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Luxury Real Estate Developer Indicted For $1 Million Tax Fraud

By Kathleen Culliton | September 8, 2016 3:58pm
 Michael Shvo, 43, was charged with failing to pay taxes on purchased artwork between 2010 and 2016. He's pictured here at Carnegie Hall on March 28, 2016.
Michael Shvo, 43, was charged with failing to pay taxes on purchased artwork between 2010 and 2016. He's pictured here at Carnegie Hall on March 28, 2016.
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Patrick McMullan

FINANCIAL DISTRICT — Luxury real estate developer Michael Shvo was indicted Thursday for failing to pay more than $1 million in New York State taxes over the past six years.

Shvo made a name for himself in the early 2000s as a hotshot young broker with a flair for flashy marketing tactics and model-filled parties.

He helped bring in $300 million in one year when he was at Douglas Elliman, according to reports. He even coined a personal catchphrase, "Let's Shvo!"

He disappeared from the public eye in 2007, only to return three years ago refashioned as a contemporary art collector and developer of high-end real estate for other art collectors.

A building he's planning in West Chelsea, the Getty, would have a gallery on the ground floor. Another, near the Holland Tunnel, was designed by famed architect Renzo Piano.

But, according to the Manhattan District Attorney’s office, Shvo evaded paying more than $1 million in state and local taxes on art, furniture, jewelry and a luxury sports car by falsely claiming the items were about to be shipped overseas.

Shvo also failed to pay more than $275,000 in corporate taxes for his company Shvo Art Ltd., which he claimed was located offshore but actually operated from his homes and offices in New York State, the DA said.

"Michael Shvo went to great lengths to defraud New Yorkers out of more than a million dollars in tax revenue,” Manhattan District Attorney Cyrus Vance said.  

“This indictment puts other purchasers of fine art on notice: the purposeful evasion of New York State and City taxes is a tax crime, and those who scheme to avoid their obligations will be held criminally and civilly accountable."

In communications with auction houses and art galleries, Shvo falsely represented that purchases he made would be shipped to an address in the Cayman Islands or other overseas destinations and, therefore, no sales tax was collected, according to the DA's office.

Instead, investigators said, the items were shipped to his office or homes in New York, including an apartment on Columbus Circle and a house in the Hamptons.

Shvo, 43, pleaded not guilty in Manhattan Supreme Court Thursday morning to seven charges of felony tax fraud, among other charges, and is expected to be released with payment of $500,000 bail.

“Mr. Shvo looks forward to his day in court where he will mount a defense to all charges related to his art business and is confident he will be acquitted,” his spokesman Ronn Torossian said.

“While Mr. Shvo is prominent in the art world, he has not committed any crime.”

Sheridan Hedley, 33, of Hedley's Inc. and Guy Drori, 49 of Bestguy Moving LLC. also appeared in court and were charged with providing false shipping documents for Shvo's purchases, which included $65,000 worth of jewelry for his wife and a new Ferrari 458 Spider sports car, the DA said.