See All Ads

Dealer Charged with Tax Crimes

M.A.D. staff | May 21st, 2013

Art dealer Glafira Rosales of Sands Point, New York, was arrested on May 21 for filing false tax returns and for failing to disclose foreign bank accounts to the IRS.

Rosales allegedly failed to report at least $12.5 million from the sale of works purported to be by celebrated Abstract Expressionist artists. Most of the income was received in bank accounts in Spain that Rosales hid from and failed to disclose to the IRS.

Manhattan U.S. Attorney Preet Bharara said in a press release: “As alleged, Glafira Rosales gave new meaning to the phrase ‘artful dodger’ by avoiding taxes on millions of dollars in income from dealing in fake artworks for fake clients. Her arrest shows that no matter how clever the scheme, attempts to hide income from the government to avoid paying taxes on that income will be discovered and prosecuted.”

IRS Special Agent-in-Charge Toni Weirauch said: “The sale of a piece of art for profit is a taxable event, and the seller is responsible for paying his or her fair share of tax, even if the art is counterfeit. The allegations in this investigation illustrate a ‘double-barreled’ tax evasion scheme: disguising who was actually selling the art and profiting from the sales, through the creation of a fictitious seller and the use of the name of a collector not associated with the transactions, and further concealing the proceeds by depositing them in an unreported foreign bank account.”

According to the allegations in the complaint, in the 1990’s Rosales began selling previously unknown paintings that had never been exhibited before that she claimed had been painted by some of the most famous artists of the 20th century, including Jackson Pollock, Mark Rothko, and Willem de Kooning. From 2006 through 2008, Rosales sold approximately one dozen of these paintings to two prominent Manhattan galleries for over $14 million.

In selling most 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. For the remainder of the paintings, she purported to represent a Spanish collector.

Experts have concluded that at least several of the paintings sold by her are counterfeit. The investigation revealed that the Swiss client never existed; that the Spanish collector never owned the paintings; and that instead of passing along a substantial portion of the proceeds of the sale of the various paintings, she kept all or almost all of the proceeds and transferred substantial portions to an account maintained by her then-boyfriend.

Rosales filed tax returns that falsely claimed she had not kept the proceeds from the sale of the paintings, when, in fact, she had. In total, she failed to report the receipt of at least $12.5 million of income for the years 2006 through 2008.

Rosales received most of the proceeds from the sale of the paintings in foreign bank accounts in Spain 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 filing a Report of Foreign Bank and Financial Accounts, Form TD F 90-22.1 (FBAR). Rosales failed to file an FBAR for the years 2007 through 2011.

Rosales is charged with filing false tax returns for the years 2006 through 2008 and with willful failure to disclose an offshore bank account for the years 2007 through 2011. On each of the three false tax return charges, she faces a maximum sentence of three years in prison, a maximum term of three years of supervised release, and a maximum fine of $100,000. On each of the five charges of willful failure to file FBARs, she faces a maximum sentence of five years in prison, a maximum term of five years of supervised release, and a maximum fine of $250,000.

Originally published in the July 2013 issue of Maine Antique Digest. © 2013 Maine Antique Digest

comments powered by Disqus