Six months ago, venture capital outfit Lux Capital was vaunting its ambitions of investing “at the outermost edges of what is possible” and celebrating clinching over $1 billion in capital commitments. On January 21, however, the Financial Times exposed the dark underbelly of this apparent success. A number of Lux’s early shareholders are now suing the VC firm, arguing that its managing partners, Peter Hébert and Josh Wolfe, pushed them to sell their shares at unfairly low rates.

Lux has categorically denied that it undervalued the disgruntled shareholders’ stakes.

But the venture capital firm’s clinical response to the charges —“We are disappointed that, despite previous failed attempts in arbitration and litigation, a handful of individuals continue to try to undermine a fair and transparent transaction”— overlooks the fact that at the heart of the dispute is the shareholders’ feeling that they were personally betrayed.

The investors, including two of the company’s co-founders, who now find themselves on the opposite side of a deposition table from Hébert and Wolfe were once such close friends of theirs that they were best men at each other’s weddings. It’s not hard to imagine how the trust built over years of such a tight-knit relationship would have made shareholders less likely to question why their shares were converted to class B and their carry of the venture capital funds slowly decreased – even as Lux’s successes mounted.

Fractious friendships

Another tale worthy of the Hollywood treatment, meanwhile, has shaken the upper echelons of the art world to its core and been christened the “greatest art fraud in history”, according to Forbes. Swiss art dealer Yves Bouvier once affectionately called his client, Russian billionaire Dmitry Rybolovlev, his “friend” in emails, and attended Rybolovlev’s birthday parties in luxurious locales from Hawaii to Monaco.

Eighteen years after Bouvier and Rybolovlev first met in Geneva, the pair are at legal loggerheads in jurisdictions around the world according to Finews—Yves Bouvier, according to his former client, overcharged him for paintings to the tune of $1 billion. If Bouvier notched up a victory last month when Monaco dropped fraud and money-laundering charges against him, the bitter legal battle between the two men is far from over.

Rybolovlev has vowed to appeal to Monaco’s highest court, and Bouvier still faces separate criminal charges in Switzerland.

The Bouvier Affair

Where did things go so wrong for the former friends? In August 2002, when Tania Rappo—the wife of the Rybolovlevs’ dentist who had fast become a family friend—brought the Russian billionaire to the Geneva Freeport where Bouvier’s shipping company Natural le Coultre was the largest tenant, it seemed like a match made in heaven. Dmitry Rybolovlev and Yves Bouvier clearly shared a dream of building “the most beautiful [art] collection of the third millennium”.

While at the helm of Natural le Coultre, Bouvier had amassed a wealth of information and connections essential for finding the masterworks Rybolovlev craved.

As for the Swiss dealer, the prospect of building the kind of collection which would be possible with Rybolovlev’s deep purse was alluring. So, too, was the potential profit he himself might make: “It is always a question of what I will earn on the deal,” Yves Bouvier told The New Yorker.

The thorny problem of Yves Bouvier’s 2 percent fee

This question of Bouvier’s commission for the 38 paintings he sold to Rybolovlev over the next 12 years is at the core of the allegations he is now fighting from Singapore to New York. According to Rybolovlev’s lawyers, the arrangement, between the two men, was never codified but was rooted in mutual understanding and friendship. It was understood that Bouvier would act as a buyer for the paintings, keeping Rybolovlev’s name discreet, and that “Bouvier should receive a flat rate of two percent of the purchase price for each painting purchased.

This covered all of his expenses. It was all based on trust, there was no written agreement."

Yves Bouvier has consistently disputed this version of events, arguing that he was acting as an independent seller—free to set his own prices—and that the 2 percent fee only covered his administrative costs. These divergent visions of what exactly was Bouvier’s financial interest in the arrangement finally clashed in spectacular fashion in the last days of 2014.

Rybolovlev had suspected that something was wrong in November, after reading an article in the New York Times which revealed that Bouvier had pocketed nearly $50 million on the da Vinci painting, the Salvator Mundi, he had sold to the billionaire collector.

Perhaps because of the confidence Rybolovlev still had in Bouvier, the curtain didn’t come down quite yet on their relationship. During his 48th birthday, Rybolovlev asked Bouvier if he had overpaid for the da Vinci—but when Bouvier seemed upset, Rybolovlev sent Tania Rappo over to the Swiss dealer with words of reassurance: “Tell him not to worry. We’re still friends.”

The final straw

On New Year’s Eve 2014, however, an interaction took place which in Rybolovlev’s mind made it clear that his trust in Bouvier had been abused. The Russian was at a party with art consultant Sandy Heller. Heller brought up a Modigliani painting, “Nu couché au coussin bleu”, which his client had sold for $93 million.

Rybolovlev was visibly stunned—he had bought that Modigliani himself, and he had forked over $118 million to Bouvier for it. Within two weeks after his conversation with Heller, Rybolovlev had filed a complaint against Bouvier with Monegasque authorities.

Five years later, the dust is still settling from the spectacular implosion of Bouvier and Rybolovlev’s friendship. Amidst mounting legal bills, the Swiss dealer had to sell his family company in 2017. Furthermore, Bouvier’s alleged wrongdoing ratcheted up policymakers’ scrutiny of his international empire of “freeports”, zones with special tax regimes where high-dollar art is often stored. With the European Parliament putting the phasing out of such zones at the top of its agenda, Bouvier’s €50 million facility in Luxembourg is on shaky ground, and he is reportedly looking to offload a similar installation in Singapore.

The legal dispute, meanwhile, is still ongoing. The Monaco case was thrown out in December on procedural grounds, as an appellate judge found that the investigations were biased against Yves Bouvier. The Swiss dealer hailed the Monaco decision as a vindication of his claims that the procedure had been biased in favor of Rybolovlev. All eyes now turn, however, to the ongoing proceedings against Bouvier in Geneva and prosecutor Yves Bertossa—as well as the correspondence between Bouvier and auction house Sotheby’s which were declassified by a New York court order and which, according to Rybolovlev, show that Sotheby’s assisted Bouvier in his alleged scheme.

Both the Bouvier Affair and the breaking story about Lux Capital illustrate that that getting into money matters with friends is no light affair. All too often, financial interests strike a death blow to friendship, as the relationship itself becomes a currency to be traded on for financial gain.
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