Sotheby’s will pay more than $6 million to settle claims that it helped clients avoid paying taxes on high-priced works of art by masters like Basquiat by claiming that big-time collectors were dealers.

A big gambler allegedly evaded taxes on $27 million worth of art from Sotheby’s between 2010 and 2015, including a $1.4 million Anish Kapoor sculpture and a painting by Jean- Michel Basquiat of $5.4 million, according to court documents.

“Sotheby’s intentionally broke the law to help its clients evade millions of dollars in taxes, and now they will pay for it,” Attorney General Letitia James wrote in a statement announcing the settlement.

“Every person and every business in New York knows they are required to pay taxes, and when people break the rules, we all lose,” James continued.

Sotheby’s will pay $6.25 million to settle the lawsuit.

THE The Wall Street Journal reported In 2020, the alleged tax evader, referred to simply as “the collector” in court documents, is Isaac Sultan, president of the shipping company Atlantic Feeder Services USA LLC, based in Miami.

Between 2010 and 2015, the collector acquired 35 works of art and furniture at Sotheby’s.

In their complaint first filed in 2020, prosecutors painted an excruciatingly detailed picture of how Sotheby’s staff were fully aware that Sultan was not a dealer, but gave him resale certificates so that it can benefit from a sales tax exemption.

“These were not acts of dishonest employees, nor were they simple negligence,” the 2020 complaint states.

He then explains how the employees provided the collector with resale certificates even though they knew full well that he was purchasing works of art for his personal use.

At least 29 Sotheby’s employees knew he was not a dealer, and at least 22 knew the pieces were intended specifically for his Manhattan apartments.

On one occasion, the collector even gave specific instructions to ship a piece from London for display in his Manhattan apartment.

According to the complaint, sales taxes on Anish Kapoor’s sculpture alone, worth $1.4 million, would have been $126,000.

Sotheby’s and the collectors’ front company, Porsal Equities, were charged under New York’s False Claims Act. Porsal Equities moved to New York in 2018 where they admitted to falsely using resale certificates.

“In this case, a major auction house went out of its way to help its wealthy clients avoid paying millions of dollars in sales taxes on their art purchases,” said Acting Commissioner Amanda Hiller. of the Ministry of Taxes and Finance, in a press release.

Additional reporting by Peter Senzamici.