Michael Shvo turned himself into the Manhattan district attorney’s office Thursday morning, The Real Deal has learned. The luxury broker-turned developer is being indicted on tax evasion charges related to his extensive art collection.
Shvo turned himself in at 1 Hogan Place, according to documents from Manhattan DA Cyrus Vance Jr.’s office. He was released on bail of $500,000.
Shvo handed over both his U.S. and Israeli passports, sources said. His wife, Seren Shvo, was with him at the courtroom. She declined to comment except to say that Shvo would be back in his office this afternoon and it would be “business as usual.”
Shvo was indicted for allegedly scheming to evade the payment of more than $1 million in tax related to the purchase of fine art, furniture, jewelry and a Ferrari, the indictment shows. The charges are criminal tax fraud in the second, third and fourth degrees, repeated failure to file taxes and offering a false instrument for filing in the first degree, among other charges. Two moving companies alleged to have aided in the scheme were charged with criminal tax fraud and falsifying business records.
He faces a potential state prison sentence of up to 15 years, according to state law. He’s due back in court Oct. 19, at which point the attorneys involved in the case will provide a judge with an update.
“Michael Shvo went to great lengths to defraud New Yorkers,” Vance said in a statement. “This indictment puts other purchasers of fine art on notice: the purposeful evasion of New York state and city taxes is a tax crime, and those who scheme to avoid their obligations will be held criminally and civilly accountable.”
When reached by TRD, Shvo’s spokesperson said, “Mr. Shvo looks forward to his day in court where he will mount a defense to all charges related to his art business and is confident he will be acquitted. He has not committed any crime nor did he act with any criminal intent whatsoever.”
New York developers are avid art collectors, and Shvo, 43, wouldn’t be the first big industry name to face allegations of tax evasion on artwork. New York Attorney General Eric Schneiderman has made tax abuse in the art world a priority, and has successfully gone after real estate figures such as Aby Rosen. Earlier this year, the RFR Holding chief agreed to pay $7 million to settle allegations that he had sought to dodge taxes on $80 million in art purchased by several of his companies, though he did not admit any wrongdoing.
The DA said that between 2010 and 2016, Shvo falsely told auction houses that purchases he made would be shipped to an out-of-state address in the Cayman Islands or other foreign countries, thus avoiding sales tax. Instead, they went to his offices and homes in New York state, including his Time Warner Center apartment and his house in Water Mill (Shvo is building a third home on a private island in the Bahamas), authorities allege.
Two moving companies, Hedley’s Inc and Bestguy Moving, are also charged with participating in the scheme.They allegedly provided the auction houses and galleries with improper shipping documentation to conceal the delivery destinations. Shvo is even alleged to have fraudulently used New York Resale Certificates, which allow art dealers to purchase items exclusively for resale without paying tax. One such purchase was for $65,000 in jewelry for his wife. In the case of the Ferrari, a 458 Spider, Shvo allegedly formed an LLC dubbed Seren LLC and registered it in Montana for the purposes of avoiding tax.
As a broker at Douglas Elliman and later at his eponymous firm, Shvo became a polarizing figure and the poster child of the last real estate boom. He developed a reputation as a tireless workhorse with a genius for generating buzz around the properties he was selling, collaborating with the likes of Philippe Starck and Giorgio Armani. After the market turned in 2008, Shvo went into semi-retirement. He consulted on real estate projects in cities like Dubai and bought and sold art. He returned to the New York market as a developer in 2013, with the purchase of the Getty gas station site on the High Line. He then went on an acquisition spree, partnering with several investors to purchase properties such as 125 Greenwich Street, 100 Varick Street, and the office portion of the Crown Building at 730 Fifth Avenue.
A fan of sculptor Francois-Xavier Lalanne, Shvo turned the Getty site at the corner of 24th Street and 10th Avenue into an exhibition of Lalanne’s sheep sculptures in 2014 and co-hosted a show for the artists and Sotheby’s S2 Gallery alongside art dealer Paul Kasmin. His collection includes several pieces from Andy Warhol, Alexander Calder, Jean-Michel Basquiat, and Frank Stella.
His spokesperson said the indictment “will not have any effect on his ongoing real estate development business.”