Putin’s Billionaire Judo Buddy Accused Of Buying Art To Launder Money Despite U.S….

Russian billionaire brothers Arkady and Boris Rotenberg and Arkady’s son Igor Rotenberg have been accused by U.S. authorities of using million dollar art deals to bypass sanctions, according to a damning congressional report published on Wednesday evening.

The U.S. Senate’s permanent subcommittee on investigations, led by Senators Rob Portman and Tom Carper, announced the tracing of “high-value art” purchases back to anonymous shell companies they allege are linked to the Rotenberg family’s Arkady and Boris, who were sanctioned by the U.S. in March 2014.  The report claims that Arkady Rotenberg, via a Moscow-based art dealer, spent $18 million buying art in the months after sanctions were imposed. The subcommittee found that shell companies linked to the Rotenbergs engaged in other transactions beyond art, totalling $91 million, despite the sanctions.

Senator Portman said in a statement that the lack of U.S. banking regulations over “multi-million dollar art transactions” was “shocking.” Adding, “We cannot let that continue. The art industry currently operates under a veil of secrecy allowing art advisors to represent both sellers and buyers masking the identities of both parties, and as we found, the source of the funds. This creates an environment ripe for laundering money and evading sanctions.”

The $7.5 million private sale of René Magritte’s La Poitrine is the most famous painting embroiled in this nexus of Russian money, shell companies and private art dealers. According to the U.S. Senate investigation, the painting arrived in Russian hands in August 2019, having been sold in May 2014 and stored in Germany. Pointing to the deal, the Senate subcommittee alleges that companies linked to the Rotenbergs “continue to have access to the U.S. dollar and the U.S. financial system despite the imposition of sanctions against Arkady and Boris Rotenberg.”

Dev Odedra, an independent anti-money laundering and financial crime expert told Forbes that art remains an attractive vehicle for those seeking to move money discreetly. “It’s the (almost) perfect mode” he says by email, adding, “it’s a bearer instrument (whoever possesses it can own it), it can be sent country to country without the watchful eye of regulators (unlike money in a bank account). “Something about the size of an A3 paper worth millions could be kept at home (or in a warehouse) for years.”

Rotenberg Revelations

Arkady Rotenberg, pictured in the Senate report alongside Russian President Vladimir Putin, both wearing white judo Judogi, is accused by the committee of actively participating in the U.S. art market by purchasing over $18 million in art in the months following the imposition of sanctions on March 20, 2014.

With an estimated net worth of $2.9 billion, Arkady Rotenberg owns SGM Group and Mostotrest, two of Russia’s biggest construction contractors. His son Igor controls drilling company Gazprom Bureniye. Arkady’s younger brother Boris is also a billionaire, according to Forbes, and is co-owner of SMP Bank. The family became embroiled in the alleged attempt to remove U.S. currency and assets from the U.S. after President Obama signed an executive order  imposing sanctions on Russia following its annexation of Crimea in March 2014.

The Senate subcommittee alleges that the billionaire family used Gregory Baltser, described as a “Moscow-based art advisor,” to facilitate the art purchases in the U.S., using funds the committee says it traced back to two shell companies – Highland Business and Highland Ventures – linked to the family. 

The investigation found that through Baltser’s private art club, called Baltzer, the Moscow dealer would take title and purchase art for his clients, paying the auction houses directly through wire transfer and not bidding at auction.

The report states: “Despite having voluntary [anti money laundering] and sanctions policies, auction houses failed to ask basic questions of Mr. Baltser, including for whom he purchased art. This allowed Mr. Baltser to continue to purchase art despite the imposition of sanctions by the United States on the Rotenbergs, completely undermining any action taken by the auction houses to block transactions by sanctioned individuals.”

The Rotenberg family is yet to publicly comment on the allegations. Rotenberg-owned businesses Mostotrest and SMP Bank have not responded to Forbes request for comment.

Gregory Baltser has denied allegations that he did business with the Rotenbergs through a letter sent to the congressional subcommittee, stating that, “Baltzer…has never, at any time, represented or transacted in any way with Boris or Arkady Rotenberg.”

The investigation also confirms that following the inquest art auction houses Phillips, Christie’s, and Sotheby’s confirmed they “would no longer transact with Mr. Baltser or BALTZER LLP due to the Subcommittee’s investigation.”