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On July 28 a judge in Paris will rule on whether the receivers can begin the process of returning around 20,000 valuable items to investors as early as September. 

An estimated 135,000 works from the world’s largest private collection of historic manuscripts were placed under seal by the French judiciary in 2014 as an investigation into a ‘pyramid’ scheme began.

For more than a decade, Aristophil, run by dealer Gérard Lhéritier, was the biggest buyer in a booming manuscript market.

Acquiring spectacular works at auction and through dealers, the company encouraged investors to speculate on historical letters and manuscripts with the promise of an annual return of 8% or more.

A Collapsed Pyramid

A total of 54 different collections were formed with nearly 18,000 investors and contracts totalling €700m before Aristophil and its subsidiaries were declared bankrupt in 2015.

Shortly afterwards, Lhéritier and five others (including the Parisian bookseller Jean-Claude Vrain) were indicted on charges of organised fraud and tax evasion and the collection seized. The investigation continues.

Only a relatively small percentage of the total Aristophil holdings could be restituted in the coming months – those from so-called Amadeus contracts where documents were fully owned by an individual.

These 20,000 items are owned by around 5000 investors.

ATG understands that the receivers have asked the judge to declare all of the Aristophil contracts void so that the Amadeus restitutions can begin.

The next step would be to invite suitable companies – including auctioneers – to assume responsibility for the proper storage and insurance of the documents on behalf of the document owners.

Currently the liquidator is shouldering these costs.

Key Holdings

Items that were offered by Aristophil in shares, and are now the property of multiple owners (known as Coralys contracts), are legally more complicated. Their redistribution could take several years.

These include extraordinary and important items such as the will of the doomed Louis XVI, the original 39ft-long manuscript of the Marquis de Sade’s 120 Days of Sodom written while imprisoned in the Bastille, two Surrealist manifestos written by André Breton and fragments of the Dead Sea Scrolls.

It will only be through the resale of these manuscripts that Aristophil’s investors will recoup any of their outlay.

However, it is estimated that their sale will not recover the full amount invested as the authorities say many items were given over-inflated price tags.

Legal Fight

Two experts assigned by the judiciary to value the documents, Christian Galantaris and Jerome Cortade, say the manuscripts were sometimes sold by Aristophil for many times their true market value.

Class action groups are also seeking compensation from other sources.

L’association nationale de defense des investisseurs contre Aristophil (Adilema), formed in March 2015 to represent the interests of 600 Aristophil victims, have initiated civil proceedings against the bankers used by the bankrupt company.

Aristophil: A Timeline

1990s: Paris dealer Gérard Lhéritier creates Aristophil, encouraging investors to speculate on the rising value of historical letters and manuscripts. Each investor consents to the works being stored by Aristophil for an agreed period of five years or more with the promise of 40% returns. Subsidiaries are opened in Austria, Belgium, Switzerland and Hong Kong.

2002: Aristophil purchases the 54-page correspondence between Albert Einstein and the Swiss mathematician Michele Besso for $559,500 at Christie’s New York. It is valued at €12m to Aristophil’s investors, and later offered for resale at €24m.

2003: The Autorité des Marchés Financiers (AMF) publishes the first of several warnings about the Aristophil business model. After an investigation, a court finds that investment in historical manuscripts does not come within the scope of the financial regulator.

2012: Gérard Lhéritier creates the Musée des Lettres et Manuscrits in Paris where trophy acquisitions are exhibited.

2013: Aristophil are no longer able to meet the repayments to customers.

March 2014: Suspecting a pyramid or ‘Ponzi’ scheme, the French judiciary launch an investigation.

November 2014: The Musée des Lettres et Manuscrits, the Aristophil headquarters and those of subsidiary companies are searched by 100 officers from the anti-fraud squad. The accounts of the Aristophil company are frozen and the whole of the collection placed under seal.

January 2015: Aristophil, heading for bankruptcy, is placed into compulsory liquidation.

March 2015: Gérard Lhéritier is indicted on charges of organised fraud and tax evasion. The company assets are frozen by the Ministry of Justice to allow investors time to file claims. Legal firms begin registering complaints and a series of class action groups are established.

September 2016: Following a break in the legal impasse, elements of the Aristophil collection could be returned to investors.