Long Island Art Dealer Indicted For Massive Art Fraud, Money Laundering, And Tax Scheme
Glafira Rosales Charged With Knowingly Selling Fake Artworks Purportedly By Renowned Artists In $30 Million Scheme
Preet Bharara, the United States Attorney for the Southern District of New York, Toni Weirauch, the Special Agent-in-Charge of the New York Field Division of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), and George Venizelos, the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the filing of a seven-count Indictment charging GLAFIRA ROSALES, an art dealer, with participating in a $30 million fraud in which she sold over 60 works of fake art to two Manhattan galleries. ROSALES was also charged with money laundering and tax crimes related to the art fraud scheme. Rosales, who was originally charged in a complaint, was arrested on May 21, 2013. The case has been assigned to U.S. District Court Judge Katherine Polk Failla and ROSALES will be arraigned on Friday, July 19, 2013, at 11 a.m.
Manhattan U.S. Attorney Preet Bharara said: “The indictment depicts a complete circle of fraud perpetrated by Glafira Rosales – fake paintings sold on behalf of non-existent clients with money deposited into a hidden bank account. The one thing about this story that is true is that this alleged fraud will be prosecuted.”
IRS Special Agent-in-Charge Toni Weirauch said: “The tax charges alleged in this indictment center on the concealment of taxable income from the sale of counterfeit paintings. This investigation is an excellent example of how the government is dedicated to detecting and investigating all kinds of income tax fraud schemes and seeing that those who commit tax fraud are prosecuted. It is important for the public to feel confident that their government is working to ensure that everyone pays their fair share.”
FBI Assistant Director-in-Charge Venizelos said: “As the indictment alleges, Glafira Rosales knowingly peddled fakes to two Manhattan art galleries. To prolong her scheme for a decade-and-a-half, not only the paintings were fake, but the stories behind them as well. The pictures Rosales painted of the anonymous Swiss client – a pure fiction – and the Spanish collector – a real person but not, as purported, the owner of any of the paintings – were as fake as the dozens of works she attributed to the modern masters.”
According to the allegations contained in the Indictment and the Complaint filed in Manhattan federal court:
Starting in 1994 and continuing through 2009, ROSALES sold more than 60 never-before exhibited and previously unknown works of art that she claimed were painted by some of the most famous artists of the 20th century, including Jackson Pollock, Mark Rothko, and Willem de Kooning. ROSALES sold these works of art to two prominent Manhattan galleries for approximately $33.2 million. In selling some of the paintings to the two galleries, she purported to represent a client with ties to Switzerland who had inherited the paintings and wanted to sell them, but who also wished to remain anonymous (the “Purported Swiss Client”). For the remainder of the paintings, she purported to represent a Spanish collector (the “Purported Spanish Collector”). ROSALES also claimed that a portion of the price paid by the Manhattan galleries would be her commission for selling the paintings and that the remainder would be passed along to her clients.
In contrast to the claims made by ROSALES, as alleged in the Indictment:
- the paintings ROSALES sold were fake, that is, not by the hand of the artists that she represented them to be;
- ROSALES knew that the paintings were counterfeit and that the statements she made about their provenance were false;
- the Purported Swiss Client on whose behalf she purported to sell most of the paintings to the Manhattan galleries never existed;
- the Purported Spanish Collector on whose behalf she claimed to sell the remainder of the paintings to the Manhattan galleries never owned the paintings;
- instead of passing along a substantial portion of the proceeds of the sale of the various paintings, she kept all or substantially all of the proceeds, and transferred substantial portions of the proceeds to an account maintained by her then-boyfriend; and
- ROSALES concealed and disguised the nature, location, source, ownership, and control of the proceeds of sales of the fake works by causing the Manhattan galleries to transfer substantial portions of the proceeds of the sales to foreign bank accounts, and by transferring, and causing to be transferred, proceeds of the sales from foreign bank accounts to accounts maintained in the United States.
ROSALES filed tax returns that falsely claimed she had not kept all, or substantially all of the proceeds from the sale of the purported clients’ paintings, when, in fact, she kept all or nearly all of the proceeds. In total, she failed to report the receipt of at least $12.5 million of income for the years 2006 through 2008.
In addition, ROSALES received most of the proceeds from the sale of the paintings in a foreign bank account that she hid from, and failed to report to, the IRS. U.S. taxpayers are required to report the existence of any foreign bank account that holds more than $10,000 at any time during a given year by the filing of a Report of Foreign Bank and Financial Accounts, Form TD F 90-22.1 (“FBAR”). ROSALES failed to file FBARs for the years 2010 and 2011.
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ROSALES, 56, of Sands Point, New York, is charged with one count of wire fraud, which carries a maximum of 20 years in prison; one count of money laundering, which carries a maximum of 20 years in prison; three false tax return charges, each of which carries a maximum of three years in prison; and two willful failure to file FBAR charges, each of which carries a maximum sentence of five years in prison.
Mr. Bharara praised the outstanding efforts of IRS-CI and FBI in the investigation, which he noted is ongoing. He also thanked the Department of Justice’s Tax Division for their significant assistance in the investigation.
This case is being handled by the Office’s Complex Frauds Unit. Assistant U.S. Attorneys Jason P. Hernandez and Daniel W. Levy are in charge of the prosecution.
The charges and allegations contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.