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Prix Fixe?

The price-fixing scandal embroiling the world's two most venerable auction houses is more than indecorous -- it might mean actual jail time. And it also raises the question: Does a true gentleman turn state's evidence?

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"I'm impressed Al has the courage to show his face," says a wealthy Fifth Avenue collector, glancing in awe at A. Alfred Taubman, the embattled former Sotheby's chairman. "In his position, I'd be home, not answering the phone."

As guests savor the lobster and caviar canapés at Sotheby's elegant York Avenue boardroom on February 29, the atmosphere is eerily reminiscent of twilight cocktails aboard the Titanic. The party is being hosted by the former chairman's wife, Judy Taubman, to introduce a cluster of 40 or so chicly dressed New York philanthropists to her new friends the Duke and Duchess of Northumberland, who are seeking to rustle up $25 million to build a public garden on the grounds of their castle in England. But the price-fixing scandal that's roiled the auction world since late January casts a formidable shadow.

Chatting with Veronica Hearst, Taubman shies away when snapped by a photographer who turns out to be shooting for Vogue. "Don't worry," the dark-lipped socialite reassures her imperiled friend. "I'm a Hearst. They'll never print it."

The room is rife with tension, punctuated by a relentless exchange of air kisses and handshakes. Into this social swirl, a hapless photographer rushes to capture the spectacle of Taubman's radiant blonde wife embracing the dignified Princess Mimi Romanoff and collides with a waiter. The crash sends a tray full of sticky sour-apple cocktails hurtling toward the 75-year-old Taubman. In a flash, there is fragrant sour-apple cocktail dripping from the left leg and elbow of his otherwise immaculate dark-blue suit.

A nervous public-relations aide proffers a tiny paper napkin to mop up the spreading mess.

"If you break the law, you have to pay, you know what I mean?" says Herbert Black, a multi-millionaire furniture collector who's suing both houses.

"It won't help," Taubman says indignantly.

Just two months ago, few could have predicted Taubman's current humiliations. Sotheby's and Christie's, those rarefied clearinghouses of precious objects and frequent hosts to the civilized world's most discerning collectors, have until now enjoyed a virtual duopoly, with a combined 90 percent of the world's fine-art auction business, generating near-record hammer sales last year of $2.3 billion apiece. To signal their high hopes for the future of the auction business in these boom times, both firms recently expanded into vast new Manhattan headquarters that reflect not only their preeminence in the art world but their efforts to redefine themselves in the dawning age of Internet commerce.

But now the two archrivals are embroiled in the most explosive scandal of the auction houses' entwined 200-year history. And Taubman has good cause to shun the press he once courted. Both firms face a slew of potentially crippling civil lawsuits stemming from an ongoing investigation by the Department of Justice into whether they illegally colluded in 1992 and 1995 to fix virtually identical commission rates. In light of these events, the firms' stupendous new premises may have been built on illegally gained profits. On January 28, Christie's sent shock waves through the art world by revealing it had turned over evidence to the Justice Department in connection with its antitrust investigation. In alerting the world to this whiff of malfeasance, Christie's deftly pointed out that the "possible conduct" had taken place prior to its current ownership by French luxury-goods magnate François Pinault (who bought the company for $1.19 billion in 1998). In a coup de grâce, Christie's added that the firm had been granted conditional amnesty by the Feds.

With disturbing new reports of documents allegedly implicating Taubman in an illegal scheme, he and Sotheby's widely respected former chief executive Diana D. Brooks (both of whom stepped down from their posts on February 21) could face the horrifying prospect of going to jail for up to three years.

This is hardly the way Taubman imagined his $38.5 million white-knight investment in Sotheby's would turn out. Because Sotheby's and Christie's have always attracted persons of wealth and social standing as clients and patrons, they have also always attracted employees and owners eager to join these exalted circles. Taubman, a Detroit-born businessman with a reputation for commercial genius, was no exception.

In 1983, fresh from a California real-estate deal that transformed him from a wealthy detail-oriented developer of innovative shopping malls into a truly rich international investor, Taubman was enlisted by David Metcalfe, a jet-set figure with close ties to the British royal family, as the man to save Sotheby's from a pair of eighties-style leveraged raiders.


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