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The credibility of former top lieutenants at Christie’s and Sotheby’s auction houses will take center stage when the price-fixing trial of former Sotheby’s chairman A. Alfred Taubman begins later this week. With jury selection scheduled for Thursday, prosecutors with the Justice Department’s antitrust division are depending on the testimony of erstwhile Sotheby’s president and CEO Diana “DeDe” Brooks and one-time Christie’s executive Christopher Davidge to make the case that Taubman was the driving force behind a six-year conspiracy to fix sellers’ commissions. Brooks and Davidge are expected to testify that they were doing the bidding of their superiors at the auction houses when they implemented the price-fixing scheme. Taubman’s defense lawyers Robert B. Fiske Jr. and Scott W. Muller of Davis Polk & Wardwell will focus on the agreement that Brooks made with the government when she pleaded guilty to price-fixing last year, when she promised to cooperate in order to avoid future charges and earn leniency at sentencing. Documents filed in the case, and statements at pretrial hearings, also show that the defense lawyers plan to portray Brooks as an executive who operated with significant latitude, supporting their contention that Taubman was out of touch with the day-to-day operations of Sotheby’s. But lead Justice Department prosecutor James J. Greene contends that Brooks could not have orchestrated the conspiracy without the involvement of Taubman, 76. Greene claims Taubman colluded with Christie’s chairman Sir Anthony Tenant in a series of secret conversations in the U.S. and abroad between 1993 and 1999, and then both men left the details to subordinates. Tenant was indicted along with Taubman in May, but he remains in England and has refused to consent to the court’s jurisdiction. As important as Brooks’ testimony may be, Taubman’s lawyers plan to launch an all-out assault on the motives of Davidge, who agreed on Dec. 24, 1999, to an $8 million severance package with Christie’s. That agreement was signed not long before Christie’s agreed to cooperate with the government in its own conditional amnesty deal. In pretrial motions and hearings in the case, Fiske and Muller argued that the $8 million was not a severance agreement but instead a payment in return for government cooperation. In an October motion asking federal Judge George Daniels of the U.S. District Court for the Southern District of New York to suppress Davidge’s testimony, Taubman’s lawyers charged that the payments to Davidge violated the New York Lawyer’s Code of Professional Responsibility Rule 7-109(c) because they amounted to paying for testimony. ‘SMOKING GUN’ The “smoking gun” to support this charge, they allege in court papers, was a letter that current Christie’s CEO Edward J. Doleman wrote to Davidge in January 2000. In the letter, Doleman said Christie’s was foregoing its right to sue Davidge for the money already paid, foreswearing any intention to withhold future payments and agreeing to pay his reasonable legal fees and expenses as long as he fully cooperated “with Christie’s and the DOJ.” “The Jan. 21 letter confirms what we have previously stated: namely, that Christie’s was acting as the government’s agent,” the lawyers argued in a memorandum in support of the motion to suppress. “Nowhere in its papers does the government state that it was unaware of Christie’s decision to pay Davidge.” Instead, they argue, the government’s answer to the motion to suppress merely stated it neither ordered nor advised Christie’s to pay Davidge. “Of course, the appropriate standard under Rule 7-109(c) is not whether the government ‘ordered’ or ‘advised’ Christie’s to make the payments, but whether the government acquiesced in them,” the memorandum states. “The government does not analyze the acquiescence standard and its refusal to state directly whether it knew of the payments (or consciously avoided such knowledge), and to what extent it directed Christie’s to try to secure Davidge’s cooperation, speaks volumes.” But in his own memorandum, Greene stated flatly that the government did not “acquiesce” in the payment of Davidge. Christie’s had every incentive under its conditional amnesty agreement to cooperate and encourage its former employee to provide truthful testimony, Greene said, but the government played no role in the severance package. “The grant of conditional amnesty to Christie’s … was not in any way contingent on the cooperation of any single individual, including Davidge, with the ongoing investigation … ” Greene wrote. Taubman lost the motion, but while Judge Daniels refused to suppress Davidge’s testimony, he also ruled that, on cross-examination, it was fair game to ask Davidge about the severance agreement. For Greene, the trial is the culmination of a four-year-long investigation into price-fixing by the two auction giants, who together control 90 percent of the global auction market. Brooks, Sotheby’s president and chief executive officer, resigned from the post in February 2000 and pleaded guilty to price-fixing on sellers’ commissions in October 2000. Her plea was followed by a guilty plea by Sotheby’s itself earlier this year in which the company agreed to pay a $45 million fine. CLASS ACTION A class action suit before federal Judge Lewis A. Kaplan, also of the U.S. District Court for the Southern District of New York, ended in a settlement, with the auction houses each agreeing to pay $256 million in damages. Taubman, who remains a large shareholder in Sotheby’s, personally contributed $156 million to Sotheby’s share of the settlement. Although the civil suit charged price-fixing on both sellers’ commissions and the premiums charge to buyers, Taubman is not accused of conspiring to fix the cost of buyer premiums. Other evidence in the case includes unsigned memos in the handwriting of Tenant, including at least one memo he penned to Davidge, allegedly as a follow-up to a conversation with Taubman, in which he purportedly tells Davidge to cooperate with Brooks. Taubman faces a maximum of 3 years in prison and a $350,000 fine if convicted. The trial in United States v. Taubman, 01 Cr. 429, is expected to last more than four weeks.

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