Michael Shvo has settled his tax evasion case for $3.5 million, ending a 19-month saga which saw the developer and real estate marketing expert sidelined from a number of New York’s most notable condo projects.
“We are pleased that this sales and use tax matter, arising from Mr. Shvo’s work in the art world, has been resolved,” Ben Brafman, an attorney for Shvo, said in a statement. “The settlement requires Michael to pay the sales and use taxes on certain works of art, along with interest and some penalties, and the case will be completely resolved. We anticipate he will meet those conditions before the adjourned date, and this matter will be fully closed and behind him.”
Shvo personally pleaded guilty to counts of criminal tax fraud, with the top count carrying a maximum sentence of up to 15 years in prison. Prosecutors, however, recommended a term of two to six years in state prison, and the judge in the case said Shvo would not spend any time behind bars so long as he pays the $3.5 million restitution. Shvo is expected to be sentenced June 7.
In September 2016, Manhattan District Attorney Cyrus Vance Jr. indicted Shvo for allegedly scheming to evade the payment of more than $1.4 million in tax related to the purchase of fine art, furniture, jewelry and a Ferrari. The charges include 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.
“Michael Shvo’s brand of tax evasion was an art form unto itself,” Vance said Thursday. “Through ornate ruses — like creating a sham Montana corporation to avoid taxes on a Ferrari — the defendant dodged more than a million dollars in state and local taxes.” His office noted that Shvo plead guilty to the felony tax fraud charges.
In the allocution entered as part of his plea agreement, Shvo admitted that “willfully and intentionally” evaded state and local taxes between 2010 and 2016 in connection with purchases of art, jewelry and furniture.
“I was assisted in these activities by … shipping companies that would present false or misleading shipping documentation to the vendors on my behalf, indicating that the purchases were being shipped overseas,” the allocution read.
A source familiar with the case told The Real Deal that Shvo “wants this behind him and has some exciting real estate deals coming to close and wants to focus on those, and most especially on his family.”
The New York Post’s Lois Weiss first tweeted about the settlement earlier Thursday afternoon.
Shvo’s current condo projects – though the level of his involvement in them has changed since the indictment – include the redevelopment of the Crown Building at 730 Fifth Avenue, the redevelopment of the Getty gas station at 501 West 24th Street, a supertall at 125 Greenwich Street, and a Soho condo project at 565 Broome Street (formerly known as 100 Varick Street). All are among New York’s priciest new developments: The penthouse at the Crown is said to be in contract for about $180 million.
The case, the source added, “is now completely resolved and he just didn’t want it drawn out so he can move forward with zero distractions.” When reached Thursday, Shvo declined to comment.