.html. 

182 Scott Reyburn, What the Panama Papers Reveal About the Art Market, N.Y. TIMES (Apr. 11, 

2016), https://www.nytimes.com/2016/04/12/arts/design/what-the-panama-papers-reveal-about-theart-market.html. 

183 Bank Secrecy Act of 1982, Pub. L. No. 97-258, codified at 31 U.S.C. § 5304. 

184 Id. 

185 RENA S. MILLER & LIANA W. ROSEN, CONG. RESEARCH SERV., R44776, ANTI-MONEY LAUNDERING:

AN OVERVIEW FOR CONGRESS, 5 (2017), https://www.crs.gov/reports/pdf/R44776.
37 

activity reports (“SARs”) regarding “any suspicious transaction relevant to a 

possible violation of law or regulation.”186 In addition to SARs, Currency 

Transaction Reports (“CTRs”) must be submitted for “individuals transporting large 

amounts of cash internationally, persons with large foreign financial interests, and 

nonfinancial entities conducting large cash transactions.”187 

 The art industry in the United States is not required to comply with the 

requirements of the BSA.188 Art dealers in the United States continue to operate 

without any regulated or structured mechanisms for transparently buying or selling 

art, including mandatory systems for the declaration or transfer of ownership.189 

Moreover, insider-trading rules applicable to the commodities market do not apply 

to art, allowing collectors to buy works of art based on privileged information.190 In 

addition, “there is currently no regulation that specifically targets money 

laundering in the art market, nor does the art market itself subject professional art 

intermediaries to any standards of professionalism that directly address money 

laundering.”191 The lack of regulatory requirements or voluntary industry-wide 

standards in the United States means “art dealers have little incentive other than 

good faith to flag possible money laundering schemes involving artwork for law 

enforcement.”192 

 Despite the weaknesses in U.S. AML safeguards for the art market, 

participants in the art industry may be subject to other restrictions including: 

import and export regulations; cultural property regulations; data protection and 

privacy laws; state anti-money laundering laws; tax regulations; and local auction 

regulations.193 If they buy or sell art outside of the United States, they may also be 

subject to non-U.S. anti-money laundering controls.194

 

186 Id. at 6. 

187 Id. 

188 Lawrence Kaye & Howard Spiegler, The Art Market: Would More Regulation Spoil All the Fun, 

ART & ADVOCACY, (Vol. 23 2016), http://www.herrick.com/publications/the-art-market-would-moreregulation-spoil-all-the-fun/. 

189 DELOITTE, Art and Finance Report 170 (5th ED. 2017), 

https://www2.deloitte.com/content/dam/Deloitte/at/Documents/finance/art-and-finance-report2017.pdf. 

190 Marc Speigler, Time To Reform the Art Market?, FORBES (May 30, 2005), 

https://www.forbes.com/2005/05/30/cx_0530conn_ls.html#69dcd7715f0a. 

191 Alessandra Dagirmanjian, Laundering the Art Market: A Proposal for Regulating Money 

Laundering Through Art in the United States, 29 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. 687, 

695 (2019). 

192 Id. at 696. 

193 SOTHEBY’S, 2019 Annual Report 56 (2019), 

https://www.sothebys.com/content/dam/sothebys/PDFs/Sothebys-Annual-Report12.31.2019.pdf?locale=en. 

194 Vera Jourova, Strengthened EU rules to prevent money laundering and terrorism financing, 

EUROPEAN COMMISSION (2018), 

http://ec.europa.eu/newsroom/just/document.cfm?action=display&doc_id=48935; Scott Reyburn, 
38 

While members of Congress have introduced legislation to add art and 

antiquities to the list of industries that must comply with the BSA,195 Congress has 

not required comprehensive transparency in the art market.196

3. The Applicability of the Berman Amendment to High-value Art 

Questions have arisen about whether U.S. sanctions policy could help 

address at least some aspects of the art industry’s problems by requiring artists and 

dealers to ensure they are not engaging in transactions with sanctioned individuals 

or entities.197 To gauge the feasibility of that approach, the Subcommittee inquired 

whether the U.S. sanctions regime applies to high-value art. 

 As described above, IEEPA allows the President to issue sanctions against 

specific categories of individuals and entities during a national emergency.198 

IEEPA authority does not, however, allow the President “to regulate or prohibit, 

directly or indirectly” “the importation from any country, or the exportation to any 

country ... of any information or informational materials, including but not limited 

to, publications, films, posters, phonograph records, photographs, microfilms, 

microfiche, tapes, compact disks, CD ROMs, artworks, and news wire feeds.”199 

The Subcommittee asked the Treasury Department how high-value art is 

treated under IEEPA, including whether it is exempt from IEEPA controls under 

the informational materials exception in the Berman Amendment. In response, on 

October 3, 2019, the Treasury Department stated: 

Earlier [in 2019], Treasury undertook a review of the issues related to 

your inquiry. That review is ongoing and may result in the issuance of 

new or further pertinent guidance. Accordingly, it would be premature 

to provide the Subcommittee a formal position on how the Berman 

Amendment to the International Emergency Economic Powers Act may 

apply in the context of the matters you raise, particularly since any 

 

Britain Moves to Regulate Its Art Trade. Bring Your ID., N.Y. TIMES (Jan. 10, 2020),

https://www.nytimes.com/2020/01/10/arts/design/uk-art-money-laundering.html. 

195 See, e.g., Coordinating Oversight, Upgrading & Innovating Technology, & Examiner Reform Act, 

H.R. 2514, 116th Cong. (2019); Wallace Ludel & Margaret Carrigan, US House of Representatives 

passes an anti-money laundering bill that could affect art and antiquities dealers, THE ART 

NEWSPAPER (Oct. 25, 2019), https://www.theartnewspaper.com/news/us-house-of-representativespasses-an-anti-money-laundering-bill-that-could-affect-art-and-antiquities-dealers.

196 Barden Prisant, The FBI Thinks You’re a Money Launderer, And Other Perils of Art Collecting, 

FORBES (Jan. 10, 2020), https://www.forbes.com/sites/bardenprisant/2020/01/10/the-fbi-thinks-yourea-money-launderer-and-other-perils-of-art-collecting/#589067023957. 

197 Alice McCool, Could Trump put an end to the Iranian art boom?, CNN (Sept. 25, 2018), 

https://www.cnn.com/style/article/is-the-iran-art-boom-under-threat/index.html. 

198 50 U.S.C. § 1703(b)(2). 

199 50 U.S.C. § 1702(b)(3). 
39 

new or further guidance could have broader implications. 

Nevertheless, we are taking the concerns you have expressed seriously 

in the context of that review. We will update you as soon as we are in 

a position to do so.200

On July 22, 2020, the Treasury Department provided the update and stated: 

Our review confirmed that Treasury does not believe the Berman 

Amendment is a categorical bar to the application of IEEPA-based 

sanctions to transactions involving artwork. Evaluation of a specific 

license application relating to designated persons—including one that 

implicates Berman Amendment materials—must depend on the 

particular facts and circumstances presented. OFAC intends to issue 

additional public guidance on this issue in the near term.201

The Subcommittee has continued to examine money laundering 

vulnerabilities in the U.S. art market in order to gauge the extent of the problem, 

how sanctioned individuals may be exploiting the market’s vulnerabilities to 

launder suspect funds, and what action should be taken to detect, stop, and prevent 

ongoing misuse of the U.S. art market. 

4. Shell Companies 

Shell companies play a significant role in contributing to anti-money 

laundering vulnerabilities in the U.S. art industry. Treasury’s Financial Crimes 

Enforcement Network (“FinCEN”) defines shell companies as “typically non-publicly 

traded corporations or limited liability companies (“LLCs”) that have no physical 

presence beyond a mailing address and generate little-to-no independent economic 

value.”202 

Shell companies are generally straightforward and inexpensive to create in 

all 50 states and offshore jurisdictions.203 This process involves completing online 

forms and making an online payment, functions that can be executed by 

 

200 Letter from Brian T. McGuire, U.S. Dep’t of Treasury, Assistant Secretary Office of Legislative 

Affairs to Chairman Rob Portman (Oct. 3, 2019). 

201 Letter from Frederick W. Vaughan, U.S. Dep’t of Treasury, Principal Deputy Assistant Secretary 

Office of Legislative Affairs to Chairman Rob Portman (Jul. 22, 2020). 

202 U.S. Dep’t of Treasury, Advisory on the Iranian Regime’s Illicit and Malign Activities and 

Attempts to Exploit the Financial System, 5 n.12 (Oct. 11, 2018), 

https://www.fincen.gov/sites/default/files/advisory/2018-10-

11/Iran%20Advisory%20FINAL%20508.pdf. 

203 Joe Pinsker, Are Shell Companies Useful for the People Who Aren’t Ludicrously Rich?, ATLANTIC, 

(Apr. 8, 2016), https://www.theatlantic.com/business/archive/2016/04/how-rich-do-you-have-to-be-fora-shell-company-to-be-useful/477384/. 
40 

individuals, lawyers, or third parties.204 Despite a shell company’s lack of 

employees and office space, “formation agents” or “company service providers” can 

provide packages and operational services including mail forwarding, business 

licenses, local street addresses, telephone listings, and assistance with opening local 

and foreign bank accounts.205

Individuals and companies can use shell companies for legitimate purposes, 

such as holding assets, making pooled investments, executing reverse mergers or 

facilitating transfers.206 They can also be misused to hide the identities of 

criminals, move illicit proceeds of crime, and commit a wide range of misconduct, 

including money laundering, human or drug trafficking, fraud, tax evasion, and 

corruption.207 

In the art world, shell companies are frequently used when buying or selling 

valuable pieces of art.208 For example, shell companies can serve as an 

intermediary allowing buyers and sellers to shift funds from one jurisdiction to 

another.209 But shell companies can also be used to conceal the identity of the 

buyers and sellers, the source and control of assets, and move suspect funds. In this 

way, shell companies can be used as financial conduits for the transfer of funds and 

assets, at times without alerting financial institutions or law enforcement to the 

parties behind the transactions.210 

Shell companies can provide this anonymity because there is no requirement 

that beneficial owners be identified during the entity’s formation, opening of 

financial accounts, or transfer of funds.211 Tom Cardamone, managing director of 

the nonprofit research group Global Financial Integrity, illustrated the efforts some 

parties make to conceal the individuals behind a shell company stating, “you can 

 

204 Malia Wollan, How to Set Up a Shell Company, N.Y. TIMES (Nov. 7, 2019), 

https://www.nytimes.com/2019/11/07/magazine/how-to-set-up-a-shell-company.html. 

205 U.S. Dep’t of Treasury, The Role of Domestic Shell Companies in Financial Crime and Money 

Laundering: Limited Liability Companies, 5−6 (Nov. 2006), 

https://www.fincen.gov/sites/default/files/shared/LLCAssessment_FINAL.pdf. 

206 Drake Forester, The Truth About Shell Companies: The Good. The Bad, and the Ugly, ALL 

BUSINESS, https://www.allbusiness.com/shell-companies-legitimate-uses-corruption-105041-1.html. 

207 Combatting Illicit Financing by Anonymous Shell Companies: Hearing Before the S. Comm. on 

Banking, Housing, & Urban Affairs, 116th. Cong. (2019) (statement of Steven M. D’Antuono, Act. 

Dep. Assist. Director, Fed. Bureau of Investigation), https://www.fbi.gov/news/testimony/combatingillicit-financing-by-anonymous-shell-companies. 

208 Scott Reyburn, What the Panama Papers Reveal About the Art Market, N.Y. TIMES ̧ (Apr. 11, 

2016), https://www.nytimes.com/2016/04/12/arts/design/what-the-panama-papers-reveal-about-theart-market.html. 

209 Casey Michel, The U.S. Is a Good Place for Bad People to Stash Their Money, THE ATLANTIC, (Jul. 

13, 2017), https://www.theatlantic.com/business/archive/2017/07/us-anonymous-shellcompanies/531996/. 

210 STAFF OF S. PERMANENT SUBCOMM. ON INVESTIGATIONS, 111TH CONG., REP. ON KEEPING FOREIGN 

CORRUPTION OUT OF THE UNITED STATES: FOUR CASE HISTORIES 2, 72 (Comm. Print 2010). 211 Id. at 72. 
41 

create an anonymous shell in one jurisdiction that controls an anonymous trust in a 

completely different country that also controls a bank account in a third country.”212 

C. The Four Major Auction Houses 

High-value art sales generally occur through a private sale or a public 

auction.213 Sotheby’s, Christie’s, Phillips, and Bonhams are among the most wellknown auction houses in the world, each dating back to the 1700s.214 In addition to 

the largest auction houses, there are over 500 second-tier auction houses that play a 

significant role in national and international markets, and numerous small auction 

houses that provide services to domestic markets.215 Since the highest value 

transactions are generally processed by the most well-known auction houses, this 

report concentrates on their role within the U.S. art market. 

1. Sotheby’s 

In 1744, Samuel Baker established Sotheby’s in London.216 At the outset, the 

company became successful by auctioning books, and later expanded its business to 

prints, coins, medals, and antiquities.217 After World War I, Sotheby’s began to 

focus on “the sale of pictures and decorative works of art.”218 In 1964, Sotheby’s 

started a period of global expansion after its purchase of Parke-Bernet, the largest 

fine art auction house in the United States at the time.219 Headquartered in New 

York, Sotheby’s currently has ten salesrooms around the world, including in 

London, Hong Kong, and Paris.220 Beyond those salesrooms, Sotheby’s BidNow 

program permits remote clients to participate in online auctions around the 

world.221 Notable Sotheby’s auctions include the 2012 sale of Edvard Munch’s The 

 

212 All Things Considered: Want To Set Up a Shell Corporation To Hide Your Millions? No Problem,

NPR (Apr. 13, 2016), https://www.npr.org/2016/04/13/474101127/want-to-set-up-a-shell-corporationto-hide-your-millions-no-problem. 

213 Samuel Rubenfeld, Art World’s Response to Money-Laundering Concerns Draws Critics, WALL ST.

J. (Feb. 27, 2017), https://blogs.wsj.com/riskandcompliance/2017/02/27/art-worlds-response-to-moneylaundering-concerns-draws-critics/. 

214 Charlotte Zajicek, The history of auctions: from ancient Greece to online houses, THE TELEGRAPH

(Oct. 7, 2016), https://www.telegraph.co.uk/art/online-auctions/history-of-auctions/; Top 5 Auction 

Houses Around World, AC. COOPER (Jun. 26, 2019), http://www.ac-cooper.com/top-5-auction-housesaround-world/. 

215 ART BASEL & UBS, The Art Market 2020 131 (2020), 

https://d2u3kfwd92fzu7.cloudfront.net/The_Art_Market_2020-1.pdf. 

216 About Us: The History of Sotheby’s Auction House, SOTHEBY’S 

https://www.sothebys.com/en/about/our-history?locale=en. 

217 Id. 

218 Id. 

219 Id. 

220 SOTHEBY’S, 2019 Annual Report 13, 57 (2019), 

https://www.sothebys.com/content/dam/sothebys/PDFs/Sothebys-Annual-Report12.31.2019.pdf?locale=en. 

221 Id. at 13. 
42 

Scream, as well as the collections of Jacqueline Kennedy Onassis and Andy 

Warhol.222 As of 2018, Sotheby’s employed 1,713 people.223 In 2019, Sotheby’s 

produced total revenues of $991,660,000.224 

Sotheby’s business is divided into two parts—an agency segment and a 

finance segment.225 The agency segment operates Sotheby’s auction and private 

sale business.226 The finance segment “earns interest income and associated fees 

through art-related financing activities by making loans that are secured by works 

of art.”227 In January 2016, Sotheby’s acquired Art Agency Partners which provides 

art advisory services and strategic guidance to art collectors, artists, and artists’ 

estates.228

 In June 2019, Sotheby’s announced a $3.7 billion merger agreement with 

BidFair USA, a company owned by the French telecom mogul and art collector 

Patrick Drahi.229 Prior to the merger, Sotheby’s was the oldest publicly traded 

company on the New York Stock Exchange (“NYSE”), “predating the [exchange] 

itself by 48 years.”230 After the deal with BidFair closed, however, Sotheby’s 

returned “to private ownership after 31 years of trading publicly on the NYSE.”231 

Sotheby’s CEO, Tad Smith, stated the acquisition “will provide Sotheby’s with the 

opportunity to accelerate the successful program of growth initiatives of the past 

several years in a more flexible private environment.”232 

 

 After Sotheby’s announced the merger, two Sotheby’s shareholders filed suit 

against the auction house alleging failure to disclose in Sotheby’s proxy statement 

 

222 About Us: The History of Sotheby’s Auction House, SOTHEBY’S 

https://www.sothebys.com/en/about/our-history?locale=en. 

223 SOTHEBY’S, 2018 Annual Report 8 (2018), 

http://www.sothebys.com/content/dam/sothebys/PDFs/2018-annual-report.pdf?locale=en. 224 SOTHEBY’S, 2019 Annual Report 8 (2019), 

https://www.sothebys.com/content/dam/sothebys/PDFs/Sothebys-Annual-Report12.31.2019.pdf?locale=en. 

225 Id. at 3. 

226 Id. 

227 Id. 

228 Id. 

229 Diana Wierbicki et al, Sotheby’s Goes Private: What It Means for the Art Market, WEALTH MGMT. 

(Jun. 25, 2019), https://www.wealthmanagement.com/high-net-worth/sothebys-goes-private-what-itmeans-art-market. 

230 Sotheby’s Celebrates Its 275th Year With Ringing of the Opening Bell at the New York Stock 

Exchange, SOTHEBY’S (Mar. 11, 2019), https://www.sothebys.com/en/articles/sothebys-celebrates-its275th-year-by-ringing-in-the-new-york-stock-exchange. 

231 Margaret Carrigan, Sotheby’s ceases publicly trading on the New York Stock Exchange as its 

$3.7bn sale to Patrick Drahi closes, ART NEWSPAPER (Oct. 3, 2019), 

https://www.theartnewspaper.com/news/sotheby-s-ceases-publicly-trading-on-the-new-york-stockexchange-as-its-usd3-7bn-sale-to-patrick-drahi-closes. 

232 Diana Wierbicki et al, Sotheby’s Goes Private: What It Means for the Art Market, WEALTH MGMT. 

(Jun. 25, 2019), https://www.wealthmanagement.com/high-net-worth/sothebys-goes-private-what-itmeans-art-market.
43 

complete and accurate information regarding the company’s valuation and 

background of the company’s proposed sale to affiliates of Mr. Drahi.233 In that suit, 

the shareholders claimed Sotheby’s filed materially misleading disclosures with the 

SEC.234 Sotheby’s stated in response that, “the vast majority of all public company 

mergers over $100 million are the subject of shareholder litigation [and] the 

lawsuits filed were expected and routine.”235 These cases were subsequently 

dismissed or settled around 2019. 

2. Christie’s 

Christie’s was founded by James Christie in London in 1766.236 Early in the 

company’s history, Christie’s benefited from the instability caused by the French 

Revolution as many French pieces of art made their way to the British market.237 

In 1824, Christie’s gained additional notoriety with the opening of the National 

Gallery in London, which featured numerous pieces purchased from Christie’s.238 

In 1977, Christie’s entered the U.S. market, opening a salesroom in New York.239 

Today, Christie’s has salerooms in London, New York, Paris, Geneva, Milan, 

Amsterdam, Dubai, Zurich, Hong Kong, and Shanghai.240 Each year, the company 

holds roughly 350 auctions in over 80 categories, including jewelry, fine arts, 

photographs, and wine.241 Notable Christie’s auctions include Elizabeth Taylor’s 

jewelry collection, George Washington’s personal copy of the U.S. Constitution and 

Bill of Rights, and the $450 million sale of Leonardo da Vinci’s Salvator Mundi.242 

In addition to public auctions, Christie’s represents clients in private sales.243 

In 2005, Christie’s entered the digital market allowing potential buyers to bid 

online through Christie’s Live.244 

 

233 Bob Van Voris & Katya Kazakina, Sotheby’s Investors Sue to Block $2.7 Billion BidFair Offer, 

BLOOMBERG (Jul. 19, 2019), https://www.bloomberg.com/news/articles/2019-07-19/sotheby-s-holderssue-over-2-7-billion-bidfair-acquisition. 

234 Id. 

235 Id. 

236 About Christie’s, CHRISTIE’S, https://www.christies.com/about-us/welcome-to-christies. 

237 The History of Christie’s Auction House, CHRISTIE’S, https://www.christies.com/auctions/thehistory-of-christies-auction-house. 

238 Id. 

239 Id. 

240 About Us: The History of Sotheby’s Auction House, SOTHEBY’S 

https://www.sothebys.com/en/about/our-history?locale=en. 

241 Id. 242 The History of Christie’s Auction House, CHRISTIE’S, https://www.christies.com/auctions/thehistory-of-christies-auction-house. 

243 About Christie’s, CHRISTIE’S, https://www.christies.com/about-us/welcome-to-christies. 244 The History of Christie’s Auction House, CHRISTIE’S, https://www.christies.com/auctions/thehistory-of-christies-auction-house. 
44 

The company is now owned by French billionaire François Pinault through 

his holding company Groupe Artémis.245 In 2018, Christie’s led the global art 

market, generating $7 billion in total sales, “the highest ever in the history of the 

auction house.”246 In 2019, the company generated $5 billion in auction sales 

alone.247

In recent years, Christie’s started its own art storage business through its 

subsidiary Christie’s Fine Art Storage Services with facilities in Singapore and 

Brooklyn.248 The company also recalibrated its business model to better 

accommodate Asian buyers’ increased participation in the art market.249 In 2017, 

Christie’s sales in Asia increased 39 percent, which ultimately represented 31 

percent of the global market.250 In part due to these increases and the expansion of 

its online activities, Christie’s closed its South Kensington branch in London and 

scaled back activities in Amsterdam.251 

Beyond its substantial presence in Asia, Christie’s has a longstanding 

relationship with the Russian market that dates back to the 1770s. In 1778, for 

example, James Christie sold Sir Robert Walpole’s art collection to Empress 

Catherine the Great, and this collection remains in the Hermitage to this day.252 

The strength of this relationship has endured and in 2016, Christie’s had a 62 

percent share “of the global market for Russian works of art.”253 The company also 

holds the record for “the highest price ever paid for a Russian painting at public 

auction – Kazimir Malevich’s Suprematist Composition, which sold for $85,812,500 

in 2018.”254 

 

245 Ted Loos, Auction Houses Find New Ways to Survive, N.Y. TIMES (Oct. 12, 2017), 

https://www.nytimes.com/2017/10/12/arts/christies-sothebys-auctions.html. 

246 Christie’s continues to lead the global art market, CHRISTIE’S (Feb. 7, 2019), 

https://www.christies.com/features/Christies-continues-to-lead-the-global-art-market-9681-1.aspx. 

247 Nicky Eaton, Christie’s Global Auction Channel Sales Total £3.9 Billion/US $5.0 Billion in 2019, 

ASSOC. PRESS (Dec. 20, 2019), 

https://apnews.com/Business%20Wire/afa3d55c49974af6ac2a34f377da8c6a. 

248 Kelly Crow, The Ultimate Walk-In Closet, WALL ST. J. (Apr. 26, 2010), 

https://www.wsj.com/articles/SB10001424052748703709804575202083586359768#. 

249 Christie’s sales in 2017 total $6.6 billion, CHRISTIE’S (Feb. 2, 2018), 

https://www.christies.com/features/Christies-2017-results-8870-1.aspx. 

250 Id. 

251 Scott Reyburn, Christie’s to Close a London Salesroom and Scale Back in Amsterdam, N.Y. TIMES

(Mar. 8, 2017), https://www.nytimes.com/2017/03/08/arts/design/christies-to-close-a-londonsalesroom-and-scale-back-in-amsterdam.html. 

252 The History of Christie’s Auction House, CHRISTIE’S, https://www.christies.com/auctions/thehistory-of-christies-auction-house. 

253 CHRISTIE’S, Russian Art 1 (2016), https://www.christies.com/media-library/pdfs/2017/russian-artmarket-report-2016-rev.pdf. 

254 50 years of Russian Art masterpieces at Christie’s, CHRISTIE’S (Dec. 11, 2019), 

https://www.christies.com/features/50-years-of-Russian-art-at-Christies-9747-3.aspx. 
45 

3. Phillips 

Harry Phillips founded Phillips Auction House (“Phillips”) in 1796.255 

Phillips first achieved “international recognition by selling paintings from the estate 

of Queen Marie Antoinette and household items from Napoleon Bonaparte.”256 The 

company was eventually passed to Harry’s son and remained with the family 

through the 1880s and into the early 1900s.257 By the 1970s, Phillips expanded its 

catalogue to include “fine art, furniture, and estate collections.”258 

In 1999, Phillips was purchased by Bernard Arnualt, chairman of Louis 

Vuitton Moet Hennessey, who subsequently merged the company with the auction 

house of private art dealers Simon de Pury and Daniela Luxembourg.259 In 2001, 

Phillips and Bonhams & Brooks confirmed they would merge all operations in Great 

Britain to trade under the name Bonhams.260 This restructuring allowed Phillips, 

de Pury & Luxembourg to concentrate on the high end market and transfer their 

lower-end art sales to Bonhams.261 In 2002, Simon de Pury took majority control of 

the company.262 Six years later, Mercury Group, a luxury retail company, acquired 

a majority share in the company, and later obtained full control in 2013.263 

 Phillips is headquartered in London, where it conducts sales in a limited 

number of categories—contemporary art, photographs, furniture, watches, and 

jewelry—and advertises itself as “the most dynamic and forward-thinking auction 

house.”264 The company’s business also includes special exhibitions, private sales, 

and advisory and consulting services for private estates, corporate clients, and 

museums.265 Phillips has ten locations around the globe, including New York, Hong 

Kong, Geneva, Moscow, Paris, and Seoul.266 In 2019, Phillips had total sales 

revenue of $908 million, “with private sales ending the year at $171.8 million and 

marking a 34 percent gain from the previous year.”267

 

255 About Us, PHILLIPS, https://www.phillips.com/about. 

256 Id. 

257 Id. 

258 Id. 

259 Id. 

260 Julia Finch, Bonhams and Phillips confirm merger, THE GUARDIAN (Jul. 13, 2001), 

https://www.theguardian.com/business/2001/jul/14/6. 

261 Id; Phillips, de Pury & Luxembourg- Company Profile, Information, Business Description, History, 

Background Information on Phillips, de Pury & Luxembourg, REFERENCE FOR BUSINESS,

https://www.referenceforbusiness.com/history2/31/Phillips-de-Pury-Luxembourg.html. 

262 About Us, PHILLIPS, https://www.phillips.com/about. 

263 Id. 264 Id. 

265 Id. 266 Locations, PHILLIPS, https://www.phillips.com/locations. 

267 Phillips’ Overall Sales Total $908 Million in 2019, PHILLIPS (Feb. 4, 2020), 

https://www.phillips.com/press/release/phillips-overall-sales-total-908-million-in-2019. 
46 

4. Bonhams 

Thomas Dodd established Bonhams in London in 1793.268 In the 1850s, 

George Bonham formed a partnership with Dodd’s successor George Jones, calling 

the company Jones & Bonham.269 In 2000, after five generations, the company was 

re-named Bonhams & Brooks following its acquisition by Brooks auction house.270 

Shortly thereafter in 2001, Brooks acquired the British operations of its rival 

company Phillips.271 A year later, Bonhams acquired the American auction house 

Butterfields, further expanding its global reach.272 In September 2018, the private 

equity firm Epiris purchased Bonhams for an undisclosed amount.273 

Bonhams “sells more jewelry lots per year than any other international 

house,” making up more than 40 percent of the company’s sales.274 Outside of 

jewelry, Bonhams specializes in low to mid-range art and antiquities as well as 

classic cars.275 The company holds more than 250 sales each year at auction venues 

around the world including Edinburgh, Hong Kong, London, New York, and 

Sydney.276

5. Online Auctions during the COVID-19 Pandemic 

In March 2020, the United States took steps to respond to the COVID-19 

pandemic with a number of jurisdictions issuing stay-at-home orders to prevent the 

spread of the virus. Sotheby’s, Christie’s, and Phillips shifted to online auction 

formats as in-person events were cancelled.277 To simulate an in-person auction 

experience, Sotheby’s filmed their auctioneer “facing a fleet of television screens so 

 

268 About Us, BONHAMS, https://www.bonhams.com/about_us/. 

269 Id. 

270 Id.; Chris Maxwell, Bonhams auction house, DIRECTOR UK (Apr. 1, 2014), 

https://www.director.co.uk/bonhams-auction-house-company-profile-1-april-2014/. 

271 About Us, BONHAMS, https://www.bonhams.com/about_us/. 

272 The Art Newspaper, Bonhams Buys Butterfields, FORBES (Aug. 6, 2002), 

https://www.forbes.com/2002/08/06/0806conn.html#493a313732d8. 

273 Anthony DeMarco, Bonhams Sold To Private Equity Firm, FORBES (Sept. 4, 2018), 

https://www.forbes.com/sites/anthonydemarco/2018/09/04/bonhams-sold-to-private-equityfirm/#5318c8261f4b. 

274 Id. 

275 Scott Reyburn, The Art World’s Elephant in the Room, N.Y. TIMES (Sept. 21, 2018), 

https://www.nytimes.com/2018/09/21/arts/design/elephant-graph-income-inequality.html. 

276 Javier Espinoza & James Pickford, Bonhams snapped up by private equity group Epiris, FIN.

TIMES (Sept. 4, 2018), https://www.ft.com/content/9052fcee-b064-11e8-8d14-6f049d06439c; Locations, 

BONHAMS, https://www.bonhams.com/locations/. 

277 Kelly Crow, Sotheby’s to Offer $60 Million Painting Online in New Format, WALL ST. J. (May 29, 

2020), https://www.wsj.com/articles/sotheby-s-to-offer-60-million-painting-online-in-new-format11590769933; Scott Reyburn, Christie’s New Auction Technique: The Global Gavel, N.Y. TIMES (Jul. 

10, 2020), https://www.nytimes.com/2020/07/10/arts/design/christies-auction.html. 
47 

viewers could watch as he [fielded] collectors’ phone bids placed via colleagues.”278 

The auctioneer also considered real-time bids placed on the Sotheby’s website.279 

 

 These online auctions were profitable for all three houses.280 Some 80,000 

people joined Christie’s July 10, 2020 auction, which sold 79 paintings and brought 

in $421 million in overall sales.281 This includes Roy Lichtenstein’s Nude with 

Joyous Painting that sold for $46.2 million to an anonymous bidder, roughly $16 

million more than its expected sale price.282 Sotheby’s auction on June 29, 2020 

brought in $234.9 million in total sales, including $85 million for a trio of Francis 

Bacon works, Triptych Inspired by the Oresteia of Aeschylus.283 The three Bacon 

paintings also sold to an anonymous telephone bidder.284

 Phillips held their own hybrid in-person and online auction on July 2, 2020 

bringing $41 million.285 Phillips CEO Ed Dolman remarked that the “sale was a 

resounding statement about the strength of our market, . . . as there’s a certain 

amount of huge pent-up demand if you think about the amount of money that would 

have been spent in the global art market.”286 Dolman added further, “it’s quite 

obvious to us there’s a significant amount of money on the sidelines waiting to get a 

chance to get back in the art market.”287

D. Art Dealers, Art Galleries, and Art Fairs 

Auction houses are not the exclusive means by which collectors purchase 

high-value works of art. Buyers also rely on art dealers to build their collections 

 

278 Kelly Crow, Sotheby’s to Offer $60 Million Painting Online in New Format, WALL ST. J. (May 29, 

2020), https://www.wsj.com/articles/sotheby-s-to-offer-60-million-painting-online-in-new-format11590769933 

279 Id. 

280 Kelly Crow, Roy Lichtenstein’s Nude Buoys Christie’s $421 Million Live-Stream Sale, WALL ST. J. 

(Jul. 10, 2020), https://www.wsj.com/articles/roy-lichtensteins-nude-buoys-christie-s-421-million-livestream-sale-11594419000; Contemporary Art Evening Auction, SOTHEBY’S (Jun. 29, 2020), 

https://www.sothebys.com/en/buy/auction/2020/contemporary-art-evening-auction?locale=en; Nate 

Freeman, Phillips Scored $41 Million in a White-Glove Contemporary Evening Sale as the Auction 

House Got Hip to New Online Landscape, ARTNET NEWS (Jul. 2, 2020), 

https://news.artnet.com/market/phillips-evening-july-2020-1892250. 

281 Kelly Crow, Roy Lichtenstein’s Nude Buoys Christie’s $421 Million Live-Stream Sale, WALL ST. J. 

(Jul. 10, 2020), https://www.wsj.com/articles/roy-lichtensteins-nude-buoys-christie-s-421-million-livestream-sale-11594419000. 

282 Id. 

283 Kelly Crow, Sotheby’s Brings Home the Bacon, WALL ST. J. (Jun. 29, 2020), 

https://www.wsj.com/articles/sothebys-brings-home-the-bacon-11593489255. 

284 Id. 285 Nate Freeman, Phillips Scored $41 Million in a White-Glove Contemporary Evening Sale as the 

Auction House Got Hip to New Online Landscape, ARTNET NEWS (Jul. 2, 2020), 

https://news.artnet.com/market/phillips-evening-july-2020-1892250. 

286 Id. 

287 Id. 
48 

through private sales.288 In 2019, aggregate dealer sales accounted for 58 percent of 

the art market by value, in contrast with auction sales, which claimed only 42 

percent.289 In private sales, art dealers serve as a liaison between artists or current 

owners and potential purchasers.290 In this role, and in exchange for a percentage 

of each artwork sold, dealers often “manage an artist’s sales, network with 

collectors and curators, and seek to ensure the longevity of an artist’s career by 

mounting exhibitions” on behalf of their artists.291

Traditionally, art dealers conduct private sales through art galleries.292 In 

2019 for example, 50 percent of dealer sales were made in galleries; the remaining 

50 percent were divided between art fairs (45 percent) and online purchases (5 

percent).293 Galleries represent artists through promotional activities, hosting 

exhibitions, and ultimately selling their work.294 Primary market dealers sell works 

by living artists while secondary-market dealers re-sell works “on behalf of 

collectors, institutions, and estates.”295 Because auction houses tend to focus on the 

secondary market, galleries execute many first-time sales and as a result play an 

influential role in determining the value of individual pieces.296 

Nevertheless, the historical dominance of art galleries has declined with the 

increasing popularity of art fairs. Unlike the traditional gallery, which operates 

from a fixed location, art fairs allow for collaboration between dealers and gallery 

owners who come together for a limited time to show a wide range of pieces at 

different price points.297 Art fairs provide valuable networking opportunities, 

increased exposure for artists, and a bolstered image for host cities, which benefit 

 

288 ART BASEL & UBS, The Art Market 2018 30 (2018), https://www.artbasel.com/about/initiatives/theart-market. 

289 ART BASEL & UBS, The Art Market 2020 32 (2020), 

https://d2u3kfwd92fzu7.cloudfront.net/The_Art_Market_2020-1.pdf.

290 Amy Zipkin, A Lifetime of Making Art, but New to Selling It Online, N.Y. TIMES (Feb. 9, 2018), 

https://www.nytimes.com/2018/02/09/business/lifetime-making-art-new-to-selling-online.html. 

291 Zoe Goetzmann, These Artists Jump-Started Their Careers by Selling Directly to Collectors on 

Instagram, Artsy (Nov. 26, 2018), https://www.artsy.net/article/artsy-editorial-artists-jump-startedcareers-selling-directly-collectors-instagram. 

292 ART BASEL & UBS, The Art Market 2018 178 (2018), 

https://www.artbasel.com/about/initiatives/the-art-market. 

293 ART BASEL & UBS, The Art Market 2020 193 (2020), 

https://d2u3kfwd92fzu7.cloudfront.net/The_Art_Market_2020-1.pdf. 

294 Anna Louie Sussman, How Galleries Support Their Artists, ARTSY (Apr. 18, 2017), 

https://www.artsy.net/article/artsy-editorial-galleries-support-artists. 

295 ART DEALERS ASSOCIATION OF AMERICA, COLLECTOR’S GUIDE 15 (45th ed. 2007), 

https://web.archive.org/web/20131008045449/http://www.artdealers.org/dnloads/adaa_guide.pdf. 

296 Allison Schrager, High-end art is one of the most manipulated markets in the world, QUARTZ (Jul. 

11, 2013), https://qz.com/103091/high-end-art-is-one-of-the-most-manipulated-markets-in-the-world/. 

297 ART BASEL & UBS, The Art Market 2018 190−191 (2018), 

https://www.artbasel.com/about/initiatives/the-art-market. 
49 

from increased tourism.298 Fairs also expose current collectors to many different 

galleries and artists in one location, therefore avoiding the inconvenience of 

traveling between different locations.299 The 2019 Art Basel Miami Beach art fair, 

for example, hosted 269 galleries from 33 countries in the Miami Beach Convention 

Center.300 

E. Voluntary Anti-Money Laundering and Sanctions Programs in the 

Art Industry 

As explained earlier, under current U.S. law, the art industry is not legally 

required to comply with the same anti-money laundering requirements as certain 

financial institutions listed in the BSA.301 The BSA authorizes the Treasury 

Secretary to require those financial institutions to file “certain reports or records 

where they have a high degree of usefulness in criminal, tax, or regulatory 

investigations or proceedings, or in the conduct of intelligence or counterintelligence 

activities, including analysis, to protect against international terrorism.”302 In 

addition, the BSA states that “in order to guard against money laundering through 

financial institutions, each financial institution shall establish anti-money 

laundering programs, including, at a minimum – 

(A)the development of internal policies procedures, and controls; 

(B)the designation of a compliance officer; 

(C)an ongoing employee training program; and 

(D)an independent audit function to test programs.”303

Although the provisions of the BSA do not apply to the art industry, all U.S. 

citizens and companies must comply with U.S. sanctions programs.304 Under 

IEEPA for example, any U.S. citizen or entity that conducts business with a person 

on the SDN list is subject to criminal and civil liability.305

 

298 Y-Jean Mun-Delsalle, The Art Fair Boom Is Forever Changing the Way the Art Market Does 

Business, FORBES (Apr. 7, 2016), https://www.forbes.com/sites/yjeanmundelsalle/2016/04/07/the-artfair-boom-is-forever-changing-the-way-the-art-market-does-business/#3589bb5d6c64. 

299 James Tarmy, Art Fairs Are Popping Up Everywhere. Do They Make Any Money?, BLOOMBERG

(Mar. 6, 2018), https://www.bloomberg.com/news/articles/2018-03-06/art-fairs-are-popping-upeverywhere-who-profits. 

300 Annie Armstrong, Art Basel Miami Beach Will Feature 269 Exhibitors in December, ART NEWS

(Sept. 11, 2019), https://www.artnews.com/art-news/news/art-basel-miami-exhibitor-list-13211/. 

301 For the complete list of entities that fall under the definition of a “financial institution” and 

therefore must comply with the Bank Secrecy Act, see 31 U.S.C. § 5312 (a)(2). 

302 31 U.S.C. § 5311. 

303 31 U.S.C. § 5318(h)(1)(A)−(D). 

304 50 U.S.C. § 1705(a).

305 50 U.S.C. § 1705(b)−(c).
50 

 Despite not having a legal obligation to implement AML programs under the 

BSA, the Subcommittee found that the four biggest art auction houses described 

above all have voluntary AML programs in place. In addition, all four have 

sanctions compliance programs. This section details the voluntary AML and 

sanctions programs in place at: (1) Sotheby’s; (2) Christie’s; (3) Phillips; and (4) 

Bonhams. The Subcommittee also interviewed one private art dealer who admitted 

they operated with no AML or sanctions compliance programs in effect. 

1. Sotheby’s 

Sotheby’s informed the Subcommittee that it has a compliance department 

that oversees all issues relating to money laundering, terrorist financing, tax 

evasion, sanctions policies, and related litigation.306 

Worldwide Policy on Money Laundering, Terrorist Financing and Tax 

Evasion. Sotheby’s has a detailed, written set of rules to combat money laundering, 

terrorist financing, and tax evasion. The current policy document (the “2018 AML 

Policy”) “applies to all members of the Board of Directors, employees, consultants, 

independent contractors, and others providing services to Sotheby’s.”307 The 

document also states that “Sotheby’s is committed to strict compliance with all 

applicable laws regarding anti-money laundering, combatting terrorist financing, 

and tax evasion.”308 It further states that “if you have any concerns about the 

activity of a client or legality of a transaction in which Sotheby’s is involved you 

must raise those concerns with the Compliance Department immediately.”309

The 2018 AML Policy explains that “the single most effective tool in 

combatting money laundering or terrorist financing is to have adequate knowledge 

about our clients. We must know who our clients are regardless of whether they are 

new or existing clients, occasional or regular purchasers or consignors and the 

volume or value of the transaction activity.”310 The 2018 AML Policy explains that 

“for all clients, new or existing, we must: (a) know the true identity of the person 

or entity who owns the property or funds in question; and (b) understand the 

source of the client’s funds.”311

The 2018 AML Policy also outlines how to deal with an agent acting on behalf 

of an undisclosed principal. The document states, in pertinent part: 

 

306 Subcommittee Briefing with Sotheby’s Employees (Oct. 25, 2018). 

307 SOT-000054−78. 

308 Id. 

309 Id. 

310 Id. 

311 Id. (emphasis in original). 
51 

In the context of ordinary auction and private sale transactions with 

an agent who you know or believe is acting on behalf of a principal 

whose identity is not disclosed, we must treat the agent as our client 

for the purposes of customer due diligence and verification of 

identification. Before you engage in transactions with agents for 

undisclosed owners, (e.g., dealers who wish to keep the names of their 

clients confidential from us), you must ensure that we know and trust 

the agent concerned . . . In addition, you should confirm that the agent 

knows personally and/or has conducted appropriate due diligence on its 

clients’ identities and activities.312

The 2018 AML Policy also notes “certain clients and transactions by their 

nature pose a higher risk of money laundering/terrorist financing or tax evasion. 

You must consider the below risk factors in connection with every transaction, and 

if you believe that your client falls within any of the following categories you must 

notify the Compliance Department immediately.”313 The “higher risk indicators” 

include: “clients residing in or with property/funds sourced from high-risk 

jurisdictions, which are those jurisdictions listed in Annex B.”314 Annex B lists 38 

countries, including Russia.315 Sotheby’s added Russia to the list of high-risk 

jurisdictions in 2018; Russia was not included as a high-risk jurisdiction in its prior 

AML policy.316

The 2018 AML Policy also requires enhanced due diligence for transactions 

involving a politically exposed person or “PEP.”317 A PEP is defined in the 2018 

AML Policy as “an individual that is, or has, at any time in the preceding year been 

entrusted with a prominent public function by any state, a European Community 

institution (such as the European Commission) or an international body....”318 The 

definition of PEP also includes immediate family members and any “person known 

to be a close associate of the PEP (such as a person who is in a close business 

relationship with a PEP or a trust or company formed for the benefit of a PEP).”319 

The 2018 AML Policy explains that for PEPs “the risk of money laundering is 

legally presumed to be higher based on his/her position and the greater likelihood 

that he/she will be exposed to corruption.”320

 

312 Id. 

313 Id. 

314 Id. 

315 Id. 

316 SOT-000419−43. 

317 SOT-000054−78. 

318 Id. 

319 Id. 

320 Id. 
52 

The Sotheby’s 2018 AML Policy also lists various types of “activity which may 

cause concern,” which it refers to as “red-flags.”321 The 2018 AML Policy states that 

“Sotheby’s may not establish or maintain a business relationship or conclude a 

transaction with a client if at the time we are suspicious about money laundering, 

terrorist funding, the client, the source of funds or the property or that the 

transaction is part of tax evasion.”322 The 2018 AML Policy lists a number of 

different types of “red-flags,” including, but not limited to the following: 

 Client is unwilling to present requested identification documents, even after 

we have given the client reasonable explanations as to why we have asked for 

this information. 

 Client refuses to provide complete and accurate contact information or 

business affiliations. 

 Client gives evasive or incomplete answers to basic, routine questions.323

The 2018 AML Policy states that “all employees are required to report any 

suspicious transactions or suspected fraud to the Compliance Department.”324

Worldwide Policy on Compliance with Economic Sanctions Programs. 

Sotheby’s 2016 Worldwide Policy Regarding Compliance with Economic Sanctions 

Programs (the “2016 Sanctions Policy”) establishes that “no Sotheby’s employee, 

wherever located, may transact with any blocked party.”325 The 2016 Sanctions 

Policy explains that OFAC: 

administers and enforces U.S. economic and trade sanctions against 

targeted foreign countries, terrorists and terrorism-sponsoring 

organizations, international narcotics traffickers, and others. The 

regulations and executive orders administered and enforced by OFAC 

prohibit, among other things, the engagement by U.S. persons in 

transactions with, or the provision by U.S. persons of services to, 

certain entities and individuals on the Specifically Designated 

Nationals and other Blocked Persons List and other OFAC lists 

(collectively, the “OFAC Lists”).326

 The 2016 Sanctions Policy also states, “Sotheby’s must ensure that no actual 

or potential client, no agent or intermediary, no beneficiary or principal whose name 

it acquires in the ordinary course of business . . . are named on the OFAC Lists, are 

owned 50 percent or more by one or more persons on the OFAC Lists, or any other 

 

321 Id. 

322 Id. 

323 Id. 

324 Id. (emphasis in original). 

325 SOT-000104−114. 

326 Id. 
53 

relevant Blocked Parties list.”327 The document instructs Sotheby’s employees to 

contact the Compliance Department if they “believe that an active Sotheby’s client 

is listed on any relevant Blocked Parties lists.”328 

 Sotheby’s also “conducts regular screening through an automated tool to 

ensure that no counterparty is on any relevant Blocked parties list. Sotheby’s also 

reruns the filter against its counterparties following the release of updates to the 

OFAC Lists and other relevant lists.”329 This process is monitored by the 

Compliance Department.330 Sotheby’s Compliance Department also conducts due 

diligence on individual transactions and requires contractual clauses and 

representations from consignors and purchasers to ensure that such purchases are 

consistent with Sotheby’s compliance requirements and that the real party in 

interest is not subject to U.S. prohibitions. 

Sotheby’s Briefing. On October 25, 2018, senior employees from the Sotheby’s 

Compliance Department briefed Subcommittee staff on the company’s policies and 

practices. The briefing was led by Sotheby’s former Chief Global Compliance 

Counsel, Head of Regulatory Affairs (“Chief Compliance Counsel”).331 She 

explained to the Subcommittee that while the art industry is not technically 

regulated, many regulatory environments apply to the art business.332 She 

continued that Sotheby’s has a “mature and well-developed” AML and sanctions 

compliance program, in which employees use a risk-based approach.333 She said the 

higher the value of the art transaction, the more Sotheby’s needs to understand 

about the background of the client or the ability of the client to purchase the 

item.334 

The Chief Compliance Counsel explained that, in some cases, dealers will 

purchase a work of art and may subsequently sell it to another person.335 In those 

instances, she stated that Sotheby’s “doesn’t have a way to get that information” 

about the person to whom the dealer may subsequently sell the artwork.336 She 

stated that, at times, Sotheby’s has asked dealers on whose behalf they are 

purchasing an item, but there is an economic disincentive for dealers to provide that 

information to Sotheby’s.337 The dealers believe that if Sotheby’s knew the identity 

of their clients, Sotheby’s would go straight to their client and cut out the dealer.338 

 

327 Id. 

328 Id. 

329 Id. 

330 Id. 

331 Subcommittee Briefing with Sotheby’s Employees (Oct. 25, 2018). 

332 Id. 

333 Id. 

334 Id.

335 Id. 

336 Id. 

337 Id. 

338 Id. 
54 

The art dealer’s livelihood depends on protecting client information.339 Should 

Sotheby’s ask a dealer to whom they may intend to resell the artwork following the 

dealer’s transaction with Sotheby’s, according to the Chief Compliance Counsel, the 

dealer would respond, “Are you kidding me? I’m not telling you.”340

 Ultimately, according to the Chief Compliance Counsel, whether to continue 

and execute a transaction with a dealer who may sell to a subsequent buyer was a 

judgment call.341 If the dealer is someone Sotheby’s knows; established in the art 

world; someone Sotheby’s has transacted with many times in the past; and is not 

under investigation, she said Sotheby’s is likely to complete the transaction.342 If 

the dealer does not meet those criteria, she said Sotheby’s would refuse to move 

forward: “we’ll say there’s too much smoke here, and we’ve done that.”343

The Chief Compliance Counsel stated that in some instances, the Compliance 

Department offers its counterparties the option of telling Sotheby’s Compliance 

personnel who their principal is, which enhances Sotheby’s ability to perform its 

due diligence and allows counterparties to protect their commercially proprietary 

information. Sotheby’s has been successful in this way in encouraging 

intermediaries to divulge their clients’ identities without risk of losing their 

business portfolio.344 She said that Sotheby’s “has a lot of success with that,” yet 

some intermediaries still refuse to disclose their principal due to a lack of trust.345 

Sometimes intermediaries request before disclosing the identity of their principal a 

non-disclosure agreement (“NDA”) to provide comfort that Sotheby’s would not 

share the information outside of its Compliance Department.346

The Chief Compliance Counsel also discussed Sotheby’s sanctions compliance 

policies.347 She explained that Sotheby’s runs its client list through World-Check on 

a daily basis to identify possible sanctions violations.348 This check includes “all the 

major sanctions from around the world.”349 Any hits on sanctioned entities get 

flagged to the Compliance Department.350 For private sales, Sotheby’s runs the 

names for both the buyer and the seller through World-Check to determine if either 

are sanctioned.351 World-Check is a database used by financial institutions to 

 

339 Id.

340 Id. 

341 Id. 

342 Id. 

343 Id. 

344 Id. 

345 Id. 

346 Id. 347 Id. 

348 Id. 

349 Id. 

350 Id. 

351 Id. 
55 

identify PEPs, SDNs, and other high-risk individuals and organizations.352 She told 

the Subcommittee that Sotheby’s “has never transacted with an SDN or blocked 

person.”353 She asserted the company has “never had a hit and never inadvertently 

transacted with one.”354

The Chief Compliance Counsel also explained that Sotheby’s due diligence at 

the time associated with the Subcommittee’s review into a new client or transaction 

involved a risk-based analysis, which factored in the value of the transaction, the 

profile on the person, and the legitimacy of why the person has the artwork or the 

funds to purchase the artwork.355 At the time, Sotheby’s was aware of the risk that 

the buyer may not be the UBO and dealt with that risk by reviewing the 

information to which it had access and kept an eye out for red flags.356 She noted 

there is a significant competitive advantage in the art world to having information 

about who owns what art, and intermediaries in the art world frequently do not 

want to disclose who their clients are because they do not want to be cut out of the 

deal.357 At the relevant time, Sotheby’s trusted some clients to do their own KYC of 

their transactions parties. And Sotheby’s will walk away from a deal if it was not 

comfortable with the responses it received.358

2. Christie’s 

Global Anti-Money Laundering and Anti-Terrorist Financing Policy. 

Christie’s first established an AML policy in December 2008,359 and updated it in 

2014 and 2015.360 The current AML policy was updated and finalized in March 

2018 (the “2018 AML Policy”).361 Christie’s former Global Head of Compliance in 

London explained that the AML policy matured over the years.362 

The 2018 AML Policy established know your client (or “KYC”) procedures as 

a “key component of Christie’s AML Policy. This involves collecting, verifying and 

keeping records of the identity of all clients.”363 The document states that 

“Christie’s will request sufficient identification documentation from clients to verify 

their identity using a risk-based approach. Where there is a greater perceived risk 

 

352 See Refinitiv World-Check Risk Intelligence, REFINITIV, 

https://www.refinitiv.com/en/products/world-check-kyc-screening. 

353 Subcommittee Briefing with Sotheby’s Employees (Oct. 25, 2018). 

354 Id. 

355 Id. 356 Id. 357 Id. 358 Id. 359 Christies-PSI-00000286−89. 

360 Christies-PSI-00000294−99 (2014); Christies-PSI-00000300−05 (2015). 

361 Christies-PSI-00000001−006. 

362 Subcommittee interview of Christie’s former Global Head of Compliance (Jul. 15, 2019) (also 

referred to below as Christie’s “Compliance Counsel”). 

363 Christies-PSI-00000001−006. 
56 

of money laundering or terrorist financing, enhanced due diligence, client risk 

reviews and KYC checks may be required.”364 The 2018 AML Policy poses two 

questions for Christie’s employees to consider regarding KYC procedures: 

 Am I satisfied that the person/entity I am dealing with is the 

person/entity they claim to be? 

 Do the circumstances of the proposed transaction give rise to a 

suspicion that the property being sold or funds used for payment are 

derived from criminal activity or may be used to fund terrorism?365

The 2018 AML Policy also states “for clients who are legal entities, Christie’s must 

also identify the natural persons in control (e.g., directors and beneficial owners).”366 

Christie’s requires certain forms of identification for individuals making purchases 

or the beneficial owner of a private company, including offshore entities.367

 Christie’s also notes circumstances that are considered “red flags.”368 The 

document explains that red flags “are indicators of circumstances where [Christie’s] 

may require further information from or about the client” and provides specific 

examples.369 

Sanctions Policy. The current Christie’s sanctions policy was issued on May 

1, 2018.370 It states that “Christie’s is committed to complying with all Sanctions 

that may apply to its business at any given time.”371 As such, employees and 

representatives must not “enter into or facilitate any business, dealings, or other 

activities, directly or indirectly, involving or for the benefit of Sanctioned Parties, 

except where expressly approved in writing by Compliance.”372

The Christie’s Sanctions Policy delineates certain countries as high risk 

countries and requires “all potential business and relationships with clients, 

suppliers and other third parties in High Risk Countries [to] be referred to 

Compliance prior to any business being conducted or any business relationship 

being established.”373 The policy also states that “Christie’s will ensure that 

employees in specific regions and departments exposed to dealings with High Risk 

Countries received appropriate training on Christie’s Sanctions obligations.”374

 

364 Id. 

365 Id.

366 Id. 

367 Christies-PSI-00000009−13. 

368 Christies-PSI-00000324−26. 

369 Id. 

370 Christies-PSI-00000014−19. 

371 Id. 

372 Id. 

373 Id. 

374 Id. 
57 

Christie’s Briefing. Employees from Christie’s U.S.-based legal department 

in New York briefed Subcommittee staff on Christie’s anti-money laundering 

policies and sanctions compliance, led by Christie’s General Counsel for Dispute 

Resolution and Legal Public Affairs (“Christie’s General Counsel”).375 According to 

her, the Legal Department acts as a “helicopter parent,” serving as an independent 

check on Christie’s business activities.376 She noted that the AML policy applies to 

all employees, including client-facing employees, because Christie’s “wants [all 

employees] to know they are responsible for [compliance] issues.”377 The Legal 

function serves as “an independent check away from the business to look at all 

decision being made” to ensure appropriate compliance.378 The Compliance 

Manager for the Americas added that there are “conversations between [clientfacing] front line staff to alert [Legal] to red flags.”379 He continued that “if a client 

gives [client-facing staff] pushback it would be an immediate escalation to Legal.”380 

Regarding Christie’s AML policies, Christie’s General Counsel noted that they are 

applicable to all Christie’s employees globally.381 Additionally, all Christie’s 

employees receive training on the policies.382 

Christie’s General Counsel noted that the Legal Department has the ability 

to “restrict” clients – such as sanctioned individuals.383 Restricting a client “blocks” 

them globally from transacting with Christie’s.384 Only the Legal Department is 

able to place or remove these restrictions.385 The decision to restrict someone with 

derogatory information is simple; the Legal Department can simply say “no” and 

restrict that individual from transacting with Christie’s.386 If information is less 

clear, the decision is escalated to the head of the compliance department through a 

report.387 If necessary, the issue can subsequently be escalated to the General 

Counsel in London or further to the Deputy CEO for a decision.388

 

375 Subcommittee Briefing with Christie’s Employees (Feb. 8, 2019). 

376 Id. 

377 Id. 378 Id. 379 Id. 380 Id. 

381 Id. 

382 Id.

383 Id. 

384 Id. 

385 Id. 

386 Id. 

387 Id. 

388 Id. 
58 

3. Phillips 

Worldwide Anti-Money Laundering Policy. Phillips provided the 

Subcommittee with its AML policy (the “Phillips Policy”), which stated that Phillips 

employees “must report any knowledge or suspicion to the appropriate Phillips 

Anti-Money Laundering Officer, who then decides whether to make a report to the 

relevant authority.”389 The Phillips Policy first asks employees to require new 

clients to submit certain forms of government-issued identification.390 The Phillips 

Policy also notes that “key questions to ask include: 

 Is the consignor or buyer reluctant to provide personal information? 

 Is there any suggestion that the client is evading, has evaded or will evade 

taxes? 

 Who is the beneficial owner of the property if it is consigned by an off-shore 

company?”391

The Phillips Policy also includes a section entitled “Red Flags,” which explains “if 

any of the following ‘Red Flags’ appear and there is no reasonable explanation for 

the particular Red Flag such that the employee is concerned about the client or 

transaction, the matter MUST be referred immediately in writing and by telephone 

to the appropriate Anti-Money Laundering Officer.”392 The Phillips Policy continues 

with a list of “what to look for,” such as: 

 Client provides unusual, inconsistent, or suspicious identification; and 

 Clients from certain high risk jurisdictions, particularly if wanting to pay 

from a local bank (e.g., Iran, North Korea, Algeria, Myanmar, Syria, 

Indonesia, Yemen).393

While the Phillips Policy did not include instructions regarding compliance with 

sanctions, Counsel for Phillips explained that sanctions compliance was considered 

a component of Phillips anti-money laundering compliance program, noting Phillips’ 

compliance training from as early as 2011 covered risks and compliance protocols 

related to sanctions.394

Phillips Briefing. Subcommittee staff received a briefing from Phillips 

General Counsel based in London.395 He explained that the company’s policies have 

developed over time.396 He stated that Phillips generally followed what the rest of 

 

389 PHILLIPS-00401−04. 

390 Id. 

391 Id. 

392 Id. (emphasis in original). 

393 Id. 

394 See Letter from Counsel for Phillips to Subcommittee staff (Jul. 22, 2020). 

395 Subcommittee Briefing with General Counsel for Phillips (Dec. 11, 2018). 

396 Id. 
59 

the art industry was doing with regard to AML policy.397 Looking forward, he noted 

that Phillips was working on incremental steps towards a better policy—based on 

some of the same obligations imposed on banks regarding enhanced customer due 

diligence.398 He said he believes this will lead to increased transparency from 

clients.399 As such, Phillips’ General Counsel stated he believed clients will not be 

surprised when Phillips begins asking for additional due diligence information, 

including ultimate beneficial owner information.400

Anti-Money Laundering, Sanctions & Counter-terrorism Financing Policy. 

Phillips’ General Counsel also explained to the Subcommittee that in late 2018, 

Phillips was preparing to update its AML policy.401 The current policy was issued 

on November 6, 2018 and included instructions on: Money Laundering; Sanctions; 

Due Diligence Process; Frequently Asked Questions; and Client Identification 

Checklist and Screening Requirements.402 Counsel for Phillips stated “the issuance 

of the policy was then followed by mandatory training in all sale sites in 2018 for all 

staff.”403 Phillips’ counsel continued: 

Phillips currently screens all sellers and buyers—whether existing or 

new—against sanctions databases. In addition, [art] agents are 

required to identify their principal and provide Phillips with KYC 

documentation in relation to themselves and their principal. Phillips 

insists upon ultimate beneficial ownership (UBO) information for all 

companies and does not rely upon third parties to carry out KYC—it is 

all handled in house. Phillips does not pay out to sellers and does not 

issue invoices to buyers without having full KYC documentation.404

4. Bonhams 

Summary Controls & Procedures Manual. In April 2018, Bonhams U.S. 

issued its Bonhams U.S. Group Summary Controls & Procedures Manual (the “2018 

Bonhams Manual”) to ensure “that Bonhams and our stakeholders reduce the risk 

of fraudulent transactions and are compliant with all appropriate regulatory and 

taxation requirements.”405 The 2018 Bonhams Manual explained that the company 

would employ “a risk-based approach to AML [that] involves assigning different 

categories of risk (e.g. low, medium, high) to various types of client[s]. We have 

 

397 Id. 

398 Id. 

399 Id. 

400 Id. 

401 Id. 

402 Draft Phillips Anti-money Laundering, Sanctions & Counter-terrorism Financing Policy provided 

to the Subcommittee; Email from Counsel for Phillips to Subcommittee staff (Mar. 19, 2020). 

403 Email from Counsel for Phillips to Subcommittee staff (Mar. 19, 2020). 

404 Id. 

405 BON004674−4700. 
60 

adopted such an approach, giving particular regard to our circumstances, such as 

our commercial activity, our range of clients and the registration process.”406 The 

2018 Bonhams Manual identifies the following risk areas: 

Type of client – Is the client a private individual or corporate entity? 

Is the client acting as a principal or agent? Are they an existing or 

new client? Are you visiting the client in their home or are you seeing 

them for the first time when they have walked in off the street? 

Type of customer – Is the customer present at the sale? Does the 

customer mix business and private transactions? 

Geographical – Where is the client situated? 

Transaction/Payment type – How does the buyer settle his/her 

invoices? How is the vendor paid? 

Ongoing monitoring (Behavior) & other risk factors 

 Is the transaction consistent with the client’s payment history? 

 Is there any unusual or erratic behavior displayed by the client? 

 Are there any indicators that raise concerns that the transaction is 

suspicious? 

 A combination of the various criteria should help determine the 

client’s risk category?407

The 2018 Bonhams Manual continues: 

However, it is ultimately the member of staff’s professional judgment 

that will determine whether a client or particular transaction requires 

further examination. 

The higher the risk level of the client, the more scrutiny should be 

applied before entering into business relations with a client. If it 

doesn’t “Smell” right, tell us!408

The 2018 Bonhams Manual also requires that a vendor provide identification. 

Further, an “agent as consignor...should disclose to [Bonhams] who their ‘principal’ 

is (especially if that person is not signing the contract) in...the Master Consignment 

Agreement (MCA) before the agent signs.”409 The document continues: “Bonhams 

should request or seek confirmation of agency or representation relationship (as 

 

406 Id. 

407 Id. 

408 Id. 

409 Id. 
61 

between the agent and principal) either by confirming with the principal or 

requesting documentary support thereof from the agent.”410

Bonhams Briefing. In a briefing with Subcommittee staff, Bonhams U.S. 

Counsel, along with outside counsel, explained that prior to the 2018 Bonhams 

Manual, Bonhams U.S. counsel communicated AML policies to staff during 

briefings and trainings.411 Bonhams U.S. Counsel noted that until 2016, most of the 

Bonhams U.S. staff was based in San Francisco, which made communication much 

easier.412 She said there was not a need for PowerPoint presentations on AML 

compliance because “everyone was sitting around the same desk.413” 

Bonhams U.S. Counsel told the Subcommittee that, historically, Bonhams 

U.S. did not check its clients against OFAC’s SDN list or any other sanctions 

lists.414 Rather, Bonhams U.S. relied on AML and sanctions checks that its 

financial institutions perform.415 According to Bonhams U.S. Counsel, the company 

would not knowingly engage in transactions with family members of sanctioned 

individuals.416 Additionally, she represented that Bonhams U.S. would not conduct 

business with art agents or advisors who were known to represent sanctioned 

individuals.417

5. Private Art Dealer 

 The Subcommittee also investigated private art sales, as further explained 

below. In reviewing those transactions, the Subcommittee interviewed a private art 

dealer based in New York (the “Private Dealer”).418 The Private Dealer has thirty 

years of experience in the art market, having studied at major universities and 

worked at many art galleries and major art auction houses 

The Private Dealer explained that, at the time the transaction described 

below took place, she had no written AML or sanctions policies.419 The Private 

Dealer explained that she had not received any AML or sanctions-related training 

at any of the galleries or art auction houses at which she previously worked.420 

When asked whether she had a legal obligation to question the origin of the funds 

 

410 Id. 411 Subcommittee Briefing with Bonhams U.S Counsel (Feb. 22, 2019). 412 Id. 

413 Id. 414 Id. Bonhams reported that it now routinely screens all clients against the SDN and other 

sanctions list via a third party screening provider. 

415 Id. 

416 Id.

417 Id.

418 Subcommittee interview of Private Dealer (Sept. 7, 2018). 

419 Id. 

420 Id. 
62 

used to purchase a piece of art, the Private Dealer responded that she did not.421 

She explained that in the art industry, questioning the source of funds would be 

considered contrary to industry standards and norms at the time—although she has 

done it on occasion—and that art agents and intermediaries would not want to 

provide that information because of confidentiality and privacy concerns of both the 

art agents and intermediaries and their clients.422 She noted, however, that most of 

her clients are American and that she knows the identity of the ultimate buyer in 

the “majority” of her transactions.423

 The Private Dealer explained that over the years, her practices regarding 

AML have significantly changed, but since the art industry is not regulated in the 

United States, she has had to self-regulate, rely on the advice of lawyers with 

expertise in AML and other related areas, and look for potential red flags in 

transactions, including with respect to the provenance of art pieces, in addition to 

relying on her gut.424 To that end, she said that if something does not feel right, or 

she does not know someone personally or through their reputation, she will not do 

business with them.425

 

421 Id. 422 Id. 

423 Id. 424 Id. 

425 Id. 
63 

III. ROTENBERG CASE STUDY: USING OFFSHORE COMPANIES, 

LAWYERS, AND ART ADVISORS TO MASK OWNERSHIP 

 Evidence examined by the Subcommittee suggests that the Rotenbergs used 

shell companies to mask their identities in transactions for high-value art both 

before and after being sanctioned by the United States. To form and manage those 

shell companies, the Rotenbergs appear to have used the services of attorney Mark 

Omelnitski and his company, the Markom Group. In addition, they also appear to 

have relied on art advisor and dealer Gregory Baltser, a U.S. citizen, to act as their 

representative in the art world to conceal their identities and involvement in 

particular art transactions, especially after becoming subject to U.S. sanctions. 

 Due to the lack of transparency in the art industry and in the formation and 

operation of shell companies, the evidence demonstrating the links between the 

Rotenbergs, their shell companies, Mr. Omelnitski, the Markom Group, and Mr. 

Baltser is not completely certain. Throughout the Subcommittee’s investigation, 

witnesses interviewed by the Subcommittee claimed uncertainty and ignorance. 

One Sotheby’s employee even told the Subcommittee she was untruthful to her 

employer when she previously stated that Mr. Baltser told her he represented 

Arkady and Boris Rotenberg. Regardless, the transactions outlined below represent 

the movement of millions of suspect U.S. dollars across international borders to 

purchase art, the investment of funds in U.S. assets with substantial rates of 

return, and a successful weakening of the impact of U.S. sanctions. 

A. Attorney Mark Omelnitski and the Markom Group 

Evidence suggests that the Rotenbergs were assisted in their efforts to evade 

U.S. sanctions by Mark Omelnitski, one of the founders of the Markom Group. 

Mark Omelnitski is a British citizen who was born in Moscow, Russia.426 The 

Rotenbergs reportedly used Mr. Omelnitski’s services to set up a number of offshore 

shell companies.427

In 2019, a Markom Group website identified Mr. Omelnitski as the Head of 

Compliance and Client Relations and a member of the Management Committee of 

the Markom Group.428 That website is no longer active and is only available 

through internet archives. On the archived website, Mr. Omelnitski was described 

as “a co-founder of Markom Group, Mark is Managing Director of Markom 

Management Limited, a founding company of the group. Mark is a member of a 

 

426 SOT-000353. 

427 Sean O’Neil & Tom Parfitt, How Putin’s cronies moved millions around the world, LONDON TIMES

(Apr. 5, 2016), https://www.thetimes.co.uk/article/how-putins-cronies-moved-millions-around-theworld-jbcgjh9vr. 

428 Markom Group, Key Staff, (May 17, 2019), 

https://web.archive.org/web/20160807231415/http://www.markomgroup.com/key-staff/. 
64 

number of professional bodies and has over 20 years’ experience in fiduciary 

services, corporate management, project administration, real estate, investment, 

and finance.”429

The archived Markom Group website also stated that the organization was “a 

group of companies established in 2004, which provides global fiduciary, trust, 

corporate business management, project administration and real estate investment 

services.”430 According to the archived website, the Markom Group included 

Markom Management Limited, described as: 

[T]he founding company of Markom Group. It provides fiduciary, 

management, administration, bookkeeping, and accounting services 

relating to the UK, Malta, Hong Kong, Luxembourg, the Isle of Man, 

British Virgin Islands, and St. Lucia registered companies, 

partnerships and private equity funds. Markom Management Limited 

is authorized by [Her Majesty’s Revenue and Customs] of the United 

Kingdom to provide trust and corporate administration services under 

AML Regulations Act.431

 In addition to reviewing the archived Markom Group website, during the 

course of its investigation, the Subcommittee also obtained a copy of the Markom 

Group of Companies Staff Handbook (5th Edition). That document stated: 

Markom Group is a group of six companies registered in different 

jurisdictions providing fiduciary, trust, corporate business 

management, corporate business administration, and real estate 

services. With headquarters based in Tortola on the British Virgin 

Islands, we also have offices in the United Kingdom, Cyprus, Spain, 

and New Zealand, and provide extensive services in more than 30 

countries around the world. At Markom Group, we provide a variety of 

services that go beyond the common concept of corporate and fiduciary 

services. We bring business services together with the latest financial, 

corporate, and investment expertise.432

The Markom Group handbook includes a Company Price List for the creation 

of companies in the following jurisdictions: United Kingdom; British Virgin Islands; 

Marshall Islands; Seychelles; Republic of Panama, and Cyprus.433 The specific 

 

429 Id. 

430 Markom Group, (Jul. 26, 2019), 

https://web.archive.org/web/20160811024803/http://www.markomgroup.com/. 

431 Markom Group, Markom Companies (Jun. 11, 2018), 

https://web.archive.org/web/20160808093702/http://www.markomgroup.com/markom-companies/. 

432 SOT-172224−356. 

433 Id. 
65 

prices for services provided in the United Kingdom and British Virgin Islands are as 

follows:434

Description Cost 

(in Euros) 

United Kingdom 

Incorporation of a company in the United Kingdom with standard 

Memorandum and Articles of Incorporation and standard Share 

Capital 

1000 

Annual Management of Company in the United Kingdom and 

provision of Registered Address 

2200 

Annual Management of Company in the United Kingdom and 

provision of Registered Address and Company Officers 

3500 

Annual Management of Company in the United Kingdom and 

provision of Registered Address and Company Officers with full 

admin, invoicing, cash management, and annual filing 

From 

31,200 

Incorporation of a Limited Liability Partnership in the United 

Kingdom with standard Limited Liability Partnership Agreement 

1200 

Annual management of Limited Liability Partnership in the United 

Kingdom and provision of Registered Address 

2500 

Annual management of Limited Liability Partnership in the United 

Kingdom and provision of Registered Address and Nominee Members 

3750 

Annual management of Limited Liability Partnership in the United 

Kingdom and provision of Registered Address and Nominee Members 

including full admin, invoicing, cash management, and annual filing 

From 

31,200 

Description Cost 

(in Euros) 

British Virgin Islands 

Incorporation of a Company in the British Virgin Islands with 

standard Memorandum and Articles of Incorporation and standard 

Share Capital 

1000 

Annual Management of the Company in the British Virgin Islands 

and provision of Registered Address 

1200 

Annual Management of Company in the United Kingdom and 

provision of Registered Address and Company Officers 

2500 

The Markom Group Handbook also listed prices for creating documents within the 

United Kingdom, British Virgin Islands, Marshall Islands, and Seychelles.435 The 

 

434 Id. 

435 Id. 
66 

specific prices for creating documents in the United Kingdom and the British Virgin 

Islands are as follows:436

Document Price by Jurisdiction Cost 

(in Euros) 

United Kingdom 

Certificate of Incorporation 273.00 

Memorandum and Articles of Incorporation 273.00 

Certificate of Good Standing 78.00 

Nominee Shareholders Declaration 296.00 

Nominee Directors Declaration 296.00 

Share Certificate 296.00 

Contract Creation From 1200 

Contract Review From 150 

Document Creation 75.00 

Document/Contract/Instruction Signing 15.00 

Legalization of Documents 191.00 

Power of Attorney 345.00 

British Virgin Islands 

Certificate of Incorporation 340.00 

Memorandum and Articles of Incorporation 340.00 

Certificate of Tax Exemption 440.00 

Certificate of Good Standing 446.00 

Certificate of Incumbency 446.00 

Nominee Shareholders Declaration 296.00 

Nominee Directors Declaration 296.00 

Share Certificate 296.00 

Contract Creation From 1200 

Contract Review From 150 

Document Creation 75.00 

Document/Contract/Instruction Signing 15.00 

Legalization of Documents 300.00 

Power of Attorney 345.00 

Certificate of Legal Validity 1,155.00 

In April 2016, The London Times reported that, according to the Panama 

Papers, Arkady and Boris Rotenberg used the Markom Group to set up a number 

offshore companies.437 The news article included a quote from Mr. Omelnitski who 

 

436 Id. 

437 Sean O’Neil & Tom Parfitt, How Putin’s cronies moved millions around the world, LONDON TIMES

(Apr. 5, 2016), https://www.thetimes.co.uk/article/how-putins-cronies-moved-millions-around-theworld-jbcgjh9vr. 
67 

told the publication: “All our clients’ dealings are bona fide transactions in 

accordance with the law.”438

1. The Markom Group Established Rotenberg-linked Shell Companies 

In spring 2016, the International Consortium of Investigative Journalists 

(“ICIJ”) published information related to a collection of over 11.5 million documents 

originating from the Panama-based law firm of Mossack Fonseca & Co. 

(“Mossack”).439 The documents spanned a more than thirty-year period from 1977 to 

2015.440 ICIJ disclosed that Mossack was “one of the world’s top creators of shell 

companies, [which are] corporate structures that can be used to hide ownership of 

assets.”441 ICIJ explained that the Mossack documents consisted of files that 

“contained information on 214,488 offshore entities connected to people in more 

than 200 countries and territories.”442 ICIJ also disclosed that the documents 

included “emails, financial spreadsheets, passports and corporate records revealing 

the secret owners of bank accounts and companies in 21 offshore jurisdictions, from 

Nevada to Singapore to the British Virgin Islands.”443 Those Mossack documents 

became known as the “Panama Papers.”444

Rotenberg-related BVI companies. The Panama Papers included an email 

chain made public by ICIJ and dated August 27, 2010 from Helen Okell at Mossack 

to Dorota Skowronska at Mossack with a copy sent to Mark Omelnitski under the 

subject line “BVI companies – audit.”445 The email identified nine companies formed 

in the British Virgin Islands (“BVI”) for the Rotenbergs.446 For each Rotenbergrelated company, the email provided the company name, ultimate beneficial owner, 

a key contact, and company activities as follows:447

 

438 Id.

439 The Panama Papers: Giant Leak of Offshore Financial Records Exposes Global Array of Crime 

and Corruption, INT’L CONSORTIUM OF INVESTIGATIVE JOURNALISTS (Apr. 3, 2016), 

https://www.icij.org/investigations/panama-papers/20160403-panama-papers-global-overview/. 

440 Id. 441 Id. 442 Id. 

443 Id. 444 Id. 

445 SGA_PSI_00053−82. The same document is also publicly available and can be accessed through 

the ICIJ’s Organized Crime and Corruption Reporting Project website at: 

https://cdn.occrp.org/projects/panamapapers/putindeal/P4.1_Earliglow_benefic_owners_contact_perso

n_Protsenko.pdf.pdf. 

446 Id. 

447 Id. 
68 

Company Ultimate Beneficial 

Owner (“UBO”) 

Contact Activities 

Beechwood Associates 

Inc. 

Arkady Rotenberg Dmitry 

Protsenko 

Investments 

Breckenridge Global 

Management Limited 

Arkady Romanovich 

Rotenberg 

Dmitry 

Protsenko 

Investments 

Causeway Consulting 

Limited 

Arkady Rotenberg Dmitry 

Protsenko 

Investments 

Culloden Properties Boris Rotenberg None Investments 

Highland Business 

Group Limited 

Igor Rotenberg Dmitry 

Protsenko 

Investments 

Highland Ventures 

Group Limited 

Boris Rotenberg Dmitry 

Protsenko 

Investments 

Kendrick Overseas 

Ltd. 

Rotenberg Dmitry 

Protsenko 

Holding 

Stormont 

Management Limited 

Igor Rotenberg Dmitry 

Protsenko 

Investments 

Stormont Systems 

Limited 

Igor Rotenberg Dmitry 

Protsenko 

Investments 

The email chain provides evidence that Mr. Omelnitski, through the Markom 

Group, had a business relationship with the Rotenbergs.448 It also provides 

evidence that Arkady, Boris, and Igor Rotenberg established at least eight BVI 

companies for use in activities related to “investments” and one holding company.449 

Two of these companies, Highland Business Group Limited and Highland Ventures 

Group Limited, played key roles in their art investments as described further below. 

In addition to the Panama Papers, evidence of links among the Rotenbergs, 

Mr. Omelnitski, the Markom Group, and the listed shell companies were the subject 

of an internal investigation performed by Barclays Bank (“Barclays”) and provided 

to the Subcommittee. Following the release of the Panama Papers in 2016, 

Barclays reviewed the companies formed by Mr. Omelnitski and the Markom 

Group. A Barclays internal investigatory memorandum concluded: 

Omelnitski and his company, Markom Group, created shell companies 

for sanctioned individual [Arkady] Rotenberg, a Russian oligarch, who 

is a close friend of the President of the Russian Federation, Vladimir 

Putin. Omelnitski is listed as a beneficial owner for the three 

companies owned by [Arkady] Rotenberg. Omelnitski and his company 

are nominee directors of multiple unidentifiable shell companies 

formed in Panama by Mossack Fonseca and the majority of these shell 

companies are owned by Russian individuals. Markom Group had 

 

448 Id. 449 Id. 
69 

created multiple shell companies for... [the] majority shareholders of 

Idealbank, which was investigated due to its possible connections to 

terrorist financing and money laundering concerns and subsequently 

was stripped of its banking license in Russia.450

The same Barclays memorandum noted, “[T]he ownership of these shell companies 

appears to be intentionally structured to be opaque in order to hide the identity of 

the true beneficiaries.”451

 Barclays closed all Markom Group and Gregory Baltser-related accounts. 

Following the investigation, in August 2017, Barclays worked to close all “198 

accounts under the Markom relationship,” of which 59 were U.S. dollar accounts.452 

Barclays also closed all accounts related to Mr. Baltser.453 Documents provided to 

the Subcommittee indicate that in 2018 Baltzer Limited subsequently began paying 

for art from an account at Ameriabank in Yerevan, Armenia.454 In 2018, the U.S. 

State Department listed Armenia as a “major money laundering jurisdiction” and 

noted that “money laundering crimes in Armenia [would] likely continue to go 

unreported and undetected.”455

2. Rotenberg-Linked Shell Companies were Used to Purchase Art 

The Subcommittee identified three shell companies connected to the 

Rotenbergs and used in the purchase of art both before and after the imposition of 

U.S. sanctions: (1) Highland Business Group Limited; (2) Highland Ventures Group 

Limited; and (3) Advantage Alliance. The known ties to the Rotenbergs are 

explained below. 

a. Highland Business Group Limited 

The Subcommittee traced certain art purchases to Highland Business Group 

Limited (“Highland Business”) prior to the imposition of U.S. sanctions on Arkady 

and Boris Rotenberg in March 2014. According to ICIJ, Highland Business was 

incorporated on January 14, 2010 and registered in the British Virgin Islands.456 

 

450 BARC_006752−61. 

451 Id. 

452 BARC_005547−51. 

453 BARC_007036. 

454 See, e.g., SOT_202090−95; Christies-PSI-00066049. 

455 U.S. Dep’t of State, Bureau of Int’l Narcotics & Law Enforcement Affairs, International Narcotics 

Control Strategy Report, Vol. II, Money Laundering (Mar. 2019), https://www.state.gov/wpcontent/uploads/2019/03/INCSR-Vol-INCSR-Vol.-2-pdf.pdf. 

456 Highland Business Group Limited, INT’L CONSORTIUM OF JOURNALISTS, 

https://offshoreleaks.icij.org/nodes/10139350. 
70 

Markom Nominees Limited is listed as a shareholder of Highland Business 

beginning on January 14, 2010.457 Mossack is listed as the company’s agent.458

The Panama Papers email chain described above listed Igor Rotenberg as the 

ultimate beneficial owner for Highland Business.459 But other evidence suggests 

that Highland Business Group received its funding from entities associated with 

Arkady Rotenberg. For example, $47,000 was transferred from Advantage Alliance 

Limited (“Advantage Alliance”) on March 27, 2012 with the payment details: “as 

per agency agreement.”460 As explained below, a Barclays’ internal investigation 

linked Advantage Alliance to Arkady Rotenberg. 

b. Highland Ventures Group Limited 

The Subcommittee traced funds for certain art purchases to Highland 

Ventures Group Limited (“Highland Ventures”) following the imposition of U.S. 

sanctions in March 2014 on Arkady and Boris Rotenberg. Conflicting evidence 

collected by the Subcommittee regarding the ownership of Highland Ventures 

places Arkady, Boris, and Igor Rotenberg as the owners of the company at various 

points in time. As explained below, the strongest evidence suggests that Arkady 

Rotenberg funded the shell company, which would make him the UBO. 

Evidence of Ownership by Arkady Rotenberg. Wire transfers in U.S. 

dollars sent by Milasi Engineering Limited (“Milasi Engineering”), a company 

owned by Arkady Rotenberg to Highland Ventures suggest that the true UBO of 

Highland Ventures was Arkady Rotenberg. 

Arkady Rotenberg owned Milasi Engineering. Documents produced to the 

Subcommittee as part of an investigation conducted by Barclays included a 

December 31, 2014 Milasi Engineering Report and Financial Statements.461 That 

document listed “Arkadiy Rotenberg” as the company’s UBO.462 That same 

document stated that Milasi Engineering was incorporated in Cyprus on September 

6, 2007 and “the principal activities of the company...are the holding of investments 

and loan financing.”463 

Milasi Engineering funded Highland Ventures.464 Wire transfers produced to 

the Subcommittee show that Milasi Engineering transferred millions of U.S. dollars 

 

457 Id. 

458 Id. 

459 SGA_PSI_00053−82. 

460 BARC_006752−61. 

461 BARC_006014−43. 

462 Id. 

463 Id. 

464 It should be noted that Barclays determined a minority portion of Milasi Engineering shares were 

held by Culloden Properties Limited (“Culloden”). See BARC_006068−69. Barclay’s investigation 
71 

to Highland Ventures. According to one wire transfer, on January 30, 2013, Milasi 

Engineering transferred $69,600,000 from its account at SMP Bank in Moscow to 

Highland Ventures’ account at The Pictet Group, a private bank with offices in 

Geneva, Switzerland.465 Payment details for the wire transfer described the funds 

as “dividends for 2011 year,” suggesting Highland Ventures– or its beneficial owner 

– was one of Milasi Engineering’s shareholders.466 A second wire transfer on 

December 18, 2013, shows Milasi Engineering transferred $54,451,493.49 from its 

account at Gazprombank in Moscow to the same Highland Ventures account at The 

Pictet Group.467 That wire transfer described the funds as “dividends for 2012 

year.”468 Together, the two transfers to Highland Ventures from Milasi Engineering 

exceeded $124 million. 

Three months later, on March 18, 2014, two days after President Obama 

signed EO 13661, which authorized sanctions on individuals providing material 

support to the Russian government, Highland Ventures moved $39,588,000 from its 

account with The Pictet Group in Geneva, Switzerland to its account at 

Gazprombank in Moscow, Russia.469 Two days after that, on March 20, 2014, the 

U.S. Treasury Department designated Arkady and Boris Rotenberg as sanctioned 

 

determined that Culloden “has always been owned by Boris Rotenberg since it was incorporated” and 

following sanctions on Boris Rotenberg “Markom continued with the transfer of the company to 

Cyprus.” See BARC_006068−69. After the transfer of Arkady Rotenberg’s interests, Milasi 

Engineering was majority owned by Igor Rotenberg who, at the time, was not yet sanctioned by the 

United States. This was presumably purposeful to comply with the Treasury Department rule that a 

company is only considered blocked if it is majority owned by a sanctioned individual. See U.S. DEP’T 

OF TREASURY, REVISED GUIDANCE ON ENTITIES OWNED BY PERSONS WHOSE PROPERTY AND INTERESTS 

IN PROPERTY ARE BLOCKED (2014), https://www.treasury.gov/resourcecenter/sanctions/Documents/licensing_guidance.pdf. Therefore, the fact that sanctioned Boris 

Rotenberg owned a minority share did not affect Milasi Engineering’s status as a sanctioned entity. 

As with Highland Ventures, Milasi Engineering made U.S. dollar transfers labeled as dividends to 

Culloden. On January 30, 2013 Milasi Engineering transferred $63,880,000 from its SMP Bank 

account in Moscow to Culloden’s account at The Pictet Group with the wire instructions “Dividends 

for 2011 Year.” See JPMorgan Chase (Nov. 7, 2018), SB981623-FI US Wire Search, Milasi 

Engineering, line 5. On October 8, 2013, Milasi Engineering sent $15,000,000 from its SMP Bank 

account to Culloden’s Societe Generale account in New York with the same wire instructions. See

JPMorgan Chase (Nov. 7, 2018), SB981623-FI US Wire Search, Milasi Engineering, line 9. Milasi 

made two large transfers from its Gazprombank account to Culloden’s accounts at The Pictet Group 

and Societe Generale in New York on January 9, 2014 for $41,711,697.34 and $19,999,963.34, 

respectively. Both payments included the wire instructions “Dividends for 2012 Year.” 

DBAG00000019, lines 34 & 35. Mr. Omelnitski admitted to Barclays during its investigation that 

Culloden was owned by Boris Rotenberg, and explained he was in the process of transferring 

Culloden to Cyprus in May 2016. See BARC_006811−17. 

465 JPMorgan Chase (Nov. 7, 2018), SB981623-F1 US Wire Search, Highland Ventures Group, line 2. 

466 Id. 

467 DBAG0000013, line 10; DBAG00000019, line 32. 

468 Id. 

469 DBAG0000013, lines 17−18. 
72 

individuals or specifically designated nationals blocked from doing business with 

U.S. persons.470

The multi-million dollar transfers between Milasi Engineering and Highland 

Ventures are strong evidence of the shell company’s link to Arkady Rotenberg.

A United Kingdom government agency determined Arkady Rotenberg owned 

Highland Ventures. In addition to the fund transfers described above, a 2018 letter 

by Barclays indicates that a UK government agency concluded that Highland 

Ventures was owned by Arkady Rotenberg.471 On May 18, 2018, the Head of 

Financial Crime Policy at Barclays Bank sent a letter to Alexandre Manfull, the 

Assistant Director of Sanctions Compliance & Evaluation at OFAC, stating “in 

August 2017, Barclays was contacted by [a UK government agency] who provided 

Barclays with a list of entities that [it] believed to be owned or controlled by Arkady 

Rotenberg, including...Highland Ventures.”472

A Societe Generale investigation linked Highland Ventures to Arkady 

Rotenberg. An investigation by Societe Generale determined that an account at 

another financial institution owned by Highland Ventures was “utilized as a passthrough account for layering activities to channel and conceal a flow of funds....”473 

Further, Societe Generale “was unable to rule out that the processed funds did not 

originate from a sanctioned individual, the father of Igor Rotenberg,” Arkady 

Rotenberg.474

An art purchase through an independent dealer linked Highland Ventures to 

Arkady Rotenberg. An invoice and transfer of funds associated with a private art 

purchase investigated by the Subcommittee provided another piece of evidence 

suggesting Arkady Rotenberg was the UBO of Highland Ventures. As further 

explained below, the private sale of a famous painting by René Magritte called La 

Poitrine listed Highland Ventures on the invoice as the buyer.475 The Markom 

Group assisted with the purchase of La Poitrine; Anna Wilkes (Finance Director 

and Managing Director for the Markom Worldwide Group) signed the invoice as the 

Director of Highland Ventures.476 The invoice listed Advantage Alliance as the 

entity that provided payment for La Poitrine, which totaled $7.5 million.477 As 

 

470 Press Release, U.S. Dep’t of Treasury, Treasury Sanctions Russian Officials, Members of the 

Russian Leadership’s Inner Circle, and an Entity for Involvement in the Situation in Ukraine (Mar. 

20, 2014), https://www.treasury.gov/press-center/press-releases/Pages/jl23331.aspx. 

471 BARC_005572−74. 

472 Id. 

473 SGA_PSI_01570. 

474 Id. 

475 Documents on file with the Subcommittee. 

476 Id. 477 Id. 
73 

explained below, the Subcommittee traced that $7.5 million payment to another 

company owned by Arkady Rotenberg, Senton Holdings Ltd.478 

Barclays also linked Advantage Alliance to Highland Ventures. An internal 

Barclays’ investigation linked Highland Ventures to Advantage Alliance through 

two wire transfers to Highland Ventures from Advantage Alliance between 

November 2015 and March 2016, which totaled $381,347.70.479 Details provided 

about the payments indicated: “as per agency agreement.”480

Together, the Milasi Engineering transfers, the UK government agency 

conclusion, and the facts surrounding the purchase of La Poitrine suggest Arkady 

Rotenberg is the UBO of Highland Ventures. 

Evidence of Ownership by Igor Rotenberg. There is also some evidence 

that the true UBO of Highland Ventures was Arkady’s son, Igor Rotenberg. First, a 

Barclays investigator summarized this finding in an April 6, 2017 email stating: 

Markom Management Ltd have confirmed that Highland Ventures 

Group Ltd was never owned by Boris Rotenberg. It has in fact always 

been owned by Igor Rotenberg since it was incorporated on [February 

18, 2010] . . . Igor is not subject to the current US sanctions, however, 

as you are already aware he is the son of Arkady Rotenberg who is a 

sanctioned individual.481

The April 2017 email also pointed to evidence provided by Markom 

Management that Igor Rotenberg owned Highland Ventures.482 That evidence 

included a Trust Deed between Igor Rotenberg and Markom Nominees Ltd dated 

February 18, 2010 stating that Igor Rotenberg had granted 50,000 shares of 

Highland Ventures to Markom Nominees Ltd as trustee.483

Saffron Nominees Limited held Highland Ventures. In addition, Markom 

Management provided documents to Barclays that indicated that Igor Rotenberg 

owned Highland Ventures through another company named “Saffron Nominees 

Limited.”484 A document titled “Register of Shareholders” for Highland Ventures 

stated that Markom Nominees Ltd held 50,000 shares from February 18, 2010 to 

 

478 BARC_000002, lines 24 and 25; BARC_006912−15. 

479 BARC_006752−61. 

480 Id. 

481 BARC_006068−71. 

482 Id. 

483 BARC_006117−20. 

484 BARC_006068−71. 
74 

March 5, 2016.485 On March 5, 2018, all 50,000 shares were transferred to Saffron 

Nominees Limited.486

Barclays also produced documents from Markom that provided additional 

information on share ownership. These documents included a “Nominee 

Declaration” dated August 5, 2016 stating that Saffron Nominees Limited held 

shares of Highland Ventures for Igor Rotenberg.487 In addition, Barclays produced 

a Certificate dated November 21, 2016 and filed with the Cyprus Ministry of 

Energy, Commerce, Industry, and Tourism Department of the Registrar of 

Companies and Official Receiver Nicosia that listed Saffron Nominees Limited as 

the owner of shares of Highland Ventures.488

Arkady Rotenberg transferred ownership of Milasi Engineering to 

Igor Rotenberg. Four months after the United States imposed sanctions on 

Arkady Rotenberg, Markom Group assisted in transferring Arkady Rotenberg’s 

interest in Milasi Engineering to his son Igor Rotenberg at a time before Igor was 

subject to U.S. sanctions. Markom Group executed this transfer by transferring 

shares in two holding companies that, together, owned the majority of shares in 

Milasi Engineering. The transfer of ownership of the two shell companies from 

Arkady Rotenberg to Igor Rotenberg amounted to also transferring the ownership of 

Milasi Engineering, since the two shell companies owned the company. 

According to documents provided by Mr. Omelnitski to Barclays, prior to July 

2014, Milasi Engineering was owned by Beechwood Associates and Kendrick 

Overseas.489 Causeway Consulting owned Kendrick Overseas.490 Arkady Rotenberg 

owned both Beechwood Associates and Causeway Consulting.491 Arkady 

Rotenberg’s ownership of Beechwood Associates and Causeway Consulting was also 

suggested by information in the Panama Papers email chain cited above.492 In 

addition, as previously mentioned, the December 31, 2014 Milasi Engineering 

Report and Financial Statement listed Arkady Rotenberg as the company’s ultimate 

beneficial owner.493

Markom Group facilitated the transfer of ownership for Beechwood Associates 

and Causeway Consulting. Documents provided by Markom Group to Barclays 

documented the transfer of Beechwood Associates and Causeway Consulting. On 

July 28, 2014, Arkady Rotenberg transferred his shares in Beechwood Associates 

 

485 BARC_00221. 

486 Id. 

487 BARC_06116. 

488 BARC_006075−76. 

489 BARC_006013. 

490 Id. 

491 BARC_006068−71; BARC_006013. 

492 SGA_PSI_00053−82. 

493 BARC-006014−43. 
75 

Ltd and Causeway Consulting Ltd to Highland Ventures.494 To document the 

transfers, Joseph Amin, Deputy Chairman of the Markom Group, sent letters on 

Markom Group letterhead to Arkady Rotenberg regarding both companies stating: 

“following the sale of this company to the third party we hereby inform you of the 

termination of our services to you in regard to the above mentioned company.”495 

The Markom Group asserted the transfer of ownership of these two companies 

effectively transferred ownership of Milasi Engineering to Igor Rotenberg. The 

Markom Group provided to Barclays a Deed of Trust dated February 18, 2010, 

making Markom Nominees the trustee of 50,000 shares of Highland Ventures on 

behalf of Igor Rotenberg.496

The Barclays investigator requested information from Markom Group on the 

consideration Highland Ventures paid for the shares in Beechwood Associates and 

Causeway Consulting “to ensure that the companies were not merely being 

transferred by Arkady to his son Igor.”497 Markom Group responded to the request 

as follows: 

Both Beechwood Associates and Causeway Consulting had been 

advanced loans by Highland Ventures Group Ltd. As neither 

Beechwood nor Causeway were able to repay these loans, the loan 

liability was converted into Share Purchase Agreements (“SPAs”) 

through which Highland Ventures Group Ltd became the new 

shareholder of the companies. The overall consideration price for the 

shares of Beechwood that was paid amounts to 6 billion Rubles 

[approximately $99,889,020.00]; and the consideration price paid for 

Causeway was 3 billion Rubles [approximately $49,950,000.00].498

The Markom Group provided Barclays with the following chart to explain the 

ownership structure:499

 

494 BARC_000227; BARC_006122; BARC_006124 (Causeway Consulting) and BARC_000231; 

BARC_006126; BARC_006077 (Beechwood Associates). 

495 BARC_006077 (Beechwood Associates); BARC_006124 (Causeway Consulting). 

496 BARC_006046−49. 

497 BARC_006068−71. 

498 BARC_006068−71; BARC_006804−10. 

499 BARC_006013. 
76 

The Barclays investigator determined the transfer to Igor Rotenberg was intended 

to evade U.S. sanctions on Arkady Rotenberg. The investigative report explained: 

It should be noted that A[rkady] Rotenberg was listed as an SDN on or 

about March 20, 2014, over four months before the ownership of 

Beechwood and Causeway was transferred to his son. Furthermore, 

such transfer to a non-SDN close relative taking place at the time of 

sanctions designation does not appear to be a proper transfer to a bona 

fide purchaser acting at arm’s length as defined by the Office of 

Foreign Asset Control (“OFAC”). Barclays NY believes the transfer of 

ownership to I[gor] Rotenberg was intended as circumvention of 

sanctions.500

Barclay’s investigation concluded with regard to Mr. Omelnitski and the Markom 

Group: 

 

500 BARC_006804−10. 
77 

Companies organized by Omelnitski and his group suggest that 

Markom may potentially have created numerous companies for 

Russian oligarchs and close acquaintances of Russian President, 

Vladimir Putin, who have been previously implicated in questionable 

undertakings. Furthermore, the ownership of these shell companies 

appears to be intentionally structured to be opaque in order to hide the 

identities of true beneficiaries.501

Evidence of Ownership by Boris Rotenberg. Finally, evidence also exists 

that Highland Ventures was owned by Boris Rotenberg. The strongest evidence is 

the Mossack email chain cited above and released with the Panama Papers, which 

listed Boris Rotenberg as the UBO of Highland Ventures.502 According to ICIJ, 

Highland Ventures was incorporated on January 14, 2010 and registered in the 

British Virgin Islands using Mossack as an agent.503 As noted above in the chart, 

Mossack listed the activities of Highland Ventures as “investments.”504

Summary of Evidence on Ownership of Highland Ventures Group. 

The evidence is not conclusive as to whether Arkady, Boris, or Igor Rotenberg, or 

possibly some combination of the three, qualified as the UBO of Highland Ventures. 

But the evidence is clear that one or more of the Rotenbergs controlled the company. 

As a result, the clear implication is that the Rotenbergs directed and funded 

purchases of high-value art in the United States. 

c. Advantage Alliance 

In addition to Highland Business and Highland Ventures, the Subcommittee 

examined the ownership and activities of a third shell company, Advantage 

Alliance. The Subcommittee became interested in Advantage Alliance due to its 

role in the purchase of La Poitrine, as explained above.505 

As mentioned above, evidence suggests that Advantage Alliance had ties to 

Arkady Rotenberg. A 2017 Barclays internal investigation observed that 

“Advantage Alliance...appears to have received payments from an entity which [the 

bank] has learned is owned by [Arkady Rotenberg].”506 Barclays identified the 

entity that made the payment to Advantage Alliance as Highland Ventures.507

 

501 Id. 

502 SGA_PSI_00053−82. 

503 Highland Ventures Group Limited, INT’L CONSORTIUM OF JOURNALISTS, 

https://offshoreleaks.icij.org/nodes/10143427. 

504 SGA_PSI_00053−82. 

505 See infra. 506 BARC_005572−95. 

507 Id. 
78 

Barclays also investigated Advantage Alliance’s links to the Markom Group 

and Mr. Omelnitski. A Barclays investigatory memorandum noted that Advantage 

Alliance’s account with the bank was opened in the name of MP Intermediary 

Services Limited in 2008.508 The memorandum continued: “The beneficial owner 

was listed as Alexander Druzhinin, a Russian national....The third party 

signatories were listed as [Anna] Wilkes, Joseph Amin, and [Mark] Omelnitski. 

Internet research identified Amin as the Managing Director of Markom Media and 

Druzhinin as a director of Markom Partners Plc.”509 Ms. Wilkes is identified in 

another related Barclays investigation as the Finance Director and Managing 

Director for the Markom Worldwide Corporation.510 In short, all three account 

signatories for Advantage Alliance were Markom Group employees. And other 

evidence previously described established that the Markom Group formed 

companies and performed related corporate services for the Rotenbergs. 

The Barclays investigation of Mr. Omelnitski also noted that when the 

Advantage Alliance account was opened at the bank, the expected annual turnover 

for the account was £3 million or about $3,746,670.511 Despite this expectation, the 

account was involved in 129 wire transfers from March 2012 to May 2016 totaling 

$60,972,491.89.512 The Barclays investigation found that Advantage Alliance 

engaged in transactions with a wide range of entities, including traders of cocoa 

products, a security firm, traders of metals, a sourcing company, a brokerage firm, a 

construction company in Russia, and a supplier of used cooking oil.513 The 

Advantage Alliance transactions also included a payment directly to an art dealer 

for the purchase of La Poitrine, which was sold to Highland Ventures, as further 

discussed below.514 

Barclays determined that the wire activity “does not appear to be in line with 

[Advantage Alliance]’s expected line of business.”515 As such, “the account was 

closed on October 24, 2016 as Barclays Corporate identified spikes in activity seen 

during April and May, with large transfers in sent straight out in full as 

Int[ernational] Payments, which did not match expectations for the nature of the 

business.”516 Further, Barclays suspected that these funds may be the proceeds of a 

crime.517

 

508 BARC_006752−61. 

509 Id. 

510 BARC_006762−65. 

511 BARC_006752−61. 

512 Id. 

513 Id. 

514 Id. 

515 Id. 

516 Id. 

517 BARC_005514−21. 
79 

In the end, although the Subcommittee was unable to determine with 

absolute certainty the ultimate beneficial owners of Highland Business, Highland 

Ventures, or Advantage Alliance, the evidence is strong that all three companies 

were connected to and controlled by the Rotenbergs.

B. Art Advisor Gregory Baltser 

In addition to evidence that the Rotenbergs used multiple shell companies to 

mask involvement in high-value U.S. art transactions, the Subcommittee reviewed 

evidence that the Rotenbergs attempted to conceal their participation in the U.S. 

art market by hiding behind a Moscow-based art advisor and dealer, Gregory 

Baltser. 

Background. Gregory Baltser is a naturalized U.S. citizen who resides in 

Moscow.518 As a U.S. citizen, he is required to comply with U.S. laws, including 

U.S. sanctions laws. Mr. Baltser graduated from Moscow State Stroganov Academy 

of Industrial and Applied Arts.519 A press release dated March 19, 2019 described 

Mr. Baltser as “a reputable antique specialist and talented decorator whose 

reputation extends far beyond the borders of the Russian Federation.”520 One 

auction house described Mr. Baltser as “the only dealer who buys whole interiors 

and houses in Europe and brings them to Russia.”521

Mr. Baltser established the BALTZER Auction Agency and Services in 2014 

and the website for the BALTZER Agency states: 

The BALTZER Agency is here to be your representative; whether at an 

auction house, gallery, art dealer, or private sale or purchase. Our 

specialists are professionals with experience of working in the world’s 

major auction houses, including Sotheby’s, Christie’s, and Phillips. 

Our job is to save you time and effort, and protect you from expensive 

mistakes.522

Mr. Baltser has also established the BALTZER CLUB, described in a press 

release as: 

 

518 SOT-000350. 

519 Gregory Baltser – Antique Expert, Collector & Decorator, FINE ART SHIPPERS (Mar. 15, 2019), 

https://fineartshippers.com/gregory-baltser-antique-expert-collector-decorator/. 

520 IIya Kushnirskiy, Introducing BALTZER – Your Personal Guide to Art Collecting, FINE ART 

SHIPPERS (Mar. 19, 2019), https://www.einpresswire.com/article/479578592/introducing-baltzer-yourpersonal-guide-to-art-collecting. 

521 Christies-PSI-00000048−49. 

522 Baltzer: Your Personal Guide to the World of Art & Collecting, BALTZER LLC (2020), 

https://baltzer.com/en/about. 
80 

a private club for art collectors, experts, and all those who are 

fascinated by beautiful things. This exclusive club is a kind of museum 

that allows the members to enjoy art and antiques in a comfortable 

and relaxing atmosphere. Besides, the BALTZER CLUB is known for 

its elegant educational and social events in one way or another related 

to culture, arts, and collectibles.523

The BALTZER Agency website states the BALTZER CLUB “includes events such as 

recitals, readings, discussion panels, exhibitions of private collections and lectures 

on various aspects of art and collecting lead by experts.”524 A prior version of the 

BALTZER website dated 2018 explained how the BALTZER Agency facilitated an 

individual’s “participation at an auction:” 

We organize your entire auction process, including registering you for 

a sale, attending an auction on your behalf and handling all of the 

subsequent stages of the transactions. Our aim is to save you from the 

red tape of auctions while protecting you from a false step.525

The 2018 website continued explaining how the BALTZER Agency assists a buyer 

in registering for an auction: 

An independent buyer at a sale must register for each new auction 

separately, going through the tedious verification process again and 

again. He or she must confirm not only their ability to pay, but also 

that their funds have not been acquired through unlawful means. 

Many auction houses have their own requirements regarding 

documentation, and oftentimes different departments of a single 

auction house in different cities may require different documents to be 

submitted. It can take several weeks for this process to be completed. 

Our clients, however, are freed from this pile of paperwork – our longstanding relationship with many auction houses means that we can 

simplify the registration process and make it the same for all auctions. 

By allowing us to handle all of your paperwork, you can even take part 

in any auction at the last minute.526

Notably, the 2018 website also addressed how an individual would participate in an 

auction, including efforts by BALTZER to provide an individual “complete 

anonymity:” 

 

523 IIya Kushnirskiy, Introducing BALTZER – Your Personal Guide to Art Collecting, FINE ART 

SHIPPERS (Mar. 19, 2019), https://www.einpresswire.com/article/479578592/introducing-baltzer-yourpersonal-guide-to-art-collecting. 

524 Baltzer: Your Personal Guide to the World of Art & Collecting, BALTZER LLC (2020), 

https://baltzer.com/en/about. 

525 BALTZER, Participation at an Auction (2018), document on file with the Subcommittee. 

526 Id. 
81 

How, exactly, would you like to take part in an auction? The most 

enjoyable option is for us to bring you privately to the main hall of our 

Club, where you can settle yourself comfortably in front of a video 

screen and watch a live broadcast of the sales in the auction room. You 

can take part in the auction yourself, if you wish, by telephone. A 

personal manager from our agency will assist you. If a visit to our 

premise is not in your plans, the manager will simply ring you during 

the auction and tell you how things are progressing over the phone, 

and pass on your bid to the auction room. Finally, you can place an 

absentee bid. In this case, we will not bother you while the auction is 

taking place. Instead, a manager will bid for lots at your instruction, 

having established a maximum beforehand. This is convenient if the 

sale you wish to participate in takes place on the opposite side of the 

world. Working on your behalf, we act professionally and exclusively 

in your interests. If necessary, we can even give you complete 

anonymity. We remain level-headed and know the auction process 

inside out.527

1. The Auction Houses Viewed Mr. Baltser as the Principal Buyer 

A key issue related to Mr. Baltser and his business is whether he acts as a 

principal or an agent when buying and selling art. The cumulative evidence, as 

discussed in more detail below, suggests that Mr. Baltser bought art on multiple 

occasions on behalf of the Rotenbergs, but never disclosed their involvement. Nor 

did the auction houses ask for whom Mr. Baltser was purchasing art. Even after 

the imposition of U.S. sanctions, Mr. Baltser failed to disclose his representation of 

the Rotenbergs, who were prohibited as a result of those sanctions from doing 

business with U.S. persons and entities. Mr. Baltser took advantage of rules and 

practices that allowed him to present himself as the “principal” buyer and avoid 

naming any client that he might be representing in the purchase or sale. This 

allowed for Mr. Baltser to provide the “complete anonymity” that his 2018 website 

promised. 

Sotheby’s. Sotheby’s told the Subcommittee that since Mr. Baltser took title 

to the purchases he made in his name, Sotheby’s did not view Mr. Baltser as an 

agent; Sotheby’s viewed him as the principal buyer. 

The Chief Compliance Counsel explained to the Subcommittee during a 

briefing that Mr. Baltser is considered the principal when he makes a purchase: 

“He buys it and pays for it.”528 She continued, “There are no third party payments, 

 

527 Id. 

528 Subcommittee Briefing with Sotheby’s Employees (Oct. 25, 2018). 
82 

the money comes from his account at a major bank.”529 She explained that there 

are some in the art business who Sotheby’s knows are buying for someone else or 

who actually disclose that they are acting as an agent or nominee on behalf of 

someone else.530 She contrasted that scenario with Mr. Baltser stating “he’s the 

principal; he’s purchasing the art in his own name with funds in his own bank 

account.”531 She explained that Sotheby’s “cannot ask clients to disclose the source 

of funds in their bank accounts. Sotheby’s has no legal authority to demand such 

information.”532

An agent, the Chief Compliance Counsel explained, will buy an item, but not 

take title.533 She explained to the Subcommittee that, under Sotheby’s policy, Mr. 

Baltser was not an agent, but instead purchased and took title of the artwork.534 

She explained that “Sotheby’s does not know and has no legal right to know to 

whom he may resell the art once he takes title of the art.535 She also stated that 

“when Baltser transacts with Sotheby’s, he is the person who takes legal ownership 

and legal risk as the purchaser.”536 She further asserted that “Baltser is taking a 

risk because his client could turn around and say, ‘I don’t want to buy this thing 

anymore.’”537

The Chief Compliance Counsel also told the Subcommittee that Sotheby’s 

staff knew Mr. Baltser well and considered him to be a known-quantity and an 

important Sotheby’s client.538 She could not recall Sotheby’s having concerns about 

transacting with Mr. Baltser prior to the Subcommittee’s investigation and said 

that he transacted with Sotheby’s using accounts at major banks. Sotheby’s assigns 

“Tiers” or “Levels” to clients based upon the amount and frequency of purchases. 

The highest level is 1 and the lowest level is 9.539 She said that Mr. Baltser was a 

“Level 1” Sotheby’s client.540 She explained that these clients are the ones who are 

“wined and dined” and receive “special attention.”541 In some cases, she said an 

entire team of Sotheby’s employees can be assigned to them.542 The Chief 

Compliance Counsel stated that Sotheby’s was moving away from using client 

levels.543

 

529 Id. 

530 Id. 

531 Id. 

532 Id. 

533 Id. 

534 Id. 

535 Id. 

536 Id. 

537 Id. 

538 Id. 

539 Id. 

540 Id. 

541 Id. 

542 Id. 

543 Id. 
83 

Christie’s. Christie’s General Counsel stated in a briefing that Mr. Baltser is 

known to Christie’s as an interior decorator who engaged with the auction house in 

low value, but high volume transactions.544 She said he would then sell the items 

purchased at Christie’s to his clients or via his membership club.545 When 

describing his purchasing history, Christie’s General Counsel stated it was 

apparent Mr. Baltser engaged in fairly low level purchases that fit within Christie’s 

understanding of his profile and operations.546 She noted that Mr. Baltser 

purchased wine, as well as interior decoration items and ceramics.547

Bonhams. Bonhams U.S. Counsel and outside Counsel for Bonhams stated 

in a briefing that Bonhams U.S. does not consider Gregory Baltser to be an agent, 

but rather a dealer given that he is transacting in his own name and with his own 

funds and thereby assumes all contractual risks.548 Bonhams U.S. also understood 

that Mr. Baltser often subsequently resells a purchased item to someone else.549 

Bonhams U.S. outside counsel noted that it is common in the auction world to have 

counter-parties and that when Bonhams U.S. sells to a dealer, Bonhams knows that 

the item may be re-sold.550 While Bonhams U.S. requires bidders (including 

dealers) to disclose whether they are acting on behalf of a third-party, and to 

represent that the third-party is not on the SDN or other sanctions list, it does not 

require that a dealer disclose the identity of a third-party buyer. Bonhams U.S. 

views Mr. Baltser as the principal buyer.551 Bonhams U.S. Counsel said that 

Bonhams U.S was not aware of who Mr. Baltser represented, nor did it matter, 

since Bonhams U.S. viewed him as the buyer.552

Phillips. While Phillips’ General Counsel did not discuss Mr. Baltser 

directly, he explained during a briefing the legal issues surrounding agents in the 

art industry.553 According to him, agents often bid on their own behalf to buy items 

for stock.554 These dealers often have a shop and sell art privately.555 He said 

auction houses have no way of knowing whether dealers are bidding on behalf of 

themselves or someone else unless the dealer tells the auction house.556 

Phillips’ General Counsel noted that sometimes after a successful bid at an 

auction, an agent will inform the auction house that they were actually acting on 

 

544 Subcommittee Briefing with Christie’s Employees (Feb. 8, 2019). 

545 Id. 

546 Id. 

547 Id. 

548 Subcommittee Briefing with Bonhams U.S Counsel (Feb. 22, 2019). 

549 Id. 

550 Id. 

551 Id. 

552 Id. 

553 Subcommittee Briefing with General Counsel for Phillips (Dec. 11, 2018). 

554 Id. 

555 Id. 

556 Id. 
84 

behalf of someone else.557 At that point the agent will provide the details of the end 

purchaser so that Phillips can issue an invoice in the name of the purchaser.558 

According to him this happens for several reasons, including: (1) the agent does not 

want to pay for the purchased item himself; and (2) agents want any legal liability 

for the purchase to transfer to the purchaser.559 Phillips then conducts “know your 

customer” checks on the actual purchaser.560 

He acknowledged that there could be circumstances in which an agent may 

have a principal that pays the agent directly.561 This would result in what he 

termed a “back-to-back transaction” whereby the invoice would remain in the name 

of the agent, and in those instances the auction house would not be aware of the 

second transaction.562 He stated that Phillips’ preference is to have the person in 

the room bidding be the person invoiced and responsible for that sale, but 

sometimes it is not that simple.563

2. Mr. Baltser Purchased Art as an Agent for Steamort 

Mr. Baltser used a shell company to purchase art, which adds another layer 

of complexity to the connections between the Rotenbergs and the high-value art 

market. Prior to the imposition of U.S. sanctions against Arkady and Boris 

Rotenberg in March 2014, the majority of purchases Mr. Baltser made that the 

Subcommittee linked to the Rotenbergs were in the name of Steamort Limited 

(“Steamort”). Steamort was incorporated in Belize on August 28, 2008.564 

Steamort’s principal place of business, however, was listed as 10 Great Russell 

Street; London, England.565 According to the company’s Certificate of Incumbency 

dated September 12, 2012, Steamort’s only director and shareholder is Jason 

Hughes, a British national residing in Cyprus.566 The Certificate of Incumbency 

states that Mr. Hughes holds the company’s 50,000 shares.567 That same Certificate 

lists ATM Secretaries Limited as the Secretary of Steamort.568 Steamort has 

maintained a bank account at Tallinn Business Bank in Estonia since at least April 

30, 2009.569 

 

557 Id. 

558 Id. 

559 Id. 

560 Id. 

561 Id.

562 Id. 

563 Id. 

564 Christies-PSI-00005647. 

565 Christies-PSI-00005647; Christies-PSI-00005637−46. 

566 Christies-PSI-00083483−84; Christies-PSI-00083535−36. 

567 Christies-PSI-00083483−84. 

568 Id. 

569 Christies-PSI-00020892. 
85 

Jason Hughes was associated with over 200 companies. According to 

public reporting, Mr. Hughes is associated with more than 200 companies. In 2012, 

an investigation by ICIJ and The Guardian uncovered “a network of individuals 

willing to appear on official records as directors of companies while acting only on 

the instructions of its real owners, who stay invisible and off-the-books.”570 The 

investigative report explained: 

The nominees play a key role in keeping secret hundreds of thousands 

of commercial transactions. They do so by selling their names for use 

of official company documents, using addresses in obscure locations all 

over the world.571 

The ICIJ investigation identified Mr. Hughes as a nominee director linked to 210 

companies, including 64 BVI companies, 144 UK companies, and 2 Irish 

companies.572

Mr. Baltser contracted with Steamort. According to a document produced 

by Christie’s to the Subcommittee, on October 27, 2008, Steamort entered into a 

services agreement (the “Steamort Agreement”) with Mr. Baltser.573 That 

agreement referred to Steamort as the “customer” and Mr. Baltser as the 

“consultant.”574 The Steamort Agreement called for Mr. Baltser to assist Steamort 

with the search, valuation, acquisition, shipping, and insurance for works of art and 

interior items.575 The Steamort Agreement allowed Mr. Baltser on behalf of 

Steamort to, in part: 

 negotiate terms and conditions of acquisition of works of art and/or 

interior items; 

 participate in auctions (including those of Sotheby’s and Christie’s), 

make bids at the auctions; and 

 conclude sale and purchase, acquisition and ancillary agreements 

with sellers.576 

The Steamort Agreement was signed by Mr. Hughes on behalf of Steamort; Mr. 

Baltser signed for himself.577

 

570 James Ball, Offshore secrets revealed: the shadowy side of a booming industry, GUARDIAN (Nov. 

25, 2012), https://www.theguardian.com/uk/2012/nov/25/offshore-secrets-revealed-shadowy-side. 

571 Id. 

572 Id. 

573 Christies-PSI-00005637−46. 

574 Id. 575 Id. 

576 Id. 577 Id. 
86 

According to the Steamort Agreement, Steamort would pay Mr. Baltser 

$9,500 a month for his services.578 A review of financial records confirmed that from 

March 25, 2010 to October 31, 2016, Steamort sent 96 wire transfers to Mr. 

Baltser’s account totaling $907,000.579 Most of these payments were in increments 

of $9,500.580 Almost all of the instructions located in the wire transfer information 

noted “payment for consulting services in antiques by invoice” followed by a date.581

Beginning in 2017, Mr. Baltser began receiving $9,500 payments from two 

companies other than Steamort, Aester Limited582 and Sinara Company LP.583 

From March 2, 2017 to April 6, 2018, Aester Limited sent Baltser eight wire 

transfers in $9,500 increments totaling $76,000.584 From July 7, 2017 to June 18, 

2018, Sinara Company sent Baltser 14 wire transfers in $9,500 increments totaling 

$133,000.585 In total, between March 2010 and October 2018, it appears Mr. Baltser 

 

578 Id. 579 DBAG0000011; BOFA-40684 (wires from 2010 were not available). 

580 Id. 

581 Id. 582 Aester Limited was incorporated on December 7, 2016, in England and Wales, with a registered 

office address of 13 John Princes Street, Second Floor, London, England. See Certificate of 

Incorporation of a Private Limited Company, Company No. 10514112 (Dec. 7, 2016), 

https://beta.companieshouse.gov.uk/company/10514112. According to its filing history, on March 16, 

2018, ATM Secretaries Limited, the same Secretary of Steamort, was appointed as the Secretary of 

the company. See Appointment of Corporate Secretary, Company No. 10514112 (Mar. 16, 2018), 

https://beta.companieshouse.gov.uk/company/10514112. On January 1, 2018, Oleksandr Baksaliar, 

a Ukrainian national, was listed as a “person with significant control” of the company. See Notice of 

Individual Person with Significant Control, Company No. 10514112 (Jul. 3, 2018), 

https://beta.companieshouse.gov.uk/company/10514112. According to the company’s confirmation 

statement filed on December 28, 2018, Aester Limited’s principal activity is the “wholesale of 

furniture, carpets and lighting equipment; wholesale of electronic and telecommunications 

equipment and parts; wholesale of wood, construction materials, and sanitary equipment; and 

wholesale of hardware, plumbing and heating equipment and supplies.” See Confirmation 

Statement, Company No. 10514112 (Dec. 28, 2018), 

https://beta.companieshouse.gov.uk/company/10514112. 

583 Sinara Company LP was registered in the United Kingdom as limited partnership (“LP”) on 

January 16, 2017. Just like Aester Limited, the principal place of business was listed as 13 John 

Princes Street, 2nd Floor, London, England. See Application for Registration of a Limited 

Partnership, Company No. LP17803 (Jan. 16, 2017), 

https://beta.companieshouse.gov.uk/company/LP017803. The general nature of the business was 

listed as “tourism and ticketing services.” See Application for Registration of a Limited Partnership, 

Company No. LP17803 (Jan. 16, 2017), https://beta.companieshouse.gov.uk/company/LP017803. The 

partners of Sinara Company LP were listed as Portervale Trading Company and Reox Limited. See

Application for Registration of a Limited Partnership, Company No. LP17803 (Jan. 16, 2017), 

https://beta.companieshouse.gov.uk/company/LP017803. On March 30, 2019, Sinara Company LP 

was dissolved; Portevale Trading Company signed the dissolution document. See Statement 

specifying the nature of a change in the limited partnership, Company No. LP17803 (Mar. 30, 2019), 

https://beta.companieshouse.gov.uk/company/LP017803. 

584 BOFA-40684. 

585 Id. 
87 

received $1,116,000 in fees for his consulting services under the Steamort 

Agreement.586

Christie’s questioned Steamort’s ownership. Prior to U.S. sanctions in 

March 2014, Mr. Baltser purchased art from the auction houses in Steamort’s 

name. The Christie’s client representative for Mr. Baltser (“Baltser Client Advisor”) 

told the Subcommittee that Mr. Baltser introduced himself as someone who 

purchased art on behalf of other people.587 The Baltser Client Advisor explained, 

“one thing’s for sure, he’s not buying it for himself.”588

Christie’s requested information on Steamort’s UBO from Mr. Baltser. On 

November 29, 2010, following the registration of Steamort’s account, Christie’s 

internally requested information regarding the “confirmation of the directors of the 

company” and “confirmation of who is the ultimate beneficial owner of the 

company.”589 The request went unanswered until February 7, 2012.590

On February 7, 2012, Christie’s compliance department emailed the Business 

Development Manager Business Development Manager about the documentation 

requested in 2010 for Steamort’s company directors and the ultimate beneficial 

owner.591 The email noted that Mr. Baltser was listed as Steamort’s owner in the 

client profile, but additional documentation was required.592 The Business 

Development Manager responded that she was unable to reach Mr. Baltser due to 

the time difference between London and Moscow, explaining: 

I have tried to get in touch with the client, but he is probably sleeping 

as he is supposed to bid very early in the morning our time. 

Steamort/Grigoriy [sic] Baltser have been regular client of Christies. 

Just today he participated in a sale in London and is bidding tomorrow 

as well. He is a very respected businessman and I personally know 

[him] very well. Is it possible for me to get this documentation to you 

after the sale. He is bidding on 19 lots!593

An AML Specialist also from Christie’s compliance department responded, “if you 

could follow up after the sale it would be greatly appreciated.”594

 

586 Id. 

587 Subcommittee interview of Christie’s Baltser Client Advisor (Jul. 15, 2019). 

588 Id. 

589 Christies-PSI-00059124−27. 

590 Id. 

591 Id. 

592 Id. 

593 Id. 

594 Id. 
88 

The next day, on February 8, 2012, the Business Development Manager 

informed the AML Specialist that she spoke to Mr. Baltser and explained to him 

that there were “some outstanding registration documents” required for Steamort.595 

She told the AML Specialist that Mr. Baltser informed her that “he can get me a 

copy of the company’s registration card and the contract that he has with Steamort 

ltd. He cannot get us the name of the beneficial owner of the company as this 

information is unavailable to him.”596 In response, the AML Specialist asked to be 

put “in touch with the person who he has entered into agreement with.”597 He also 

reminded the Business Development Manager that “beneficial ownership is 

required for all business clients, and this information has been outstanding for 

nearly two years already.”598 The Business Development Manager forwarded the 

AML Specialist’s email to the Baltser Client Advisor requesting advice. The 

Business Development Manager stated that Mr. Baltser said he would “not bother 

the directors of the company with any questions and he cannot provide us with the 

information on who the beneficiaries are. I am stuck.”599

On February 21, 2012, the AML Specialist asked the Business Development 

Manager for an update regarding the required Steamort documentation.600 The 

following day, February 22, 2012, the Business Development Manager informed the 

AML Specialist that Mr. Baltser asserted he would provide everything the next 

week.601 

A month later, on March 22, 2012, the Business Development Manager 

emailed the AML Specialist documents regarding Steamort, including the 

Baltser/Steamort 2008 Services Agreement and the Belize Certificate of 

Incorporation dated August 28, 2008.602 The AML Specialist replied stating that the 

documents confirmed the agreement between Baltser and Steamort, but did not 

“confirm ownership of the Belize Company.”603 The AML Specialist once again 

requested that the Business Development Manager confirm the owner of Steamort, 

stressing that “this inquiry has been open since the fall 2010 sales.”604 On March 

26, 2012, the AML Specialist emailed “we will need to restrict the account from 

future bidding pending confirmation of beneficial ownership.”605

 

595 Id. 

596 Id. 

597 Id.

598 Id. 

599 Id. 

600 Christies-PSI-00041928. 

601 Id. 

602 Christies-PSI-00041976−87. 

603 Id. 

604 Id. 

605 Christies-PSI-00042009. 
89 

That same day, March 26, 2012, the Business Development Manager sought 

the Baltser Client Advisor’s advice; Mr. Baltser wanted to bid in an upcoming 

auction in New York.606 The Business Development Manager emailed: 

the “beneficiary” issue is still not resolved. [Mr. Baltser] says that 

even verbally he cannot confirm anything as he himself doesn’t know 

who the ultimate beneficiaries of Steamort are. He is asking if he can 

still bid in the sale without this document. What can we do?”607 

The Baltser Client Advisor responded: “let me check, please. As soon as I have 

some info[rmation], I will let you know.”608 The Baltser Client Advisor responded to 

the AML Specialist: 

Christie’s London can accept the verbal confirmation of the beneficiary 

owner of the company (as an exception). This is a very important 

client of ours who actively buys in various Gold Sale categories. We 

worked very hard to encourage this client to participate in the sales 

and we feel it’s a shame to lose him now. The additional documents 

were requested in February 2012, the client provided them at his 

earliest convenience. Please advise if I should contact any other 

colleagues of ours to discuss this urgent matter.609 

The Baltser Client Advisor confirmed to the Subcommittee that on certain occasions 

Christie’s would accept verbal confirmation of the beneficial owner.610

The AML Specialist emailed and requested that she “kindly disclose the 

beneficial owners, and Legal can conduct the checks.”611 On March 27, 2012, the 

Business Development Manager informed the Baltser Client Advisor that she would 

contact Baltser and “try to ask him to at least verbally confirm, the beneficiaries.”612 

On March 28, 2012, the Business Development Manager emailed Christie’s 

compliance and stated that “the sole beneficiary of Steamort is Mrs. Luisa 

Brown.”613 The AML Specialist responded that same day: “Luisa Brown is clear, 

and the client is fine to bid in the upcoming sale on April 4th.”614 The AML 

Specialist continued: “Going forward, please note we require documentary 

confirmation of beneficial ownership in accordance with our Legal requirements 

 

606 Christies-PSI-00035437. 

607 Id. 

608 Id. 

609 Christies-PSI-00042041. 

610 Subcommittee interview of Christie’s Baltser Client Advisor (Jul. 15, 2019). 

611 Christies-PSI-00099753. 

612 Christies-PSI-00099719. 

613 Christies-PSI-00099753. 

614 Christies-PSI-00099787. 
90 

when opening new business accounts, and without it a risk review would have to be 

conducted.”615

When questioned by the Subcommittee, the Baltser Client Advisor stated 

that she had no knowledge of Mrs. Brown and did not know of any connection 

between Mrs. Brown and Mr. Baltser.616 Mr. Baltser never provided documentary 

evidence that Luisa Brown was the beneficial owner of Steamort.617

3. Mr. Baltser Established BALTZER Auction Agency and Club in 

Moscow 

The creation of Mr. Baltser’s art agency and private club, called BALTZER 

Auction Agency and Club, added another layer of complexity to the purchase of 

high-value art by shell companies linked to the Rotenbergs. The creation of 

BALTZER is further described below. Notably, Mr. Baltser’s last name is spelled 

with an “s” and his art agency with a “z.” 

In November 2012, prior to forming his agency and club, Mr. Baltser 

contacted Christie’s and Sotheby’s to discuss a business proposal with him through 

his new private club in Moscow.618 Mr. Baltser sent a letter to Christie’s explaining 

“we have conceived a definitive idea of creating a new company with transparent 

and clear ideology, which would be able to solve many problems of auction life, 

guaranteeing to the participants the clean title of transaction and services.”619 Mr. 

Baltser indicated his new company’s club would be used by “a whole class of 

contemporaneous collectors” that he had created and who were “the leading Moscow 

and Russian collectors – the active participants of auction biddings at many world 

marketplaces.”620

a. Christie’s Partnered with Mr. Baltser 

Beginning in late 2012, Christie’s and Mr. Baltser began discussing a 

potential partnership. On December 17, 2012, the Managing Director of Growth 

Markets for Christie’s in London (“Managing Director”), sent an email to Mr. 

Baltser to inform him that Christie’s has “all of the key people internally at 

Christi[e]’s together to discuss your interesting proposal. We are consolidating a 

list of questions which we will have with you by the close of business tomorrow 

evening and looking forward to continuing discussions with you.”621 The following 

 

615 Id. 

616 Subcommittee interview of Christie’s Baltser Client Advisor (Jul. 15, 2019). 

617 Subcommittee interview of Christie’s former Global Head of Compliance (Jul. 15, 2019). 

618 Christies-PSI-00016692−94; SOT-005728−30. 

619 Christies-PSI-0016692−00016694. 

620 Id. 

621 Christies-PSI-00000649. 
91 

day, Mr. Baltser emailed the Managing Director that he was glad “we are moving 

forward with the proposal and I expect way more activity going with the auctions as 

soon as I get this new structure set....and I will be happy to answer and clarify all 

the questions in a timely manner. ”622 

On December 18, 2012, the Managing Director provided Mr. Baltser with a 

list of questions raised by various members of the Christie’s team regarding his 

proposal, including: 

 Do you intend to bid on behalf of [the art club] or on behalf of the third party? 

 Will you be able to take on responsibility to obtain all necessary KYC/AML 

(Know your client and Anti money laundering) checks required? What 

structures are in place to ensure these protocols are met? 

 Will we know the names of the clients or will all details be held by you and 

the company?623

Beginning in early 2013, representatives from Christie’s began traveling to 

Moscow to meet with Baltser and his team regarding the proposal.624 On January 

22, 2013, Mr. Baltser sent the Baltser Client Advisor a reply to the Managing 

Director’s questions, stating: 

We are currently in the process of reviewing Russian laws and related 

legislation pertaining to KYC/AML. One of the key components of the 

KYC/AML process implies checking the identity of every client and 

collecting Personally Identifiable Information (PII). According to 

Russian legislation as well as the Confidentiality Agreement between 

Company and our clients, [Mr. Baltser’s agency] is obligated not to 

disclose [personally identifiable information] data to any third parties 

without the Client’s consent, except as may be required by law or court 

order. Considering this, we are ready to accept responsibility for such 

processes as KYC (know your customer) and AML (anti money 

laundering).625

On March 21, 2013, the Baltser Client Advisor emailed the Managing 

Director to inform him that she is “in regular contact with Mr. Gregory Baltser 

regarding various auctions and client purchases” and explained that he: 

keeps on asking if we are ready to proceed with our IT advice and 

further discussions of his proposed project. Unfortunately, Gregory 

cannot proceed with ordering any technical equipment and his whole 

 

622 Christies-PSI-00000651. 

623 Christies-PSI-00000653−54. 

624 Christies-PSI-00000694. 

625 Christies-PSI-00020853−56. 
92 

project is on hold now. Gregory is very much concerned that he is 

missing all major auctions in May, June and July (and is under 

impression we [are] no longer interested in cooperation).626 

On March 22, 2013, the Managing Director replied that he needed “to get [the 

President of Christie’s Europe] to focus on this and will try and do so today and 

send an appropriate message to Mr. Baltser.”627 On March 27, 2013, the Baltser 

Client Advisor emailed the President of Christie’s Europe requesting his “thoughts 

on Gregory Baltser’s project discussed yesterday and if we could proceed with it on 

the IT front.”628 On April 12, 2013, the President of Christie’s Europe approved 

moving forward with the project with Baltser “as long as there is no corporate 

risk.”629 

On April 24, 2013, Christie’s representatives met with Mr. Baltser in Moscow 

to discuss the partnership between Mr. Baltser’s art agency and Christie’s.630 

Present at the meeting were Mr. Baltser, the Managing Director, the Business 

Development Manager, and the Baltser Client Advisor.631 The meeting resulted in 

a list of action items to move the partnership forward.632

i. Mr. Omelnitski Served as the Money Laundering 

Reporting Officer for BALTZER LLP 

The action items noted that Mr. Baltser “further explained that their Trustee 

in London was familiar with the [KYC] process and they have a system approved by 

the Russian government.”633 On June 5, 2013, Mr. Omelnitski emailed the 

Managing Director, stating that Mr. Baltser asked him “to contact [you] in regards 

to arranging a meeting for purposes of identifying of required [AML/KYC] 

compliance procedures and policies.”634 

On August 12, 2013, Mr. Omelnitski emailed corporate documents regarding 

the “new Baltser structure” to Christie’s Senior Compliance Counsel (“Compliance 

Counsel”), including incorporation records pertaining to the newly created Baltzer 

entities – Baltzer Limited (Cyprus) and BALTZER LLP.635 The Shareholders 

Certificate for Baltzer Limited listed Markom Nominees LTD as shareholder.636 

 

626 Christies-PSI-00036515−16. 

627 Id. 

628 Christies-PSI-00036540. 

629 Christies-PSI-00037583−85. 

630 Christies-PSI-00000725−31. 

631 Id. 

632 Id. 

633 Id. 

634 Christies-PSI-00000764. 

635 Christies-PSI-00005845−76. 

636 Id. 
93 

Baltzer Limited also listed Markom Directors as its Director and Markom 

Secretaries Limited as its Secretary.637

The following day, Mr. Omelnitski emailed Christie’s in-house counsel in 

London a copy of BALTZER’s Compliance Procedures Manual.638 The manual 

stated: 

In addition to our existing money-laundering measures, BALTZER 

(“Agency”) has entered into an agreement with Markom Management 

Limited (“Markom”), whereby Markom will independently check, verify 

and handle information about the Agency’s clients.639

The manual further stated that BALTZER employees “unclear on the [customer due 

diligence] steps required when engaging a new client please contact Dr. Mark 

Omelnitski (the [Money Laundering Reporting Officer]), in the first instance for 

further advice.640 

 Christie’s compliance personnel reviewed the Manual, which identified 

compliance measures. The Manual indicated that BALTZER had entered into an 

agreement with Markom for Markom to independently check, verify, and handle 

information about BALTZER clients.641 The Manual states that BALTZER clients 

are required to comply with AML legislation, and identifies obligations arising 

under the UK’s 2007 Money Laundering Regulations.642 The Manual also included 

BALTZER’s customer due diligence measures, including customer identification 

procedures for individuals and entities, and provided for enhanced due diligence 

where the client is a politically exposed person.643 In addition, Christie’s compliance 

personnel noted that Markom was listed on the HMRC-Her Majesty’s Revenue & 

Customs-Supervised Businesses Register of companies that have registered with 

HRMC under the UK Money Laundering Regulations.644

 

637 Id. 

638 Christies-PSI-00001179−1237. 

639 Id. 

640 Id. 

641 See Christies-PSI-00001190. 

642 See Christies-PSI-00001194. 

643 See Christies-PSI-00001194−95. 

644 See Letters from Counsel for Christie’s to Subcommittee staff (Mar. 5, 2019 and Jul. 22, 2020). 
94 

ii. Christie’s Agreed to Allow Mr. Baltser to Conduct AntiMoney Laundering and Sanctions Checks on His Own 

Clients 

Mr. Omelnitski represented Mr. Baltser and BALTZER LLP in contract 

negotiations with Christie’s as Mr. Baltser and Christie’s exchanged drafts of the 

agreement.645 On February 4, 2014, Christie’s and BALTZER LLP entered into a 

letter agreement that established the terms of the two entities’ relationship.646 Mr. 

Baltser signed on behalf of BALTZER LLP; the Managing Director signed on behalf 

of Christie’s.647 As part of the agreement, Christie’s agreed to supply BALTZER 

LLP with a number of bidding paddles under one account.648 As stated in the 

contract, this enabled BALTZER LLP to “bid in Christie’s auctions 

simultaneously.”649 

Regarding customer due diligence, the agreement established that: 

 BALTZER LLP will conduct customer due diligence on its members to 

the standards required by the EU Money Laundering Directive, 

consents to Christie’s relying on such customer due diligence and will 

retain for a period of not less than 5 years, the documents and records 

evidencing the same. Where these documents or records are held 

outside the UK, copies will be made available to Christie’s or relevant 

enforcement agencies or regulators under court order or relevant 

mutual assistance procedure. 

 BALTZER LLP will further certify to Christie’s, at the end of every 

trading year that it has conducted customer due diligence in 

accordance with these requirements and that it has no reason to 

suspect that any of its members are engaged in money laundering 

activities.650

Christie’s former Global Head of Compliance explained these provisions mirrored 

language she previously used as an attorney for a large U.S. financial institution in 

agreements between financial institutions.651 She also confirmed to the 

Subcommittee that this was the first time Christie’s allowed another entity to 

perform these types of customer due diligence checks.652

 

645 Christies-PSI-00001516−21. 

646 Christies-PSI-00000032−34. 

647 Id. 

648 Id. 

649 Id. 

650 Id. 

651 Subcommittee interview of Christie’s former Global Head of Compliance (Jul. 15, 2019). 

652 Id. 
95 

iii.BALTZER LLP Failed to Provide Anti-money Laundering 

and Sanctions Compliance Certifications Required by the 

Agreement with Christie’s 

As stated above, the agreement between BALTZER LLP and Christie’s 

required BALTZER LLP to certify annually that it conducted customer due 

diligence and did not suspect its clients were engaged in money laundering.653 

Obtaining that certification, as scheduled and with the proper assertions regarding 

anti-money laundering, became a challenge for Christie’s over the course of the 

relationship due to a lack of responsiveness by Mr. Omelnitski, despite numerous 

attempts by Christie’s to obtain the certification. As explained below, Christie’s 

later revised the agreement with BALTZER, in part because of Mr. Omelnitski’s 

failure to provide the required compliance certifications. The new agreement 

required Mr. Baltser to identify all winning bidders to the Christie’s Legal 

Department to perform KYC checks. 

2014. Christie’s Compliance Counsel emailed Mr. Omelnitski on September 

26, 2014 requesting “to refresh [Christie’s] due diligence in relation to the 

BALTZER arrangements, particularly around sanctions screening.”654 She 

confirmed to the Subcommittee she was referring to the increasing number of 

sanctions imposed by the United States and the European Union on Russian 

individuals and entities in response to the annexation of Crimea.655

On October 15, 2014, the Compliance Counsel emailed Mr. Omelnitski 

regarding the certification required in the February 2014 Letter Agreement.656 She 

explained that “[g]iven the rapidly evolving sanctions landscape in Russia, we are 

asking all our business partners to certify that they have complied and will continue 

to comply with relevant AML regulations including ongoing sanctions screening 

against...EU, UN, OFAC, etc. lists.”657 The Compliance Counsel emailed Mr. 

Omelnitski on October 31, 2014 to again request the report.658 Mr. Omelnitski 

responded and assured her that “we are preparing the report...I shall have it for 

you within a week.”659 On November 22, 2014, Mr. Omelnitski emailed the 

Compliance Counsel stating, “I am really sorry for [the] delay with the report. I am 

traveling extensively over the last two months. I shall be ready with it next week. 

Once again apologies for [the] delay.”660 

 

653 Christies-PSI-00000032−34. 

654 Christies-PSI-00098744. 

655 Subcommittee interview of Christie’s former Global Head of Compliance (Jul. 15, 2019). 

656 Christies-PSI-00098749−52. 

657 Id. 

658 Id. 

659 Id. 

660 Christies-PSI-00088125. 
96 

Mr. Omelnitski provided the certification to the Compliance Counsel on 

December 2, 2014 titled, “AML Report on behalf of ‘Baltzer’ for period October 2013 

through November 2014.”661 The document stated: 

I can confirm that our investigation did not reveal any irregularities, 

which were concerning. I can further confirm that despite BALTZER 

having a significant number of Russian clients there were no 

transactions, which fall under recent sanctions against Russia.662

The former Global Head of Compliance told the Subcommittee this language 

satisfied the certification requirement in the February 14, 2014 Letter 

Agreement.663

2015. A year later, on December 3, 2015, the Compliance Counsel emailed 

Mr. Omelnitski asking, “could you please let me have a compliance report for this 

year?”664 Mr. Omelnitski did not provide the requested compliance report.665

2016. The Compliance Counsel emailed Mr. Omelnitski on June 7, 2016 and 

again asked, “would you please be able to send me a compliance certification again 

similar to the report you so kindly provided at the end of 2014?”666 Mr. Omelnitski 

did not provide the requested report.667 On June 28, 2016, the Compliance Counsel 

again requested that Mr. Omelnitski “confirm when we can expect to receive your 

compliance certification?”668 Mr. Omelnitski failed to provide the requested 

compliance report.669

2017. On July 13, 2017, the Compliance Counsel emailed Mr. Omelnitski 

stating, “we will need the compliance certificate from you as per our agreement.”670 

On October 9, 2017, Mr. Omelnitski emailed information regarding BALTZER’s 

purchases.671 Mr. Omelnitski’s email stated that for “transactions September 2016-

September 2017,” Baltzer’s agency “had the turnover of £3,269,457.30, Euro 

5,775,449.40 and USD 1,402,661.60.”672 The email broke down those amounts 

between auction houses, clients, and suppliers.673 The email did not provide any 

certifications regarding compliance with AML policies as required by the Letter 

 

661 Christies-PSI-00035361−62. 

662 Id. 

663 Subcommittee interview of Christie’s former Global Head of Compliance (Jul. 15, 2019). 

664 Christies-PSI-00098858. 

665 Subcommittee interview of Christie’s former Global Head of Compliance (Jul. 15, 2019). 

666 Christies-PSI-00098961. 

667 Subcommittee interview of Christie’s former Global Head of Compliance (Jul. 15, 2019). 

668 Christies-PSI-00098976. 

669 Subcommittee interview of Christie’s former Global Head of Compliance (Jul. 15, 2019). 

670 Christies-PSI-00093620−23. 

671 Christies-PSI-00093885−87. 

672 Id. 

673 Id. 
97 

Agreement.674 In response, the Compliance Counsel alerted Mr. Omelnitski that 

“we need to talk and review the approach to client due diligence.”675

 The Compliance Counsel asked Mr. Omelnitski to “clarify the relationship 

between BALTZER and Markom” on October 20, 2017.676 She raised the fact that 

“BALTZER is both a client who outsources client due diligence and compliance to 

Markom Group as well as a related entity due to Markom Group being a 

director/shareholder.”677 She also addressed the issue of Mr. Baltser’s clients and 

suggested that “the Compliance Department is able to keep the identity of clients 

securely within a private and confidential file that is not accessible by anyone other 

than Compliance/Legal.”678 The Compliance Counsel asserted the information 

would “be provided solely to me in order to enable Christie’s to comply with our 

KYC procedures and relied on solely for this purpose.”679 She explained to the 

Subcommittee that she never received answers to her questions about the Markom 

Group’s relationship to Mr. Baltser’s companies.680

2018. The parties negotiated the terms of a new agreement, which was 

signed on March 19, 2018.681 The new agreement contained additional 

requirements, which the former Global Head of Compliance explained gave 

Christie’s additional control and comfort regarding purchases by BALTZER.682 For 

purposes of customer due diligence, the new agreement required that, “For all 

successful bidders, BALTZER will make the customer due diligence documentation 

(including any originals) promptly available to Christie’s for inspection within 10 

working days after the auction and in any event, prior to the release of the relevant 

lot.”683 The new terms also stated that “BALTZER warrants on a continuing basis 

while this agreement remains in force that: 

i. any bid on behalf of its Members does not facilitate tax evasion or tax 

fraud; 

ii. any bid on behalf of its Members does not violate or facilitate a 

violation of sanctions including those administered or enforced by the 

US Department of Treasury’s OFAC, US Department of State, the UN 

Security Council, the EU, Her Majesty’s Treasury or the Hong Kong 

Monetary Authority; 

 

674 Id. 

675 Id. 

676 Christies-PSI-00094167−68. 

677 Id. 

678 Id. 

679 Id. 

680 Subcommittee interview of Christie’s former Global Head of Compliance (Jul. 15, 2019). 

681 Christies-PSI-00005015−27. 

682 Subcommittee interview of Christie’s former Global Head of Compliance (Jul. 15, 2019). 

683 Christies-PSI-00099306−14. 
98 

iii. it does not know, and has no reason to suspect that any buyer is under 

investigation for, charged with or convicted of money laundering, 

terrorist activities or other crimes; and 

iv. any shipping of lots on which Baltzer has successfully bid will be done 

in compliance with all applicable export and import laws.684

The new agreement was dated March 19, 2018.685 The former Global Head of 

Compliance explained that with the new agreement, the BALTZER account was 

restricted until the company provided Christie’s the required customer 

documentation.686 She told the Subcommittee that BALTZER complied with the 

new requirement and provided the customer information, but continued to pay for 

purchases from his bank account.687 Therefore, financially, Christie’s was unable to 

look beyond BALTZER’s bank account to determine the source of the funds used to 

make purchases.688

b. Sotheby’s Declined to Sign an Agreement with BALTZER LLP, 

but Continued to Transact with Mr. Baltser 

Mr. Baltser also approached Sotheby’s to enter into an agreement with 

BALTZER LLP. While Sotheby’s considered the proposal, the auction house 

ultimately declined. According to a document produced by Sotheby’s to the 

Subcommittee, during the course of the negotiations with Mr. Baltser, the Sotheby’s 

account representative for Mr. Baltser (“Baltser Account Representative”), 

represented to Sotheby’s leadership that Mr. Baltser’s clients were Russian 

oligarchs.689 She also specifically identified Arkady and Boris Rotenberg as two of 

Mr. Baltser’s clients.690 But when asked by the Subcommittee to confirm that 

Arkady and Boris Rotenberg were Mr. Baltser’s clients, she said she had fabricated 

the information to encourage Sotheby’s to agree to Mr. Baltser’s proposal.691 The 

Subcommittee questions her truthfulness in her interview, given the Subcommittee 

traced funds used to purchase art by Mr. Baltser back to shell companies linked to 

the Rotenbergs. 

 

684 Id. 

685 Id. 

686 Subcommittee Interview of Christie’s former Global Head of Compliance (Jul. 15, 2019). 

687 Id. 

688 Id. 

689 SOT-015933. 

690 SOT-018689−93. 

691 Subcommittee interview of Sotheby’s Baltser Account Representative (Jun. 27, 2019). 
99 

i. Mr. Baltser Purchased Art from Sotheby’s on Behalf of 

Steamort 

As with Christie’s, Mr. Baltser purchased art from Sotheby’s on behalf of 

Steamort, signing invoices on behalf of the company as early as 2011.692 The 

Baltser Account Representative told the Subcommittee that Mr. Baltser used 

Steamort to purchase items from Sotheby’s.693 She explained that it was common 

for purchasers to use various companies when purchasing art.694 The Baltser 

Account Representative asserted Steamort preceded BALTZER LLP and she did not 

believe Steamort existed anymore.695 She did not know why Mr. Baltser made the 

switch from Steamort to BALTZER LLP, but she thought that Mr. Baltser created 

BALTZER LLP around the time that he established his art agency. She also 

recalled that Mr. Baltser provided BALTZER LLP’s incorporation and compliance 

due diligence documents to Sotheby’s.696

ii. Mr. Baltser Approached Sotheby’s on his Business 

Proposal with BALTZER LLP 

In early 2013, Mr. Baltser also approached Sotheby’s about a business proposal 

with his art agency. On February 11, 2013, the Baltser Account Representative 

emailed Sotheby’s Chief Operating Officer in Europe, and other Sotheby’s associates 

(in pertinent part): 

Level 1, top transacting Russian client, Mr. Gregory Baltser (Steamort 

Ltd) is setting up a private club in Moscow for his friends and clients, 

Russian oligarchs. This club’s activity will be centered around auction 

house activities. He wants to involve the club members into buying at 

auctions. 

Some of these clients have already started transacting through him.697

The Baltser Account Representative explained to the Subcommittee that Mr. 

Baltser’s club would allow club members to view a live stream of an auction taking 

place outside of Moscow.698 She also noted that using the word “oligarch” at the 

time meant a high net worth Russian individual.699 She purposefully used the word 

“oligarch;” it was her job to sell Mr. Baltser’s ideas to her superiors.700

 

692 SOT-000406−07; SOT-006167. 

693 Subcommittee interview of Sotheby’s Baltser Account Representative (Jun. 27, 2019). 

694 Id. 

695 Id. 

696 Id. 

697 SOT-015933. 

698 Subcommittee interview of Sotheby’s Baltser Account Representative (Jun. 27, 2019). 

699 Id. 

700 Id. 
100 

 An internal Sotheby’s meeting invitation dated March 25, 2013 explained 

how Mr. Baltser’s club would work: 

The client [Mr. Baltser] would have members bid on his account. He 

could have members bidding against each other but under the same 

account, on different paddles. He would remain liable to Sotheby’s for 

any bids his members provide – he would control that his end to 

effectively manage his risk...Mostly his members would pay him and 

he would pay us. His members may wish to be invoiced directly – in 

which case, if not already known to us, our KYC rules apply and they 

set up an account and we invoice directly – although in the event of 

non-payment he knows he can’t “excuse himself”.... We’d have/keep the 

veto – e.g. would not allow a transfer to a No Bid client.701

The Baltser Account Representative explained that Sotheby’s invoiced Mr. Baltser 

directly and would divide his purchases into multiple invoices if he requested.702 

She asserted Mr. Baltser was the client: “That’s how he bid and that’s how he paid. 

As far as I’m concerned the client is Greg Baltser.”703 The Baltser Account 

Representative made clear that she could not register a bid for Mr. Baltser unless 

the payment would be coming from his company.704 However, she also explained 

that Mr. Baltser “would almost never tell us on behalf of who he is bidding for.”705 

 The Baltser Account Representative continued to advocate partnering with 

Mr. Baltser and forwarded several documents from Mr. Baltser to her colleagues 

regarding his club on May 31, 2013.706 One of the documents noted that Mr. Baltser 

would “obtain all the necessary KYC/AML checks required.”707 The document also 

noted “one of the key components of the KYC/AML process implies checking the 

identity of every client and collecting personally identifiable information.”708 The 

Baltser Account Representative recalled there were extensive discussions internally 

at Sotheby’s about Mr. Baltser performing the KYC checks on his own because 

Sotheby’s wanted to know who his clients were for KYC purposes.709 Sotheby’s 

asked him to reveal the identity of his clients, which “obviously made him very 

uncomfortable as a dealer would never do this normally.”710 She explained that Mr. 

Baltser was reluctant to do this, but Sotheby’s was unsure how it could satisfy itself 

 

701 SOT-115602. 

702 Subcommittee interview of Sotheby’s Baltser Account Representative (Jun. 27, 2019). 

703 Id. 

704 Id. 

705 Id. 

706 SOT-172699−711. 

707 Id. 

708 Id. 

709 Subcommittee interview of Sotheby’s Baltser Account Representative (Jun. 27, 2019). 

710 Id. 
101 

that his clients were compliant.711 She recalled that Mr. Baltser provided 

additional company and compliance documents to address Sotheby’s KYC concerns. 

She explained that dealers and art galleries never disclose who their clients are. 

However, she noted that any gallery owner was responsible for running its own 

client due diligence.712 She stated that Sotheby’s did due diligence on Mr. Baltser 

as the client, but Mr. Baltser would perform the due diligence on his own clients.713

In summer 2013, Mr. Baltser continued to push regarding a partnership 

between himself and Sotheby’s.714 Through the Baltser Account Representative, 

Mr. Baltser requested a meeting to “address all the questions and issues we have 

with” his proposal.715 In the same June 6, 2013 email, the Baltser Account 

Representative noted that “this week Gregory has set up a record for a Russian 

painting at auction buying Nichols Roerich’s canvas at Bonhams for [£7.88 

million],” referring to Mr. Baltser’s purchase of the Madonna Laboris.716

iii. The Baltser Account Representative Claims Arkady and 

Boris Rotenberg were Mr. Baltser’s Clients before they 

were Sanctioned 

As part of her continued advocacy on behalf of Mr. Baltser, and his business 

proposal to Sotheby’s, the Baltser Account Representative created a document in 

advance of a meeting on October 9, 2013 that showed Mr. Baltser’s clients included, 

Arkady and Boris Rotenberg.717 The Baltser Account Representative sent an email 

to her assistant that attached Forbes biographies of the men.718 The Deputy 

Chairman of Sotheby’s Europe and Chairman of Sotheby’s Russia (“Chairman of 

Sotheby’s Russia”) told the Subcommittee during an interview that when he saw the 

list that included Arkady and Boris Rotenberg, he thought, “It looked quite 

impressive to me—to have [] oligarchs on the list.”719 He confirmed that he believed 

the compliance department and the managing director of Sotheby’s would have seen 

the client list at the time, which was before sanctions were imposed on Arkady and 

Boris Rotenberg.720

 

711 Id. 

712 Id. 

713 Id. 

714 Subcommittee interview of Sotheby’s Baltser Account Representative (Jun. 27, 2019); SOT172576−78. 

715 SOT-172576−78. 

716 Id.

717 SOT-018689−93. 

718 SOT-018689−93. 

719 Subcommittee interview of the Deputy Chairman of Sotheby’s Europe and Chairman of Sotheby’s 

Russia (May 30, 2019). 

720 Id. 
102 

However, the Baltser Account Representative stated in her Subcommittee 

interview that Mr. Baltser never represented to her that Arkady and Boris 

Rotenberg were his clients.721 She stated she fabricated the fact the Rotenbergs 

were clients of Mr. Baltser to convince her employer, Sotheby’s, there was 

“significant business potential” in the agreement with Mr. Baltser.722 She stated 

she located the two Rotenbergs by googling Russians on the Forbes list.723 The 

biographies attached to her email listed Arkady Rotenberg as number 1,153 on the 

Forbes list and number 30 in Russia.724 The biography for Boris Rotenberg listed 

him as number 1,031 on the billionaires list and number 69 in Russia.725 The 

Subcommittee questions the truthfulness of Baltser Account Representative’s 

answer given that funds used by Mr. Baltser to purchase art were traced back to 

shell companies linked to the Rotenbergs. 

In order to facilitate a decision on Mr. Baltser’s proposal, the Baltser Account 

Representative and the Chairman of Sotheby’s Russia drafted a list of pros and 

cons.726 Once they both agreed on the list, they sent the list to the then Managing 

Director for Sotheby’s Europe (“Managing Director”) on October 15, 2013.727 The 

list included the following positive points they associated with the proposed 

business arrangement with Mr. Baltser: 

1. Baltser has a client base that wants to buy in our sales and have 

already been buying using Baltser’s services. We encourage his bids 

and he pays on time. 

2. He declared his plans willingly and honestly to us. He is regulated by 

the Russian authorities and before accepting to deal with any of his 

potential clients he has to go through KYC and do all due diligence. 

3. His logistics operation, to make buying in auction houses easy and fun, 

appeals to a number of wealthy Russians who trust him. Among his 

clients are Forbes list businessmen. 

4. On several occasions the identity of his clients has been revealed to us 

and we set up personal accounts for these clients. Some have already 

started transacting with us directly.728

The list also included “concerns:” 

1. We do not always know who his clients are. We do however know 

Baltser well and we have transacted with him for a number of years. 

 

721 Subcommittee interview of Sotheby’s Baltser Account Representative (Jun. 27, 2019). 

722 Id. 

723 Id. 

724 SOT-018689−93. 

725 Id. 

726 SOT-051481–82. 

727 SOT-018663−64. 

728 Id. 
103 

He is well known to the dealer community for the last 15 years. We 

assume we are happy that he transacts as usual, if we decide not to 

recognize his new plans. 

2. He can manipulate a market by a ring. There is no evidence at all to 

support this. Anyway this is not in his interest as the more clients he 

gets to bid the more fees he can charge. 

3. His business becomes too powerful and he dictates terms to us. We 

don’t think that will happen as we do not see this business growing 

into 100s of clients. Exclusivity is important to Russians. Also there 

are too many factions between the powerful elite who will always use 

different agents and dealers. There are many more powerful buyers in 

the market and full [buyer’s premium] is paid by all.729

The email to the Managing Director continued: 

Whilst we must be fully compliant it does seem duplicitous that we 

allow him to bid today but have worries when he explains his 

ambitions. Furthermore we allow other European and US agents that 

bid on behalf of clients and we do not demand to know who their 

clients are.730

The email then asked the question: “Should we be partners?”731 And concluded, “In 

our opinion, no. If Baltser has more clients bidding in our sales we benefit anyway. 

If his business succeeds and we think this is a winning formula we should then 

consider changing our office model.”732

As with Christie’s, Mr. Omelnitski provided documentation of anti-money 

laundering and client due diligence policies and procedures to Sotheby’s on behalf of 

Mr. Baltser, including a 50-page BALTZER LLP compliance procedures manual and 

customer due diligence measures, as well as BALTZER LLP incorporation 

documents.733 He also advocated for Mr. Baltser saying “Gregory is really anxious 

to commence co-operation with Sotheby’s” on October 11, 2013.734 The Baltser 

Account Representative told the Subcommittee she understood that Mr. Omelnitski 

was Mr. Baltser’s representative in the United Kingdom and that his role appeared 

mainly to involve helping Mr. Baltser set up BALTZER LLP.735

 

729 Id. 

730 Id. 

731 Id. 

732 Id. 

733 SOT-005232−82. 

734 SOT-004597−99. 

735 Subcommittee interview of Sotheby’s Baltser Account Representative (Jun. 27, 2019). 
104 

 On October 28, 2013, the Chairman of Sotheby’s Russia emailed the 

Managing Director to request a date to meet with Mr. Baltser in Moscow.736 He 

responded, “sure but not before I have heard your convincing arguments as to how 

we protect our position re ‘his’ clients!”737 The Chairman of Sotheby’s Russia 

responded referencing his October 15, 2013 email of positive points and concerns 

and noted “I saw [Mr. Baltser] last week with [the Baltser Account Representative] 

and he has agreed to reveal the names of his clients.”738

iv. Sotheby’s Declined Mr. Baltser’s Business Proposal 

Sotheby’s corporate headquarters in New York ultimately decided not to sign 

an agreement with Mr. Baltser.739 The Chairman of Sotheby’s Russia told the 

Subcommittee that one of the reasons Sotheby’s declined Mr. Baltser’s business 

proposal was due to concern over his undisclosed clients.740 The concerns extended 

beyond the identity of his clients to their potential to manipulate market prices by 

coordinating their bids at Sotheby’s auctions.741 He also explained that Sotheby’s 

wanted to have more control over the transactions by directing them to occur 

directly with Sotheby’s, and Mr. Baltser’s proposal overall was more advantageous 

for Mr. Baltser than Sotheby’s.742

Even though Sotheby’s declined Mr. Baltser’s proposal, Mr. Baltser continued 

to bid in auctions and purchase art from the auction house. The Chairman of 

Sotheby’s Russia explained the only difference was that Sotheby’s declined Mr. 

Baltser’s business proposal to create a direct cable for broadcasting high quality 

images of items being auctioned by Sotheby’s into Mr. Baltser’s private art club.743

c. Mr. Baltser Purchased Art with Funds Traced to Rotenberglinked Shell Companies 

The evidence indicates that the Rotenbergs used Mr. Baltser as their art 

adviser and agent both before and after the imposition of U.S. sanctions in March 

2014. Each purchase followed the same pattern. Mr. Baltser purchased the art and 

took title either through Steamort or later, his own company BALTZER LLP. Then, 

one of the shell companies highlighted above (Highland Business or Highland 

Ventures) would wire funds to Steamort to pay for the piece of art. Prior to U.S. 

 

736 SOT-018624. 

737 Id. 

738 Id. 

739 SOT-201809−11; SOT-01893; Subcommittee interview of the Deputy Chairman of Sotheby’s 

Europe and Chairman of Sotheby’s Russia (May 30, 2019). 

740 Subcommittee interview of the Deputy Chairman of Sotheby’s Europe and Chairman of Sotheby’s 

Russia (May 30, 2019). 

741 Id. 

742 Id. 

743 Id. 
105 

sanctions, Mr. Baltser routinely purchased art in the name of Steamort; Steamort 

would also wire the funds directly to the seller. 

Following the imposition of U.S. sanctions, which coincided with the 

establishment of BALTZER, Mr. Baltser added a step. Steamort generally wired 

funds to purchase the art to BALTZER LLP. Mr. Baltser would then take title for 

the purchased artwork in the name of BALTZER LLP and wire the funds to the 

auction house from his BALTZER LLP account. 

There were exceptions to this post-sanctions practice. One such exception 

documented below involved Highland Ventures taking title to a $7.5 million 

Magritte painting, while another shell company linked to Mr. Omelnitski 

(Advantage Alliance) wired the payment directly to the dealer. The Subcommittee 

traced those funds to a company owned by Arkady Rotenberg. 

4. Examples of Pre-Sanctions Art Purchases 

Several examples of how the Rotenbergs purchased art pre-sanctions through 

the services of Mr. Baltser follow. 

a. Nicholas Roerich’s And We Continue Fishing

Date of Sale November 1, 2011 

Price $1,426,500 

Auction House Sotheby’s New York 

Purchaser of Record Steamort Limited 

Transaction background. On November 1, 2011, Sotheby’s held an auction 

entitled “Important Russian Art.”744 Nicholas Roerich’s And We Continue Fishing

from the Bolling Family Collection was part of that sale and was projected to sell for 

between $1.2 million and $1.5 million.745 The Sotheby’s website noted that the 

painting was “the fourth of six paintings in Roerich’s Sancta series.”746 Further, the 

website stated, “These allegorical paintings are meant to represent a spiritual 

journey, and they are unique within the artist’s 1920s oeuvre for their distinctively 

Russian setting and imagery.”747

 

744 Important Russian Art, SOTHEBY’S (Nov. 1, 2011), 

https://www.sothebys.com/en/auctions/ecatalogue/2011/important-russian-art/lot.18.html; SOT000299−301. 

745 Id. 

746 Id. 

747 Id. 
106 

Mr. Baltser purchased the 

painting for $1,426,500 in the name of 

Steamort.748 Following the purchase, 

Sotheby’s invoiced Steamort for the net 

amount of $1,426,500.749 That amount 

included the $1,200,000 hammer price 

as well as the $226,500 buyer’s 

premium.750

Origin of funds used for 

purchase. On November 16, 2011, 

Highland Business wired $1,496,862.12 

from its account with Societe Generale 

to Steamort’s Tallinn Business Bank 

account.751 The notes for the wire transfer stated “payment under finder agreement 

[dated October 26, 2011].”752 Five days later, on November 21, 2011, Steamort 

wired $1,415,808.20 from its Tallinn Business Bank account to Sotheby’s New York 

account at JPMorgan Chase.753 The wire transfer instructions stated “[payment] by 

statement of account [dated November 2, 2011], Account N 51245607 for subjects of 

interior.”754

Owner. When questioned, the Sotheby’s Baltser Account Representative told 

the Subcommittee that she did not know for whom Mr. Baltser purchased this 

painting, nor did she recall asking him to reveal the identity of the buyer.755

b. Pierre-August Renoir’s Nature Morte aux Fruits

Date of Sale May 14, 2012 

Price $1,750,000 

Auction House Sotheby’s New York 

Purchaser of Record Steamort Limited 

 Transaction background. On May 14, 2012, Mr. Baltser purchased Renoir’s 

Nature Morte aux Fruits for $1,750,000 on behalf of Steamort through a private 

 

748 SOT-000406−07. 

749 Id. 

750 Id. 

751 SGA_PSI_00506−29, transaction no. 19453397. 

752 Id. 

753 DBAG0000024, line 256; JPMorgan Chase (Nov. 7, 2018), SB981623-F1 US Wire Search, 

Steamort, line 62. 

754 Id. 

755 Subcommittee interview of Sotheby’s Baltser Account Representative (Jun. 27, 2019). 

Nicholas Roerich’s And We Continue Fishing (Photo 

Credit: Sotheby’s) 
107 

sale.756 The invoice noted the sale was for Sotheby’s sale number: “NOPT12-

2012.”757

 Origin of funds used for purchase. On May 16, 2012, Highland Business 

wired $1,989,000 from its Societe Generale account to Steamort’s Tallinn Business 

Bank Account.758 The wire transfer instructions noted that the payment was 

“according to finder agreement dated [May 14, 2012].”759 On May 21, 2012, 

Steamort wired $1,750,000 from its Tallinn Business Bank account to Sotheby’s 

New York account at JPMorgan Chase.760 The wire transfer instructions noted the 

payment was for “Sale: NOPT12 -2012, Lot 0128 for subjects of interior.”761

Owner. When questioned, the Sotheby’s Baltser Account Representative told 

the Subcommittee that she did not know for whom Mr. Baltser purchased this 

painting, nor did she recall asking him to reveal the identity of the buyer.762

Shipment. Art Courier managed the shipment of the painting by Dietl to 

Germany for storage at the Hasenkamp art storage facility.763 

c. Pierre-Auguste Renoir’s Femmes dans un Paysage

Date of Sale June 11, 2012 

Price $2,800,000 

Auction House Sotheby’s Hong Kong 

Purchaser of Record Steamort Limited 

Transaction background. In May 2012, the Sotheby’s Baltser Account 

Representative learned of a private sale of Pierre-Auguste Renoir’s Femmes dans un 

Paysage in Hong Kong.764 The seller wanted $3,300,000 for the painting.765 On June 

7, 2012, the Baltser Account Representative said in an email that her client “seems 

to be interested however he is not ready to pay 3.3. His offer is 2.7 USD.”766 On 

June 8, 2012, the Sotheby’s representative for the seller in Hong Kong emailed the 

Baltser Account Representative confirming that “we have a go ahead to sell at $2.8 

 

756 SOT-006167. 

757 Id. 

758 SGA_PSI_00506−29, transaction no. 20892304. 

759 Id. 

760 DBAG0000024, line 320; JPMorgan Chase (Nov. 7, 2018), SB981623-F1 US Wire Search, 

Steamort, line 72. 

761 Id. 762 Subcommittee interview of Sotheby’s Baltser Account Representative (Jun. 27, 2019). 

763 Dietl Production (Jun. 28, 2018) (409911 Air Export JFK to FRA). 

764 SOT-043264−67. 

765 Id. 

766 Id. 
108 

million.”767 The email continued “we can bill in [Hong Kong] where there is no 

tax.”768 However, the Baltser Account Representative responded that “the buyer – 

Steamort Ltd – would like the deal to be done in [New York].”769 She then 

emphasized “it is very important to the buyer. The lot will then be shipped to 

Europe or Russia.”770 The Baltser Account Representative told the Subcommittee 

she did not recall why it was important for the deal to be done in New York.771

On June 11, 2012, Mr. Baltser – on behalf of Steamort – purchased the 

painting for $2,800,000.772 

Origin of funds used for purchase. On June 20, 2012, Highland Business 

wired $3,396,600 from its account at Societe Generale to Steamort’s Tallinn 

Business Bank account.773 The wire transfer instructions noted: “according to 

finder agreement.”774 On June 22, 2012, Steamort transferred $2,800,000 from its 

Tallinn Business Bank to Sotheby’s Hong Kong account at HSBC Hong Kong.775 

The payment notes for the wire transfer stated: “for subjects of interior.”776

Owner. When questioned, the Sotheby’s Baltser Account Representative told 

the Subcommittee that she did not know for whom Mr. Baltser purchased this 

painting, nor did she recall asking him to reveal the identity of the buyer.777

Shipment. Art Courier managed the shipment of the painting by Dietl for 

“temporary storage at [Cologne],” Germany at the Hasenkamp art storage 

facility.778

 

767 Id. 

768 Id. 

769 Id. 

770 Id. 

771 Subcommittee interview of Sotheby’s Baltser Account Representative (Jun. 27, 2019). 

772 SOT-006071; SOT-002387−91. 

773 SGA_PSI_00506−29, transaction no. 21173983. 

774 Id. 775 DBAG0000024, line 339. 

776 Id. 

777 Subcommittee interview of Sotheby’s Baltser Account Representative (Jun. 27, 2019). 

778 SOT-041359−60; SOT-041364. 
109 

d. René Magritte’s Le Rendez-Vous and Salvador Dali’s Papillons

Date of Sale November 7, 2012 

Price $869,000 

Auction House Sotheby’s New York 

Purchaser of Record Steamort Limited 

Transaction background. On November 7, 2012, at Sotheby’s Impressionist 

& Modern Art Sale, Mr. Baltser purchased René Magritte’s Le Rendez-vous and 

Salvador Dali’s Papillons in the name of Steamort.779 Le Rendez-vous sold for 

$662,500, which included the hammer price of $550,000 and buyer’s premium of 

$112,500.780 Papillons sold for $206,500, which included the hammer price of 

$170,000 and buyer’s premium of $36,500.781 Together the cost of the two paintings 

totaled $869,000.782

Origin of funds used for 

purchase. On November 13, 2012, 

Highland Business wired 

$903,180.11 from its account at 

Societe General to Steamort’s Tallinn 

Business Bank account.783 The wire 

transfer instructions noted: 

“according to finder agreement.”784 

On the same day, Steamort wired 

$869,000 from its Tallinn Business 

Bank to Sotheby’s New York account 

at JPMorgan Chase.785 The wire 

transfer noted it was “for subjects of 

interior.”786

Owner. When questioned, the 

Sotheby’s Baltser Account Representative told the Subcommittee that she did not 

know for whom Mr. Baltser purchased these paintings, nor did she recall asking 

him to reveal the identity of the buyer.787

 

779 SOT-000402−05. 

780 Id. 

781 Id. 

782 Id. 

783 SGA_PSI_00-00506−29, transaction no. 22320799. 

784 Id. 

785 DBAG0000024, line 394; JPMorgan Chase (Nov. 7, 2018), SB981623-F1 US Wire Search, 

Steamort, line 87. 

786 Id. 

787 Subcommittee interview of Sotheby’s Baltser Account Representative (Jun. 27, 2019). 

René Magritte’s Le Rendez-Vous (Photo Credit: 

Sotheby's)
110 

Shipment. Art Courier managed the shipment for both the paintings by Dietl 

to Germany for storage at the Hasenkamp art storage facility.788

e. Salvador Dali’s Monstruo Blando Adormecido

Date of Sale December 13, 2012 

Price $2,350,000 

Auction House Sotheby’s London 

Purchaser of Record Steamort Limited 

Transaction background. On December 13, 2012, Sotheby’s London invoiced 

Steamort through Mr. Baltser for the purchase of Salvador Dali’s Monstruo Blando 

Adormecido for $2,350,000 in a private sale.789 The invoice was numbered: 

92179804.790

In past instances, Mr. Baltser signed the purchase contract on behalf of 

Steamort. For this purchase, however, the purchase contract was signed by “A. 

Solovyeva.”791 The Baltser Account Representative emailed Mr. Baltser: “Sorry, 

this is not your signature. The accountants cannot accept it. Please sign it yourself 

and send me again.”792 Instead, Mr. Baltser sent a document that listed Alevtina 

Solovyeva as holding the power of attorney for Steamort.793 He also provided Ms. 

Solovyeva’s Russian passport.794

Origin of funds used for purchase. On December 14, 2012, Highland 

Business wired $3,113,550 from its Societe Generale account to Steamort’s account 

at Tallinn Business Bank.795 The wire transfer noted: “according to finder 

agreement.”796 On December 17, 2012, Steamort wired $2,350,000 from its Tallinn 

Business Bank to Sotheby’s London account at HSBC London.797 The wire transfer 

noted: “pmt by invoice 92179804 [dated December 13, 2012] for subjects of 

interior.”798

 

788 DIETL 409911 (Air Export JFK to FRA). 

789 SOT-005674−76. 

790 Id. 

791 SOT-005630−31. 

792 SOT-005690. 

793 SOT-005686−87. 

794 SOT-5681−82. 

795 JPMorgan Chase (Nov. 7, 2018), SB981623-F1 US Wire Search, Highland Business Group, line 

15. 

796 Id. 

797 DBAG0000024, line 409. 

798 Id. 
111 

Owner. When questioned, Sotheby’s Baltser Account Representative told the 

Subcommittee that she did not know for whom Mr. Baltser purchased this painting, 

nor did she recall asking him to reveal the identity of the buyer.799

Shipment. A November 29, 2012 letter from Sotheby’s London to Mr. Baltser 

confirmed the export license for the painting and also noted, “The next step is for 

the painting to be shipped to Cologne as per your discussions with [Sotheby’s 

Baltser Account Representative].”800 Art Courier managed the shipment of the 

painting to Germany for storage at the Hasenkamp art storage facility.801

f. Lyonel Feininger’s Brucke II; Salvador Dali’s Sans Titre: New 

Accessories; and Man Ray’s Le Trop-Plein

Date of Sale February 4, 2014 

Auction House Christie’s London 

Purchaser of Record Baltzer Limited 

Transaction background. On February 4, 2014, Christie’s London held its 

Impressionist/Modern Evening Sale.802 During that sale, Mr. Baltser purchased 

Lyonel Feininger’s Brucke II for £4,786,500.803 Baltser Limited took title of the 

painting.804 In another Christie’s sale that same day, The Art of the Surreal, Mr. 

Baltser purchased Salvador Dali’s Sans Titre: New Accessories and Man Ray’s Le 

trop-plein.805 Baltzer Limited took title for those two paintings as well.806

Origin of funds used for purchase. The Subcommittee did not receive wire 

information regarding the above paintings since Mr. Baltser purchased the 

paintings in British pounds in London. However, as explained below, it is likely Mr. 

Baltser purchased these paintings on behalf of the Rotenbergs. On August 30, 

2015, an employee of Mr. Baltser emailed a Christie’s employee a list of “links of our 

Client’s works.”807 Mr. Baltser’s employee explained “If you see any opportunities to 

promote these works or to make this collection more valuable please let me 

know.”808 The list of 31 works included Sans Titre, Le Trop-Plein, and Brucke II.809 

 

799 Subcommittee interview of Sotheby’s Baltser Account Representative (Jun. 27, 2019). 

800 SOT-015974 

801 SOT-005713−14. 

802 Sale 1505: Impressionist/Modern Evening Sale, CHRISTIE’S (Feb. 4, 2014), 

https://www.christies.com/salelanding/index.aspx?intsaleid=24583&saletitle=. 

803 Christies-PSI-00046436; see also Sale 1505: Impressionist/Modern Evening Sale, Lot 36, 

CHRISTIE’S (Feb. 4, 2014), https://www.christies.com/lotfinder/lot/lyonel-feininger-5766388-

details.aspx?from=salesummery&intobjectid=5766388. 

804 Christies-PSI-00046436. 

805 Christies-PSI-00046433−35. 

806 Id. 807 Christies-PSI-00062223−26. 

808 Id. 

809 Id. 
112 

The Subcommittee traced funds used to purchase 16 of these paintings to 

Rotenberg-linked shell companies. Specific to Brucke II, Mr. Baltser’s employee 

noted “The client wants to send this painting to an exhibition. Do you have any 

ideas? Do you have any news re Brucke 0? Is it possible to make an offer to the 

owner?”810

Owner. The Christie’s Baltser Client Advisor told the Subcommittee Mr. 

Baltser bid for these paintings over the phone with her.811 She stated someone was 

with Mr. Baltser during the bidding, but she did not recognize the individual’s voice 

or ask who was with Mr. Baltser.812 She did not know for whom Mr. Baltser 

purchased the paintings.813

As explained below, Mr. Baltser attempted to sell the Brucke II five years 

later at an auction at Sotheby’s in February 2019.814 However, prior to the auction, 

Sotheby’s withdrew Brucke II from the auction due to a lack of interest in bidding 

on the painting.815

5. The United States Sanctioned Arkady and Boris Rotenberg on 

March 20, 2014 

As stated above, the United States government imposed sanctions on certain 

“Russian government officials and members of the inner circle” on March 20, 2014 

in response to Russia’s annexation of Crimea, including Arkady and Boris 

Rotenberg.816 Despite these sanctions, Mr. Baltser’s business model did not change. 

He continued to purchase art just as he did before the United States imposed 

sanctions on the Rotenbergs and several entities associated with them.817 This 

continued despite the auction houses taking actions to block transactions by 

sanctioned individuals. 

Sotheby’s. Boris Rotenberg and his wife, Karina, were listed in the 

Sotheby’s client directory.818 Sotheby’s records reflect only one transaction 

 

810 Id. 

811 Subcommittee interview of Christie’s Baltser Client Advisor (Jul. 15, 2015). 

812 Id. 

813 Id. Counsel for Christie’s explained that this is consistent with historic practice for an auction 

house not to routinely ask dealers for the identity of dealers’ clients because of concerns that auction 

houses would poach dealers’ clients. See Letter from Counsel for Christie’s to the Subcommittee (Jul. 

22, 2020). 

814 SOT-202107−09. 

815 Subcommittee interview of Sotheby’s Baltser Account Representative (Jun. 27, 2019). 

816 Press Release, U.S. Dep’t of Treasury, Treasury Sanctions Russian Officials, Members of the 

Russian Leadership’s Inner Circle, and An Entity for Involvement in the Situation in Ukraine, (Mar. 

20, 2014), https://www.treasury.gov/press-center/press-releases/pages/jl23331.aspx. 

817 Subcommittee interview of Sotheby’s Baltser Account Representative (Jun. 27, 2019); 

Subcommittee interview of Christie’s Baltser Client Advisor (Jul. 15, 2019). 

818 Subcommittee interview of Sotheby’s Baltser Account Representative (Jun. 27, 2019). 
113 

regarding Boris or Katrina Rotenberg, which was Karina’s art purchase for 

approximately £3,000 in May 2012.819 In February 2014, the month before U.S. 

sanctions were imposed, the Baltser Account Representative requested that 

Sotheby’s consider Boris and his wife “level 2” collectors.820 Sotheby’s considered 

clients given this designation “high value clients or collectors” with “a total 

transaction value greater than or equal to $5 [million], but less than $25 [million] in 

the last three years” or “a documented collection value of between $5 and 25 

[million].”821

When asked by a Sotheby’s colleague over email about Boris and Karina 

Rotenberg’s collection interests, the Baltser Account Representative replied that 

they collected “Russian [works of art]” and “Sculpture (bronze).”822 The Baltser 

Account Representative told the Subcommittee she could not remember why she 

requested that Sotheby’s upgrade the Rotenbergs to level 2 clients when they had 

not made any purchases in the past two years before the request.823 She 

commented she believed moving them to a level 2 client better reflected their 

significant potential to purchase artwork because of their wealth, and would give 

them access to preferred events.824 The Baltser Account Representative said she 

never worked directly with Karina or Boris Rotenberg or met them in person.825

Internal emails indicate that Sotheby’s blocked Boris Rotenberg from 

purchasing or consigning with the auction house following the March 20, 2014 

sanctions.826 On March 21, 2014, a Sotheby’s employee emailed the Baltser Account 

Representative the list of 16 newly sanctioned Russian individuals from the U.S. 

Treasury Department that included Arkady and Boris Rotenberg and stated, “There 

are some familiar names on this list. I hope it won’t effect [sic] the rest of our 

business.”827 In another email to the Baltser Account Representative, another 

Sotheby’s employee noted, “quite a few of our clients are affected by this.”828 

According to the Baltser Account Representative, transactions with Boris Rotenberg 

were subsequently blocked.829

Christie’s. Christie’s General Counsel explained to the Subcommittee that 

following the imposition of U.S. sanctions on Russia in March 2014, Christie’s 

immediately recognized these sanctions posed a new “high risk” for them.830 She 

 

819 SOT-38579–85; SOT-038569–70. 

820 SOT-061223. 

821 SOT-059764–65. 

822 SOT-061223. 

823 Subcommittee interview of Sotheby’s Baltser Account Representative (Jun. 27, 2019). 

824 Id. 

825 Id. 

826 SOT-202066−69. 

827 SOT-202071−74. 

828 SOT-202066−69. 

829 Subcommittee interview of Sotheby’s Baltser Account Representative (Jun. 27, 2019). 

830 Subcommittee Briefing with Christie’s Employees (Feb. 8, 2019). 
114 

observed that Christie’s has a lot of Russian clients who are high net worth 

individuals.831 In response to the imposition of sanctions, Christie’s Compliance 

Manager for the Americas added that Christie’s screened their client lists against 

the revised SDN lists and restricted any accounts they identified in their system.832 

He noted that Christie’s increased its scrutiny of Russian art sales in the United 

Kingdom.833 Neither Christie’s General Counsel nor the Compliance Manager for 

the Americas were aware of any specific guidance provided to Christie’s employees 

in response to the March 2014 sanctions.834

A Christie’s employee circulated the U.S. Treasury Department’s 

announcement of the April 28, 2014 sanctions to a group with the note “I thought it 

might [be] interesting to read.”835 Another Christie’s employee responded “not good 

news unfortunately.”836 Still another Christie’s employee, Managing Director of 

Christie’s Russia, on the email chain responded: 

No. The message internally though should I think focus on the fact 

that there is huge amounts of money currently being repatriated to 

Russia from overseas. This will lead to a lot of money needing to be 

invested in ‘safe’ assets which means being able to sell [post sanctions] 

locally becomes increasing interesting. And hence the need for the new 

office is crucial. It’s also a strong message of support from Senior 

management that even in this economic climate Christie’s is still 

investing in its Russian operation by going ahead with the new office. 

So look at the positives.837

While another Christie’s employee responded that “its just more familiar faces are 

on the sanctions list,” the Managing Director of Christie’s Russia agreed, but wrote 

“I’m just telling you what I’m telling everyone in London...to fend off the ‘poor you’ 

‘poor russia’ chat!”838

On May 19, 2014, Christie’s blocked Arkady and Boris Rotenberg from 

Christie’s spring exhibition marketing.839

 

831 Id. 

832 Id. 

833 Id. 

834 Id. 

835 Christies-PSI-00035164−69. 

836 Id. 

837 Id. 

838 Id. 

839 Christies-PSI-00101137−74. 
115 

6. Examples of Post-Sanctions Art Purchases 

Despite blocking Arkady and Boris Rotenberg from buying or selling directly 

with their businesses, U.S. auction houses continued to do business with Mr. 

Baltser, even though he was known to be participating in art deals with wealthy 

Russian oligarchs, who could be subject to U.S. sanctions. In particular, the 

Sotheby’s Baltser Account Representative told Sotheby’s management that Arkady 

and Boris Rotenberg were Mr. Baltser’s clients.840 The Subcommittee also 

identified transactions with a private dealer and a public gallery based in New York 

linked to Rotenberg shell companies. In total, the Subcommittee identified 

$18,405,625 in art purchased in the months following the Rotenbergs being 

sanctioned by the United States. Examples of post-sanctions transactions 

facilitated by Mr. Baltser linked back to the Rotenbergs follow.841

a. Sotheby’s New York Impressionist and Modern Art Day Sale: 

Multiple Works 

Date of Sale May 8, 2014 

Price $6,806,125 

Auction House Sotheby’s New York 

Purchaser of Record BALTZER LLP 

Transaction background. On May 8, 2014, less than two months after the 

United States imposed sanctions on Russia, Sotheby’s New York held its 

Impressionist & Modern Art Day Sale.842 The sale brought in $66 million, “marking 

a new record result for this auction in New York.”843 At that sale, Mr. Baltser 

purchased the following items listed on invoice number 92320018:844

 

840 As explained above, in June 2019, the Sotheby’s Account Representative told the Subcommittee 

she fabricated this information in an effort to convince Sotheby’s management to accept Mr. Baltser 

proposal. See infra, pgs. 101-103. 

841 While art is the focus of this report, the Subcommittee also reviewed transactions related to Mr. 

Baltser purchasing wine through the auction houses. In one instance, Mr. Baltser facilitated 

Christie’s shipment of wine directly to a residence linked to Igor Rotenberg after Igor was sanctioned 

by the United States. In August 2018, an employee of Mr. Baltser requested that Christie’s ship 

$32,000 worth of wine to the following address: Case dell’Olmo in Monte Argentario, Italy. See

Christies-PSI-00080314. Public information suggests this residence belongs to Igor Rotenberg. See

Enea LandArt LLC Invoice, Mr. and Mrs. Rotenberg, Casa dell Olmo, Monte Argentario, Italy, 

https://novayagazeta.ru/storage/b/2014/09/26/Dok4.pdf. 

842 Impressionist & Modern Art Day Sale, SOTHEBY’S (May 8, 2014), 

https://www.sothebys.com/en/auctions/2014/impressionist-modern-art-day-sale-n09140.html. 

843 Id. 

844 SOT-028595−98. 
116 

Description Hammer 

Price 

Buyers 

Premium 

Total 

Henry Moore, Figures $500,000 $105,000 $605,000 

Marc Chagall, Femme et Enfant $980,000 $201,000 $1,181,000 

Lyonel Feininger, Ulla $170,000 $39,000 $209,000 

Lyonel Feininger, Yellow Ship on 

Red Sea

$60,000 $15,000 $75,000 

Lyonel Feininger, Steile Strasse $200,000 $45,000 $245,000 

Georges Braque, Pichet et Journal $2,500,000 $465,000 $2,965,000 

Tsuguharu Foujita, Portrait de 

Jeune Femme (Hanka Zborowska)

$290,000 $63,000 $353,000 

Maurice de Vlaminck, La Seine à 

Chatou

$475,000 $100,000 $575,000 

Tamara de Lempicka, Le 

Coquillage

$450,000 $95,000 $545,000 

The invoice number 92320018 reflected the total 

purchase of art by Mr. Baltser as $6,753,000.845 Mr. 

Baltser also purchased Emile Othon Friesz’s La sieste

for $53,125, which included a hammer price of $42,500 

and a buyer’s premium of $10,625.846 Sotheby’s 

numbered the invoice for La sieste as 92320019.847 

Together, both invoices totaled $6,806,125. 

The Sotheby’s Baltser Account Representative 

told the Subcommittee that Mr. Baltser had participated 

in the auction over the telephone with her.848

Origin of funds used for purchase. On May 27, 

2014, Steamort wired $3,956,825 from its Tallinn 

Business Bank account to BALTZER LLP’s Barclays 

account.849 The wire transfer noted it was “part 

payment by invoice 40 [dated May 16, 2014] for subjects 

of interior.”850 And on June 3, 2014 Steamort wired 

$2,965,000 from its Tallinn Business Bank account to 

BALTZER LLP’s Barclays account.851 That wire transfer stated, “payment by 

 

845 Id. 

846 SOT-028593−94. 

847 Id. 

848 Subcommittee interview of Sotheby’s Baltser Account Representative (Jun. 27, 2019). 

849 DBAG0000024, line 559; BARC_006850, line 10. 

850 Id. 

851 DBAG0000024, line 561; BARC_006850, line 11. 

Tsuguharu Foujita’s, Portrait 

de Jeune Femme/Hanka 

Zborowska (Photo Credit: 

Sotheby’s)
117 

invoice 40 [dated May 16, 2014] for subjects of interior.”852 Together the wires 

totaled $6,921,825. 

On June 3, 2014, BALTZER LLP 

wired $6,806,125 from its Barclays bank 

account to Sotheby’s New York JPMorgan 

Chase account.853 The payment details 

noted that the wired funds were for invoices 

“92320018” and “92320019.”854

Owner. When asked about these 

purchases, the Sotheby’s Baltser Account 

Representative stated she assumed Mr. 

Baltser was purchasing these lots on behalf 

of one or more of his clients.855 She recalled 

hearing Mr. Baltser talking to his client on 

the phone call during the auction and described “another Russian male voice in the 

background.”856 She did not know, however, with whom Mr. Baltser interacted 

during the auction.857

Shipment. Art Courier managed the shipment of the paintings by Dietl to 

Germany for storage at the Hasenkamp art storage facility.858

b. Works by Yakov Georgievich Chernikhov 

Date of Sale June 4, 2014 

Price $598,000 

Auction House Bonhams New York 

Purchaser of Record BALTZER LLP 

Transaction background. On June 4, 2014, Bonhams held an auction in New 

York titled, “The Story of the 20th Century.”859 The auction examined “the last 

century from several angles, including history & politics, art & literature and 

science & technology, closing with a private collection of materials related to the 

 

852 Id. 

853 JPMorgan Chase (Nov. 7, 2018), SB981623-F1 US Wire Search, Baltser, Line 11; BARC_006850, 

line 12. 

854 Id. 

855 Subcommittee interview of Sotheby’s Baltser Account Representative (Jun. 27, 2019). 

856 Id. 

857 Id. 

858 DIETL 45253 (Air Export JFK to CGN). 

859 Press Release, Bonhams, The Story of the 20th Century (Jun. 4, 2014), 

https://www.bonhams.com/press_release/16539/. 

George Braque's Pichet et Journal (Photo 

Credit: Sotheby's)
118 

history of computing.”860 The description of the auction continued: “The Arts & 

Literature section is anchored by an important graphic archive of Soviet architect 

and futuristic visionary, Yakov Chernikov, consisting of more than 1,000 original 

and richly detailed illustrations (estimate $350,000-450,000).”861 The auction was 

held in Bonhams’ Madison Avenue salesroom in New York.862

At the auction, Mr. Baltser purchased Lot 28 for $425,000, which included 

the $350,000 hammer price and a $75,000 buyer’s premium.863 Lot 28 included 

architectural drawings and sketches by Chernikhov.864 Mr. Baltser also purchased 

Lot 29 for $173,000, which included the $140,000 hammer price and a $33,000 

buyer’s premium.865 Lot 29 included Chernikhov’s “unpublished journals, 

sketchbooks, and treatises.”866 Bonhams invoiced BALTZER LLP for both lots.867 

The invoice noted “auction details: BOK14061NY – 21652” and the Client number 

for BALTZER LLP as 20353471.868

Origin of funds used for purchase. On June 16, 2014, Highland Ventures 

wired $612,950 from its Gazprombank account in Moscow to Steamort’s Tallinn 

Business Bank account.869 The wire transfer noted, “as per invoice 50 [dated June 9, 

2014].”870 On June 20, 2014, Steamort wired this same amount from its Tallinn 

Business Bank account to BALTZER LLP’s Barclays bank account.871 That wire 

transfer noted, “payment by invoice 61 [dated June 19, 2014] for subjects of 

interior.”872

On July 8, 2014, BALTZER LLP wired $598,000 from its Barclays bank 

account to Bonhams’ account at City National Bank.873 The wire instructions noted 

“as per invoice 19146328 for sale BOK14061NY-21652 Client ID 20353471.”874

 

860 Id. 

861 Id. 

862 Id. 

863 BON000569. 

864 Lot 28, Yakov Georgievich Chernikhov, BONHAMS (Jun. 4, 2014), 

https://www.bonhams.com/auctions/21652/lot/28/?category=list&length=186&page=1. 

865 BON000569. 

866 Lot 29, Yakov Georgievich Chernikhov, BONHAMS (Jun. 4, 2014), 

https://www.bonhams.com/auctions/21652/lot/29/?category=list&length=12&page=3. 

867 BON000569. 

868 Id. 

869 DBAG0000024, line 565. 

870 Id. 

871 DBAG0000024, line 568; BARC_006850, line 20. 

872 Id. 

873 BARC_006850, line 28. 

874 Id. 
119 

Shipment. Art Courier handled the shipment for both Chernikhov lots, which 

were shipped by Dietl to Germary for storage at the Hasenkamp art storage 

facility.875

c. René Magritte’s La Poitrine

Date of Sale June 2014 

Price $7,500,000 

Private Sale Private Art Dealer 

Purchaser of Record Highland Ventures Group Limited 

Transaction background. Magritte’s La Poitrine was sold through a private 

art dealer located in New York City (“Private Dealer”). The Private Dealer 

explained to the Subcommittee during her interview that the sale of La Poitrine

started like most of her sales, in that the seller’s agent reached out to her to ask if 

she knew anyone interested in buying the painting.876 Initially, the painting was 

located in Pittsburgh, Pennsylvania, but was transported to Cirkers Warehouse in 

New York City where the Private Dealer viewed it.877 The Private Dealer explained 

that she did extensive due diligence to ensure the provenance of the painting. That 

due diligence included researching the artwork using well-established industry 

resources, viewing the painting herself, confirming based on information available 

to her and an analysis of the label on the back of the painting that the seller was 

the owner and the work was authentic, and consulting legal counsel.878

The Private Dealer explained to the Subcommittee that she contacted Art 

Advisor 1 to see if she knew of an interested buyer for La Poitrine because she had 

known Art Advisor 1 was looking for a Magritte.879 The Private Dealer told the 

Subcommittee that she knew Art Advisor 1 from her time previously working for 

another gallery.880 The Private Dealer stated that Art Advisor 1 was well known to 

that gallery, as well as in the industry, and had made a number of purchases 

there.881 However, the Private Dealer had never sold a piece to Art Advisor 1 before 

contacting her regarding La Poitrine.882

The Private Dealer emailed Art Advisor 1 on May 9, 2014: “[A]ttached is a 

poor photo of the Magritte that has been offered to me for $9,500,000. I think it is a 

very good picture but too expensive. If you have interest I can see if there is 

 

875 DIETL 458323 (Air Export JFK to FRA). 

876 Id. 877 Id. 

878 Id. 

879 Id. 

880 Id. 

881 Id. 

882 Id. 
120 

flexibility. It is in NYC as well!”883 Following several emails regarding negotiations 

on price, the Private Dealer emailed Art Advisor 1 on May 19, 2014: “I believe the 

owner will take $6,750,000 if payment is fast so we can close at $7.5 if you can get 

him to agree.”884 Art Advisor 1 emailed the Private Dealer to inform her that she 

should issue the invoice to: 

HIGHLAND VENTURES GROUP LTD 

Akara bldg., 24 De Castro str. 

Wickhams Cay 1 Road Town 

Tortola, BVI885

The Private Dealer issued the invoice to Highland Ventures on May 30, 2014.886 

On June 5, 2014, Art Advisor 1 emailed the Private Dealer and relayed that 

“[t]he client want[s] the guarantee or certificate that it’s exact Magritte from 

catalogue reasonee....He wants guarantee that [] its exact[ly] this work from 

catalogue. And he send money.”887 Art Advisor 1 continued, “can we do just 

certifyed [sic] of the back photos by his lawyer? just easy 2 photos and certify that 

its original?”888 In response, the Private Dealer emailed Art Advisor 1 “an image of 

the back of the painting with the Carnegie Museum label and name of the owner 

covered” and a picture of “the loan letter from Carnegie (also name of owner 

covered).”889

At the request of the Private Dealer, a New York Law Firm describing itself 

as “a boutique law firm with a practice focused on art matters,” provided an opinion 

letter on La Poitrine dated June 5, 2014.890 The New York Law Firm addressed the 

opinion letter to “Undisclosed Potential Purchaser” at “Undisclosed Address.”891 

The opinion letter explained that a client of the law firm “requested that we view 

and confirm that the painting...is located in New York and ready to ship.”892 The 

letter stated that two attorneys, including the letter’s signatory, had viewed the 

painting and included two pictures of the front of the painting and one of the back 

(or verso).893 The letter stated that the attorneys were “provided with what appear 

to be copies of (i) an invoice reflecting the sale of the Artwork in 1965 (as described 

in the Catalogue Raisonne excerpt), (ii) 1981 correspondence with the editor of the 

 

883 DEALER000002−04. 

884 DEALER000007. 

885 DEALER0000018. 

886 DEALER0000026. 

887 DEALER000030. 

888 DEALER000033. 

889 DEALER000034−37. 

890 DEALER000040−43. 

891 Id. 

892 Id. 

893 Id. 
121 

Catalogue Raisonne, and (iii) museum documents with a name matching that on the 

verso of the painting.”894 The letter concluded: 

While we, as attorneys, cannot provide warranties or legal advice to an 

undisclosed potential purchaser, we can and do confirm that the facts 

set forth above based on our personal knowledge are accurate and that 

we did today view and photograph the painting as described above. 

We are also advised that the current owner of the painting is, in 

connection with its sale, prepared to represent and warrant without 

qualification or reservation of any kind that the painting is an 

authentic work of art created by Rene Magritte. 

 On June 10, 2014, the Private Dealer emailed Art Advisor 1 the executed 

purchase agreement dated May 28, 2014. The purchase agreement listed Highland 

Ventures Group Limited as the buyer, while the Private Dealer was listed as the 

agent for the “Undisclosed Owner” for the purchase price of “US$7,500,000 (to be 

paid in equivalent Euros (€) with rate determined on the date of payment).”895 The 

Private Dealer signed on behalf of her company as the Managing Member; Anna 

Wilkes signed on behalf of Highland Ventures as the company’s Director.896

 The purchase agreement attached wire transfer instructions that stated 

$7,500,000 was sent from Advantage Alliance’s account at Barclays to the Private 

Dealer’s account at First Republic Bank.897 On July 7, 2014, the Private Dealer 

wired Art Advisor 1’s mother $400,000 for “[f]ixed agreed introduction commission 

fees on purchase of the painting by the client” to her LGT Group Bank account.898 

 

894 Id. 

895 Private Dealer Production on file with the Subcommittee (Apr. 11, 2018). 

896 Id. 

897 Private Dealer Production on file with the Subcommittee (Apr. 11, 2018). 

898 Id.; Subcommittee interview of Private Dealer (Sept. 7, 2018). 
122 

The Private Dealer 

kept $237,500 and 

wired the remaining 

$6,862,500 to the 

seller’s agent.899 The 

Private Dealer told the 

Subcommittee she 

never questioned the 

involvement of 

Highland Ventures or 

Advantage Alliance in 

the transaction, nor 

would it occur to her to 

question the 

involvement of either 

entity.900 She stated 

she had relied, in part, 

on the advice of outside 

legal counsel and the 

involvement of established financial institutions in connection with the 

transaction.901 She explained she also took comfort in the fact that the buyer was 

represented by a well-known person in the industry who had previous dealings with 

well-established galleries and art auction houses.902

 Both the buyer and the seller remained confidential for the duration of the 

sale.903 The Subcommittee also interviewed Art Advisor 1, who reported that she 

did not know the buyer’s identity.904 Art Advisor 1 told the Subcommittee she was 

working for Art Advisor 2, who she believed knew the name of the buyer.905 The 

Subcommittee interviewed Art Advisor 2 and asked her for the name of the buyer of 

La Poitrine.906 Art Advisor 2 declined to give the Subcommittee the name of the 

buyer without the buyer’s consent; Subcommittee staff asked Art Advisor 2 to 

request the buyer allow her to provide their name to the Subcommittee.907 

Subcommittee staff also emailed Art Advisor 2 and asked for the name of the 

buyer.908 She initially replied that she was still waiting for her client to answer the 

 

899 Subcommittee interview of Private Dealer (Sept. 7, 2018). 

900 Id. 

901 Id. 902 Id. 903 Id. 

904 Subcommittee interview of Art Advisor 1 (Jun. 14, 2019). 

905 Id. 

906 Subcommittee interview of Art Advisor 2 (Jul. 12, 2019). 

907 Id. 

908 Email to Art Advisor 2 from Subcommittee Staff (Jul. 22, 2019). 

René Magritte’s La Poitrine (Photo Credit: Private Dealer)
123 

request to reveal his or her identity.909 Subcommittee staff emailed Art Advisor 2 

again a month later; she did not respond.910

Origin of funds used for purchase. The Subcommittee traced the payment for 

La Poitrine to Senton Holdings Limited (“Senton Holdings”).911 A Barclays’s 

investigation found that Senton Holdings is a company that is ultimately owned by 

Arkady Rotenberg.912 The Barclays investigatory memorandum explained that 

Senton Holdings was an offshore entity operated by AKM Associates Ltd on behalf 

of Estate Managers (Surrey) Ltd, which is owned by Arkady Rotenberg.913

On June 17, 2014, Senton Holdings wired $7,555,000 from its Gazprombank 

account in Moscow to Advantage Alliance’s Barclays account in the United 

Kingdom.914 The following day on June 18, 2014, Advantage Alliance sent 

$7,500,000 from its Barclays bank account to the Private Dealer’s account at First 

Republic Bank with the wire instructions, “as per purchase confirmation [dated 

May 28, 2014].”915

Shipment. A BALTZER employee coordinated the shipment of the painting 

through Dietl International.916 The painting was shipped to the Hasenkamp 

storage facility in Germany.917

d. Jean-Paul Riopelle’s Ombre d’Espace

Date of Sale June 23, 2014 

Price $1,750,000 

Private Sale Public Art Gallery in New York 

Purchaser of Record Igor Rotenberg; BALTZER LLP 

Transaction background. In June 2014, a public art gallery located in New 

York (the “Gallery”) exhibited works for sale at the annual Art Basel art fair in 

Switzerland.918 The exhibit included a “large canvas by Jean-Paul Riopelle, a 

leading member of the European Abstract Expressionist movement.”919 The Gallery 

described Riopelle’s Ombre d’Espace as “a thrilling juxtaposition of vivid reds, blues, 

 

909 Email from Art Advisor 2 to Subcommittee Staff (Sept. 6, 2019). 

910 Email from Subcommittee Staff to Art Advisor 2 (Oct. 10, 2019). 

911 BARC_000002, lines 24 and 25. 

912 BARC_006912−15. 

913 Id. 

914 BARC_000002, line 24. 

915 BARC_000002, line 25. 

916 DEALER000055; DEALER000070. 

917 DIETL 456047 (Air Export JFK to FRA). 

918 Website on file with the Subcommittee. 

919 Id. 
124 

yellows and greens in a rich, thick impasto. The painting flashes with energy, 

representing the dynamic action of the painter.”920

On June 17, 2014, 

representatives from the 

Gallery met Igor Rotenberg at 

the Art Basel exhibit in 

Switzerland.921 Igor Rotenberg 

gave the Gallery representative 

his business card, which 

indicated he was the Chairman 

of the Board for NPV 

Engineering.922 According to 

notes taken by the Gallery 

representative on Mr. Baltser’s 

business card, Mr. Baltser 

accompanied Igor Rotenberg as 

his art advisor and translator.923 

The notes also indicated a city and state where Mr. Baltser lived.924

Later that day, June 17, 2014, a Gallery representative emailed Igor 

Rotenberg, “Congratulations on your decision to acquire the extraordinary painting 

Ombre d’Espace, 1954, by Jean Paul Riopelle for your collection.”925 The email 

attached the invoice for the painting stating the price of $1,750,000.00 and 

addressed the invoice to: 

Igor Rotenberg 

Chairman of the Board of Directors 

NPV Engineering 

5, B Strochenovsky Pereulok 

Moscow 115054 RUSSIA926

This was the same address found on Igor Rotenberg’s business card.927

 On June 19, 2014, a Gallery representative emailed Mr. Baltser: “I 

understand from your conversation with [the Gallery owner] that information for 

the invoice for the Riopelle painting needs to be changed. Kindly send to us as soon 

 

920 Id. 

921 GALLERY PSI 0029. 

922 GALLERY PSI 0054. 

923 Id. 

924 Id. 

925 GALLERY PSI 0045−47. 

926 Id. 

927 GALLERY PSI 0054. 

Jean Paul Riopelle's Ombre d'Espace
125 

as possible the updated details.”928 Mr. Baltser responded that same day with the 

updated information, which requested the invoice be changed to BALTZER LLP.929 

Mr. Baltser requested, “Please issue an invoice to BALTZER LLP using our London 

address.”930 As requested, the Gallery representative updated the invoice with the 

following address: 

BALTZER LLP 

Suite 9, 68 South Lambeth Road 

London, UNITED KINGDOM931

Origin of funds used for purchase. On June 24, 2014, Highland Ventures 

wired $1,785,000.00 from its Gazprombank account to Steamort’s account at Tallinn 

Business Bank.932 The associated wire transfer instructions noted: “as per invoice 

no 65 [dated June 23, 2014].”933 On June 26, 2014, Steamort wired $1,785,000.00 

from its Tallinn Business Bank account to BALTZER LLP’s Barclay’s account.934 

The wire transfer instructions stated, “payment by invoice 65 [dated June 23, 2014] 

for subjects of interior.”935 That same day, BALTZER LLP sent $1,750,000 from its 

Barclay’s account to the Gallery’s account at Citibank.936 The wire instructions 

noted, “invoice 11116 [dated June 17, 2014] client BALTZER LLP.”937

Shipment. In July 2014, Ombre d’Espace was shipped to the Gallery’s 

warehouse in New York located at Crozier Fine Arts.938 Internal Gallery emails 

indicated that Mr. Baltser “asked us to keep the Riopelle in the US for Igor until his 

home in Italy is finished. He said that they would probably have it delivered in 

September when the home is ready.”939 On October 20, 2014, a Gallery 

representative emailed Crozier Fine Arts and requested that Ombre d’Espace be 

released to Dietl.940 Dietl, in turn, requested that the painting be released to 

Tiffany Transport on October 22, 2014.941 The airway bill indicated that the 

painting was shipped to the Hasenkamp art storage facility in Germany.942

 

928 GALLERY PSI 0073. 

929 GALLERY PSI 0075−76. The updated BALTZER LLP information for the invoice was on 

Markom Management letterhead. 

930 GALLERY PSI 0089−90. 

931 GALLERY PSI 0125−26. According to public filings, this was the same address for Markom 

Management Ltd at this time. Markom Management Ltd, Company No. 05291280, Annual Return, 

(Feb. 13, 2014), https://beta.companieshouse.gov.uk/company/05291280. 

932 DBAG0000024, line 571. 

933 Id. 

934 DBAG0000024, line 572. 

935 Id. 

936 BARC_006850, line 22; CITI0000628, 1811141 wires, Baltzer LLP, line 1 (Nov. 15, 2018). 

937 Id. 

938 GALLERY PSI 0218−20. 

939 GALLERY PSI 0223. 

940 GALLERY PSI 0257. 

941 GALLERY PSI 0265. 

942 GALLERY PSI 0306. 
126 

e. Ormond Gigli’s Girls in the Windows, New York City, 1960 

Date of Sale September 29, 2014 

Price $32,500 

Auction House Christie’s New York 

Purchaser of Record BALTZER LLP 

Transaction background. On September 29, 2014, Christie’s New York held a 

photography auction that included Ormand Gigli’s photograph Girls in the 

Windows, New York City, 1960.943 At that auction, Mr. Baltser purchased Girls in 

the Windows for $32,500.944 That price included a $26,000 hammer amount and a 

$6,500 buyer’s premium.945 The invoice was issued to BALTZER LLP in Moscow, 

Russia and was numbered: “DB 14002121.”946 The condition report for the 

photograph stated: 

Vibrantly colored 

chromogenic print on semiglass paper with margins 

and flush-mounted on 

aluminum. Very minor 

bumps to print corners not 

affecting image, visible 

under close inspection only. 

A beautiful print in 

excellent condition.947

Origin of funds used for 

purchase. On October 6, 2014, 

Highland Ventures wired 

$33,312.50 from its Gazprombank 

account to Steamort’s Tallinn 

Business Bank account.948 The 

wire noted “per request DD 

October 2, 2014 (Ref. Christie’s 

20/21 Photographs.”949 On October 

30, 2014, BALTZER LLP wired 

 

943 Lot 119: Girls in the Windows, CHRISTIE’S (Sept. 29, 2014), 

https://www.christies.com/lotfinder/Lot/ormond-gigli-b-1925-girls-in-the-5827326-details.aspx. 

944 Id. 

945 Christies-PSI-00034727−29. 

946 Id. 

947 Christies-PSI_00040866. 

948 DBAG0000024, line 587. 

949 Id. 

Ormond Gigli's Girls in the Windows, New York City, 1960 

(Photo Credit: Christie's)
127 

$32,500.00 to Christie’s New York account at JPMorgan Chase with the note 

“invoice no DB 14002121 [dated September 29, 2014].”950 

Owner. The Christie’s Baltser Client Advisor stated that since Christie’s 

New York auctioned the photograph, she was not on the phone with Mr. Baltser 

when he bid for it.951 She did not know for whom Mr. Baltser purchased the photo, 

nor did she ever ask him to reveal the identity of the buyer.952

f. Tamara De Lempicka’s Un Port Sous La Lune

Date of Sale November 6, 2014 

Price $665,000 

Auction House Christie’s New York 

Purchaser of Record BALTZER LLP 

Transaction background. On November 6, 2014, at Christie’s New York 

Impressionist & Modern Day Sale, BALTZER LLP successfully purchased Tamara 

De Lempicka’s Un port sous la lune for $665,000, which included the hammer price 

of $550,000 and a buyer’s premium of $115,000.953 Christie’s issued an invoice 

numbered: DB 14005218.954 The condition report for the painting stated: 

Oil on canvas. Wax-lined. There is frame abrasion to the extreme 

edges with associated losses in the upper corners. There are horizontal 

and vertical stretcher-bar marks. There are lines of stable craquelure 

to the canvas. There are surface abrasions to the right of the bird and 

above the hammer. There are pin-points of paint loss near the center 

right edge. Examined under ultra-violent light. There are scattered 

strokes of inpainting, predominantly to the aforementioned stretcherbar marks and to the wall on the left.955

Origin of funds used for purchase. On November 26, 2014, Highland 

Ventures sent three wires totaling $721,369.98 from its Gazprombank account in 

Moscow to Steamort’s Tallinn Business Bank account.956 These three wires were in 

 

950 BARC_006850, line 41; JPMorgan Chase (Nov. 7, 2018), SB981623-F1 US Wire Search, Baltzer, 

line 27. 

951 Subcommittee interview of Christie’s Baltser Client Advisor (Jul. 15, 2019). 

952 Id. As noted above, Counsel for Christie’s stated this was consistent with historic industry 

practice for an auction house not to routinely ask dealers for the identity of their clients because of 

concerns that auction houses would poach dealers’ clients. See Letter from Counsel for Christie’s to 

the Subcommittee (Jul. 22, 2020).

953 Christies-PSI-00071575−76. 

954 Id. 

955 Christies-PSI-00041703. 

956 DBAG0000024, lines 600, 601, and 602. 
128 

the following increments: $681,685; $15,435; and $24,249.98.957 All three wires 

referenced a request or invoice dated November 24, 2014.958

On December 1, 2014, Steamort 

wired $697,120.00 from its Tallinn 

Business Bank account to the BALTZER 

LLP’s Barclays bank account.959 On 

December 3, 2014, BALTZER LLP wired 

$665,000 to Christie’s New York.960 The 

wire noted it was for “invoice [number] 

DB 14005218 DD [November 6, 

2014].”961

Owner. When asked, the 

Christie’s Baltser Client Advisor stated 

she did not know for whom Mr. Baltser 

purchased the painting, nor did she ask 

Mr. Baltser to reveal the identity of the 

buyer.962

Shipment. Art Courier managed 

the shipment of Un port sous la lune by 

Dietl to the Hasenkamp art storage 

facility in Germany.963

g. Andreas Gursky’s James Bond Island I and Niagara Falls

Date of Sale November 13-14, 2014 

Price $1,054,000 

Auction House Phillips New York 

Purchaser of Record Steamort Ltd 

Transaction background. On November 13, 2014, Mr. Baltser purchased 

Andreas Gursky’s James Bond Island I at the Phillips Contemporary Art auction 

(Sale NY010714, Lot 14) in New York for $725,000.964 This amount included the 

 

957 Id. 

958 Id. 

959 DBAG0000024, line 605; BARC_006850, line 54. 

960 BARC_006850, line 55; JPMorgan Chase (Nov. 7, 2018), SB981623-F1 US Wire Search, Baltzer, 

line 35. 

961 Id. 

962 Subcommittee interview of Christie’s Baltser Client Advisor (Jul. 15, 2019). 

963 DIETL 46653 (Air Export JFK to FRA). 

964 PHILLIPS-00441. 

Tamara De Lempicka's Un Port Sous La Lune 

(Photo Credit: Christie's)
129 

$600,000 hammer price and the $125,000 buyer’s premium.965 The next day, 

November 14, 2014, Mr. Baltser purchased Gursky’s Niagara Falls at the same 

auction (Sale NY010814, Lot 228) for $329,000.966 That amount included the 

$270,000 hammer price and the $59,000 buyer’s premium.967 Phillips originally 

invoiced BALTZER LLP for both pieces of art on November 19, 2014.968 The two 

purchases together totaled $1,054,000.

Origin of funds used for purchase. On November 21, 2014, Highland 

Ventures wired $743,185 from its Gazprombank account in Moscow to Steamort’s 

Tallinn Business Bank account.969 The same day, Highland Ventures also wired 

$337,285 from its Moscow-based Gazprombank account to Steamort’s Tallinn 

Business Bank account.970 The amounts together totaled $1,080,470. 

However, instead of Steamort forwarding the payment to BALTZER LLP, 

Steamort paid Phillips directly. An employee of Mr. Baltser’s emailed Phillips that 

Mr. Baltser’s client wired the money for the paintings to the wrong account.971 Mr. 

Baltser’s employee asked Phillips to re-invoice to a third party, Steamort.972 Prior 

to re-invoicing to Steamort, consistent with Phillip’s then-controlling policy, Phillips 

required Steamort to establish an official account with Phillips. It was within this 

process that Phillips obtained Steamort’s certificate of incorporation and a letter of 

authorization,973 which were provided.974 The letter stated: 

STEAMORT LTD, a company incorporated under the laws of Belize 

under registration number 77,269 on the 28th of August 2008, 

(hereinafter referred to as the “Company”) hereby confirms that the 

Company has effected the payment of $1,054,000 (one million and fifty 

four thousand US dollars zero cents) with regard to the purchase of the 

artworks by BALTZER LLP who was acting as an agent of the 

Company at Phillips’ Contemporary Art auctions held on 13 and 14 

November 2014 in New York. The details of the purchased works of 

are as follows: 

 

965 Id. 

966 PHILLIPS-00442. 

967 Id. 

968 PHILLIPS-08282−84. 

969 DBAG0000024, line 598. 

970 DBAG0000024, line 597. 

971 PHILLIPS-08266−68; PHILLIPS-08280. 

972 Id. 

973 Id. 

974 PHILLIPS-08255−60. 
130 

Lot No. 14. – Andreas Gursky, James Bond 

Island I (Invoice No. NY10714/1025/1) 

Lot No. 228 – Andreas Gurksy, Niagara 

Falls (Invoice No. NY010814/1109/1).975

The letter was electronically signed by Steamort 

Director Jason Hughes.976 Phillips changed the 

purchaser on the invoice to Steamort for both 

works.977

On December 1, 2014, Steamort wired 

$725,000 and $329,000 from its Tallinn Business 

Bank account in two separate wires to Phillips’ 

account at Citibank.978 The wire transfer 

instructions noted the payment was for “payment 

by invoice...for subject of interior.”979 The 

instructions specifically referenced NY010714, Lot 

14 and NY010814, Lot 228.980

Owner. The Phillips Baltser Account Representative stated she did not know 

for whom Mr. Baltser purchased these photographs or the owner of Steamort.981

Shipment. The photographs were separated for shipment. James Bond 

Island I was shipped to Moscow with Alexander Dobrovskiy listed on the invoice on 

Phillips letterhead.982 Niagara Falls was shipped to Hasenkamp art storage facility 

in Germany with BALTZER LLP listed on the invoice.983 Art Courier managed the 

shipments handled by Dietl.984

 

975 Id. 

976 Id. 

977 PHILLIPS-00441−42. 

978 DBAG0000024, lines 603, 604. 

979 Id. 

980 Id. 

981 Subcommittee interview of Phillips Baltser Account Representative (Apr. 4, 2019). 

982 DIETL 465442 (Air Export JFK to MOW). While Phillips created invoices listing both BALTZER 

LLP and Steamort as the owner of James Bond Island I, Dietl’s shipping records included the invoice 

on Phillips letterhead indicating Alexander Dobrovskiy had purchased and taken title for the 

painting. After an internal investigation, Phillips found no record of this version of the invoice in its 

files, nor were any Phillips employees aware of the invoice listing Mr. Dobrovskiy as the owner of 

James Bond Island I. See Letter from Counsel for Phillips to Subcommittee staff (May 6, 2019). 

983 DIETL 46653 (Air Export JFK to FRA). 

984 DIETL 465442 (Air Export JFK to MOW); DIETL 46653 (Air Export JFK to FRA). 

Andreas Gursky's James Bond Island I 

(Photo Credit: Phillips)
131 

7. Mr. Baltser Shipped Art Purchased by Rotenberg-linked 

Companies to the Hasenkamp Storage Facility in Germany 

A number of pieces of art examined by the Subcommittee were shipped to 

Hasenkamp in Germany for storage. As such, the Subcommittee requested 

information from Hasenkamp on the pieces of art maintained there in storage 

related to Mr. Baltser or BALTZER LLP.985 In response, a Hasenkamp 

representative initially stated that he would need Mr. Baltser’s consent to release 

that information.986 Later, the Hasenkamp representative sent an email indicating 

that he had determined that Mr. Baltser only managed the art stored at the 

facility.987 The name on the contract with Hasenkamp to store the art was 

Highland Business Limited, which was later replaced by Taide Connoisseur 

Selection.988 The Hasenkamp representative could not provide the name of the 

individual behind Highland Business Limited, since the contract was signed in the 

company’s name.989

A website that is no longer publicly available stated, “Taide Connoisseur 

Selection Limited was incorporated on 5th October 2016 with registration number 

2016-00336 and is licensed by Financial Services Regulatory Authority as Private 

Mutual Fund (number IMF (PF)/025 as characterized by The International Mutual 

Act 12.16.”990 A tab for “Key Staff” listed only one person: Dr. Mark Omelnitski.991

In August 2019, during the course of the Subcommittee’s investigation, the 

Taide Connoisseur Selection account at Hasenkamp was closed and all art stored 

under the account was shipped to Moscow.992

The Subcommittee documented at least one purchase by Taide Connoisseur 

during the course of its investigation. That purchase was of Joseph Albers’s 

Embedded Linear Construction II. 

a. Joseph Albers’s Embedded Linear Construction II

Date of Sale September 28, 2017 

Price $47,500 

Auction House Christie’s New York 

Purchaser of Record Baltzer Limited 

 

985 Email from Subcommittee staff to Hasenkamp representative (Jun. 25, 2019). 

986 Email from Hasenkamp representative to Subcommittee staff (Jun. 28, 2019). 

987 Email from Hasenkamp representative to Subcommittee staff (Jul. 16, 2019). 

988 Id. 

989 Email from Hasenkamp representative to Subcommittee staff (Jul. 26, 2019). 

990 Screenshots of website on file with the Subcommittee. 

991 Id. 992 Email from Hasenkamp representative to Subcommittee staff (Jul. 23, 2020). 
132 

Transaction background. Josef Albers’s Embedded Linear Construction II

was offered for sale on September 28, 2017 as part of Christie’s Post-War and 

Contemporary Art sale in New York, sale number 13892.993 The work was Lot 17. 

The condition report provided by Christie’s noted that, “The work is structurally 

sound and in working order. Faint abrasions, small spots of discoloration and 

minute accretions are visible occasionally to the metal. A few faint handling marks 

are to the glass.”994 Mr. Baltser bought the work in the name of Baltzer Limited 

with a hammer price of $38,500 and a buyer’s premium of $9,500 for a total of 

$47,500.995 

Origin of funds used for purchase. On November 14, 2017, Taide Connoisseur 

sent $50,129.88 from its Gazprombank account in Moscow to Baltzer Limited’s 

account at Ameriabank.996 On November 16, 2017, Baltzer Limited sent $47,500 to 

Christie’s account at JPMorgan Chase in New York with the wire instructions “Sale 

no 13892 [dated September 28, 2017] Lot 17.”997

Shipment. A BALTZER 

employee emailed Christie’s on 

November 28, 2017 and requested that 

the auction house “organize shipping 

of this lot from New York to 

Frankfurt.”998 The BALTZER 

employee referred Christie’s to an ArtCourier employee who explained that 

“Christie’s will need to organize export 

from the USA and airfreight to 

[Frankfurt Airport] airport only, 

uncleared. We will handle supervision 

in Germany, collection of the crate 

from [Frankfort Airport] and local 

delivery under bond to our bonded 

warehouse by ourselves.”999 The 

contact for Christie’s at the Frankfort 

Airport was an employee of Hasenkamp 

art storage facility located in Cologne.1000 BALTZER paid Christie’s the shipping 

costs of $2,575 on January 12, 2018.1001

 

993 Christies-PSI-00026831. 

994 Christies-PSI-00026828. 

995 Christies-PSI-00058908−09. 

996 CITI000628, 1811141 wires, Baltzer Limited, line 6 (Nov. 15, 2018). 

997 JPMorgan Chase (Nov. 7, 2018), SB981623-F1 US Wire Search, Baltzer, line 166. 

998 Christies-PSI-00078529. 

999 Christies-PSI-00078545−50. 

1000 Christies-PSI-00078604−11. 

1001 Christies-PSI-00079041−61. 

Joseph Alber's Embedded Linear Construction II 

(Photo Credit: Christie's)
133 

8. Mr. Baltser Attempted to Sell Art Purchased with Funds Traced to 

Rotenberg-linked Companies 

Information provided to the Subcommittee indicates that Mr. Baltser has also 

sought to sell pieces of art owned by his clients. His efforts in 2015 to generate 

interest among potential buyers in 31 high-value paintings provides further 

evidence of Mr. Baltser’s business relationship with the Rotenbergs. 

a. Mr. Baltser Sent Christie’s a List of Works in the Rotenberg’s 

Collection 

On August 30, 2015, one of Mr. Baltser’s employees emailed Christie’s 

stating: “Please find below the links of our Client’s works....If you need any extra 

information for any of these works, please feel free to ask. If you see any 

opportunities to promote these works or to make this collection more valuable 

please let me know.”1002 Mr. Baltser’s employee continued: “I also have more 

clients with some [impressionist] works they are ready to sell.”1003

 The email listed 31 paintings by Giorgio de Chirico, Salvador Dali, René

Magritte, Pierre-Auguste Renoir, Man Ray, Lyonel Feininger, Tsuguharu Foujita, 

Tamara de Lempicka, Henry Moore, Marc Chagall, Maurice de Vlaminck, Georges 

Braque, and Yves Tanguy.1004 The list read as stated below and included the 

following paintings, 16 of which are also highlighted above:1005

1. Giorgio de Chirico 

Le Muse Inquietanti 

Ettore e Andromatica 

2. Salvador Dali 

Nu de Dos, Gala 

Bataille Autour d’un Pissenlit (This work is available for sale) 

Sans Titre 

Ampurdanese Yang and Yin 

Papillons, 1950 

Soft Monster, 1976 

3. Renee Magritte 

The Pleasure Principle 

La Generation Spontanee, 1937 (This work is available for sale) 

 

1002 Christies-PSI-00062223−26. 

1003 Id. 

1004 Id. 

1005 Id. 
134 

La Poitrine, 1960 

Le Renez-Vous 

La Traversee Difficile II 

Le Prince Charmant 

Towards Pleasure 

4. Pierre-Auguste Renoir 

Femme dans un paysage 

Still Life with Fruits 

5. Man Ray 

Le Trop-plein, 1937 

6. Lyonel Feininger 

Brucke II 

The Clients wants to send this painting to an exhibition. Do you have any ideas? 

Do you have any news re Brucke 0? Is it possible to make an offer to the owner? 

Steep Street 

Ulla 

Sailing ship on Red Sea 

7. Tsuguharu Foujita 

Hanka Zborowska 

8. Tamara De Lempicka 

Le Coquillage, 1939 

Nature Morte avec Lys et Photo 

New York Harbor 

All these three works are in Turin till 

tomorrow (August 31) and then they 

move to Verona for the exhibition. 

9. Henry Moore 

Three Figures 

10.Marc Chagall 

Scène champêtre 

11.Maurice de Vlaminck 

La Seine a Chatou, 1909 

12.Georges Braque 

Pichet et Journal Marc Chagall's Scene Champetre/Femme et enfant 

(Photo Credit: Sotheby's)
135 

13.Yves Tanguy 

The Speeding Bow 

When the Subcommittee showed the email containing the above list of works 

to her, the Christie’s Baltser Client Advisor noted that the email was not addressed 

to her, and she did not know who owned the collection of works.1006 As explained 

above, the Subcommittee traced funds used to purchase 16 of the 31 listed paintings 

back to Rotenberg-linked shell companies suggesting the Rotenbergs were the 

“client” of Mr. Baltser’s who owned the collection.1007

b. Mr. Baltser Attempted to Sell Brucke II

In late 2018, Mr. 

Baltser approached 

Christie’s and Sotheby’s 

about selling two works 

that were part of the 

collection listed above. 

Those two works were 

Salvador Dali’s Bataille 

Autour d’un Pissenlit

(“Battle around a 

dandelion”) and Lyonel 

Feininger’s Brucke II.1008 

Both auction houses 

provided estimates for the 

auction of the paintings and 

deal terms. Mr. Baltser 

 

1006 Subcommittee interview of Christie’s Baltser Client Advisor (Jul. 15, 2019). 

1007 The 16 paintings the Subcommittee traced funds used to purchase the paintings to Rotenberglinked shell companies include: (1) Salvador Dali’s Papillons and (2) Soft Monster (Monstruo Blando 

Adormecido); (3) Renee Magritte’s Le Rendez-Vouz and (4) La Poitrine; (5) Pierre-Auguste Renoir’s 

Femme dans un paysage and (6) Still life with fruits (Nature Morte aux fruits); (7) Lyonel Feininger’s 

Steep Street (Steile Strasse), (8) Ulla, and (9) Sailing ship on Red Sea; (10) Tsuguharu Foujita’s 

Hanka Zborowska (Portrait de Jeune Femme); (11) Tamara de Lempicka’s Le Coquillage and (12) 

New York Harbor (Un Port Sous la Lune); (13) Henry Moore’s Three Figures; (14) Marc Chagall’s 

Scene Champetre (Femme et Enfant); (15) Maurice de Vlaminck’s La Seine a Chatou; and (16) 

Georges Braque’s Pichet et Journal. 1008 As noted above, Dali’s Battle around a dandelion (Bataille Autour d’un Pissenlit) was included in 

the list of 31 works sent by Mr. Baltser’s employee to Christie’s. See Christies-PSI-00062223−26. 

The provenance provided by Mr. Baltser to Christie’s stated the current owner purchased the 

painting in July 2013 at ARTEXPO SA. Christies-PSI-0073512−13. Financial records provide 

support for this purchase. On July 11, 2013, Steamort sent $7,000,000 from its Tallinn Business 

Bank account to ARTEXPO SA’s UBS account in Geneva, Switzerland. DBAG0000024, line 462. 

The wire instructions stated: “Payment by invoice GB-130702 [dated July 4, 2013] for subject of 

interior.” Id. The fact that Christie’s only estimated the painting would sell for between £2 million 

and £3 million explains why the painting was not considered for auction. 

Salvador Dali's Battle Around a Dandelion (Photo Credit: Fundacio 

Gala Salvador Dali)
136 

chose Sotheby’s to auction Brucke II, but the painting was ultimately pulled from 

the auction due to lack of interest. At the time, the Subcommittee was investigating 

both auction houses and Mr. Baltser. 

i. Mr. Baltser Approached Christie’s to Sell Brucke II 

An employee of Mr. Baltser emailed Christie’s Baltser Client Advisor on 

December 7, 2018 to alert Christie’s that one of Mr. Baltser’s clients was interested 

in selling Salvador Dali’s Bataille Autour d’un Pissenlit and Lyonel Feininger’s 

Brucke II.1009 The email noted that both of the paintings were located in Germany 

for storage.1010 She responded to Mr. Baltser’s employee on December 21, 2018 that 

Christie’s suggested an offering price for Feininger’s Brucke II between £4 million 

and £6 million and an offering price between £2 million and £3 million for Dali’s 

Bataille Autour d’un Pissenlit.1011 

On January 14, 2019, Christie’s Director, Head of Evening Sale for 

Impressionist and Modern Art emailed Mr. Baltser the terms the auction house 

would provide if Mr. Baltser chose Christie’s to consign and sell Brucke II.1012 The 

email documented what Christie’s would offer with regard to “Sale date and 

Context: 

 Our Impressionist & Modern Art Evening Sale will be held on the 27th 

February. 

 The market for German art is incredibly strong at the moment, so now 

is a very good time for your client to offer the work. Your work 

would be a highlight of the German section of the sale. 

 You will recall the work was acquired from us by your client, so it is a 

work we know very well, and we also know the under-bidders of the 

work when it was sold to your client. This is a unique knowledge 

advantage that Christie’s has. 

 This February sale season will be one of the strongest ever at King 

Street – we have an incredible single owner collection ‘Hidden 

Treasures’ which will be before the Evening Sale, and a number of 

masterpieces confirmed for the Evening Sale. I attach an overview of 

these works, and also the related press releases. As a result, all top 

Impressionist & Modern collectors will be at Christie’s this 

season. 

 

1009 Christies-PSI-00081879−83. 

1010 Id. 

1011 Christies-PSI-00096106−26. 

1012 Christies-PSI-00082059−66. 
137 

 These works already consigned are very complementary to your work – 

and nothing we have consigned will compete with your 

work.”1013

The email also described the marketing Christie’s would offer stating, “We can 

provide the following: 

1. Feature window banner at King Street 

2. Frontispiece detail inclusion in the Impressionist & Modern Art 

Evening Sale 

3. Tour to New York as part of February’s sale preview (early February) 

4. Eight pages in the catalogue including a fold-out illustration 

5. Inclusion in Christie’s Magazine as a highlight of the Impressionist & 

Modern Art Evening Sale 

6. Inclusion in the Chinese language sale ebrochure 

7. Online highlight of the sale 

8. Postcard at front of House”1014

Financially, Christie’s offered “an enhanced hammer of 106%.”1015 Regarding 

timing, Christie’s noted, “We will be printing the catalogue around the 31st [of] 

January, so we have around two weeks to finalise everything. The timing will be 

tight, but it is all possible.”1016

 Two days later, on January 16, 2019, Christie’s offered to increase the 

hammer level to 107.5 percent explaining, “This is beyond our normal level for this 

value but we are keen to work with you on this project and to work again with this 

fantastic picture.”1017

 The Baltser Client Advisor explained that Christie’s was eager to have the 

Brucke II for the evening sale, but the consignment was very competitive.1018 She 

noted that Mr. Baltser was also talking to Sotheby’s about selling the painting.1019 

Ultimately, Mr. Baltser consigned Brucke II with Sotheby’s to sell, but the Baltser 

Client Advisor stated that Mr. Baltser did not make the decision.1020 She explained 

that Mr. Baltser told her the lawyer for his client who owned the painting made the 

decision to consign the painting to Sotheby’s.1021 

 

1013 Id. (emphasis in original). 

1014 Christies-PSI-00082059−66. 

1015 Id. (emphasis in original). 

1016 Id. 

1017 Christies-PSI-00065736. 

1018 Subcommittee interview of Christie’s Baltser Client Advisor (Jul. 15, 2019). 

1019 Id. 

1020 Id. 

1021 Id. 
138 

ii. Sotheby’s Agreed to Sell Brucke II

Mr. Baltser also contacted the Baltser Account Representative at Sotheby’s 

about consigning and selling Brucke II. She emailed Mr. Baltser that Sotheby’s 

estimated the painting would bring between £4 million and £6 million at 

auction.1022 In an internal Sotheby’s email, she confirmed that “the estimate was 

fine (around the same as offered by other auction houses).”1023 She also noted, “this 

client has an important collection which might be potentially for sale in the future:

4 works by Magritte 

3 works by Dali 

several De Chirico(s) 

several De Lempicka”1024

Brucke II was added to Sotheby’s Impressionist and Modern Art Evening Sale 

in London scheduled for February 26, 2019.1025 Two versions of the contract to 

consign and sell the painting existed. The first contract was dated January 15, 

2019.1026 The terms of the contract made clear that Sotheby’s estimated Brucke II

would sell for between £4,000,000 and £6,000,000 at auction.1027 The contract also 

established that Sotheby’s would pay Mr. Baltser “7.5 [percent] of the hammer price 

achieved for the [Brucke II].”1028 Mr. Omelnitski signed on behalf of BALTZER 

LLP, but Sotheby’s did not execute this version.1029

 Sotheby’s did sign a version of the contract with the same terms dated 

January 18, 2019.1030 However, this version was not signed by Mr. Omelnitski on 

behalf of Mr. Baltser. Instead, Markom Directors (Cyprus) LTD signed the January 

18, 2019 version of the contract on behalf of Mr. Baltser.1031 The Baltser Account 

Representative did not know why there were two versions of the contract, or why 

Sotheby’s only signed the January 18, 2019 version of the contract.1032 Following 

the execution of the contract, the Baltser Account Representative coordinated the 

shipment of Brucke II from Cologne to London.1033 

 

1022 SOT-202506. 

1023 SOT-202405. 

1024 Id. 

1025 A Century of Bauhaus: School of Modernity, SOTHEBY’S (Feb. 12, 2019), 

https://www.sothebys.com/en/articles/a-century-of-bauhaus-school-of-modernity. 

1026 SOT-202176−78. 

1027 Id. 

1028 Id. 

1029 Id. 

1030 SOT-202107−09. 

1031 Id. 

1032 Subcommittee interview of Sotheby’s Baltser Account Representative (Jun. 27, 2019). 

1033 SOT-202532−33. 
139 

Sotheby’s requested information related to sanctions compliance. In light of 

the Subcommittee’s ongoing investigation, Sotheby’s sent due diligence questions to 

Mr. Baltser regarding the proposed transaction and his general compliance 

program.1034 In the email attaching the questions, the Baltser Account 

Representative explained to Mr. Baltser, “There is additional scrutiny being placed 

on transactions with clients in certain regions and we are therefore asking for this 

additional information.”1035 The Baltser Account Representative told the 

Subcommittee this was the first time she had seen Sotheby’s request such 

information from a client.1036 

Sotheby’s questioned Mr. Baltser regarding the February 2014 purchaser of 

Brucke II. As part of Sotheby’s due diligence questions to Mr. Baltser regarding the 

Brucke II proposed consignment, Sotheby’s requested that Mr. Baltser respond to a 

series of questions regarding compliance with sanctions laws entitled, “Sotheby’s 

Sanctions Questionnaire.”1037 Sotheby’s asked: “When you purchased Lyonel 

Feininger, Brucke II, from Christie’s on 4 February 2014, were you acting as a 

bidding or buying agent on behalf of another individual or entity? If yes, on whose 

behalf were you acting?”1038 Mr. Baltser responded: 

The purchase was made on May 14, 2014. Yes, we were acting on 

behalf of our client, the legal entity. However, our Finder agreement 

with the client contains a non-disclosure provision, which legally 

prohibits us to disclose the client’s identity to anyone without the 

client’s consent. Further to the below explanations, please note that 

after all appropriate checks by us at that time, we are able to confirm 

absence of any sanctions of any country in relation to that client.1039

The Subcommittee subsequently requested that Sotheby’s provide it with a copy of 

those due diligence questions and answers and told Sotheby’s that it had no 

objection to Sotheby’s notifying Mr. Baltser at that time of the Subcommittee’s 

request for those documents. After the Subcommittee reviewed those materials, 

which disclosed the identity of the company and individual Mr. Baltser stated 

currently owned Brucke II; it did not disclose the name of the previous owner who 

purchased Brucke II at a Christie’s auction on February 4, 2014 due to a nondisclosure agreement. The Subcommittee requested that Sotheby’s ask Mr. Baltser 

to request that his previous client consent to disclosing his or her name to 

 

1034 SOT-202154−55. 

1035 Id. 

1036 Subcommittee interview of Sotheby’s Baltser Account Representative (Jun. 27, 2019). 

1037 SOT-202045−89. 

1038 Id. 

1039 Id. 
140 

Sotheby’s.1040 Sotheby’s requested the information, but as of the publishing of this 

report, Sotheby’s has been unable to obtain the requested consent.1041

In addition, recognizing the disparity in the public sale date and the sale date 

provided by Mr. Baltser in his response to Sotheby’s due diligence questions, the 

Chairman of Sotheby’s Russia emailed Mr. Baltser on April 1, 2019 and pointed out 

“the Christie’s sale occurred in February, and not in May.”1042 Mr. Baltser 

responded, “My apologies, you are indeed correct and the sale date was on 4 

February 2014.”1043

 Mr. Baltser did not provide the name of the February 2014 purchaser. As 

stated above, Mr. Baltser asserted that he could not reveal the name of the 

individual or entity that purchased the Brucke II on February 4, 2014 due to a nondisclosure provision in the relevant contract.1044 Mr. Baltser stated, however, “Yes, 

we have identified the ultimate beneficial owner of the purchasing entity, and 

determined that neither the entity nor the ultimate beneficial owner of the entity 

were on any sanctions list or blocked persons list in any jurisdiction.”1045

Sotheby’s also asked Mr. Baltser: “Are you now selling on behalf of another 

individual or entity or does any other individual or entity have a financial interest 

in the sale?”1046 Mr. Baltser responded to that question, “Yes, we are selling on 

behalf of our current client (who is different from, and not associated with, the 

previous client), whose details are presented below.”1047 The attachments asserted 

that the Brucke II now belonged to a company incorporated in the Marshall 

Islands.1048 In response to further questioning by Sotheby’s, Mr. Baltser confirmed 

ultimate beneficial owner of the Marshall Island company and provided a Russian 

passport for that individual.1049 He continued, “We confirm that appropriate 

sanctions checks have been done for [the UBO] and [the UBO] is not subject to 

sanctions in any jurisdiction.”1050

 Sotheby’s also questioned Mr. Baltser about his other clients and asked, 

“Have you done all appropriate checks to ensure that none of the individuals or 

entities on whose behalf you have acted for in prior transactions with Sotheby’s 

were subject to any sanctions by the U.S., UK, EU or other country?”1051 In 

 

1040 Email from Subcommittee Staff to Counsel for Sotheby’s (Jul. 18, 2019). 

1041 Email from Counsel for Sotheby’s to Subcommittee Staff (Jul. 18, 2019). 

1042 SOT-202045−89. 

1043 Id. 

1044 Id. 

1045 Id. 

1046 Id. 

1047 Id. 

1048 Id. 

1049 Id. (including a Russian passport for the named UBO at SOT-202083). 

1050 Id. 

1051 Id. 
141 

response, Mr. Baltser stated, “Yes, we have done such checks and none of these 

check found any sanctions applicable to the persons on whose behalf we have acted 

for in prior transactions with Sotheby’s.”1052

Brucke II was in storage at Hasenkamp art storage facility in Germany.1053 

The transport of the painting to London was managed by Art Courier.1054 The 

Baltser Account Representative explained that the Brucke II was removed from the 

auction because Sotheby’s was not able to identify any potential bidders before the 

day of the sale.1055

9. Mr. Baltser Did Not Cooperate with the Subcommittee’s 

Investigation 

 During the course of its investigation, the Subcommittee asked to interview 

Mr. Baltser.1056 Through his counsel, Mr. Baltser declined the interview request 

and stated that he was in Moscow with no plans to return to the United States. On 

August 23, 2019, Mr. Baltser’s counsel wrote to the Subcommittee on behalf of 

Baltzer Limited (the “August 2019 Letter”) following a discussion of the 

Subcommittee’s findings. The August 2019 letter stated, in part: 

Baltzer [Limited], a Cyprus company, is one of many art dealerships 

that offer services to individuals and entities who wish to purchase or 

sell fine art in private sales or at auctions. Some of Baltzer [Limited]’s 

clients are Russian nationals and entities, and Russian law allows 

such individuals and entities to engage Baltzer [Limited] on a basis 

which affords them confidentiality and prohibits Baltzer [Limited] 

from disclosing their identities without their consent under pains of 

administrative, civil, or criminal penalties. As such, Russian law 

severely limits the information that Baltzer [Limited] would be able to 

provide your Subcommittee. 

Baltzer [Limited] can confirm, however, that it has never, at any time, 

represented or transacted in any way with Boris or Arkady Rotenberg. 

Baltzer [Limited] strongly denies any suggestion to the contrary.1057

In another letter from his attorney on July 13, 2020 letter (the “July 2020 Letter”), 

Mr. Baltser stated that BALTZER LLP was dissolved in 2017, but never dealt with 

 

1052 Id. 

1053 SOT-202710−11; SOT-202727−28. 

1054 SOT-202727−28. 

1055 Subcommittee interview of Sotheby’s Baltser Account Representative (Jun. 27, 2019). 

1056 Subcommittee conference call with David Vicinanzo, Counsel for Baltzer Limited (Jul. 23, 2019). 

1057 Letter from David Vicinanzo, Counsel for Baltzer Limited to the Subcommittee (Aug. 23, 2019). 
142 

Arkady or Boris Rotenberg.1058 The July 2020 Letter also stated that Mr. Baltser’s 

agreement with Steamort required him to maintain the confidentiality of Steamort’s 

clients, but he “has personal knowledge that he was never involved in any 

transaction involving Steamort Ltd. that constituted any transaction with any 

person or entity that appear on the OFAC list at the time of the transaction.”1059 

The July 2020 Letter also stated that Mr. Baltser could not confirm whether he ever 

dealt with Igor Rotenberg due to Russian law.1060

Neither letter addressed whether Highland Business or Highland Ventures 

were clients of Baltzer Limited, BALTZER LLP, or Steamort. Despite ICIJ 

publishing information surrounding the Panama Papers since the spring of 2016, 

the July 2020 Letter stated that Baltzer Limited had: 

no access to or knowledge of the Panama Papers and is unaware of 

anyone who does. Accordingly, Baltzer has and must reasonably rely 

on the U.S. Department of Treasury’s own determination through the 

OFAC list. That list – the government’s own official position – 

confirms that Highland [Business and Highland Ventures are] not 

sanctioned. Additionally, the most widely-accepted commercial 

sanctions list check services, Visual Compliance and Thompson 

Reuters World-Check, do not list Highland entities as owned by Boris 

or Arkady Rotenberg.1061

As noted above, Barclays used the information found in the Panama Papers to 

conduct an extensive investigation of its accounts related to Mr. Omelnitski. This 

investigation determined that Mr. Omelnitski and his company “created shell 

companies for sanctioned individual [Arkady] Rotenberg...intentionally structured 

to be opaque in order to hide the identity of the true beneficiaries.”1062 The 

investigation led to the bank closing all Mr. Omelnitski’s accounts, including 

accounts related to Mr. Baltser.1063

10. During the Course of the Subcommittee’s Investigation Phillips, 

Christie’s, and Sotheby’s Stopped Transacting with Mr. Baltser 

 During the Subcommittee’s investigation Phillips, Christie’s, and Sotheby’s 

reported that the auction houses would no longer transact with Mr. Baltser or 

BALTZER LLP due to the Subcommittee’s investigation. Counsel for Phillips told 

 

1058 Letter from David Vicinanzo, Counsel for Baltzer Limited to the Subcommittee (Jul. 13, 2020). 

1059 Id. (noting that Nixon Peabody, Mr. Vicinanzo’s firm, did not represent BALTZER LLP or 

Steamort Ltd.). 

1060 Id. 1061 Letter from David Vicinanzo, Counsel for Baltzer Limited to the Subcommittee (Jul. 13, 2020). 

1062 BARC_006752−761. 

1063 BARC_005547−51; BARC_007036. 
143 

the Subcommittee it stopped transacting with Mr. Baltser when it received the 

Subcommittee’s initial request.1064 Christie’s stopped transacting with Mr. Baltser 

during the course of the Subcommittee’s investigation.1065 And counsel for 

Sotheby’s reported the auction house added Mr. Baltser to its “all transactions 

blocked” list, which requires an analysis of each transaction before it is executed.1066 

Counsel for Sotheby’s reported the auction house made this determination after 

reviewing documents from another auction house used by Subcommittee staff 

during its interview of a Sotheby’s employee. 

Counsel for Baltser Limited addressed the auction houses blocking Mr. 

Baltser in his August 2019 Letter response to the Subcommittee: 

 Despite Baltzer’s innocence, the inquiries posed by this Subcommittee 

to the art dealership and auction community have already severely 

impacted Baltzer’s ability to conduct the legitimate business in which 

it has engaged for several decades. This has done substantial 

collateral damage to Baltzer and its employees, and has forced Baltzer 

to largely suspend operations.1067

Counsel for Bonhams U.S. reported that the auction house has continued to 

transact with the BALTZER Agency in a limited capacity.1068 Specifically, Bonhams 

U.S. has accepted bids from the BALTZER Agency, but has not accepted 

consignments.1069 With respect to each bidding registration, the BALTZER Agency 

has been asked to confirm, prior to bidding, whether they are acting as an agent or 

principal.1070 If the BALTZER Agency has responded that it is acting as an agent, it 

must provide (and has provided) as a condition of being permitted to bid: (i) the full 

name, address and date of birth of the principal; (ii) a copy of the passport of the 

principal; (iii) a letter of authorization from the principal; and (iv) a completed 

bidding registration form, signed by the principal.1071

 

1064 Email to Subcommittee staff from Counsel for Phillips (Mar. 6, 2020). 

1065 Conference call with Counsel for Christie’s (Mar. 18, 2020). 

1066 Conference call with Counsel for Sotheby’s (Mar. 23, 2020). 

1067 Letter from David Vicinanzo, Counsel for Baltzer Limited to the Subcommittee (Aug. 23, 2019). 

1068 Email from Counsel for Bonhams to Subcommittee staff (Jul. 25, 2020). 

1069 Id. 1070 Id. 1071 Id. 
144 

IV. ADDITIONAL U.S. DOLLAR TRANSACTIONS BY ROTENBERGLINKED SHELL COMPANIES 

While the Subcommittee investigation concentrated on certain high-value art 

purchases involving the Rotenberg-related shell companies Highland Business and 

Highland Ventures, those companies did not limit their activities to art 

transactions. Records indicate that the companies were also used for other 

purposes and conducted other transactions in U.S. dollars after Arkady and Boris 

Rotenberg were sanctioned in March 2014. 

Between the announcement of sanctions by President Obama on March 16, 

2014 and the addition of Arkady and Boris Rotenberg to the SDN list on March 20, 

2014, shell companies linked to the Rotenbergs repatriated $121,966,500 to Russia. 

As explained below, these companies and others continued conducting 

transactions—including art purchases—in U.S. dollars totaling $91,554,202.30 after 

the imposition of U.S. sanctions on Arkady and Boris Rotenberg on March 20, 2014. 

Steamort. Although the UBO of Steamort is unknown, it is clear the 

company served as an intermediary between Rotenberg-linked shell companies and 

BALTZER LLP in the purchase of art. Following the imposition of sanctions on 

March 20, 2014, Steamort was a part of 160 transactions totaling 

$22,643,828.05.1072 The most recent transaction was dated May 15, 2017.1073

Highland Ventures. Highland Ventures sent $39,588,000.00 from its account 

at The Pictet Group in Switzerland to its Gazprombank account in Moscow on 

March 18, 2014, two days after President Obama announced sanctions on Russia 

related to its annexation of Crimea, but before Arkady and Boris Rotenberg were 

added to the SDN list on March 20, 2014.1074 

Highland Ventures continued to operate in U.S. dollars through U.S.-based 

financial institutions post-March 20, 2014.1075 Bank wire information shows that 

the company was involved in 36 transactions amounting to $16,433,804.16; most of 

these transactions were payments made by Highland Ventures to a variety of 

parties, including Steamort, Advantage Alliance, Ernst and Young, and other art 

galleries.1076

Advantage Alliance. Advantage Alliance also participated in U.S. dollar 

transactions through U.S.-based financial institutions following the imposition of 

U.S. sanctions in March 2014. From April 3, 2014 to June 6, 2016, Advantage 

 

1072 DBAG0000024, line 548–707. 

1073 DBAG0000024, line 707. 

1074 DBAG0000013, lines 17−18. 

1075 DBAG0000013, lines 19−54. 

1076 Id. 
145 

Alliance was involved in 87 transactions totaling $29,048,139.65.1077 Those 

transactions included the receipt of $16,033,224.30 and the payment of 

$13,014,915.35.1078 Despite dealing in U.S. dollars, the counterparties to these 

transactions were not always located in the United States.1079

Other Rotenberg-related shell companies listed in the Panama Papers 

engaged in high-dollar transactions unrelated to art after March 2014. 

Causeway Consulting. The Panama Papers linked Arkady Rotenberg to 

Causeway Consulting.1080 An investigation by Barclays confirmed Arkady 

Rotenberg owned the shell company.1081 Causeway Consulting sent $14,663,000 

from its Gazprombank account in Moscow through a U.S.-based financial institution 

to entities located outside of the United States from January 13, 2015 to April 8, 

2015.1082

Culloden Properties. The Panama Papers identified Boris Rotenberg as the 

owner of Culloden Properties.1083 An investigation by Barclays confirmed Boris 

Rotenberg was the UBO for the company.1084 Culloden Properties sent $82,378,500 

from its Pictet Group account to an account at Gazprombank in Moscow on March 

18, 2014, two days after President Obama announced sanctions on Russia for its 

occupation of Crimea, but before sanctions were imposed on March 20, 2014 on 

Arkady and Boris Rotenberg.1085 Culloden sent $255,800 in two transactions on 

March 11, 2015 and August 12, 2015 from its Gazprombank account in Moscow to 

entities located outside of the United States.1086

Other companies linked to the Rotenbergs also continued to transact in U.S. 

dollars post-sanctions on Arkady and Boris Rotenberg: 

Milasi Engineering. As explained above, the 2014 Financial Statement for 

Milasi Engineering listed Arkady Rotenberg as the UBO.1087 Post March 20, 2014 

sanctions on Arkady Rotenberg, Milasi Engineering sent $99,700 on March 13, 2015 

to a shell company located in BVI.1088

 

1077 BARC_000002, lines 23−109. 

1078 BARC_000002. 

1079 Id. 

1080 SGA_PSI_00063−82. 

1081 BARC_006124. 

1082 DBAG00000008, lines 3−5. 

1083 SGA_PSI_00063−82. 

1084 BARC_006068−69. 

1085 DBAG0000010, line 5. 

1086 DBAG0000010, lines 6−7. 

1087 BARC_006014−6043. 

1088 DBAG0000019, line 37. 
146 

 Senton Holdings. An investigation by Barclays determined that Arkady 

Rotenberg was the UBO for Senton Holdings.1089 After March 20, 2014, Senton 

Holdings was a part of transactions worth $8,409,930.44, with the most recent wire 

transfer dated June 26, 2018.1090 The largest transfer of $7,555,000, as mentioned 

above, was tied to the purchase of La Poitrine by René Magritte.1091 

 

1089 BARC_006912−15. 

1090 DBAG0000022, lines 5−15. 

1091 DBAG0000022, line 5. 
147 

V. CONCLUSION 

As Congress and the Executive Branch consider ways to ensure the 

effectiveness of sanctions, the role that shell companies play in allowing UBOs to 

remain anonymous must be considered. While there are legitimate business 

reasons to retain confidentiality, offshore entities with nominee directors and 

shareholders pose a significant threat to the success of U.S. efforts to block 

sanctioned individuals from engaging in prohibited transactions. 

The Subcommittee’s investigation also makes clear that the voluntary 

programs in place at auction houses are not enough. Further, there is a lack of 

transparency in private art sales. As such, Congress should add high-value art to 

the list of industries that must comply with BSA requirements. Given the intrinsic 

secrecy of the art industry, it is clear that change is needed in this multi-billiondollar industry.