Shock acquittals in Wildenstein art dynasty's tax fraud trial

A French court has delivered a shock acquittal on tax-dodging charges for the heirs to the Wildenstein art-dealing dynasty, while declaring there had been a "clear attempt" to conceal art treasures and other property worth billions of euros.

Guy Wildenstein's lawyer Herve Temime (L) speaks to reporters after the verdict AFP

Presiding judge Olivier Géron was worried that his decision could be "misunderstood" when he announced on Thursday that he was acquitting 71-year-old Franco-American Guy Wildenstein, his nephew Alec Junior, his estranged Russian sister-in-law Liouba Stoupakova, two lawyers, a notary and two offshore trusts.

They had clearly intended to conceal their massive wealth from tax authorities, he said, but shortcomings in French law and in the conduct of the inquiry made it impossible to convict them.

Assets worth billions offshore

The heirs were accused of concealing assets worth billions in offshore trusts and failing to declare their full worth on the occasion of the deaths of two heads of family.

Their possessions included thorough-bred horses, artworks - including paintings by renaissance master Caravaggio, rococo painter Fragonard and post-impressionist artist Bonnard - and a gigantic ranch in Kenya that was used in the filming of Sydney Pollack's 1985 movie Out of Africa.

After their father's death in 2001, Guy and his brother Alec declared they were worth just 40.9 million euros for inheritance tax purposes, paying the bill in bas-reliefs sculpted for Louis XVI's wife, Marie-Antoinette.

When Alec died in 2008, Guy declared an inheritance of less than 60 million euros.

The prosecution called for a four-year suspended sentence and 250-million-euro fine for Guy Wildenstein, one year suspended for Stoupakova and six months suspended for Alec Junior.

None of them appeared in court.

Prosecutors also wanted a two-year suspended sentence for notary Robert Panhard, two years in jail and one suspended with a million-euro fine for Swiss lawyer Peter Altorfer and two years suspended for French lawyer Olivier Riffaud.

And they called for two trusts - one based in the Bahamas, the other in Guernsey - to be fined the maximum possible for complicity in tax fraud, 187,500 euros each.

Intention not enough for conviction

But the law has to apply equally to "the powerful and the poor", Géron said, and knowing that the family intentionally hid its wealth was not a sufficient legal basis to find them guilty.

He said he was "astonished" that French MPs had not passed laws to clarify the status of trusts until 2011, although they have been under the spotlight for over a century.

That law could not be applied to this case since it referred to events that took place before it had been passed.

Géron also criticised investigators, claiming they had failed to carry out sufficient research in the tax havens to establish that the trusts were "fictional" and that the Wildensteins had secretly maintained access to and control of their fortune.

After the verdict Guy Wildenstein's lawyer, Hervé Témine, said his client was "very relieved" while expressing concern it might give rise to controversy over "justice for the rich".

Widows, ex-wives and lawsuits

The first signs of trouble for the Wildensteins came in 2005 when Daniel's second wife, Sylvia Roth-Wildenstein, sued Guy and Alec, accusing them of hiding the true extent of the family's wealth when her husband died.

In 2011 Stoupakova filed suit for breach of trust, claiming that she had been deprived of her fair share of the inheritance.

There were further legal worries in the US in the same year when prosecutors opened an investigation into suspicions of receiving stolen goods and breach of trust against Guy Wildenstein, seizing several paintings, including one by impressionist Berthe Morisot valued at 800,000 euros.

New tax case pending

The case has been an embarrassment for former president Nicolas Sarkozy, who made Guy Wildenstein, a member of his party's US branch, a commnader of the Legion of Honour in 2009, describing him as a "friend".

Thursday's acquittal will not be the end of the Wildensteins' legal difficulties.The French fiscal authorities are pursuing them for 550 million euros in allegedly unpaid taxes.