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UNITED STATES ATTORNEYS OFFICE

Southern District of New York

U.S.ATTORNEY PREET BHARARA

FOR IMMEDIATE RELEASE CONTACT: U.S. ATTORNEY'S OFFICETuesday, May 21, 2013 Ellen Davis, Julie Bolcer,http://www.justice.gov/usao/nys Jerika Richardson, Jennifer Queliz

(212) 637-2600

FBI IRS-CIMartin Feely, Jim Margolin Gregory TranchinaJ. Peter Donald, Kelly Langmesser (212) 436-1687Adrienne Senatore(212) 384-2100

MANHATTAN U.S. ATTORNEY CHARGES ART DEALER

WITH HIDING MILLIONS OF DOLLARS IN INCOME

FROM FRAUDULENT SALES OF ARTWORK

Glafira Rosales Allegedly Hid from the IRS at Least $12.5 Million in Proceeds from Sales ofArtwork Purported to Be Painted by Famous Abstract Expressionists

Preet Bharara, the United States Attorney for the Southern District of New York, ToniWeirauch, the Special Agent-in-Charge of the New York Field Office of the Internal RevenueService, Criminal Investigation (IRS-CI), and George Venizelos, the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (FBI), announced todaythe arrest of GLAFIRA ROSALES, an art dealer, for filing false tax returns and for failing todisclose a foreign bank account to the IRS. ROSALES allegedly failed to report the receipt of atleast $12.5 million in income from the sale of works purported to be by celebrated abstractexpressionist artists. Most of the income was received in a bank account in Spain that ROSALEShid from, and failed to disclose to, the IRS. She was arrested in Sands Point, New York thismorning and will be presented in Manhattan federal court this afternoon before U.S. MagistrateJudge Sarah Netburn.

Manhattan U.S. Attorney Preet Bharara said: As alleged, Glafira Rosales gave newmeaning to the phrase artful dodger by avoiding taxes on millions of dollars in income fromdealing in fake artworks for fake clients. Her arrest shows that no matter how clever the scheme,attempts to hide income from the government to avoid paying taxes on that income will bediscovered and prosecuted.

IRS Special Agent-in-Charge Toni Weirauch said: The sale of a piece of art for profit isa taxable event and the seller is responsible for paying his or her fair share of tax, even if the artis counterfeit. The allegations in this investigation illustrate a double-barreled tax evasionscheme: disguising who was actually selling the art and profiting from the sales, through thecreation of a fictitious seller and the use of the name of a collector not associated with the

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transactions, and further concealing the proceeds by depositing them in an unreported foreignbank account.

FBI Assistant Director-in-Charge George Venizelos said: As alleged, Glafira Rosalescommitted tax fraud in falsely reporting that she was selling art on behalf of clients. In truth,those clients were just part of the picture she painted to perpetrate her multi-million dollarscheme. There is consistency in the scheme, however: The artwork Rosales sold appears to be asfake as her story about the clients she claimed to represent.

According to the allegations in the Complaint unsealed today in Manhattan federal court:

In the 1990s, ROSALES, an art dealer, began selling previously unknown paintings thathad never been exhibited before, and that she claimed were painted by some of the most famousartists of the 20

thcentury, including Jackson Pollock, Mark Rothko, and Willem de Kooning.

From 2006 through 2008, ROSALES sold approximately one dozen of these paintings to twoprominent Manhattan galleries for over $14 million. In selling most of the paintings to the twogalleries, she purported to represent a client with ties to Switzerland who had inherited thepaintings and wanted to sell them, but who also wished to remain anonymous (the PurportedSwiss Client). For the remainder of the paintings, she purported to represent a Spanish collector

(the Purported Spanish Collector). ROSALES also claimed that a portion of the price paid bythe Manhattan galleries would be her commission for selling the paintings, and that theremainder would be passed along to her clients.

In contrast to the claims made by ROSALES, the investigation has revealed that:

experts in the fields of art, art history, and materials science have concluded that at leastseveral of the paintings sold by her are counterfeit;

the Purported Swiss Client on whose behalf she claimed to sell most of the paintings tothe Manhattan galleries never existed;

the Purported Spanish collector on whose behalf she claimed to sell the remainder of thepaintings to the Manhattan galleries never owned the paintings; and

instead of passing along a substantial portion of the proceeds of the sale of the variouspaintings, she kept all or almost all of the proceeds, and transferred substantial portions toan account maintained by her then-boyfriend.

ROSALES filed tax returns that falsely claimed she had not kept all, or almost all of theproceeds from the sale of the purported clients paintings, when, in fact, she had. Further, therewas no Swiss client and no Spanish collector. In total, she failed to report the receipt of at least

$12.5 million of income for the years 2006 through 2008.

In addition, ROSALES received most of the proceeds from the sale of the paintings in aforeign bank account that she hid from, and failed to report to, the IRS. U.S. taxpayers arerequired to report the existence of any foreign bank account that holds more than $10,000 at anytime during a given year by the filing of a Report of Foreign Bank and Financial Accounts, FormTD F 90-22.1 (FBAR). ROSALES failed to file FBARs for the years 2007 through 2011.

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ROSALES, 56, of Sands Point, New York, is charged with filing false tax returns for theyears 2006 through 2008, and with willful failure to disclose an offshore bank account for theyears 2007 through 2011. On each of the three false tax return charges, she faces a maximumsentence of three years in prison, a maximum term of three years of supervised release, and amaximum fine of $100,000. On each of the five willful failure to file FBAR charges, she faces amaximum sentence of five years in prison, a maximum term of five years of supervised release,

and a maximum fine of $250,000.

Mr. Bharara praised the outstanding efforts of IRS-CI and FBI in the investigation, whichhe noted is ongoing. He also thanked the Department of Justices Tax Division for theirsignificant assistance in the investigation.

This case is being handled by the Offices Complex Frauds Unit. Assistant U.S.Attorneys Jason P. Hernandez and Daniel W. Levy are in charge of the prosecution.

The charge and allegations contained in the Complaint are merely accusations, and thedefendant is presumed innocent unless and until proven guilty.

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