PARIS — The heir of a New York art-dealing empire went on trial in Paris on Thursday for allegedly hiding his huge family fortune in offshore tax havens, prompting French authorities to demand hundreds of millions in back taxes.
Guy Wildenstein, a 70-year-old Franco-American art dealer, could be sentenced to up to 10 years in prison if convicted of the criminal charges in one of the biggest tax fraud trials ever held in France.
Investigating judges say Wildenstein and his nephew Alec Wildenstein heavily undervalued the family fortune in estate tax returns filed in 2002 and 2008 after Guy’s father, Daniel Wildenstein died in Paris in 2001.
The elder Wildenstein was a French citizen and renowned art dealer, collector and historian known to have owned numerous paintings by the likes of Monet, Renoir, Caravaggio, Picasso, Velazquez, and Rembrandt.
When he died, one of the trusts sheltering his fortune allegedly held a number of master paintings valued at $1.1 billion, court documents show.
Apart from small parts of the estate owned in France and London, “the whole patrimony of Daniel Wildenstein was held in trusts” located in tax havens like the Bahamas, Guernsey or the Cayman Islands, the investigating judges say in court documents.
The family fortune includes the famous Wildenstein & Co. art gallery in New York, thoroughbreds and racehorses, a private business jet, properties in New York and the Virgin Islands, and a 75,000-acre ranch in Kenya where parts of the Oscar-winning movie “Out of Africa” were shot.
Guy Wildenstein has said he knew his father had used trusts but didn’t know the details, being himself “neither a tax nor a financial specialist.”
At the opening hearing Thursday, defense lawyers asked the court to postpone the trial, arguing that the process of transferring assets to foreign trusts was then a legal tax optimization.
“At that time, there was no law” forbidding it, Wildenstein’s lawyer, Herve Temime, told the court. “There is therefore an absolute doubt on the very existence of unpaid taxes.”
French authorities are demanding a staggering 553 million euros ($621 million) in back taxes.
Wildenstein is challenging both the amount of back taxes claimed by French tax authorities and the fraud allegation itself in a separate procedure before a tax judge, Temime said.
Defense lawyers argued the criminal trial therefore should be suspended until it is determined whether the trust transfers constituted fraud.
Prosecutor Mireille Venet countered that the criminal court should judge the case, arguing a recent higher court ruling allows tax and criminal proceedings to move forward in tandem.
The presiding judge said the court would decide whether to postpone the trial on Monday.
The case was opened after Guy’s stepmother, Sylvia, who has since died, and sister-in-law Liouba, brought documents to French authorities amid fears they were being swindled.
Liouba is also a defendant in the trial, along with Alec, three tax lawyers and two trusts, all accused of committing or helping in tax fraud or money laundering.
If not adjourned, the trial is expected to last almost a month.