Page:2020-07-29 PSI Staff Report - The Art Industry and U.S. Policies that Undermine Sanctions.pdf/9

 bid at auctions on behalf of his clients under an account in the name of BALTZER. This allowed Mr. Baltser to guarantee on his website that "we can give you complete anonymity." Under the proposed agreement, Mr. Baltser pledged to conduct all AML and sanctions checks on his clients and provide an annual certification to the auction houses that no member of BALTZER was engaged in money laundering. Mr. Omelnitski served as BALTZER's chief AML officer and represented Mr. Baltser in contract negotiations with the two auction houses. To be clear, Mr. Baltser put the same attorney who established and maintained shell companies to mask the Rotenbergs' ownership in charge of his new venture's AML compliance.

Christie's partnered with BALTZER. Christie's accepted Mr. Baltser's proposal and signed the agreement with BALTZER on February 4, 2014. At the end of 2014, Mr. Omelnitski certified to Christie's that "despite BALTZER having a significant number of Russian clients there were no transactions, which fall under recent sanctions against Russia." Mr. Omelnitski failed to provide another such certification for the next three years, despite repeated requests from Christie's to provide the annual certificate promised in the agreement. In 2018, Christie's renegotiated its agreement with BALTZER to require client due diligence documents after each purchase.

A Sotheby's employee identified Arkady and Boris Rotenberg as Mr. Baltser's clients. Sotheby's also considered Mr. Baltser's business proposal, but ultimately declined. During negotiations, a Sotheby's employee represented to Sotheby's management that Mr. Baltser had told her that his clients included Russian oligarchs. In fact, she told Sotheby's management that Mr. Baltser had identified Arkady and Boris Rotenberg as two of his clients (five months prior to U.S. sanctions). During her Subcommittee interview, however, the same Sotheby's employee said Mr. Baltser had never told her that Arkady and Boris Rotenberg were his clients. Instead, she asserted she fabricated this information in an effort to convince Sotheby's to accept BALTZER's proposal. Despite declining the proposal, Sotheby's continued to conduct business as usual with Mr. Baltser and his new company, BALTZER, and never questioned whether Arkady and Boris Rotenberg were his clients. The Subcommittee independently traced post-sanction purchases by BALTZER to shell companies linked to the Rotenbergs, suggesting the Sotheby's employee was not truthful in her Subcommittee interview.

Mr. Baltser continued to purchase art with funds linked to the Rotenbergs even after March 2014 sanctions. Following the imposition of sanctions by the United States on Arkady and Boris Rotenberg in March 2014, the funds Mr. Baltser used to purchase works of art at auction houses continued to follow the same general financial path as before sanctions. By this time, BALTZER provided another layer of anonymity for the funds used to purchase art. After Mr. Baltser successfully bid at auction, funds were wired from Highland Ventures to Steamort,