NEW YORK – The former chairman of Sotheby’s “watched from on high” as his subordinates carried out his orders hatching a price-fixing scheme with Christie’s and cheating customers out of millions of dollars, a federal prosecutor said in closing arguments Monday.
A. Alfred Taubman, 76, of Bloomfield Hills, Mich., has been on trial for three weeks on charges he and Christie’s Chairman Anthony Tennant stole as much as $400 million in commissions from sellers from 1993 to 1999.
The defense was scheduled to deliver closing arguments Monday afternoon and jury deliberations were to begin Tuesday.
Assistant U.S. Attorney John Greene told the jury in closing arguments that Taubman had the motive, the capacity and the opportunity to carry out the price-fixing conspiracy.
Sotheby’s profits started shrinking in the late 1980s, from $410 million in 1989 to $202 million in 1992, and Taubman’s stock in the company had plummeted as well, Greene said.
The prosecution’s case centered on testimony by Diana “DeDe” Brooks, the former chief executive for Sotheby’s who pleaded guilty in October 2000 to price-fixing charges. She agreed to testify against Taubman in hopes of avoiding a three-year prison sentence.
Brooks, 51, testified that the plot was conceived during a secret 1993 meeting in London at which Taubman and Tennant agreed they “were killing each other on the bottom line, and that it was time to do something about it.”
During testimony, Brooks and her counterpart at Christie’s, Christopher Davidge, both said their bosses ordered them to end a costly rivalry by eliminating discounts and charging identical, non-negotiable commissions. Taubman also warned her to keep quiet about it, Brooks added.
The secret deal denied sellers the right to negotiate a lower commission from one auction house by threatening to take business to the other. Since some auction items are worth millions of dollars, negotiating even part of a percentage less could translate into considerable savings for the seller.
“The fix was in,” Greene said.
During testimony, the defense tried to show that Brooks rigged commissions behind Taubman’s back.
William Sheridan, chief financial officer of Sotheby’s, testified Brooks complained about having to answer to “old men who fall asleep at meetings.” She once even extended a $105 million line of credit to a buyer without getting the board of director’s mandatory approval, he said.
Another Sotheby’s executive, Michael Curl, claimed when he mentioned speaking to Taubman about the business, Brooks snapped: “Alfred Taubman doesn’t run this company – I do.”
Brooks’ predecessor, Michael Ainslie, portrayed Taubman as being demanding about maintaining Sotheby’s lead in market share, but confused by math. Shown an internal document prosecutors say details the price-fixing conspiracy, Ainslie said, “I can’t imagine him being able to understand the complexity (of the document)…. It’s all about numbers.”
Tennant, 71, of Andover, England, has said he will not come to the United States to face charges in an antitrust case not covered by extradition treaties.
Sotheby’s pleaded guilty to conspiracy and was sentenced to pay $45 million. Christie’s was granted amnesty by the government for its cooperation.
If convicted, Taubman would face up to three years in prison.
