Art Dealer Scams Russian Billionaire: Your Broker Should Never Provide Escrow

April 28, 2015  |   How to Buy & Sell Websites   |     |   Comments Off on Art Dealer Scams Russian Billionaire: Your Broker Should Never Provide Escrow

I just read the interesting Bloomberg article about how art dealer Yves Bouvier allegedly scammed Russian billionaire Dmitry Rybolovlev when Rybolovlev purchased a $118,000,000 Modigliani painting through the dealer.

I’ll give you a little bit of background on the story: Rybolovlev has purchased over $2 billion worth of art through the art dealer over a 10-year time-frame. During this time, Bouvier had inflated invoices that detailed the sale prices of some of the art. The art investor and his broker never had any brokerage agreement and Rybolovlev never signed any sale contracts with the art sellers directly.

The Modigliani painting was actually sold to Rybolovlev for about $94 million by Steven Cohen, the hedge fund manager. But Bouvier invoiced Rybolovlev for $118 million. As such, the buyer paid $24 million over the asking price. $118 million went to the dealer Bouvier who then, in turn, paid the seller $94 million and pocketed the difference.

The Flow of Money

Art deals require discretion and anonymity so it is understandable that buyers want to remain in the shadows when purchasing important pieces of art. Hence the use of middlemen to acquire expensive works of art. In addition, most purchases are made through offshore companies controlled by trusts or other offshore entities.

For the sake of anonymity, sale contracts do not usually include the buyer’s name. However, in any business transaction, especially transactions of large dollar numbers, there must be a sale contract between the buyer and the seller. Even if the buyer and seller are trusts or shell corporations.

In the art deal described above, the art dealer presented himself not as the escrow service or as the buyer’s agent but as the seller of the art to the buyer. Essentially, he claimed that he bought the art from the seller and re-sold it to the buyer for profit. This has been deemed an alleged fraud.

But the real mistake made by the investor in this case is allowing the broker to control the flow of money. Whenever selling any asset, whether it be art or domain names or websites or real estate, you should never let your broker handle your escrow services.

A Broker is a Matchmaker, not an Escrow Service

A broker is simply a matchmaker between a buyer and a seller. A broker gets compensated for bringing these two parties together. An advisor provides advice and gets compensated for providing advice. But once the match has been made and the assets and cash have to change hands between the buyer and seller, an independent third-party escrow service must be engaged for that purpose.

This escrow service will then handle the receipt of the cash and the asset and disperse these assets to the appropriate parties. The broker should receive cash from the escrow service just like any other member of the transaction.

Global Transactions

Website and domain name transactions tend to happen between buyers and sellers who often do not even live on the same continent. Having an intermediary escrow service to handle the transfer of money and assets is vital.

Otherwise, there is always the risk that the buyer could receive the asset and not pay the seller or the seller could receive the money and not transfer the asset to the buyer. An escrow service can receive both money and assets and transfer them to the appropriate parties.

Of course, I’m not saying all brokers are untrustworthy. It is just intelligent that because the broker has a vested interest in the outcome of the transaction, he or she should not be allowed to control the flow of money or assets in the transaction. There is no reason to take the risk that a broker can receive cash in his bank account and decide to disappear with some or all of the cash.

The flow of money and assets should be left to an impartial and reputable third-party escrow service provider.

In conclusion, when selling your domain names or websites, be sure to use a trusted escrow service. Examples include or, which is owned by For very large transactions, it may be a good idea to use a reputable law firm that offers escrow services.


Kris Tabetando provides mergers & acquisitions (M&A) advisory and brokerage services to Internet companies. He also partners with investors to acquire & manage Internet businesses.

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