MANHATTAN (CN) - Federal prosecutors unsealed a 12-count indictment against three men, including the alleged forger in the $33 million Modern Masters art fraud that led to the closure of the Knoedler art gallery.
The indictment against brothers Jose Carlos Bergantinos Diaz and Jesus Angel Bergantinos Diaz and the painter Pei Shen Qian was filed under seal on March 31 and unsealed today.
Jose Carlos has dual citizenship in Spain and the United States; Jesus Angel is a citizen of Spain. Pei is a dual citizen of China and the United States; he lives in Queens.
The 41-page indictment does not name the Knoedler gallery, though it is obvious that Knoedler is the indictment's "Gallery 1," described as a century-old Manhattan gallery that closed in 2011.
The indictment's "Gallery 2" also "was a prominent dealer in fine art."
Jose Carlos ran King's Fine Arts with a key player in the Knoedler fiasco, Glafira Rosales, from 1995 through 2010, according to the indictment. From 2006 through 2010 they also ran Glafira Rosales Fine Arts, the indictment states.
Rosales and her gallery are not defendants in this case.
The defendants are accused of orchestrating a $33 million scam selling forged paintings they attributed to Mark Rothko, Jackson Pollock, Willem de Kooning, Robert Motherwell, Barnett Newman, and other modern painters, whose work, cynics have noted, is regarded as rather easy to forge.
"By knowingly and falsely claiming that the Fake Works were painted by these famous artists, Jose Carlos Bergantinos Diaz, Jesus Angel Bergantinos Diaz, Qian, and Rosales were able to trick purchasers and prospective purchasers into paying tens of millions of dollars in total for many of the Fake Works which, as the defendants and Rosales well knew, were essentially worthless," the indictment states.
"... as the defendants well knew, the Fake Works were created not by famous artists, but by Qian, with guidance from Jose Carlos Bergantinos Diaz, Jesus Angel Bergantinos Diaz, and Rosales. Jose Carlos Bergantinos Diaz, Jesus Angel Bergantinos Diaz, and Rosales also created and refined at least two false provenances (i.e., historical ownership records) for particular Fake Works in order to dupe purchasers into believing that those Fake Works were painted by particular famous artists, instead of by Qian.
"The defendants earned more than $33 million from the scheme to create and sell the Fake Works. To conceal the illegal nature and origin of the proceeds from the scheme, Jose Carlos Bergantinos Diaz and Jesus Angel Bergantinos Diaz, the defendants, and Rosales worked together to launder the proceeds by transferring the proceeds through foreign and domestic bank accounts that they controlled.
In addition, as set forth below, to increase the amount of proceeds he kept from the unlawful scheme, Jose Carlos Bergantinos Diaz, the defendant, unlawfully impeded and obstructed the Internal Revenue Service ('IRS') by hiding millions of dollars in his unlawful income from the IRS and by knowingly failing to report the existence of the foreign bank accounts that he controlled or maintained an interest in, as required by law.
Finally, in an effort to hide his role in the unlawful scheme, Pei Shen Qian, the defendant, lied to agents of the Federal Bureau of Investigation about his role in the fraud. In particular, during an interview with FBI agents investigating the scheme, Qian falsely claimed, among other things, that he did not recognize Rosales's name; that Qian was unfamiliar with the names of certain artists (including artists whose names Qian had repeatedly and fraudulently signed on paintings QIAN created, in order to trick purchasers into believing those artists had created the paintings); and that Qian had never attempted to create paintings mimicking the style of certain abstract expressionist artists."
They are charged with wire fraud, conspiracy to commit wire fraud, conspiracy to commit money laundering, money laundering, conspiracy to defraud the IRS, tax fraud and false statements.