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February 14, 2012 - Lee Harvey Oswald gravestone wanted back from Roscoe museum
ROCKFORD REGISTER STAR - “A tombstone doesn’t typically come with a title or a deed of ownership.” Several parties have asserted title to the gravestone of the assassin of JFK, Lee Harvey Oswald. David Card (the son of the late buyer-owner of Mrs. Oswald’s house, where the gravestone was stored) alleges that Holly Ragan lacked authority to sell the gravestone in 2009 to Wayne Lensing (the owner of Historic Auto Attractions, whose private museum contains the world's largest collection of JFK memorabilia including the gravestone). Ms. Ragan acquired possession of the gravestone when it was stored by Mr. Card’s mother at Ms. Ragan’s mother-in-law’s home. The gravestone is reportedly worth up to $100,000.
February 6, 2012 - Collector says gallery took $950k for forgeries
COURTHOUSE NEWS SERVICE - Joseph Goldsmith, an art collector, has sued New York-based art gallery, Charlton Rose Fine Art, and its principals for selling nearly a million dollars in forged artworks falsely attributed to Keith Haring, Jean-Michel Basquiat and Andy Warhol from 2005 to 2007. Mr. Goldsmith alleges that the gallery induced him to purchase the art, which representatives of the Haring and Basquiat estates later declared to be fakes, by providing fabricated certificates of authenticity.
[ARIS Commentary: Although neither art title insurance nor any other insurance product covers or insures the authenticity, authorship or attribution of art; the art title insurer’s underwriting process, which is conducted by a third-party without a financial stake in the transaction, can help to prevent collectors from buying fake or otherwise problematic artworks. It is part of title insurance carriers’ routine due diligence and internal protocols to assess moral hazards surrounding submitted artworks (including the contents and veracity of certificates of authenticity) to support the company’s financial decision to guarantee clear legal title to the work.]
February 4, 2012 - Greenwich artist hopes for return of seized paintings
STAMFORD ADVOCATE - Serbian customs officials seized fifteen artworks by the Connecticut artist Marian “Bing” Bingham worth several thousand dollars while the works were on their way to an exhibition at a gallery in Bucharest, Romania. The authorities alleged that because the importing party (the dealer which represents the artist in the United States) lacked the necessary transit form, the artworks had presumptively entered the country illegally and were subject to seizure on suspicion of being smuggled works.
[ARIS Commentary: Transporting art - even contemporary, relatively inexpensive art - across national or international borders requires compliance and understanding of country-specific forms, rules and regulations which can be confusing to collectors (both foreigners and nationals) and violation of which can result in seizure, fines and criminal penalties, and which impinge upon the clear legal title to the work. Documentation by an insurance company that accompanies the work, such as a policy of title insurance, can function as a quasi-passport that can facilitate the cross-border movement of the work.]
January 24, 2012 - Thanks a lot, Uncle Sam
COURTHOUSE NEWS SERVICE - Margaret Bowland, a Brooklyn-based artist, has sued the United States, the Smithsonian Institute and the National Portrait Gallery in United States District Court of the Eastern District of New York for shipping her painting, which was exhibited at the National Portrait Gallery for over a year, to a third-party buyer without her authorization and without receiving the $100,000 sales price. The painting, which won the “People’s Choice Award” in the museum’s portrait competition, was previously exhibited at the Klaudia Marr Gallery in New Mexico. The museum sent the picture in accordance with the gallery’s instructions even though the museum purportedly knew that the artist held title to the work. The artist has not been paid by the buyer (who allegedly paid the gallery) or the gallery; but, neither party is named as a defendant in the case.
January 19, 2012 - $14M suit hits Gagosian
NEW YORK POST - Jan Cowles has sued Larry Gagosian, the Gagosian Gallery and John Doe (the unidentified buyer of her Lichtenstein picture) in New York state court to recover a Lichtenstein picture worth allegedly $5 million. Another case filed by Mrs. Cowles against the gallery with similar facts involving the unauthorized sale of a Tansey picture has settled. (See ARIS News, May 11, 2011, March 11, 2011). Mrs. Cowles alleges that the gallery knew that the Lichtenstein work belonged to her and not her son Charles Cowles but made no effort to contact her or her attorney to obtain authority to take the picture from her apartment or to offer it for sale.
January 19, 2012 - Colleen Weinstein disputes Hotel Chelsea’s handling of late husband’s art; demands return
NY DAILY NEWS - Colleen Weinstein, the wife of the late Arthur Weinstein, owner of Hotel Chelsea and other New York City night clubs, has threatened to sue Chelsea Dynasty LLC, the new owner of the hotel, to get her husband’s artworks back. The Weinstein art collection hung until recently prominently in the halls of the hotel. Mrs. Weinstein claims that the new owner unlawfully removed the entire collection of 25 artworks from the premises and will not let her take a mobile that hangs on the 10th floor. The hotel’s representative asserts that it acquired full legal title to all of the Weinstein’s art when it purchased the building.
January 17, 2012 - Basquiat’s Authentication Committee to disband in September 2012
GALLERIST NY - The Authentication Committee of the estate of Jean-Michel Basquiat announced that it will stop accepting applications to review artworks. This decision follows the disbanding of the Lichtenstein and Warhol committees in light of the potentially serious financial and legal consequences surrounding making negative decisions about the authenticity of applicants’ submitted artworks. Most art experts would agree that real paintings tend to have the right provenance and a literary reference in the artist’s catalogue raisonné.
January 12, 2012 - Remember who owns the Alamo jacket
COURTHOUSE NEWS SERVICE - Dallas-based Heritage Auctions sold in December 2011 a tan suede jacket worn by John Wayne in the 1960 “The Alamo” movie for $119k subject to a pre-sale agreement between Ellsworth Marshall Jones (a stuntman, who received the jacket while working on the film,) and Derek Jones (Marshall’s nephew, who alleges that his uncle gifted the jacket to him in 1990,) to keep the sales proceeds in escrow. After the sale, Ellsworth reneged on the agreement and restated his claim to recover possession of the jacket. The auction house filed a declaratory judgment action in United States District Court for the Northern District of Texas seeking an order confirming that Derek is the rightful owner of the jacket and that pursuant to the pre-sale agreement the auction house can deliver the jacket to the winning bidder.
January 6, 2012 - NASA questions Apollo 13 commander’s sale of list
ASSOCIATED PRESS - Dallas-based Heritage Auctions has suspended the $388k sale of a 70-page module checklist used on the Apollo 13 mission in light of ownership claims raised by NASA. Commander James Lovell consigned the item, which bears his handwritten mission notes, to the auction house and gave standard written representations about his clear title to the historical document. NASA has also asserted title to three other space memorabilia items in the same November 2011 Heritage sale and has settled another similar astronaut memorabilia claim. According to NASA officials, there is a potential risk of government seizure of all aerospace-astronaut items unless and until the title issue has been resolved.
December 15, 2011 - Humana sends smuggled Italian statues home
AUCTION CENTRAL NEWS - Humana Inc., a Kentucky-based health insurance company, returned a pair of 2nd century Roman marble statues to Italy after the company discovered that the statues had been illegally smuggled out of Italy. The company purchased the statues, which were displayed in the lobby of Humana’s headquarters, from an unnamed art gallery in New York in 1984.
December 8, 2011 - The law vs scholarship
THE ART NEWSPAPER - Individual art experts following the lead of institutional artists’ foundations are increasingly reluctant to give opinions about the authenticity of art for fear of being sued for their conclusions. The threat of litigation trails the rise in 20th century art prices and may stall academic discussions about artists’ oeuvres. Academics lose even when they win baseless lawsuits because in the U.S. courts the “American rule” is that legal fees are borne by each party and are not generally recoverable from the losing party. If experts continue to avoid giving authenticity opinions, fakes may more readily enter the art market and deceive innocent buyers.
[ARIS Commentary: As more and more individual academics and institutional boards, foundations and estates decide to exit from the business of providing certificates and opinions on the authenticity of artwork offered in the stream of commerce, there will be greater uncertainty about authentication protocols for buyers. Even if an artist’s foundation continues to work on a catalogue raisonné, the foundation may not disclose to the owner whether or not their submitted artwork will be included in the catalogue, creating uncertainty around the work until the catalogue is published and inclusion (or exclusion) of the work is known. An alternative, cost-effective approach to address authenticity for transacting parties with additional benefits is to obtain title insurance financially securing the party’s legal title to the artwork, which places an additional lens on provenance and in turn authenticity , see ARIS commentary December 2, 2011.]
December 2, 2011 - Possible forging of modern art is investigated
THE NEW YORK TIMES - Federal and New York law enforcement authorities are investigating a possible two-decade long, multi-million dollar expert art forgery: In particular, whether approximately twenty works by postwar masters such as Motherwell, Pollack and Rothko sold by prestigious dealers and galleries including Knoedler & Company are fakes. Glafira Rosales, an art dealer from Long Island, who claimed to have access to an anonymous, international collector with a cache of undiscovered art, brought the artworks to market. The involved dealers and galleries, the bulk of which are not being targeted by FBI and other investigators, have asserted that they did not intentionally or knowingly sell forged artwork yet none can positively identify the selling collector represented by Ms. Rosales or point to any documented provenance for the sold artworks.
[ARIS Commentary: Although art title insurance does not cover or insure authenticity or attribution (which can be a matter of divergent opinion), the title insurer’s underwriting process for an art title insurance policy serves as an additional lens by an independent, third-party on matters which brings to the surface moral hazards surrounding the artwork such as fake provenance histories with fictitious prior owners or over- or understated valuations that can signal authenticity and other issues. Collectors routinely gain comfort on authenticity by the fact that a title insurance company has vetted and financially guaranteed clear legal title to the artworks.]
November 30, 2011 - Nazi loot claim fails to hinder planned Cologne auction of Kandinsky work
BLOOMBERG - Lempertz auction house based in Cologne, Germany plans to sell a Kandinsky watercolor with a low estimate of $1.2 million without disclosing in the catalogue that there is an unresolved WWII restitution claim for the picture. Heirs of Lissitzky-Kueppers contend that in 1926 the work was loaned to the Hanover museum and later seized by the Nazis as “degenerate art.” Lempertz argues that in the 1920s Ms. Lissitzky-Kueppers gifted the watercolor to Lotte Beck, whose family allegedly had possession of the work until 1989. The auction house has not notified potential German or international buyers of the Lissitzky-Kueppers heirs’ pending restitution claim for the work in the catalogue or elsewhere stating that there was no reason “to tarnish the painting.”
November 30, 2011 - A gallery that helped create the American art world closes shop after 165 years
THE NEW YORK TIMES - Knoedler & Company – one of the oldest, most esteemed art galleries in the United States that helped define American artistic taste for generations and provided art to many great collections and institutions – has abruptly closed. The gallery did not specify the reasons for its closure apart from stating it was due to business considerations. Former Knoedler clients will have little recourse if and when they discover that they purchased art with problematic title or authenticity from the gallery.
November 28, 2011 - Dispute over $400 million Huguette Clark estate jeopardizes future museum
ARTFIX DAILY - Distant relatives of the late Huguette Clark, heiress to a copper mining fortune, have contested the disposition of Ms. Clark’s $400 million estate in New York Surrogate’s Court. Ms. Clark executed two diametrically different wills six weeks apart: The first will gave her fortune to family members and the second will established a foundation to create an art museum and gave money to charity, her nurse, lawyer and accountant but nothing to relatives. At issue in the likely expensive and protracted estate dispute is the ownership of Ms. Clark’s large art collection, which includes valuable works by Renoir, Sargent, and Monet.
November 17, 2011 - Wedgewood museum faces threat of forced sale
THE GUARDIAN - The Wedgewood Museum in Stoke-on-Trent, England might be forced to close and liquidate its multi-million pound collection of china because of the museum’s historic ties to Waterford Wedgewood Potteries, the company founded by the Wedgewood family which went into bankruptcy administration two years ago. Under English law, any company linked to a pension scheme can be held responsible for pension shortfalls. Because five out of 7,000 former Wedgewood company employees became museum employees, the museum may be held liable for the company’s outstanding £134 million pension payments. The museum has been legally and financially independent from the Wedgewood company for fifty years.
November 8, 2011 - 200 years later, France claims a missing artwork
THE NEW YORK TIMES - The French Ministry of Culture has alleged that a painting brought to France to be authenticated as a work by the artist Tournier and for sale was stolen in 1818 from the Augustins Museum in Toulouse. Mark Weiss, owner and director of Weiss Gallery in London, purchased the picture at an auction in 2010 in Maastricht, the Netherlands. French authorities contend that the painting belongs to the French state and cannot leave the country. Ironically, Mr. Weiss imported the picture in the hopes of selling it to the Toulouse museum, the same museum from which it was allegedly stolen 200 years ago. Mr. Weiss was shocked by the theft allegation because French officials have been aware of the painting’s existence for several years and the Art Loss Register had no record of the theft.
See also “British gallery rejects France’s claim to painting,” AFP, November 8, 2011.
http://www.google.com/hostednews/afp/article/ALeqM5gwnLxwPjOmx7gzFK208ZtGNsW9oA?docId=CNG.5c6f9c9973a18c4db96c87564df72b72.421
November 4, 2011 - The Getty Museum is in a legal fight over Armenian bible pages
LOS ANGELES TIMES - A state court in California has denied the J. Paul Getty Trust’s motion to dismiss a lawsuit brought by the Armenian Orthodox Church to recover several pages of an ancient biblical manuscript allegedly stolen from the church either around the end of WWI or in the late 1940s. (See ARIS News, April 6, 2011). The Getty bought the manuscript pages in 1994 for $950,000 and asserts that it has clear legal title to them. An attorney for the church noted that the church has identified and may pursue restitution claims for at least 60 similar Armenian manuscripts, which were allegedly stolen during the Armenian Genocide and are now in the collections of American museums.
See also “Getty fails to derail Armenian church lawsuit over manuscripts,” The Bellingham Herald, November 3, 2011.
http://www.bellinghamherald.com/2011/11/03/2256372/getty-fails-to-derail-armenian.html
November 1, 2011 - Man demands Nazi-looted Modigliani
COURTHOUSE NEWS SERVICE - Philippe Maestracci, the sole heir to the Jewish art dealer Oscar Stettiner who ran a gallery in Paris before WWII, has filed a declaratory judgment action in U.S. District Court for the Southern District of New York to be declared the owner of and recover a Modigliani painting currently in the possession of the New York-based Helly Nahmad Gallery. The heir alleges that Stettiner was forced to flee Paris in 1939 leaving his art collection including the Modigliani behind, which was later sold without Stettiner’s consent.
November 1, 2011 - Artists file lawsuits, seeking royalties
THE NEW YORK TIMES - Several artists including Chuck Close have filed a class-action lawsuit against Sotheby’s, Christie’s and eBay for allegedly violating the 1976 California Resale Royalty Act. The lawsuits seek to force the auctioneers to reveal the identity and location of sellers, information that is kept secret, but necessary to enforce the royalty payments. Acclaimed Los Angeles-based artist Mark Grotjahm has also sued prominent California collector Dean Valentine in California state court to recover a 5% royalty owed for three artworks that Mr. Valentine has resold. California is the only U.S. state that has such legislation, although the royalty rights of artists (also known as droit de suite) is recognized by many European countries. The California law generally provides that artists whose work is resold are entitled to 5% of the sales price if the transaction takes place in California or the seller resides in the state. Mr. Valentine has argued, and the auction houses will presumably also argue, that the California law interferes with the U.S. Copyright Act of 1976.
[ARIS Commentary: Collectors, galleries and auction houses that allegedly violate the California Resale Royalty Act may be creating security liens on resold artworks for down-stream buyers carrying rights of recovery in addition to or in lieu of money damage claims against the sellers. For instance, there is some indication that violation of the droit de suite regulation in the U.K. known as the 2006 Artist’s Resale Right Regulations, which will expand three-fold in 2012 to include the estates of deceased artists, may prevent U.K. authorities from granting export licenses for the offending resold artwork.]
See also “Sam Francis Foundation sues nine galleries for artists’ royalties,” Los Angeles Times, November 1, 2011.
http://www.latimes.com/entertainment/news/la-et-artists-royalties-20111102,0,5428167.story
November 1, 2011 - Art, photo collection going up for bids after being seized from Birmingham attorney
THE BIRMINGHAM NEWS - The IRS has seized a large collection of photographs and paintings worth approximately $500,000 including many works by emerging African-American artists from a formerly prominent lawyer, and will liquidate the collection at a public auction to satisfy the attorney’s outstanding IRS tax liens.
October 31, 2011 - Passionate investing on the rise: Spotlight on asset protection for collectors
ACE Private Risk Services® - As demand for and spending on fine art, jewelry, wine and other valuable collections continues to rise, it is increasingly important for high net worth individuals and their wealth advisors not only to understand the market trends but also to engage the experts who can address and manage a variety of risks. These risks include physical damage, theft and improper title or legal ownership involved with this asset class. These risks can start at the purchase transaction and extend through the life of ownership until the collector or members of his or her family decide to sell, donate, exhibit or execute estate strategies around the object.
October 26, 2011 - ACE Private Risk Services and ARIS Title Insurance Corporation announce marketing alliance to provide risk management solutions for collections of fine art and other precious items
BUSINESS WIRE - ACE Private Risk Services, part of the ACE Group focused on high-net-worth personal lines, is partnering with ARIS to help individuals, wealth advisors and institutions understand and address the full range of property plus title risks associated with collecting fine art and other precious items.
October 26, 2011 - Second lawsuit filed against gallery
MAINE ANTIQUE DIGEST - SEM Art Ltd., a Monaco-based gallery representing an unidentified buyer of artworks by Dana Melamed from New York-based Priska C. Juschka Fine Art, has sued Juschka in New York state court for not delivering three of twelve artworks that SEM allegedly purchased from Juschka at Art Basel Miami in 2009. In a related but earlier lawsuit against the gallery also filed in New York state court, Ms. Melamed alleges that Juschka under-stated the total sales price of the twelve artworks (including the three at issue in the SEM lawsuit) that Juschka reported to the artist that the gallery sold and thus failed to pay the artist her full share of the sales proceeds. The court in the first-in-time lawsuit had ordered the return of three Melamed works now in question in the SEM case to Ms. Melamed.
October 19, 2011 - Museum lays claim to Dr. Kevorkian’s art
COURTHOUSE NEWS SERVICE - The Armenian Library and Museum of America has sued in Massachusetts state court the personal representative of the estate of Jack Kevorkian and to be declared the owner of seventeen paintings by Dr. Kevorkian, the late physician who became infamous for his role in assisted suicides. The museum alleges that Dr. Kevorkian gifted the collection to the museum after an exhibition of the works. The estate alleges that the will of Dr. Kevorkian bequeathed all of Dr. Kevorkian’s assets including these paintings to his niece. Since the 1999 exhibition, the museum has maintained continuous possession of the pictures.
October 18, 2011 - Consignor protection bill introduced in New York
MAINE ANTIQUE DIGEST - Assemblywoman Rosenthal has introduced a bill to the New York State Assembly to increase protections provided to artists and their heirs and personal representatives when they consign artwork to dealers and galleries in the art market. The proposed legislation will bolster existing protections provided in the New York Arts and Cultural Affairs Law – clarifying the definition of heirs and representatives, specifying that funds held on behalf of artists by art merchants are held in statutory trusts and are not subordinate to consignees’ creditors’ claims in a bankruptcy proceeding, and creating private rights of action and the recovery of attorney fees by artists seeking to enforce merchants’ breach of the fiduciary duty.
[ARIS Commentary: The bill makes explicit the fiduciary obligations of art dealers and galleries to their represented artists and artists’ estates and establishes damages and consequences for such breaches. The drafters of the bill recognize the unfortunate effect that gallery failures and closures have had on the livelihood of artists and their families especially in the wake of the financial crisis and collapse of the Salander-O’Reilly Galleries. See ARIS News, June 22, 2011 et al.]
October 17, 2011 - Who owns this damaged masterpiece by Henry Moore?
THE ART NEWSPAPER - Henry Moore and the Contemporary Art Society donated in 1967 an important Moore sculpture that currently stands opposite the House of Parliament and is deteriorating because the City of Westminster, the Department of Environment and other government agencies have all denied ownership of the sculpture. Until legal title to the work is resolved, it cannot be restored or moved.
October 15, 2011 - Grossman: Judge might be asked to determine painting ownership
THE ERIE TIMES-NEWS - Erie County, the Northwest Pennsylvania Artist Association and the Erie Art Museum all claim ownership of a painting by the American Impressionist artist Frederick Childe Hassam, which is worth millions and currently hangs in a public library building. The county is considering filing a declaratory judgment action in order to sell the painting to fund an endowment for the county’s library collection. However, the museum and local arts community have stated that they will seek to block any such legal motion on the grounds that the Erie Art Club, the predecessor to the Erie Art Museum, purchased the painting in 1904 and has not relinquished title to work to the county. An attorney for the County Council opined that it will be difficult for the parties to prove ownership since there are no ownership records such as bill of sale.
October 12, 2011 - D.C. law firm sued over settlement for Picassos sold under Nazi regime
THE BLOG OF LEGALTIMES - Thomas Wach, the son of one of Paul von Mendelssohn-Bartholdy’s sisters, has filed a lawsuit in United States District Court for the District of Columbia against Byrne, Goldenberg & Hamilton, the law firm that represented the heirs of Mr. Mendelssohn-Bartholdy in the heirs’ WWII art restitution claims. The firm obtained financial settlements for the heirs from the Guggenheim Foundation and the Museum of Modern Art for two Picasso pictures that Mendelssohn-Bartholdy allegedly sold under duress during the Nazi-era. Mr. Wach alleges that the lawyers incorrectly did not include him as an heir or party to the settlement agreements and that he is entitled to a portion of the settlement funds.
[ARIS Commentary: The Wach case highlights two important trends in art litigation cases. Lawyers, fiduciaries, and other professionals who advise individuals or institutional clients around fine art and important collectibles are increasingly being sued for their role and on claims of inadequately or negligently navigating the art ownership risk for their clients. Second, even when parties are cognizant of an identified art title risk and have executed a settlement agreement addressing the title defect in the artwork – such as pursuant to a bankruptcy or WWII restitution settlement – that agreement does not guarantee that ownership to the subject art has been fully resolved.]
October 11, 2011 - Museum welcomes dispute over work
THE NEW YORK TIMES - The Mary Brogan Museum of Art and Science in Florida has sought to raise its profile as a regional museum and attract financial donations from its role in the middle of a WWII restitution claim for a 16th century painting on loan from an Italian state-run museum (see Alert News, September 9, 2011). The United States Attorney for the Northern District of Florida ordered the museum to retain possession of the painting until the ownership issue is settled. The director of the museum apparently did not consider the risk of WWII historical theft or know that the museum could have asked the State Department to declare the work immune from the seizure at least while the work was in the United States as the Museum of Modern Art did in 1998 after it faced a seizure order for Egon Schiele’s “Portrait of Wally” on loan from an Austrian museum. The relationship between the Italian museum and the Florida museum has become strained as a result of the pending dispute.
October 6, 2011 - Widow and ex-wife battle over collector’s icons
THE ART NEWSPAPER - The ownership of a collection of rare, museum-quality Russian icons is being contested in a Russian court by the widow, ex-wife and children of the late Russian collector and businessman Mikhail de Boire. Mr. de Boire’s ex-wife alleges that she donated 75 of the best icons to the State Pushkin Museum of Fine Arts in 2010 after lending the works for an exhibition at the Tsaritsyno Palace. However, Mr. de Boire’s widow claims that the icons are hers and were stolen by the ex-wife. Pending the court’s resolution of the dispute, the icons will remain in storage at the museum.
October 5, 2011 - Exchange artwork and collectibles and defer paying capital gain taxes
ASSET PRESERVATION INC. - Artwork and collectibles can be used for IRC 1031 tax deferrals if the owner satisfies certain conditions including holding the art or collectible primarily for investment. To prove to the IRS that their property was not held for personal use, taxpayers should treat their art or collectible like any other investment asset and seek expert advice when buying and selling, maintain records of all purchases and obtain art title insurance.
September 22, 2011 - Art title insurance provided by ARIS adopted by global art fund manager Artemundi Management Limited as standard protocol
BUSINESS WIRE - Artemundi Management Limited, part of the Artemundi Group (“Artemundi”), one of the world’s leading art investment funds, with $300 million invested in the art market since the 1990s, has taken the market lead and made art title insurance a standard part of its investment protocols to manage the art market title risks. The first transaction to fall under Artemundi’s new protocols is an important Willem de Kooning painting featured in the retrospective exhibition at the Museum of Modern Art in New York.
September 19, 2011 - Warhol painting among $2.8 million Irish bad bank auction
REUTERS - Ireland’s National Asset Management Agency (NAMA), created to purge Irish banks of over $42 billion worth of high-risk real property loans, will sell through Christie’s a debtor’s 14-piece art collection. This is the first time that the NAMA has auctioned art of a debtor, and the agency expects to liquidate additional fine art and tangible personal property tied to bad loans in the near future.
September 18, 2011 - Tony Curtis auction angers family
BBC - The fifth and last wife of the late Hollywood icon, Tony Curtis, has auctioned at Julien's Auctions in Beverly Hills, California, art and other Hollywood memorabilia the actor owned despite protests from Mr. Curtis’ five children. Mr. Curtis disinherited his children in revisions to his will written months before his death in 2010. The Curtis children have sought to contest their father’s will.
September 13, 2011 - Case of stolen Rembrandt intrigues art world
AUCTION CENTRAL NEWS - A drawing allegedly by Rembrandt circa 1630 valued at $250,000, which was stolen from an art exhibition at the Ritz-Carlton Hotel in Marina del Rey, was found abandoned and undamaged at a local church two-days after the theft. The Los Angeles County Sheriff’s Department has taken possession of the picture and has refused to release the drawing to the Linearis Institute, the entity that was exhibiting the work, because the institute has offered no bill of sale or other documentary evidence proving its ownership. The institute has also declined to reveal the name of the seller to law enforcement authorities.
September 9, 2011 - Mary Brogan Museum of Art & Science’s borrowed Italian painting: ownership dispute
ARTDAILY - The U.S. Attorney’s Office has ordered the Mary Brogan Museum of Art & Science in Tallahassee, Florida to hold and not return a 16th century Italian Renaissance painting, which the museum borrowed from the Pinacoteca di Brera museum in Milan, Italy for an exhibition, until U.S. and Italian authorities address a possible WWII restitution claim to the picture.
September 3, 2011 - Lake Forest family’s Renoir painting object of court fight about who is rightful owner
CHICAGO TRIBUNE - Due to a possible restitution claim by the heirs of Richard Semmel, a persecuted German Jewish textile mogul, the executor of the estate of Newton Korhumel, a steel industrialist, has been prevented from selling a Renoir painting which was scheduled to be auctioned at Christie’s Chicago. As is their standard practice, the auction house will retain the picture until the parties’ dispute is resolved. Mr. and Mrs. Korhumel purchased the picture in 1956 from a New York gallery. Mr. Korhumel's estate filed a declaratory judgment action in United States District Court for the Northern District of Illinois seeking to be declared the rightful owner of the painting. However, the lawyer for Mr. Semmel's estate asserts that Mr. Semmel is the rightful owner of the picture since he was most likely forced to sell it to finance his abrupt departure from Nazi Germany in 1933.
August 26, 2011 - Collector sues dealer for $5m in missing Picassos, Matisses, Klee . . .
COURTHOUSE NEWS SERVICE - George Ball has sued art dealer Scott Cook in United States District Court for the Southern District of New York to recover artwork that he entrusted to Mr. Cook to store as well as $5 million for artwork that Mr. Cook sold on Mr. Ball’s behalf at a Christie’s auction and absconded with the sales proceeds. Mr. Cook has allegedly already spent the proceeds from the auction sale of Mr. Ball’s artworks, closed his former New York-based business, and fled from the U.S. Prior to this incident, Mr. Cook reportedly had an excellent reputation in the marketplace as an honest and trustworthy art dealer.
August 23, 2011 - Ex-con superintendent found lacking as protector of art
THE NEW YORK OBSERVER - The superintendant of a Tribeca building, which houses the studio of the late Abstract Expressionist artist Shirley West, has allegedly stolen nearly 500 artworks by Ms. West. The artist’s niece entrusted the superintendent to safeguard the collection.
August 23, 2011 - Family’s claim against MoMA hinges on dates
THE NEW YORK TIMES - The U.S. Supreme Court will decide next term whether to grant the appeal of a replevin claim for three Grosz artworks brought by the German artist’s heirs against the Museum of Modern Art (see ARIS News, April 13, 2009), and revisit the question of whether New York’s three-year statute of limitation expired under the demand and refusal rule for these allegedly Nazi looted artworks. Some experts argue that cases involving art lost during WWII should be decided on the merits as suggested in non-binding international Holocaust-recovery declarations adopted by the U.S. government rather than procedural technicalities. Other experts argue that time limits are not just technical but speak to the issue of whether it is possible to accurately reconstruct historical occurrences and that it would be unfair to penalize rightful art owners by taking certain legal defenses out of the equation in WWII restitution cases.
August 17, 2011 - Huge diamond forfeited in Ohio to be auctioned
ART DAILY - A 43-carat yellow diamond seized by the U.S. Marshal Services from Paul Monea, an Ohio businessman convicted of money laundering and conspiracy, is to be sold at auction by the federal government. It is unclear how Mr. Monea acquired the diamond known as the “Golden Eye.” Mr. Monea’s two children, a New York minister and a California businessman, have claimed ownership of the diamond reported to be worth millions. The U.S. Court of Appeals for the Sixth Circuit affirmed a ruling permitting the sale of the diamond and the proceeds to be split between victims of Mr. Monea’s criminal activities and the federal, state and local law enforcement agencies that investigated Mr. Monea’s case.
August 12, 2011 - Man sues his uncle for a Warhol
COURTHOUSE NEWS SERVICE - Robert Fenton, husband of the art dealer known as Shaindy Fenton and trustee of the Fenton Family Trust, has sued his brother-in-law, Neil Balick, in United States District Court for the Eastern District of Pennsylvania to recover a blue Shaindy Warhol portrait, one of three Warhol commissioned portraits of his late wife. Mr. Fenton alleges that the trust loaned the picture to Mr. Balick on a temporary basis so that Mr. Balick could enjoy the painting but never intended nor did the trust transfer title to the artwork. (The source appears to have mistakenly mischaracterized the litigants’ family relationship.)
August 9, 2011 - In war over a Motherwell “Spanish Elegy,” the painting is modern but the lawsuits are Byzantine
ARTINFO - In the case of Killala Fine Art Limited v. Julian Weissman, Dedalus Foundation, Inc. et al in the United States District Court for the Southern District of New York, at issue is the authenticity of a Robert Motherwell painting sold by the art dealer Julian Weissman to the gallery Killala Fine Art and whether the Dedalus Foundation (which was created by the artist Motherwell to fund a variety of art programs including sponsoring the Motherwell catalogue raisonné project) is liable for changing its opinion about the attribution of the work. In a crossclaim, the foundation alleges that Mr. Weissman should be held liable for providing false and misleading information about the provenance of the work, which induced the foundation to attribute the work to Motherwell originally. The foundation claims that Mr. Weissman told the foundation that he purchased the work from a Kuwaiti princess when in fact, the foundation claims based on later-discovered information, Mr. Weissman acquired the work from an art dealer previously suspected of trafficking forged artworks.
August 3, 2011 - New York socialite jailed for allegedly stealing millions of dollars worth of historical documents
BUSINESS INSIDER - Barry Landau, a noted presidential historian and collector of American historical artifacts and memorabilia, has been charged with stealing important historical papers including documents signed by President Lincoln, Benjamin Franklin and President Roosevelt worth $6 million from the Maryland Historical Society, New York Historical Society and Franklin D. Roosevelt Presidential Library and Museum. According to prosecutors, Mr. Landau sold four stolen papers to a private buyer for $35,000.
August 3, 2011 - Prosecutors seek 10-plus years for ex-assistant who ripped off Pulitzer heir Kenward Elmslie
NEW YORK POST - James Biear, former assistant to Kenward Elmslie, grandson of Joseph Pulitzer, is awaiting sentencing for stealing art and other valuable personal property from his boss Mr. Elmslie, who suffers from Alzheimer’s Disease. Mr. Biear also sold some of the art that he stole from Mr. Elmslie including a Warhol crate "Heinz 57" to Jane Holzer, a protégée of Warhol, for $220,000 (see ARIS News November 24, 2009).
July 26, 2011 - Rosa Parks trust, estate tied up in lengthy court fight
FINANCIAL PLANNING - Six-years after civil rights icon Rosa Parks passed away, executors, the non-profit Rosa and Raymond Parks Institute for Self Development and family members are embroiled in a dispute over assets in Ms. Park’s estate including a considerable amount of civil rights memorabilia. A Michigan state trial judge has given lawyers representing the estate the authority to sell at auction and retain the sales proceeds of memorabilia to satisfy their unpaid legal fees because the estate is illiquid. Former executors and Ms. Park’s foundation have appealed the court’s ruling to allow the sale of memorabilia and to stop the future sale of memorabilia housed in New York auction houses.
[ARIS Commentary: Until resolution of questions surrounding the validity of Ms. Park’s trust and will, title to all of the memorabilia coming out of Ms. Park’s estate is clouded with uncertainty and potential liens by the competing heirs, adversely effecting the marketability, salability and valuation of these objects. Irrespective of the Michigan court’s ruling permitting the sale of the memorabilia in the midst of the dispute, current buyers of the memorabilia should be aware that they may be later subject to rescission, restitution, or indemnity claims based on for instance a reversal of the trial court’s decision by the Michigan appellate court.]
July 22, 2011 - Convicted art dealer gets 16 years in prison, loses Renoir
THE NEW YORK OBSERVER - Rocco DeSimone, a former art dealer based in Rhode Island, has been convicted of money laundering and mail fraud stemming from a fraudulent investment scheme. Mr. DeSimone collects fine art and Japanese swords, which are now being confiscated to repay the $6 million that he owes in restitution to victims of his scam.
July 17, 2011 - Fighting for his family portraits
THE TELEGRAPH - The Earl of Cardigan has challenged the past and upcoming sale, securing a last minute injunction to halt the sale, of 25 paintings taken from his ancestry home in Wiltshire, England by the trustees of his estate, who decided to sell the art to satisfy the earl’s £2 million debt following a divorce settlement. The trustees took the portraits including works by Sir Joshua Reynolds and other important British artists unbeknownst to the earl while he was out of the country and consigned them for sale at Sotheby’s. The first batch of paintings was sold in April 2011; the second batch has been enjoined from sale by the English court pending resolution of the earl’s claim. The estate trustees contend that the sale of the artwork is a necessary alternative to pay down the earl’s debt given the earl’s lack of liquidity to satisfy his divorce payments despite the earl’s ownership of several historic, valuable real estate properties.
July 13, 2011 - Arts patron accused of hiding assets
STAR TRIBUNE - Michael Antonello, a Minnesota insurance agent who owes millions in civil court judgments for his role in selling fraudulent life insurance policies, has been accused of thwarting payment to plaintiffs. Mr. Antonello transferred title of $3 million worth of his art and musical instruments to Michael J. Antonello and Associates Ltd. The company allegedly leveraged these objects as loan collateral to secure financing from a New York firm, which placed bank creditor liens on the works, on top of the plaintiffs’ judgment liens.
July 11, 2011 - Judge to decide ownership of “Jackie letter”
AUCTION CENTRAL NEWS - The U.S. District Court for the Northern District of Texas will determine the owner of a condolence note written by former first lady Jacqueline Kennedy to her sister-in-law Ethel Kennedy after the death of her husband Robert Kennedy. The letter was found amongst papers of a plumber, who once worked in the Kennedy home, after the plumber’s death. The plumber’s son sold the note to a Connecticut dealer, who in turn sold it to the Massachusetts collector, who consigned the letter for sale at Dallas-based Heritage Auction Galleries before it was seized by the FBI. The Kennedy children believe that the letter may have been stolen since it was never gifted, loaned or sold by the family. There is no evidence that any of the prior sellers or buyers were aware of the purported theft.
July 11, 2011 - De Vries withdrawn at Christie’s
ANTIQUES TRADE GAZETTE - A rediscovered 17th century bronze statue with an estimated value of £5 to £8 million was pulled from a sale the evening before it was to be auctioned off at Christie’s London. The auction house reported that it withdrew the work because new information came to light affecting the validity of the existing export license. The work was consigned by a German noble family.
July 7, 2011 - Pennsylvania family fights United States Treasury over rare 1933 gold coins
ART DAILY - The heirs of Israel Switt, a jeweler who died in possession of 10 never-circulated “double-eagle” gold coins that are worth an estimated $80 million, are contesting the U.S. government’s claim of ownership of the coins that were allegedly stolen from the U.S. Mint in Philadelphia in 1933. The heirs believe that the coins could have left the Mint legally. The U.S. Treasury seized the coins when the heirs took them to the Treasury to be authenticated. The government will likely argue that Mr. Switt was involved in the theft and because a thief cannot pass title through probate or other transference, the coins are government property.
July 1, 2011 - No ‘finders keepers,’ artist tells gallery
COURTHOUSE NEWS SERVICE - German artist Franz Erhard Walther has sued art dealer Keith Johnson and his gallery, Urban Architecture, in United States District Court for the Eastern District of New York to recover a collection of his canvas assemblages, photographs and drawings worth an estimated $2 million, which were consigned in 1988 to the John Weber Gallery, before the gallery filed for bankruptcy protection in 2001. Mr. Walther failed to recover the artworks during the Weber gallery's bankruptcy proceedings. In 2008, Mr. Johnson contacted Mr. Walther and informed him that he acquired a collection of his artworks from Mr. Weber and proposed a consignment arrangement with his gallery to sell the works; however, Mr. Walther refused a second consignment of the collection and asserts that he retains title to the works.
June 30, 2011 - Germany hands Netherlands 8 Old Masters bought in World War II
BLOOMBERG - Germany returned eight pictures to the Netherlands that Alfred Kummerle acquired before and during Nazi occupation of the Netherlands between 1940 and 1944 and that the East German government later seized. The eight works at issue were once owned by Dutch Jewish art dealers Jacques Goudstikker and Nathan Katz and have been housed at the Leipzig Museum. This case illustrates "how complex restitution questions can be, given the tortuous route many artworks took before and after World War II [since] the [Germany government's] Federal Office for Central Services had to weigh claims from not only the Dutch government and the Kummerle heirs, but also from the Conference on Jewish Material Claims Against Germany." The Claims Conference is an organization that recovers unclaimed Jewish property lost due to Nazi persecution.
June 30, 2011 - Barquet Group to seek joint administration with equity owner
THE DEAL - Ramis Barquet, a leading Latin American art dealer, and his solely-owned Chelsea-based gallery selling primary and secondary market artworks, have filed for joint administration and protection from creditors under Chapter 11 of Title 11 of the U.S. bankruptcy code in U.S. District Court for the Southern District of New York. The two largest unsecured creditors are Sotheby’s and SageCrest II LLC, which received over $6 million in debt assigned from ACG Credit Co. LLC (owned and controlled by Ian Peck) and sued the gallery and Mr. Barquet in United States Bankruptcy Court for the District of Connecticut.
June 22, 2011 - Renaissance Art Investors, LLC v. Moretti Fine Art Ltd
COMPLAINT - Renaissance Art Investors, LLC (RAI), has sued Fabrizio Moretti and his art gallery in New York state court to recover two sculptures by Prospero Clemente that RAI bought from and later consigned for sale to Mr. Salander and the Salander-O'Reilly Galleries. In 2008, after Mr. Salander filed for bankruptcy (he was later charged with criminal activity vis-a-vis his failure to pay proceeds due investors and consignors (see ARIS News, March 4, 2011)), RAI reported the sculptures as stolen as part of a larger inventory of missing art owned by RAI that was consigned to the gallery. In March 2011, RAI discovered that the sculptures were offered for sale by Mr. Moretti at the TEFAF Maastrict art fair and secured a court order in the Netherlands to seize the sculptures and have them held by a bailiff until the parties' competing ownership claims to the works can be resolved.
[ARIS Commentary: The RAI, Moretti lawsuit confirms that owners-consignors are in fact suing downstream buyers for restitution of their art lost due to a dealer absconding with funds after the sale of consigned artwork and that art investors and collectors are regarding their works as stolen versus losses purely recoverable against the dealer in order to support their looking to the purchaser for redress in the case of consignments gone array. (For a more detailed discussion on the entrustment-consignment paradigm, see ARIS News, June 9, 2011 and May 23, 2011).]
June 21, 2011 - A resurgence in art buying over the web
THE NEW YORK TIMES - Online commercial fine art sales have increased in the last few years, and so has the proliferation of online art sales websites. Many new collectors are buying contemporary art and other lower priced art as an investment on the web. Online art sales are generally viewed as more accessible and transparent than private sales by art dealers or galleries.
[ARIS Commentary: Although online art sales are often perceived as more transparent than traditional private gallery sales, buyers should be aware of possible title risks when purchasing contemporary or other types of art online and even when priced below $100,000 or as low as $10,000. Only some online art sales and auction sites vet provenance (which in many cases is not the equivalent of the legal chain of title) and sellers' backgrounds. Online buyers often do not know who is selling the work (e.g., an art dealer, a private collector or a living artist) and whether the seller has the full right, title and interest and authority to sell the work. Several online art sales and auction sites are, however, properly managing the art market title risk by transferring the risk to a third-party insurer and offering buyers title insurance as part of the online sales transaction.]
June 18, 2011 - Fight over $300M art estate
NEW YORK POST - Clare Stone, the widow of the late Allan Stone, a famous New York art dealer and collector, has accused Lelia Wood-Smith, the appointed executor of the Stone estate, of impropriety in handling the $300 million Stone estate, which owns art by de Kooning and other Abstract Expressionists. Since Mr. Stone’s death in 2006, his heirs and the executors have disagreed over how to best manage the valuable art assets left in trust to Mrs. Stone and his six children. In particular, in the latest court filings, Mrs. Stone accused Ms. Wood-Smith of removing $200 million worth of art from a Stone home and taking other art in lieu of commission without approval of the court or trust.
[ARIS Commentary: Executors and trustees, especially those not familiar with the art industry, should take care to avoid pitfalls in managing trusts and estates with art holdings. Even advisors with the best intentions can make unintended missteps in navigating the complicated, unregulated art market.
Trustees must protect and preserve clients’ collectibles with the highest degree of skill and prudence, irrespective of the advisor’s familiarity with the art industry, or face potential claims of breach of fiduciary duty and duty of care. If selling works at auction (which is often perceived as the best way to achieve the highest price and neutrality for trusts and estates) or through private dealers, advisors must represent and warrant clear legal title to the works even though they lack sufficient knowledge and information about the chain of title of the consigned objects.
As in the Stone case, it can be challenging to corral multiple heirs to agree upon a single course of action in deciding whether to keep, gift, donate or sell certain artworks. If the executor sells estate art without the requisite approval of the court or trust beneficiaries, buyers of that artwork may be subject to a claw-back type of lien and defective title claim by one or several heirs, who disagree with the executor’s decision to sell the artwork.
In addition, if the fiduciary seeks the opinion of counsel on the state of legal title of the artwork, this opinion will be exempt from the attorney-client privilege and subject to discovery by the estate or trust beneficiaries if a title problem later arises and causes a loss to the beneficiaries due to the fiduciary’s mismanagement of the art asset. See United States v. Jicarilla Apache Nation, 2011 WL 2297786 (decided Jun. 13, 2011) (affirming the existence of the “fiduciary exception” to the attorney-client privilege).]
June 15, 2011 - Bad Blood: Czech government scrambles to recall international art loans, fearing they will be seized in $500 million dispute
ARTINFO - In light of an arbitration finding that the Czech government owes businessman Josef Stava and his company Diag Human $500 million for defamation, the Czech government has sought to withdraw and prevent seizure of its artworks currently loaned out to museums around the world. Mr. Stava has already seized two paintings and one sculpture from the Belvedere Gallery in Vienna, Austria on the basis of an Austrian court decision upholding the arbitration decision and continues to seek seizure and confiscation orders for loaned Czech art in the U.S. and various European countries. The Czech government has stated that this case will affect its art loan policy for many years in the future.
June 9, 2011 - Zell says L.A. art dealer took him for millions
COURTHOUSE NEWS SERVICE - Chubb Indemnity Insurance Company has sued David Tunkl and his art gallery Worldwide Masterpieces, Inc., in Superior Court in Los Angeles, California as the subrogee of The Samuel Zell Revocable Trust, Helen Zell and Samuel Zell, the well-known real estate investor and entrepreneur. Under the terms of Chubb’s property insurance policy, Chubb paid the Zells $5.8 million for their loss of three artworks (one Balthus and two Léger pictures), which in 2007 and 2008 the Zells consigned for sale with Mr. Tunkl and for which Mr. Tunkl never paid the Zells the sales proceeds. Mr. Tunkl allegedly admitted to selling the artworks without the Zells’s authority and spending the proceeds.
[ARIS Commentary: The $5.8 million insurance settlement reportedly paid by Chubb to the Zells dispels the notion that property insurers have not had to cover claims under certain versions of their fine art property insurance policies for conversion by dealers or galleries after the R.H. Love decision in United States District Court of Illinois. (See extensive discussion of the entrustment issue in ARIS Commentary to ARIS News from May 23, 2011.)
However, after the R. H. Love litigation, property insurers as a whole have sought to avoid covering similar conversion-entrustment scenarios by revising their all-risk policy language specifically to exclude fraudulent, dishonest or criminal acts by parties entrusted with covered property, and using new policy language explicitly to that effect. This new policy language has been raised and challenged in the aftermath of the Salander-O’Reilley Galleries downfall in separate cases by two insured parties (The Philadelphia Museum of Art and Renaissance Art Investors) against AXA Art Insurance.
The Chubb- Zells-Tunkl case highlights once again the significant uncertainty surrounding rights of recourse in the context of the frequent market practice of consignments gone array: consigning sellers, property insurers, dealers without sufficient assets and innocent buyers are each jockeying for recovery or a safe-harbor, but not all are properly managing the consignment risk through a true third-party risk transfer to a title insurer.
If the art dealer, Mr. Tunkl, whom Chubb is currently suing, lacks as he claims money to repay the loss (presumably why the Zells looked to Chubb for recourse rather than the dealer in the first instance), then Chubb as the subrogated holder of the right of recovery against the dealer might choose (as other similarly situated parties in the market have done in their cases against the buyers of their works) to pursue litigation against the buyers of the three paintings at issue to recover the pictures on the grounds that the buyers did not acquire legal title. However, to prevail under this approach, Chubb must demonstrate why the Uniform Commercial Code entrustment rules do not protect the buyers as buyers in the ordinary course (BIOC) and successfully argue either that Mr. Tunkl’s actions amounted to theft and under U.S. law a thief cannot pass clear legal title or that the buyers hold a status more akin to that of a merchant-dealer under the UCC. See Brown v. Mitchell-Innes & Nash, Inc., 2009 WL 1108526 (S.D.N.Y. April 24, 2009) (suggesting that certain buyers may be treated as merchants under the UCC and not obtain same protections as BIOCs if a plaintiff shows that a buyer ignored red-flags of impropriety in the transaction and failed to meet higher standard of inquiry).
A further complication in the Chubb-Zell-Tunkl case is that Chubb will have to reconcile its position in this case, i.e., that the dealer’s actions were theft or conversion, with its position in the R. H. Love litigation, i.e., that the dealer’s actions were no more than a breach of the consignment contract. Moreover, the Chubb-Zell-Tunkl case should be viewed within the larger context of the changes the property insurance industry has made to this industry’s policy language to exclude fraudulent, dishonest or criminal acts by parties entrusted with covered property and the fact that property insurance policies renew each year. Beyond legacy claims under old property insurance policies, in the future the debate over whether a dealer that has not paid a consignor constitutes theft or instead constitutes a breach of contract will be academic at least for claims between insured parties under their property insurance policies against their insurers.
It remains to be seen what will happen to the legal landscape in dealer entrustment cases after the property insurers are out of the equation (for the reasons described above), and courts must determine in a given case who will the bear the loss of a consignment-gone-array as between the seller-consigner and the good faith buyer (or buyer in the ordinary course under the UCC), when neither party has properly managed the risk with a title insurance policy and the title insurer acting as an escrow agent to ensure that all parties are paid.]
June 8, 2011 - Michael Werner Gallery sues trustee accused of hoarding painting
THE NEW YORK OBSERVER - The Michael Werner Gallery has filed a temporary restraining order in New York State court against Christie’s and James H. Rich, an art collector and trustee of the Carnegie Museum of Art, seeking to stop Mr. Rich from selling a Peter Doig painting that the gallery sold to Mr. Rich for $162,000 in 2004. The painting is scheduled to be sold at an upcoming Christie’s London auction with an estimate of $2.2 to $2.7 million. According to the gallery, at the time of purchase, Mr. Rich agreed to gift the entire work to the Carnegie Museum of Art but gifted only a 10% share and later repurchased the 10% share from the museum.
June 8, 2011 - Treasured Pissarro print turns into costly headache
THE NEW YORK TIMES - Sharyl Davis lost a Pissarro picture, which she purchased in 1985 for $8,500, in a federal civil forfeiture proceeding after spending $100,000 in legal defense costs (see ARIS News, June 6, 2011). Ms. Davis parenthetically stated in commenting on her loss: “[m]y $100,000 asset turned into a $100,000 liability” and “[f]ortunately most of my artists are still living, or were [at the time she purchased their work] so there’s no problem with the title.”
[ARIS Commentary: Ms. Davis, a self-described artist, collector and interior designer, is not alone in mischaracterizing the notion that title risks do not exist for contemporary works or works by living artists. For post-modern to contemporary art, the ownership risk often has to do with a host of matters such as creditors claiming a security interest in the art because the seller used the art to secure financing but did not pay back their debt to the lender; the seller failing to disclose a right-of-first-refusal clause in a bill of sale between the first dealer and the first buyer either intentionally or because the seller did not know that the clause existed; or the seller entrusting the work to a dealer or gallery for sale and the dealer selling the consigned work and not paying the seller the owed proceeds.]
June 6, 2011 - ‘Innocent buyer’ of stolen art loses out to French museum
NEW YORK LAW JOURNAL - The United States Court of Appeals for the Second Circuit affirmed the district court’s granting of the federal government’s forfeiture claim based on a violation of customs law and the National Stolen Property Act and rejected Sharyl Davis’s argument that she should retain ownership rights as an “innocent buyer” of the 1884 monograph work by Camille Pissarro. At the time of her purchase of the work in 1985 for $8,500 from a San Antonio, Texas gallery, Ms. Davis did not know that a thief had stolen the picture from the Museé Faure in Aix-les-Bains, France in 1981, smuggled the picture out of France and into the United States and consigned the picture for sale to the Texas gallery. The Department of Homeland Security working with French police asked Sotheby’s to withdraw the picture from sale in 2003 after it was consigned by Ms. Davis. The Court found that in the context of civil forfeitures under Title 19 the buyer must bear the loss and that there is no innocent-owner defense.
May 31, 2011 - Forged painting was once in collection of Steve Martin, German police say
THE NEW YORK TIMES - German prosecutors have charged four individuals with creating and selling through various dealers, galleries and auction houses over a 14-year period nearly 50 faked paintings allegedly by artists such as Heinrich Campendonk, Fernand Léger and Max Ernst for a total of $21 million. The forged paintings were sold with elaborate fake provenance histories as coming from the conspirators’ grandfather’s art collection and fake stickers on the frames.
[ARIS Commentary: The actor Steve Martin, one of the buyers of a faked work, noted that in this case, “the forgers were quite clever in that they gave it a long provenance and they faked labels, and it came out of a collection that mingled legitimate pictures with faked pictures.” Even though authenticity, authorship and attribution are not covered by art title insurance, these issues are related to the art market ownership risk, because fraudulent provenances nearly always accompany forged artworks. Vetting provenance information as a subset of legal title (see ARIS News, February 1, 2011, the Gerald Peters Gallery case) and correlating it to other title information is integral to the title insurer’s underwriting process.]
See also “German authorities crack brazen forgery ring that infiltrated auction houses and museums worldwide,” ARTINFO, November 9, 2010.
May 25, 2011 - Goya painting pitches Spanish baroness against son in EUR 6m court battle
THE GUARDIAN - Borja Thyssen has sued his mother Baroness Carmen Thyssen, one of Europe’s wealthiest art collectors, to recover two paintings worth an estimated 6 million euro. Mr. Thyssen alleges that his adoptive father and his mother’s husband, the late Baron Hans Heinrich von Thyssen, promised to gift him the disputed Goya and Giaquinto paintings as part of his inheritance. The paintings, now in the hand of the baroness, were previously exhibited at the Thyssen-Bornemisza museum in Madrid as part of a long-term and extended loan arrangement with the museum while the baroness negotiated the sale of her 600 million euro collection with the Ministry of Culture of Spain.
May 24, 2011 - An Italian painting in Kentucky, headed home
THE NEW YORK TIMES - The Speed Art Museum in Louisville, Kentucky has agreed to return a 14th century altarpiece that was stolen in 1971 from a villa in Goito, Italy to the Italian authorities. The museum purchased the work in 1973 from Newhouse Galleries in New York for $38,000 without knowledge of the prior theft. The work has remained in the museum’s store rooms for the past decade.
May 23, 2011 - The hottest current fine arts-insurance legal action to watch - In praise of appraisals
ARTNEWS - For fine art and collectible property insurance purposes, it is critical for collectors to understand what is covered and is not covered by their policies and to obtain correct and current appraisals. In a case called "the hottest current fine arts-insurance legal action to watch," the Philadelphia Museum of Art sued AXA Art Insurance after the former industry-leading, now bankrupt Salander-O'Reilly Galleries failed to pay the museum proceeds from the sale of two insured, consigned paintings.
[ARIS Commentary: When collectors leave or "entrust" their art with dealers, galleries, framers, conservators and others who are considered merchants selling goods of that kind under Article 2 of the Uniform Commercial Code (UCC) and that merchant sells the work without paying the consignor or in breach of the agreed upon sales price, there is little recourse available to the consignor apart from suing the merchant for fraud or breach of contract.
The debate continues among consignors, buyers and property insurers over who bears the risk of loss when dealers go bankrupt or otherwise cannot or do not pay consignors after the sale of a consigned work and how to resolve the claimed conflict between, on the one hand, the UCC entrustment provisions, which give a merchant-dealer legal capacity to transfer legal title of consigned artworks to a buyer in the ordinary course (BIOC), and, on the other hand, the UCC Article 9 provisions pertaining to perfected security interests, designed to create priority rules among competing creditors holding a security interest in the debtor's assets when the debtor defaults on a financial instrument and used by the art industry to create notice to a BIOC that some party other than the merchant-dealer owns all or a fractional interest in the consigned work. See Bender v. Carroll, No. 2009-civ-601375 (N.Y. Civ. Ct. filed May 6, 2009); Philadelphia Museum of Art v. AXA Art Insurance Corp., No. 2010-civ-00587 (N.D. Md. filed March 8, 2010); AXA Art Insurance Corp. v. Renaissance Art Investors, LLC, No. 2010-civ-5581 (S.D.N.Y. filed July 22, 2010).
In the wake of the R.H. Love litigation against Chubb's subsidiary Pacific Indemnity Company (in which the United States District Court in Illinois found that a private collector, who consigned paintings to the gallery for sale, could sue the collector's homeowner insurer under an "all risk" policy for loss from the gallery's failure to pay the proceeds of the consignment sale) the property insurance industry modified the standard policy language to clarify that property insurance policies do not cover this kind of loss. For instance, the all risk policy language at issue in the AXA-RAI case excludes coverage for "[a]ny fraudulent, dishonest, or criminal act or acts by: . . . (b) [a]nyone entrusted with the Covered Property."
Advocating that consignors file UCC-1's for their consigned art creates an interesting legal question for courts, because the filing of a UCC-1 (intended under the UCC to apply to the rights of creditors of the consignor against the consignor's assets) arguably states nothing more than what is obvious in the art industry, that is, that works sold on consignment are by definition owned by someone other than the dealer. There is some suggestion that a sophisticated collector and buyer might be treated as a merchant under the UCC and not obtain the same protections as a BIOC under the entrustment rules unless that party satisfies a higher standard of inquiry and investigates red-flags indicating a lack of propriety of the transaction. See Brown v. Mitchell-Innes & Nash, Inc., 2009 WL 1108526 (S.D.N.Y. April 24, 2009). Courts will likely struggle to nullify the entrustment rules by engrafting into the UCC a BIOC's duty to investigate and interpret the financial affairs of a selling dealer, the necessary outgrowth of giving legal meaning to the notice of UCC-1's as transformed to the art industry.
The issues become still more legally complicated in the wake of the Metropolitan Museum of Art-Gagosian Gallery case as museums now start to use UCC-1 filings to place the market on notice of promised or completed full or partial gifts of artworks to the museum (many partial gifts pre-date the 2006 amendments to the U.S. tax code which chilled factional gifts). See The Metropolitan Museum of Art v. Safflane Holdings, Ltd., No. 2011-civ-3143 (S.D.N.Y. filed May 10, 2011); Safflane Holdings, Ltd. v. Gagosian Gallery, Inc., No. 2011-civ-01679 (S.D.N.Y. filed March 10, 2011).
The desire of many art owners to maintain confidentiality including in how they identify themselves in a UCC-1 filing and the often multi-state dimension of art industry transactions among consignors, dealers and buyers further frustrates the efficacy of UCC-1 filings even if they are to be given some legal effect against BIOCs purchasing works from merchant-dealers.
Consignors can best manage the risks they attempt to solve via UCC-1 filings by requiring the consignee-dealer to agree in the consignment agreement (i) that the dealer will not sell the work except in escrow, with the title insurer company serving as escrow agent, as part of securing title insurance for the benefit of the buyer, at a cost that the seller and dealer can share; and (ii) that the dealer does not possess legal authority to transfer title to the consigned work except in conformity with the consignment agreement. Such a process will enable the title insurer to assure that all interests are properly satisfied in the sale transaction, as is done in real property transactions, as well as protect against the myriad of non-UCC title risks.
Buyers who equally insist that title insurance be part of the purchase transactions can avoid being drawn into the continuing disputes over whether the buyer qualifies as a BIOC and obtained clear legal title as well as gain protection against non-UCC title risks and avoid later debates with their own property insurer over questions of insurable interest in the subject artwork for any kind of future covered loss.]
May 11, 2011 - Met seeks return of ‘Innocent Eye Test’
COURTHOUSE NEWS SERVICE - The Metropolitan Museum of Art along with co-plaintiff Jan Cowles, who gave a 30% share of the painting at issue in 2001 to the museum, has filed a lawsuit in United States District Court for the Southern District of New York seeking to recover and to be declared an owner of a 1981 Mark Tansey painting. Ms. Cowles alleges that she purchased the picture from her son Charles Cowles before gifting 30% of it to the museum. In August 2009, allegedly without Ms. Cowles's knowledge or authority, while the painting was in Mr. Cowles's possession, he consigned and sold it through the Gagosian Gallery to two art collectors for $2.5 million. The collectors have sued the gallery for millions of dollars in damages also in United States District Court for the Southern District of New York for failing to notify them at the time of the purchase transaction of the museum's existing partial ownership interest in the painting. See ARIS News, March 11, 2011.
[ARIS Commentary: There is a growing trend in the legal landscape affecting the art industry establishing a duty of care and corresponding liability for art market professionals, who do not adequately protect their clients through research and other means from the exposure of defective legal title of fine art and other significant collectibles. See ARIS News, April 8, 2011 (potential liability for Warhol authenticity board); March 4, 2011 (potential liability for accountants to Salander-O'Reilly Galleries); February 2, 2011 (potential liability for Gerald Peters Gallery). Sophisticated collectors can suffer major financial losses by steadfastly relying on the art industry's old business model and traditional practices of art market professionals, who as a matter of course conduct highly variable due diligence on classic liens and encumbrances potentially infringing art that is the subject of multi-million dollar transactions and are incapacitated as non-market-neutral parties (or advisors to such parties) from conducting effective full due diligence on these risks given the still secret nature of the art industry. As in the Tansey case, galleries generally do not research the risk of joint ownership by multiple parties, or identify it even when such information is available in the public domain or through the gallery's special relationships and knowledge about an artist's body of work. Traditionally, galleries as in this case have relied on their ability to unwind the art transaction to make parties whole in the event of an art title issue, but that remedy does not redress a party's often significant detrimental reliance in making other decisions on the basis that they own the art, such as 1031 exchanges, trust and estate plans or charitable gifts of their art, as well as their desire to keep a unique piece of artwork and to avoid reputation-related issues, often leading to substantial financial loss independent of unwinding the transaction.]
See also "Buyer sues over a sale made and a sale not made," Maine Antique Digest, May 12, 2011.
May 9, 2011 - Painting “gift to dealer” case settled
THE ART NEWSPAPER - American contemporary artist Julie Heffernan and the Los Angeles-based Kopeikin Gallery have resolved their dispute over ownership of Ms. Heffernan’s painting entitled Self Portrait. The artist sued Mr. Kopeikin and his gallery in New York state court to recover a painting that she allegedly consigned to the gallery in 2005 for sale at a gallery exhibition. Mr. Kopeikin claimed that Ms. Heffernan gave him the picture, although he admitted that they never specified the particular work to be offered as a gift.
[ARIS Commentary: The Heffernan v. Kopeikin case highlights a common but avoidable title pitfall often impacting contemporary and primary market art. As a best practice for giving or receiving gifts of fine art or other important collectibles, both the donor and donee should insist on relying upon a written document detailing the name of the artist and the title, dimensions, medium and date of creation of the gifted object.]
May 9, 2011 - Art still serves up rich pickings for legal eagles
THE ART NEWSPAPER - Experts and practitioners in the field of art law have noticed an increase in lawsuits in the art market in the United States as well as a consistent level of litigation over art outside of the United States especially legal disputes involving issues of title and authenticity. More than ever before collectors, dealers, galleries, auction houses, museums and artists are turning to litigation to resolve legal questions about their art.
[ARIS Commentary: As art is increasingly viewed as an asset and treated as an investment, it follows that parties will take the necessary legal steps to protect and establish their right, title and interest in their art. Litigation is expensive and time-consuming, with the costs of litigation often being disproportionate to the value of the object. Experts agree that the best course of action is proactive risk management and mitigation.]
May 6, 2011 - Arizona car auction owner indicted for fraud
AUCTION CENTRAL NEWS - The owner of International Car Auction, an Arizona-based auction house specializing in selling classic American cars and street rods, has been charged with selling consigned cars and failing to pay the sales proceeds to consignors.
May 5, 2011 - Archive of artworks stolen by Nazis goes online
THE GUARDIAN - WWII archival records from the United States, Britain, Germany and other European countries have been digitized and are now available on a single web portal. Access to these historical documents will help researchers and families make more effective restitution claims for stolen paintings, sculptures, jewelry and other artifacts.
May 5, 2011 - Wealth managers unprepared for tomorrow's client - Krawcheck
THE WALL STREET JOURNAL - A leading financial expert predicted that private wealth managers and the investment management industry as a whole are not prepared to address the changing needs of high net worth individuals and their portfolios which may contain fine art and other important collectibles. Tomorrow’s clients are more likely to be women and members of the millennial generation, who place all forms of risk aversion as a top priority.
May 4, 2011 - SJM ex-director under scanner over artefacts 'theft'
THE TIMES OF INDIA - Tens of thousands of artifacts and antiques were stolen in the 1990’s from India’s Salar Jung Museum with the help of the former director of the museum. The current location of these missing objects is not known.
April 22, 2011 - Austrian Nazi victim’s heir to get Klimt painting from Salzburg’s modern art museum
ART DAILY - An Austrian art museum will return a Gustav Klimt painting entitled “Litzlberg am Attersee” estimated to be worth as much as $44 million to the heir of the original Jewish owner, Amalie Redlich. The painting was seized from Ms. Redlich’s apartment before she was deported to Poland in 1941.
[ARIS Commentary: There has been an increase in the frequency and severity of WWII and other types of historical restitution claims for fine art. Claimants have access to more information than ever before on the internet and in publicly available resources.]
April 20, 2011 - Venerable art dealer is enmeshed in lawsuits
THE NEW YORK TIMES - Guy Wildenstein, president of Wildenstein & Company and fifth-generation art dealer with galleries in New York, Tokyo and Paris, has faced a French police investigation and multiple lawsuits for his and his family’s art business practices (ARIS News, February 3, 2011). Criminal and civil charges leveled against Mr. Wildenstein include unlawfully keeping the art of long-standing clients after their passing, tax evasion and money-laundering.
[ARIS Commentary: Collectors should take steps to protect their art holdings for the benefit of their heirs by documenting in trust and estate plans the location of and ownership interest third-parties might have in their artworks to help to avoid potential loss, exposures related to guaranteeing clear legal title to the art, and confusion by younger generations who otherwise must attempt to track past transfers of the possession and title to family artworks.]
April 18, 2011 - Lenny Dykstra accused of bankruptcy fraud
COURTHOUSE NEWS SERVICE - Lenny Dykstra, the former New York Mets and Philadelphia Phillies major league baseball player, was charged with embezzling more than $400,000 worth of objects including sport memorabilia from his bankruptcy estate without the permission of the court appointed trustee. Mr. Dykstra filed for bankruptcy protection in 2009.
[ARIS Commentary: The Dykstra case follows on a smaller scale the case of Ralph Esmerian, the former high-end jeweler and owner of Fred Leighton, who admitted to bankruptcy fraud, embezzling and double-pledging $20 million worth of jewelry (see ARIS News, November 22, 2010, May 21, 2009, and May 1, 2008). Buyers of art and other important collectibles including jewelry and Hollywood or sport memorabilia should be aware of potential title risks related to state and federal bankruptcy cases. In particular, buyers should actively avoid acquiring art and other objects for prices below market value from sellers or debtors who lack the authority of the bankruptcy trustee to sell items from the estate or from sellers who are in financial distress and may likely and imminently file for bankruptcy protection and whose transactions the bankruptcy court can void and rescind.]
April 8, 2011 - Warhol v. insurer
COURTHOUSE NEWS SERVICE - The Andy Warhol Foundation and the Andy Warhol Art Authentication Board (the “Board”) has sued Philadelphia Indemnity Insurance in New York state court for $6.6 million, claiming that their D&O and E&O insurer refused to pay for legal costs the Board incurred between 2002 and 2010 in defending against the Simon-Whelan litigation, which was resolved by settlement and which tied to a claim first arising in 2002.
[ARIS Commentary: Although the Warhol Board case does not involve a legal title issue, the litigation against the D&O insurer serves as a warning as to evolving interpretations on coverage to the museum, trustees and management community, as well as other art market fiduciaries such as trust fiduciaries, all of whom may look to their D&O coverage, including property and casualty insurers (which includes D&O and E&O insurance products), for art industry matters. Since at least 2007, the D&O market has increasingly introduced clearer policy exclusions around title-related losses due to corporate or fiduciary decisions in order to assure that the D&O carrier does not become a de facto title insurer. D&O insurers are in general more closely looking at what it intended the scope of the D&O coverage to be in art world matters. Both trends can affect directors, officers or trustees and in the case of museums in its acquisitions, deaccessioning or charitable gift acceptances activities where financial losses flow as a result.]
See also ARIS News, March 11, 2010, “Museum sues insurer in Salander fiasco,” (Philadelphia Museum of Art versus AXA Art Insurance Company; refusal to pay for loss of two insured paintings consigned to Lawrence Salander after failure and inability of gallery to pay the proceeds to museum following consignment sale); Frigon v. Pacific Indemnity Co., No. 05-6214, 2007 U.S. Dist. LEXIS 17813, (D. N.D. Ill. Mar. 14, 2007) (property insurance coverage denied under “all risk homeowner’s policy”; dealer’s conversion (theft) of art).
April 6, 2011 - Armenian restitution claims grow
THE ART NEWSPAPER - Following the WWII restitution model, there has been a recent uptick in legal cases challenging the ownership by museums and private collectors of artifacts that were allegedly looted during the Ottoman Empire and Armenian massacres between 1915 to 1918 and 1920 to 1923. For instance, the Western Prelacy of the Armenian Apostolic Church of America has sued The J. Paul Getty Museum in California state court seeking to recover several pages of a Medieval Armenian bible that the museum claims it legally purchased from an Armenian family living in the U.S. in 1994 after a thorough review of the provenance.
See also “Statement from The J. Paul Getty Trust regarding the Canon Tables,” June 2, 2010.
http://www.getty.edu/news/press/canon_tables/canon_tables.html
April 4, 2011 - Rich are targeted in IRS audit offensive
THE WALL STREET JOURNAL - Over the past several years, the Internal Revenue Service (IRS) has cracked down on tax avoidance and increased its auditing practice of high-net worth Americans by as much as 10% for persons annually earning more than $10 million. The IRS audits wealthier taxpayers primarily through correspondence and requesting answers to detailed questions and copies of records including personal property and non-personal property asset appraisals.
[ARIS Commentary: U.S. art collectors, who are often part of this scrutinized class of wealthier taxpayers frequently audited by the IRS, should ensure that their art appraisals are IRS-compliant, which means that the appraisal must be completed by an independent appraiser and follow USPAP (Uniform Standards of Professional Appraisal Practice) standards. USPAP standards require appraisers to identify with specificity in their reports the economic attributes (such as provenance, ownership interests and other restrictions or encumbrances) that materially affect value and specify the assumptions or hypothetical conditions they use to render an opinion in light of the attribute (USPAP, Standard Rule 7-2(e)). There are growing market signs that if an appraisal report fails to contain the assumptions or hypothetical conditions surrounding the status of the legal title of the art or other tangible personal property appraised, then this failure will significantly impact taxpayers and the executed tax strategy around their assets.]
April 1, 2011 - Million-dollar-plus painting forfeited
MAINE ANTIQUE DIGEST - The United States District Court for the Southern District of New York has ordered that the oil on copper painting Leda ed il Cigno by Italian Renaissance artist Lelio Orsi be forfeited to the United States government as property brought into the U.S. in violation of customs laws. The order is based on a finding that the customs entry summary filed in 2006 when the former purchaser imported the painting into the U.S. falsely identified Great Britain as the country of origin of the work. Later sold by Sotheby's in June 2008 for $1,497,000, the second buyer rescinded the purchase after learning of a pending Italian criminal investigation into the earlier removal of the work from Italy. The painting will be returned to the Italian government pursuant to its request.
March 30, 2011 - Paris must justify its right to Zadkine's estate
THE ART NEWSPAPER - Nicolas Hasle, son of the late sculptor Ossip Zadkine, has challenged the alleged ownership by the Council of Paris of 300 works in his father's and father's wife's estate. An appellate court in Paris, France has held that the city council must explain its claim of superior ownership rights over that of the artist's son. Mr. Hasle was born outside of marriage in 1960 but was recognized as a legitimate heir by the French courts in the 1980s. The artist's wife, who died in 1981, allegedly bequeathed the artist's estate to the City of Paris.
March 30, 2011 - Clyfford Still Museum circumvents donor intent
CULTURE GIRL - A Maryland state court has ruled that the estate of Patricia Still, who was the late wife of the artist Clyfford Still, can release to the City of Denver four of the artist's paintings to be sold before the city formally acquires a second gift of 400 works from the Still collection. The city created the Clyfford Still Museum to house 2,000 works earlier gifted by Mr. and Mrs. Still. Although the sale of the four paintings, worth a combined estimate of $25 million, technically satisfies the AAMD's deaccession guidelines, critics have questioned whether the sale violates the donor's intent for the art collection as stated in the legal gifting documents. The gifts came with numerous strings attached including a prohibition on lending the art for exhibition and displaying other artists' works next to Still's works.
See also "Denver can sell works from Still estate," The Art Newspaper, March 28, 2011.
March 15, 2011 - Dallas museum is sued
THE NEW YORK TIMES - A lawsuit has been filed against The Dallas Museum of Art by Arnold Leon Schroeder, Jr., the stepson of the writer, publisher and close friend of Winston Churchill, Emery Reves, seeking the return of some 1,400 works of art valued at $400 million, including paintings by Van Gogh, Renoir and Pissarro, which the late Mrs. Reves donated to the Dallas Art Museum twenty-five years ago, and seeking damages. The claim of ownership surfaced after the Dallas Museum of Art celebrated last year the 25th anniversary of the donation, one the largest donations in the history of the museum. The suit, filed March 11, 2011, in federal court in Dallas, alleges that the museum's former director and two trustees conspired to circumvent French law by secreting the collection out of France and thus depriving the heir of his right under French law to half of his mother's estate. The museum ultimately built a wing to house the collection. The museum maintains that the collection was part of a charitable trust and foundation created by Emery Reves, which Mrs. Reves oversaw after her husband's death, and not part of Mrs. Reves' estate.
March 11, 2011 - Collector sues Gagosian Gallery for selling him a painting partially owned by Met
THE NEW YORK TIMES - A collector, who purchased a 1981 Mark Tansey painting in 2009 from the Gagosian Gallery, has sued the gallery for several million dollars in damages in United States District Court for the Southern District of New York for failing to inform him at the time he purchased the work that the Metropolitan Museum of Art already owned a 31% share of the painting. The gallery brokered the sale for the then-owner, Charles Cowles, a former Chelsea art dealer and publisher of Artforum, who represented at the time of the sale that he had clear title to the picture.
[ARIS Commentary: The Tansey case highlights the opaque nature of the art market in general and private treaty sales in particular and the often hollow nature of the representations and warranties of clear legal title traditionally relied upon in art sales transactions. A buyer’s inability to know who the actual owner-seller is reduces the efficacy of these representations and warranties, as does a misstatement of the status of the legal title of the work, even if made innocently, and not accurately identifying joint ownership interests or liens encumbering the art.]
March 9, 2011 - If you take street art off the street, is it still art?
THE WALL STREET JOURNAL - A mural allegedly by the graffiti artist Banksy is the subject of litigation between 555 Nonprofit Gallery and Studios and Bioresource Inc., the owner of the derelict Packard car plant building, where the picture was originally created and taken from a cinder-block wall. See ARIS News, May 29, 2010. The building’s owner has sued the gallery in Michigan state court in Wayne County for replevin claiming that the gallery lacked authority from the foreman to remove the picture worth an estimated $100,000.
March 4, 2011 - Accountants blamed in Old Masters art fraud
COURTHOUSE NEWS SERVICE - Renaissance Art Investors (RAI) has sued the former accountants and accounting firm of Mr. Salander and his gallery (the Salander-O'Reilly Galleries) in United States District Court for the District of New Jersey for over $40 million for allegedly aiding and abetting Mr. Salander's $120 million art fraud scheme in which among other things Mr. Salander sold art without paying consignors and sold the same painting multiple times. (See extensive ARIS News on the Salander matter, May 13, 2010, May 7, 2009, March 27, 2009, March 15, 2009, February 10, 2009, November 19, 2007, November 6, 2007 and November 5, 2007.) RAI alleges that the defendant accountants ignored red-flags and other warning signs about Mr. Salander's activities and prepared false financial and other records on which RAI and other investors relied in doing business with the gallery.
[ARIS Commentary: Accountants, attorneys and other advisors to parties buying, selling or investing in art should recognize their potential liability to third-parties for intentionally or negligently ignoring red-flags indicative of their client's improper business conduct when it is foreseeable that third-parties will rely on the professional's services to their clients and as a result lose money in their art-related transactions with the client. Although the RAI case focuses on alleged fraudulent and criminal conduct, the RAI case should serve as a wake-up call to professionals in this post-Madoff market to the broader potential professional liabilities for consciously or negligently failing to inquire and adequately confirm a client's legal ownership of the art assets the client is transacting, e.g., accounting firms which provide unqualified audit reports of the art-assets held by art investment funds or reports of lending portfolios of banks lending against art as collateral.]
February 16, 2011 - After two decades of secrecy, a German museum can finally unveil its mystery Monet
ARTINFO - In 1991, an anonymous woman donated a Monet painting to the Wallraf-Richartz Museum in Cologne, Germany, with the stipulation that the painting could not be exhibited during her lifetime. The donor acquired the work in Nazi Germany in the 1940s. The museum respected the donor’s wishes and has only recently made the whereabouts of the painting known.
[ARIS Commentary: The gifted Monet painting may have been lost, looted or stolen under duress during WWII. As a result, the museum may not have acquired clear legal title to the picture and the museum and its trustees may face claims and accountabilities for effectively hiding the painting for the past 20 years and preventing potential claimants from coming forward.]
February 10, 2011 - Lost for years, a trove of Chinatown art is tracked down
THE NEW YORK TIMES - The Executive Director of San Francisco’s Chinese Historical Society of America discovered (and eventually purchased 7 of 12) missing watercolors by Jake Lee, a well-respected 20th century Chinese-American painter, that were last seen hanging in Kan’s Restaurant. After the restaurant closed in the early 1990s, the works were stored in the garage of a former busboy of the restaurant, who recently claimed he threw away all but one of the pictures when he moved two years ago. In 2010, the Pasadena auction house, John Moran Auctioneers, sold the pictures, identifying at the time the consignors-owners as “private collectors."
February 7, 2011 - Australian trade launch fight against resale right
ANTIQUES TRADE GAZETTE - Australian dealers, galleries and auction houses have voiced their opposition to the Resale Royalty Right for Visual Artists Act of 2009, which is similar to the artists’ resale rights system in place in the U.K. art market. Under the Australian program, living artists including Aboriginal artists as well as the estates of artists who died less than 70 years ago are entitled to a royalty percentage every time that their art sells for more than $1000 AUS. Critics allege that the scheme is burdensome, bureaucratic and unfair in that it applies even when art is sold at a loss.
[ARIS Commentary: Following the U.K. trend, some Australian galleries and dealers may be trying to avoid paying the artists’ resale right levy by opting to take more works on consignment (i.e., stepping outside of the chain of title) rather than buying art directly from artists and selling their art as inventory. Galleries, dealers and buyers should be aware that their exposure surrounding levies of this form are not entirely eliminated when works are sold on consignment.]
February 3, 2011 - Artworks worth millions seized from Wildenstein Institute
THE TELEGRAPH - The heirs of two wealthy art collectors have claimed in separate, unrelated cases that Guy Wildenstein, the well-respected owner of the leading Parisian gallery the Wildenstein Institute, unlawfully kept more than 30 artworks belonging to their relatives. As part of the French authorities’ investigation, police have seized millions of dollars worth of art from the gallery.
February 1, 2011 - Provenance error results in lawsuits
MAINE ANTIQUE DIGEST - Steve Sell, an established oil businessman, has sued the Gerald Peters Gallery in U.S. District Court for the Northern District of Texas to recover the $1.5 million purchase price of a N.C. Wyeth painting that he alleges he bought because of the gallery’s negligent or intentional misrepresentation that the picture was on a 1908 cover of the Saturday Evening Post. The gallery admits that it mixed up two Wyeth pictures with the same title but claims that the value of the work was not affected by whether the picture was on the magazine cover.
[ARIS Commentary: Collectors should be aware of the critical yet often overlooked difference between the provenance and legal title of an artwork. Provenance relates to the location and prior possessors of an artwork from its creation to the present, whereas legal title relates more broadly to the past and present full right, interest and ownership of the work, which may or may not overlap with physical possession of the art. In the art world “possession is [not really] nine tenths of the law.” It is not uncommon for the quality, status and strength of evidence of certain past names in the provenance of a work to increase the valuation of an art work.]
January 28, 2011 - Banks move to keep their top clients in the picture
FINANCIAL TIMES - With art sales and prices in 2010 having reached historic highs - the first rise in three years - wealthy individuals are returning or turning for the first time to buying art as an alternative asset. Several banks are capitalizing on their clients’ renewed demand for art investments by launching art portfolio funds, art lending services and partnering with art advisory groups.
[ARIS Commentary: Those who are new to the art market, as well as seasoned collectors, investors, borrowers and lenders, are well-advised to recognize fully and to address the prevalent ownership risks in art transactions, which include for instance defective title from a seller's lien for unpaid state taxes, and which are exacerbated by the opaque nature of the market. Likewise, when buying a share of an art fund, investors should be cognizant of whether the fund discloses sufficient details about its buying and selling protocols to assess whether the fund has avoided exposures from acquiring works with defective title and whether it is guaranteeing clear legal title when selling fund assets. Protocols that do not properly manage these issues can in turn create contingent liabilities that can affect whether the fund can close and distribute profits without creating potential E&O liabilities and claw-back liabilities for investors. In robust sales environments, it is particularly not uncommon for buyers to deemphasize best risk management practices only later to face a variety of economic and legal exposures.]
To view the Financial Times article, go to the above link.
January 20, 2011 - Singer Boy George returns lost icon to Cyprus church
GUARDIAN - The pop star Boy George returned a 300-year old icon in the Byzantine style to the Cyprus Orthodox Church after a Bishop recognized it hanging on the singer’s wall while watching a television interview of the star. Boy George purchased the icon in 1985 without knowledge that it was stolen during the 1974 invasion of Cyprus.
January 16, 2011 - NYC landlord wants money from Lennon suit auction
FORBES - Mark Arrow, a New York City landlord, has sued Connecticut-based Braswell Galleries in New York state court to recover the proceeds from the sale of one of John Lennon’s suits consigned to satisfy a $20,000 debt of rent owned by Mr. Arrow’s former tenant. The gallery decided not to pull the item from the sale despite notice before the auction of the landlord’s claim.
[ARIS Commentary: This case poses the interesting question of whether the buyer of the Lennon suit (who paid $46,000 for it) obtained clear legal title from their purchase at the auction sale when the gallery was put on notice that the consignor’s property was allegedly encumbered by a financial lien.]
January 12, 2011 - Hopper’s estranged wife pulls star’s art from sale
THE INDEPENDENT - The estranged wife of the late actor Dennis Hopper has secured a temporary restraining order from a Los Angeles, California Superior Court stopping the sale of numerous artworks scheduled to be sold on January 12, 2011, on behalf of the Dennis Hopper Trust at Christie’s New York Interiors sale. Shortly before Mr. Hopper’s death, he filed for divorce claiming among other things that his wife had absconded with over a million dollars worth of his art collection.
January 12, 2011 - Fraud alleged in George Inness art sale
COURTHOUSE NEWS SERVICE - The art dealer 624 Art Holdings, LLC has sued Berry-Hill Galleries Inc. and its principals in New York state court for selling and trading five consigned artworks worth an estimated $2 million contrary to the parties’ arts administration agreement. The plaintiff alleges that the once well-regarded gallery failed to provide notice or payment of completed sales, and that a downstream buyer (Michigan art gallery R.H. Bluestein & Company) neglected to review the ownership history of a disputed painting by Whittredge. The plaintiff notes that it diligently filed UCC-1 financing and continuation statements putting potential buyers on notice of its ownership interest in the consigned pictures.
January 10, 2011 - Can’t afford a Picasso? How about a piece of one?
THE NEW YORK TIMES - With the continuing volatility in the equity markets, a new group of art funds in emerging markets like Russia, India and China has cropped up selling to investors private shares of pooled artworks. There are inherent conflicts surrounding art funds: proponents laud the democratization of trading art as a legitimate commodity with high returns and opening up of the traditionally secretive art market; others recognize the challenges for funds in securing desirable artworks, obtaining low or fair prices from resistant dealers or galleries and avoiding unwittingly laundering money or hiding corrupt assets.
See also “NY Times casts doubt on art funds,” Art Market Monitor, January 10, 2011.
January 7, 2011 - Woman wants her Renoir back
COURTHOUSE NEWS SERVICE - Bambi Byrens has sued her cousin, Barry Semler, in California state court for $10 million as well as conversion, punitive damages and litigation costs for failing to return her Renoir and Turner paintings and other family heirlooms stored at his home. Ms. Byrens claims that Mr. Semler has repeatedly refused to return her valuables and asserts full ownership rights in the disputed objects, which she would like to sell to pay off her debts and ongoing financial obligations.
January 7, 2011 - You bought it – but do you own it? Questions of ownership for art and collectibles.
HERITAGE - Over the past year the media has reported on numerous stories about bankruptcies, resurfaced stolen art, divorce and family disputes and foreign governments’ repatriation claims in which individuals, institutions and fiduciary advisors have had to address questions about whether they or their clients actually have clear legal ownership of their art and collectibles. Even if art and collectibles are purchased in good faith after having conducted thorough due diligence, there are no guarantees against future title claims given the art industry’s lack of transparency and regulation and the resulting adverse consequences of defective legal title including total loss of the object, legal fees and derivative damages such as loss of a charitable deduction.
January 6, 2011 - Sellers and buyers need to know who’s who
THE ART NEWSPAPER - In the case of Accidia Foundation v. Simon Dickinson in the English courts, a High Court in London found a dealer liable for taking a $1 million commission without disclosing it to the seller. The seller’s advisor and the dealer hired to find a buyer negotiated the fee as part of a $7 million sales price. The seller discovered the hidden commission after the buyer rescinded the transaction because of authenticity concerns.
[ARIS Commentary: This case shows the lack of transparency in the art market. In particular, how unidentified buyers and sellers, undisclosed dealers and agents (who may or may not have the seller’s authority to the sell the art) and the lack of paperwork, negatively impacts private treaty sales.]
See also “Leonardo case exposes back-room deals,” The Art Newspaper, January 6, 2011.
January 4, 2011 - Benin ivory mask at Sotheby's withdrawn from February sale
ANTIQUES TRADE GAZETTE - Sotheby’s has withdrawn from an upcoming London February sale, at the request of the consignors, heirs of British Lieutenant Colonel Gallwey, six lots including a 16th century ivory mask from the Kingdom of Benin in Nigeria having a total value of over £4 million. The Lieutenant was stationed in Africa during the Punitive Expedition in 1897 when much of the Kingdom of Benin’s art was destroyed or plundered. Several Nigerian government officials as well as an on-line interest group criticized the sale of these allegedly stolen tribal artifacts and called for their restitution to Nigeria.
December 16, 2010 - Feds seize 2 paintings stolen from Poland by Nazis
AOL - The U.S. government has filed a forfeiture action in the United States District Court for the Southern District of New York to seize two paintings by prolific Polish artist Julian Falat, which have been consigned to and are in the custody of Christie’s and Doyle in New York. Both pictures, valued at $50,000 each, were part of pre-WWII museum collections in Poland that were looted during WWII and published as wartime losses in Polish governmental reports. According to agents from Homeland Security Investigations, they could not find custom documentation showing that the works were lawfully imported into the U.S.
[ARIS Commentary: The government’s Falat forfeiture action alleging transportation of stolen property in interstate and foreign commerce, failure accurately to complete U.S. custom declarations and fraudulent or knowing concealment of stolen property after importation highlights the important and often overlooked encumbrance on art of export and import violations. There are serious adverse consequences for handling illegally exported or imported art including strict liability in some circumstances, seizure of art, fines and potential criminal liability including prison terms. It is challenging for collectors and other stakeholders in the art market to secure copies of relevant U.S and foreign customs papers and in such circumstances, absent taking other affirmative action, to show absolute good faith.]
December 9, 2010 - Metropolitan Museum sued for a Cezanne
COURTHOUSE NEWS SERVICE - Pierre Konowaloff, the great-grandson and sole heir of Russian industrialist and art collector Ivan Morozov, sued The Metropolitan Museum of Art in United States District Court for the Southern District of New York to recover a Cezanne painting worth an estimated $50 million to $70 million. Mr. Konowaloff alleges that the painting was looted in 1918 during the Russian Revolution and then illegally sold by the Soviet government through several straw galleries in 1933 to American collector Stephan Clark, who gifted the work to the museum on his death in 1960. This case is the second time that Mr. Konowaloff has sought through legal means to recover his family’s looted artwork. (See ARIS News, December 26, 2009, June 3, 2009, May 30, 2009, March 24, 2009, discussing similar lawsuit against Yale University over Van Gogh painting). The museum asserts that it has clear legal title to the painting and will defend against the lawsuit.
See also “Met Museum sued over Cezanne painting stolen by Bolsheviks from collector,” Bloomberg, December 8, 2010.
http://www.bloomberg.com/news/2010-12-09/met-museum-sued-over-cezanne-taken-by-bolsheviks-from-collector.html
December 2, 2010 - Paris court orders sculptures returned to Calder estate
THE NEW YORK TIMES - After eight years of litigation, an appellate court in France has ordered the estate of Aimé Maeght (the Parisian dealer who represented Alexander Calder during his lifetime) to return an additional seven sculptures worth over $6 million to the artist’s estate. The French court has not yet ruled on whether Mr. Maeght’s estate must reimburse the artist’s estate for numerous Calder works that Mr. Maeght sold in 1976 after Mr. Calder’s death without reimbursing the artist’s heirs.
November 29, 2010 - Trove of Picassos surfaces, and so do questions
THE NEW YORK TIMES - More than 270 previously unknown works on paper by Pablo Picasso, worth an estimated $80 million, have surfaced after Pierre Le Guennec, a man who served as the artist’s electrician for three years, sought to have them authenticated by the artist’s estate. Mr. Le Guennec claims that Picasso gifted the works to him as compensation for his services to the artist. The artist’s heirs have sued Mr. Le Guennec in French court to recover the works, asserting that they were stolen and that there is no proof of or plausible explanation for the alleged gifts.
November 22, 2010 - Former Fred Leighton owner is arrested
THE WALL STREET JOURNAL - Ralph Esmerian, former owner of high-end jeweler Fred Leighton, was arrested and charged with bankruptcy fraud, wire fraud, and concealment of assets in United States District Court in the Southern District of New York (see also ARIS News, May 21, 2009, May 1, 2008). The criminal complaint alleges that Mr. Esmerian double-pledged personal and company-owned jewelry as collateral to secure nearly $200 million in loans and then sold pledged jewelry without notifying the lenders or bankruptcy court after filing for Chapter 11 bankruptcy protection for Fred Leighton.
See also “A red-carpet jeweler is charged with fraud,” The New York Times, November 22, 2010. http://www.nytimes.com/2010/11/23/nyregion/23jewels.html?_r=2
November 19, 2010 - A passion that knows no bounds
THE ECONOMIST - Phillips de Pury & Company gave free reigns to art dealer and consultant Philippe Ségalot to organize a contemporary art sale entitled "Carte Blanche," which achieved a record $117 million (including commission) for the auction house. Mr. Ségalot solicited consignments for all of the art, made purchasing recommendations to his clients, purchased art on behalf of his clients, and received a percentage of the buyer's premium for all works sold. Guarantees or irrevocable bids (in which anonymous third-party investors agree to buy lots at minimum prices and profit if works sell above the guarantee) were offered for 7 of 33 lots, with Mr. Ségalot and his colleagues purchasing 6 of the guaranteed lots at record prices.
[ARIS Commentary: The "Carte Blanche" sale is a reminder that the art market lacks regulation, in particular the lack of government regulation surrounding insider-trading and conflicts of interest in art transactions, areas which are heavily regulated, for instance, in the equity markets. Even if there is no untoward activity, in other markets it is illegal for buyers and sellers to rely upon the same advisor and for that advisor also to profit from the sales transaction. In addition, the increase in lots offered with financial guarantees and the unusual high prices achieved in the “Carte Blanche” sale for certain previously unpopular works demonstrates the lack of transparency in the art market and the lack of information available to buyers who do not have relationships with art advisors closely connected to the market.]
November 3, 2010 - Stolen Degas painting resurfaces at Sotheby’s auction
AFP - An Edgar Degas painting that was stolen from a museum in Le Havre, France in 1973 was pulled from Sotheby’s New York Impressionist & Modern Art sale. After a staff member at the museum recognized the painting in the auction catalogue, the office of the French Minister of Culture notified the auction house of its ownership claim to the picture. The painting was not listed as stolen with Interpol (the world’s largest international police organization) although it was included on a French stolen art museum database.
October 19, 2010 - Court sides with family on portrait
THE BOSTON GLOBE - An Appeals Court in Massachusetts found that the heir to the owner of a 245-year old family portrait, and not the property insurance company that paid out a $25,000 loss to the owner in 1977, has legal title to the painting, based on reimbursement to the insurer of the original loss payment and the subrogated rights language in the property insurance policy. When the picture was stolen in 1976, its appraised value was $25,000. After the picture was discovered in 2007, its appraised value was $400,000 to $800,000. The heir offered to reimburse the loss pay-out without regard for the value appreciation or interest, but the insurer claimed full ownership rights under the subrogation agreement.
[ARIS Commentary: The facts in this insurance case highlight a secondary theft quandary facing art property insurers, their insured and the overall art market, namely: whether property insurers upon paying a theft loss take full legal title to artworks under their subrogated rights or only a lien to the extent of their payment to the original insured. With either outcome, a title defect lingers and impacts the subsequent sale or other transaction of the artwork when it returns to the market.]
October 18, 2010 - Chelsea Art Museum could close
THE WALL STREET JOURNAL - The Chelsea Art Museum faces challenges to its existence since Director Dorothea Keeser failed to meet a bankruptcy court’s deadline (involving Ms. Keeser’s company that purchased the building) requiring the museum either to find a buyer or to pay back over $19 million owed the mortgage lender. The parties dispute the legal rights of the lender to take title and potentially sell the building that houses the museum. In a separate transaction in August 2010, Ms. Keeser pledged – in violation of regulations promulgated by the New York Department of Education Board of Regents – the museum’s permanent collection valued at $2.5 million to secure financing to pay down interest owed on the mortgage. The fate of the museum’s art collection is uncertain given the continuing property dispute, Board of Regents’ investigation and related bankruptcy proceedings.
October 18, 2010 - Plunder database lists 20,000 art objects stolen from France
BLOOMBERG - The U.S. Holocaust Memorial Museum and Conference on Jewish Material Claims Against Germany created a searchable on-line database of Nazi records (maintained by the Einsatzstab Reichsleiter Rosenberg) containing more than 20,000 art objects – half of which have not been returned to the original owner or their heirs – seized from Jewish collectors or entities in France during WWII. The database was established to assist families searching for their lost artworks as well as to assist museums and dealers in checking their holdings and inventory for Nazi-looted art.
October 14, 2010 - Museum of Fine Arts v. Seger-Thomschitz, Museum of Fine Arts, Boston, Plaintiff, Appellee, v. Claudia Seger-Thomschitz, Defendant, Appellant
LEAGLE - The United States Court of Appeals for the First Circuit affirmed a ruling by the United States District Court of Massachusetts dismissing on statute of limitations grounds a WWII restitution claim made by the heir of Austrian-Jewish collector Dr. Oskar Reichel for a Oskar Kokoschka painting in the collection of the Museum of Fine Arts in Boston (MFA) (ARIS News, May 30, 2009, January 24, 2008). The heir asserted that Dr. Reichel was forced to sell the Kokoschka picture due to Nazi persecution and that good title never passed to the MFA. After confronted with the WWII claim, the MFA undertook extensive provenance research; concluded that Dr. Reichel validly transferred the painting; and filed a declaratory judgment to confirm its rightful ownership. The Court held that because the heir discovered the location of the painting in Fall 2003 but demanded return of the artwork in March 2007, her claim fell outside the Massachusetts three-year statute of limitations period applicable to tort actions; thus the court did not rule on the merits of the parties’ ownership claims and counterclaims.
[ARIS Commentary: The appellate court’s statements in the final paragraph of its opinion highlight the increasing pressures in the market on museums and the requirement that museums augment their affirmative efforts in their due diligence review of the status of the legal title to the works in their collections, both those artworks that they previously acquired and those that they are acquiring today. The appellate court seemed to go out of its way to emphasize (i) that it could not address the merits of the substantive claims, (ii) that the court’s ruling “do[es] not vindicate the conduct of parties,” and (iii) that the MFA did not initiate a provenance investigation until being confronted with the heir’s claim as opposed to in 1973 when the museum acquired the painting. The court cautioned that although “[t]he timing of that investigation may have been legally inconsequential in this case[,] [m]useums should take all reasonable steps to resolve the Nazi-era provenance status of objects before acquiring them for their collections — whether by purchase, gift, bequest, or exchange, [consistent with the] American Association of Museums, Guidelines Concerning the Unlawful Appropriation of Objects During the Nazi Era (Nov. 1999), http://www.aam-us.org/museumresources/ethics/nazi_guidelines.cfm.” (Emphasis supplied.).]
See also “Court rules Boston museum can keep painting sold under duress in Nazi-held Austria during WWII,” Mail, October 17, 2010.
http://www.dailymail.co.uk/news/article-1321034/Appeals-court-allows-museum-Austrian-painting-sold-Nazi-duress.html
October 4, 2010 - Lawsuit: Sears wants Willis Tower artwork back
CHICAGO TRIBUNE - Sears, Roebuck & Co. and the Chicago-based investor group that purchased the “Sears Tower” building and renamed it Willis Tower in 2009 are in dispute over ownership and the ability to move the Alexander Calder sculpture entitled “The Universe,” which has been located in the lobby of the building since 1974.
October 4, 2010 - Norton Simon’s disputed ‘Adam and Eve’ getting closer look from Supreme Court
LOS ANGELES TIMES - The U.S. Supreme Court asked the U.S. Solicitor General to submit a brief on whether a California statute extending the statute of limitation period for Holocaust victims and their heirs to sue museums and galleries for the return of Nazi-looted artwork unconstitutionally encroaches on the U.S. government’s foreign policy. The U.S. District Court in Los Angeles and the Ninth Circuit Court of Appeals dismissed the replevin claim made by Ms. Von Saher (daughter-in-law of the Dutch art dealer Jacques Goudstikker) for a Lucas Cranach the Elder painting in the collection of the Norton Simon Museum in Pasadena on the basis of the voided California Holocaust art law.
See also “Under the U.S. Supreme Court: Goering, a museum and Nazi-looted art,” UPI, October 10, 2010. http://www.upi.com/Top_News/Analysis/Supreme-Court/2010/10/10/Under-the-US-Supreme-Court-Goering-a-museum-and-Nazi-looted-art/UPI-52691286695800/
September 24, 2010 - Avoid legal pitfalls when buying art
THE NEW YORK TIMES - Buyers of art should be aware of the possibility of unidentified encumbrances derived from past owners’ financial challenges including liens from unpaid federal or state taxes, collateral pledges on outstanding debts and fraudulent conveyances related to bankruptcy proceedings. In making acquisitions, collectors should think strategically about how best to protect themselves against potential art title claims as well as how encumbrances on their art may adversely impact their estate planning and future sales, donations or bequests of their art.
September 21, 2010 - U.S. returns valuable paintings seized from ex-banker to Brazil
THE WALL STREET JOURNAL - U.S. Immigration and Customs Enforcement and the U.S. Attorney for the Southern District of New York returned to Brazilian authorities two paintings owned by Edemar Cid Ferreira, the former head of collapsed bank Banco Santos, who was convicted and sentenced to 21 years in prison for orchestrating a $1 billion bank fraud. The two recovered pictures are part of a larger collection of missing works valued at $30 million that Mr. Ferreira used in a money laundering and international smuggling scheme: creating misleading shipping invoices and selling art with false titles and at understated values to evade a Sao Paulo Court’s asset freezing order.
See also “ICE recovers Brazilian masterpieces linked to bank fraud,” ICE News Releases, September 21, 2010.
http://www.ice.gov/pi/nr/1009/100921newyorkcity.htm
September 21, 2010 - Here’s an idea. If you want the art you should pay for it. Promptly.
THE ART NEWSPAPER - Since the 2008 economic downturn, many dealers, galleries and auction houses have struggled to obtain payment from buyers. Sellers have offered discounts for fast payment; required buyers to pay in full before picking up their art; required non-refundable deposits; accrued interest on outstanding monies; and threatened to sue for non-payment.
[ARIS Commentary: When art buyers delay making payment or fail to pay the full purchase price, ownership of that art becomes murky. Depending upon the overall legal circumstances, whether the art was sold at auction or in a private sale and the conditions of the auction sale or terms of the private sales agreement, the seller, consignor, artist and buyer may hold or claim title to the art.]
September 16, 2010 - For sale: fraudster Marc Dreier’s art collection
CRAIN’S - More than 80 pieces from the art collection of Marc Dreier, who was convicted of fraud, conspiracy and money laundering (see ARIS News, December 10, 2008), and his law firm Dreier LLP will be auctioned at Phillips de Pury & Co. pending approval by the U.S. Bankruptcy Court of the Southern District of New York. The Dreier sale is one of many recent and upcoming solo art collection auctions driven by individual and corporate bankruptcies.
[ARIS Commentary: There are several risks in buying art sold subject to bankruptcy proceedings. For instance, the bankruptcy court’s approval and order of a liquidation sale may not cleanse the art from all non-creditor related title claims nor prevent claims by prior owners and creditors asserting replevin against downstream buyers on the basis of a prior fraudulent conveyance.]
September 12, 2010 - For collectors, a hard lesson in the art of the swindle
CRAIN’S - Numerous victims of criminally convicted New York City-based art dealer Lawrence Salander and the bankrupt Salander-O’Reilly Galleries are attempting to recover millions of dollar of losses caused by Mr. Salander’s fraudulent actions from their insurers. Renaissance Art Investors (RAI) filed a lawsuit in the United States District of the Southern District of New York for $22 million against AXA Art Insurance after the insurer denied the claim on the basis that the policy excluded fraud and many purchases alleged made by Mr. Slander on RAI’s behalf may have been shams not passing title to RAI.
August 19, 2010 - New York sues for return of Central Park drawings
Los Angeles Times - The city of New York has sued the seller of Central Park drawings originally owned by the Department of Public Works for $1 million in damages or return of the works, which were allegedly found in a Manhattan trash bin sometime before 1960. The City learned of the existence of the drawings when 86 of the 127 works were placed for sale with Christie's auction house. The 127 illustration drawings date from 1860 to 1885 and are stamped "Department of Public Parks." The City claims that it never authorized the destruction or abandonment of the drawings and that they were "lost or erroneously discarded."
August 18, 2010 - Fight to save Wedgwood collection from company pension scheme
THE ART NEWSPAPER - As a result of Waterford Wedgwood plc going into receivership in January 2009, a UK court is deciding whether art housed at the company-owned Wedgwood Museum can be sold to partially satisfy £134 million pounds worth of debt owed by the Wedgwood Pension Fund to former employees. The museum, which was formed in 1906, has in its collection thousands of ceramics, manuscripts and paintings valued at approximately £15 million pounds.
July 28, 2010 - Hungary sued in Holocaust art claim
THE NEW YORK TIMES - Heirs of the Jewish Hungarian banker Baron Mor Lipot Herzog have sued Hungary and several Hungarian museums in United States District Court in Washington to recover more than $100 million worth of art as well as to obtain an inventory accounting of all looted Herzog art in defendants’ possession. In 2008 after more than two decades of negotiations, a Hungarian court dismissed the Herzog family’s WWII restitution claim. Other countries including Germany, Poland and Russia may also have looted Herzog art in their museum collections.
July 20, 2010 - Leopold Museum to pay $19 million for painting seized by Nazis
THE NEW YORK TIMES - After more than a decade of litigation (see ARIS News, October 7, 2009), the Leopold Museum in Vienna, the United States government and the estate of Lea Bondi Jaray have settled a WWII ownership dispute to Egon Schiele painting’s entitled "Portrait of Wally". The painting was seized by Nazi authorities from Ms. Bondi Jaray’s Vienna art gallery in 1938 and subpoenaed as stolen property by the Manhattan District Attorney when it was on loan to the Museum of Modern Art in New York in 1997. As part of the court-approved settlement, the Leopold Museum will pay the estate $19 million; the estate will release its title claim to the painting; the Leopold Museum will note Ms. Bondi Jaray’s prior ownership of the painting in relevant provenance labeling; and the painting will be exhibited for a limited time period at the Museum of Jewish Heritage in New York.
July 14, 2010 - Artwork: You bought it, you (don’t?) own it!
THE HUFFINGTON POST - Collectors should be aware of the breadth and severity of title risks impacting art in the open market. Art ownership can be tainted – by criminal activity such as historical theft and crooked art dealers as well as civil disputes for instance concerning marital property and artists’ estates – even if collectors conduct due diligence and obtain warranties of clear title from sellers. Transferring the risk to a third-party through art title insurance is the only effective way to protect against all the primary losses due to defective title (that is loss of art, loss of financial investment, and legal defense costs) plus the derivative effects such as the destruction of an estate plan, loss of the charitable donation and loss of the tax deduction benefit.
July 6, 2010 - Art-broken: 40G pic loss
NEW YORK POST - Christie’s pulled a painting valued at $50,000 and believed to have been done by a student of Leonardo da Vinci from its June 9, 2010, Old Masters & 19th Century Art sale in light of competing title claims. The claimants consigned the painting in 2004 to Greenwich Antiques and Consignment and have been looking for its whereabouts since 2009 when that shop went out of business. The seller purchased it for $6,500 from a liquidation sale of the shop’s inventory.
May 29, 2010 - Detroit gallery hides Banksy’s graffiti art after threats
FREE PRESS - A non-profit art gallery in Detroit, Michigan has removed and hidden from its public exhibition space a mural painted by graffiti artist Banksy due to the controversy surrounding the gallery’s removal of the work from a derelict plant. It is unclear whether the artist, who may be deemed to have legally abandoned the work and in the past has refused to authenticate his works removed from outdoor spaces; the owner or disputed owners of the building on which the mural was painted, or the gallery, who claims to have gotten approval from a foreman at the site to take the mural, has clear legal title to this piece of street art.
May 21, 2010 - Say it isn’t Picasso – Paris art theft raises security and title concerns
ART LAW GALLERY - Five important paintings valued in excess of $120 million were stolen from the Paris Museum of Modern Art. This theft highlights the widespread problem of inadequate museum security throughout Europe and the United States as well as the spillover effect of art theft on the art industry – that is stolen artworks with defective title (especially less well-known works at lower price points) that are traded on the open market to unwitting museum and private buyers.
May 13, 2010 - Fraudster Salander to Sell Paintings at Christie's as Dealer Awaits Prison
BLOOMBERG - Christie’s New York will sell on June 9, 2010, in a dedicated session of its Old Masters & 19th Century Art sale a group of 130 paintings and sculptures from the inventory of Salander-O’Reilly Galleries LLC. This sale is proceeding pursuant to a chapter 11 plan approved by the Bankruptcy Court for the Southern District of New York. The seller has purchased for all works in the sale Art Title Protection Insurance ATPI® issued by ARIS for the benefit of the buyers to enhance buyers’ confidence in bidding and quell any potential concerns about third-party ownership claims.
See also "Christie's to Auction Off Old Master Art From Bankrupt Salander Gallery," Wall Street Journal, May 13, 2010.
May 10, 2010 - True art ownership
PRIVATE WEALTH - Prudent collectors should be aware of the financial and legal risks potentially impacting ownership of their artwork. In addition to the well-known and publicized risk of theft during WWII, clear legal title to art and other important collectibles may be infringed by ordinary or contemporary theft as well as other liens and encumbrances including those created by galleries and individuals due to financial pressures. Acquiring art title insurance is one precaution that collectors can take to protect themselves from loss of their art, litigation costs and the resulting consequences of defective title such as the destruction of an estate plan.
May 10, 2010 - Woman seeks to stop sale of Schindler’s list
COURTHOUSE NEWS SERVICE - A friend and heir of Oskar Schindler’s wife has sued a memorabilia dealer and his company in Supreme Court of the State of New York County of New York to enjoin him from selling for $1.5 million the original document naming the 801 Jewish individuals that Mr. Schindler saved from concentration camps during WWII, which inspired the book by Thomas Keneally and the movie by Steven Spielberg. The plaintiff alleges that she owns all right, title and interest in and to the so-called “Schindler’s List” document.
April 23, 2010 - Consignor demands $560K for landscape
COURTHOUSE NEWS SERVICE - Universe Antiques Inc., a New York company that buys antiques, is suing William Vareika Fine Arts Ltd., a Rhode Island company that buys fine arts, for breach of their consignment agreement and fraud in Supreme Court of the State of New York County of New York. The plaintiff alleges that it consigned the 19th century painting entitled “The Rainbow” to the defendant to sell to a third-party for $700,000 but the defendant only paid two of the ten owed installment payments.
April 23, 2010 - Tangled tale of a stolen Degas
COURTHOUSE NEWS SERVICE - Universe Antiques Inc. has sued three sellers who sold it a stolen Degas sculpture for conspiracy to defraud, unjust enrichment and restitution of the $225,000 purchase price in Supreme Court of the State of New York County of New York. The complaint alleges that the boyfriend of one of the sellers stole the statue from Norman Alexander, a retired businessman and art collector, and Mr. Alexander obtained a court order to recover the statue from Universe Antiques Inc., who sold a 50% ownership stake in the work to Rafael Collection, Ltd, a co-plaintiff in the case. The plaintiffs also allege that they reimbursed the losses suffered by Spanierman Gallery LLC, who sold the sculpture to a private collector for $450,000 and then provided a refund to their client upon rescission of the transaction.
April 7, 2010 - Gallery’s artworks seized
THE WALL STREET JOURNAL - American Capital Financial Services seized artwork from Berry-Hill Galleries, a New York gallery specializing in American Art that filed for Chapter 11 bankruptcy protection in 2005, pursuant to an order granted by the United States District Court for the Southern District of New York. According to the lender’s court application, the gallery owes the bank over $9.5 million and secretly sold over two-hundred paintings without reserving or paying any of the sale proceeds to the bank.
April 6, 2010 - Lawsuit filed over Eames Archives
THE NEW YORK TIMES - Wright auction house in Chicago has pulled from its Eames Auction archives of the 20th century furniture designers in light of a lawsuit filed by the designers’ daughter in Illinois Circuit Court. John and Marilyn Neuhart, design historians who collaborated with Charles and Ray Eames on numerous books and exhibits, consigned the archive. Ms. Eames claims that her parents never intended to gift the archive to the Neuharts and that the family still owns the papers, which consist of the largest private collection of Eames materials.
March 23, 2010 - BofA wants CNET founder’s art
COURTHOUSE NEWS SERVICE - ML Private Finance LLC, a financial company owned by Bank of America, sued and obtained in the United States District Court for the Southern District of New York a $21.6 million judgment for money owed by Halsey Minor, founder of CNET, and the Halsey McLean Minor Revocable Trust. (See ARIS News, September 3, 2008 discussing Sotheby’s lawsuit against Mr. Minor). ML Private Finance LLC is seeking court approval to recover Mr. Minor’s art, which was used as collateral for a $25 million loan, now in the possession of Christie’s and Paul Kasmin Gallery Inc., or the proceeds from the sale of Mr. Minor’s art.
See also “CNET’s Minor stirs auction fight for $17 million art collateral,” Bloomberg, March 26, 2010.
March 11, 2010 - Museum sues insurer in Salander fiasco
COURTHOUSE NEWS SERVICE - The Philadelphia Museum of Art has sued AXA Art Insurance Company (AXA) in the United States District Court for the District of Maryland for breach of contract arising out of the loss of two insured paintings that the museum consigned to Lawrence Salander of Salander-O’Reilley Galleries. Mr. Salander has been criminally charged with defrauding and stealing more than $90 million worth of art from his clients and has filed for bankruptcy protection personally and for his gallery (see ARIS News, May 7, 2009, March 27, 2009, March 15, 2009, February 10, 2009, November 19, 2007, November 6, 2007, November 5, 2007). AXA denied coverage on the basis that the museum did not suffer direct loss or damage to the paintings and the exclusion for government control over the property applied. The museum alleges the losses are covered because Mr. Salander and his gallery stole the pictures, sold them and then misappropriated the sales proceeds.
[ARIS Commentary: The legal theory (that when dealers and galleries sell consigned works without the authority to do so and fail to pay consignors the sales proceeds their actions are akin to conversion and theft) was first successfully pleaded in the case of Frigon v. Pacific Indemnity Co., No. 05-6214, 2007 U.S. Dist. LEXIS 17813, (D. N.D. Ill. Mar. 14, 2007) and is now widely accepted by the art industry. Thus, buyers should be aware that art previously sold by dealers and galleries facing financial challenges or bankruptcy proceedings may be subject to title claims raised by prior owners and consignors.]
March 5, 2010 - Ansel Adams’ son sues museum for prints
COURTHOUSE NEWS SERVICE - The son of photographer Ansel Adams is suing The Fresno Metropolitan Museum, which closed in January 2010 due to financial troubles, in Superior Court for the State of California to recover six original Adams prints that he donated to the museum in 1983. Dr. Adams seeks to enjoin the museum from selling these works at auction to help pay off the museum’s $4 million worth of debt as well as a declaratory judgment stating that his donation was a restricted gift that the Directors cannot dispose of at their discretion.
[ARIS Commentary: The Adams case highlights the title risks plaguing museums involved in bankruptcy proceedings or other distressed situations, in particular, claims between the institution or its general creditors and its donors, who previously gifted art to the museum and now object to their art being liquidated.]
February 22, 2010 - Tussle over $1.4 million Warhol painting
COURTHOUSE NEWS SERVICE - Stephen Lachapelle has sued Nancy Bishop in California Superior Court in Los Angeles County for declaratory judgment of ownership of the Warhol painting entitled “Portrait of Linda Cossey with Camera,” which sold at Christie’s London February 11, 2010 sale for $1,374,750. Mr. Lachapelle claims that in 1990 he loaned Ms. Bishop $25,000 based on a handshake to purchase the painting, but Ms. Bishop never repaid the money. Ms. Bishop alleges that she is the rightful owner. Until Mr. Lachapelle and Ms. Bishop settle their ownership dispute with a written agreement or court order, the successful bidder’s title to the painting is in flux and Christie’s will retain the sales proceeds.
[ARIS Commentary: Buyers should be aware of the risk of creditor and bank liens potentially infringing art sold at auction or in private transactions. It is challenging for laypersons without access to confidential information about the provenance history of an artwork to discover whether upstream owners have used their art as loan collateral and whether sellers obtained possession of their art from default by a borrower.]
February 21, 2010 - Artwork caught in custody battle
HOUSTON CHRONICLE - Joanne Herring, known for her alliance with Representative Charlie Wilson in supporting anti-communist forces in Afghanistan, is suing in Texas civil court in Harris County Geoffrey Rice to recover an 18th century Scottish painting entitled “Portrait of a Man” that she reported stolen from her home in 1986. Mr. Rice, who consigned the work to Sotheby’s for sale, alleges that he purchased the painting in 1983 from Hart Galleries (see ARIS News, April 28, 2009) but has no documentary evidence or bill of sale. Sotheby’s has pulled the painting – worth an estimated $15,000 to $20,000 – from auction and will continue to hold it pending resolution of the ownership dispute.
[ARIS Commentary: Litigation expenses often far exceed the financial value of art subject to ownership disputes. In the Herring case, both parties will likely spend more than $20,000 (that is the high estimate for the work) on attorney fees in a trial set for 2011. Art title disputes can be fierce battles especially when both parties are good-faith purchasers with emotional or sentimental attachments to the art.]
See also "Charlie Wilson’s art war,” New York Post, February 22, 2010.
February 11, 2010 - Judge in Italy orders return of Getty Bronze
LOS ANGELES TIMES - A judge in Italy has ordered the J. Paul Getty Trust and Getty Museum in Malibu, California to return to Italy a bronze statue known as the Victorious Youth dated 300 B.C. to 100 B.C. This decision is the latest ruling in a long litigation battle between the museum and Italy. The Getty indicated it will appeal the decision on the basis that it has had legal title to the statue for more than 30 years, beginning shortly after the statue was discovered in international waters.
February 10, 2010 - Sotheby’s sues Chinese buyers for nonpayment of art won at sale
BLOOMBERG - Sotheby’s is suing in the Judiciary of the Hong Kong Special Administrative Region of the People’s Republic of China several Chinese individuals, who successfully bid for antiquities and paintings and then later refused to pay the auction house. This cultural-political protest practice garnered headlines in February 2009 when a bidder refused to pay for two animal fountainheads at Christie’s Paris auction of Yves Saint Laurent’s art collection (see ARIS News, March 3, 2009).
February 9, 2010 - Collector sues gallery over Basquiat helmet
ARTINFO - An art collector is suing Katzuhito Yoshii and Yoshii Gallery in New York State Supreme Court in New York County for selling a Jean-Michel Basquiat sculpture for $300,000 without the authority to do so. The plaintiff alleges that he did not consign the work for sale but rather loaned it to the gallery as a favor. The plaintiff is suing Mr. Yoshii for breach of bailee duties, conversion, fraud and $500,000, the estimated total value of the sculpture.
[ARIS Commentary: Collectors should be aware of inherent title risks and potentially unfavorable bankruptcy and UCC laws when consigning or transferring physical possession of their art to galleries and dealers.] January 29, 2010 - The Art World’s Gordon Gekko
THE WALL STREET JOURNAL - Asher Edelman, the notorious former Wall Street banker, art collector and owner of New York-based art gallery, Edelman Arts, Inc., (see ARIS News, December 3, 2009 discussing Mr. Edelman’s seizure of art at another gallery’s booth with assistance of the U.S. Marshals at Art Basel Miami Beach 2009), has created an art financing company, Art Assured Ltd. Mr. Edelman, who allegedly raised $12 million from investors for his new business, intends to join boutique lenders and banks accepting art as loan collateral (see ARIS News, October 22, 2009, July 30, 2009) as well as the small niche of financiers offering private guarantees for artworks consigned to public auction.
[ARIS Commentary: With the rise of third-party financiers like Mr. Edelman increasingly providing private, undisclosed guarantees for art worth thousands to millions of dollars, sellers will likely become more comfortable consigning artworks to auction and there will likely be more lots per sale although there will also likely be less transparency in auction sales concerning sellers' identity and their ownership interests in consigned works.]
January 12, 2010 - Artists miffed over Rothschild Foundation’s missing grant money
THE NEW YORK TIMES - The Judith Rothschild Foundation – created by the will of the trust’s namesake artist to give grants to contemporary artists’ estates and art organizations – has defaulted on numerous 2009 grants worth over $100,000. Numerous grantees, who filed complaints with the State of New York Office of the Attorney General, have alleged that the sole trustee of the foundation illegally purchased thousands of drawings by emerging artists with foundation money contrary to the terms of the artist’s will.
[ARIS Commentary: The Judith Rothschild Foundation case is a prime example of the title risk of lack of authority to purchase art and challenges related to limited oversight of charitable organizations in the trust and estate context. The April 2009 to January 2010 exhibition at the Museum of Modern of Art entitled “Compass in Hand: Selections from the Judith Rothschild Foundation Contemporary Drawings Collection,” publicly displayed for the first time part of the foundation’s multi-million dollar art collection donated to the museum and exposed the foundation to the grantees’ potential claims. The New York Attorney General will likely investigate whether the trustee was authorized to acquire and gift the exhibited drawings as well as acquire other art in the foundation’s collection and whether the museum acquired clear legal title to works gifted by the foundation.]
See also “The Vanishing Benefactor,” The Wall Street Journal, January 14, 2010.
January 7, 2010 - Tavern in the red: Famed eatery forced to sell the silver
THE WALL STREET JOURNAL - Tavern On The Green, the landmark restaurant in New York City’s Central Park, which filed for bankruptcy in the United States District Court for the Southern District of New York after losing its operating license and with $8 million in debt, will be selling at public auction all of the restaurant’s silver, china, décor and lighting. New York City has claimed that around a dozen items slated for the sale including wood paneling and signage cannot be sold because they are part of the structure of the building and owned by the City. The bankruptcy court is expected to determine the owner of these disputed objects.
January 6, 2010 - Art thieves grab $1.15 million Degas as heists spread
BLOOMBERG - A pastel drawing by Degas worth €800,000 was stolen from the Musée Cantini in Marseille, France. The Degas work was on loan from the Musée D’Orsay in Paris for a traveling exhibition. There is growing concern over art theft in France given theft of this Degas picture, theft of 30 works worth over €1 million from the villa of a private collector in southern France, theft of a Picasso sketchbook from the Picasso Museum in Paris as well as prosecution of stolen art ring operating at Hôtel Drouot in Paris (ARIS News, December 7, 2009). Authorities are investigating whether there are any connections among the multiple high-profile art thefts in France. (See also “Art thefts rock France for second time in a week,“ The Financial Times, January 3, 2010.)
December 26, 2009 - Yale: Suit over Van Gogh work imperils other art
THE NEW YORK TIMES - In Motion to Dismiss papers filed in the United States District Court of Connecticut in litigation between Yale University and Pierre Konowaloff over ownership of “The Night Café” (see ARIS News, June 3, 2009, May 30, 2009, March 24, 2009), Yale argues that if the court finds that the university lacks clear legal title to the Van Gogh work because it was nationalized by the Russian government in 1918, then the court will cloud title to billions of dollars worth of art in the international market and adversely affect United States foreign relations with Russia. Yale also claims that the statute of limitations period has passed. The claimant asserts that the case should be decided on its facts without regard to diplomacy with Russia, which is not a party to the lawsuit.
December 9, 2009 - Family feud imperils a prized Spanish art collection
TIME - A key issue in the multimillion-dollar inheritance dispute between Borja Thyssen and his mother Carmen Cervera is ownership of over one thousand important artworks currently housed at the Thyssen-Bornemisza Museum pursuant to a loan agreement which is set to expire in 2011. (See also ARIS News, September 9, 2009 “Spain cannot shake suit over Nazi looted art” discussing WWII restitution claim for Pissarro painting in the collection of the Thyssen-Bornemisza Museum.) Mr. Thyssen claims he is co-heir of the entire collection and full owner of two works including a Goya painting and estimated to be worth a combined €7 million that were gifted by his father. The fate of the Thyssen art collection is unknown, that is, whether a long term loan to the Spanish government will be renegotiated and renewed or the collection will be divided between Mr. Thyssen and Ms. Cervera and possibly sold at auction.
December 7, 2009 - The art of the trade
MAINE ANTIQUE DIGEST - Museums often acquire art through donations (such as promised gifts, long-term loans that turn into gifts, “fractional” or “partial” gifts and charitable remainder trusts) as well as exchanges with museums and dealers or a combined gift and swap transaction.
[ARIS Commentary: Museums and dealers should be aware of possible title risks in acquiring traded art, which is on the rise, and protect themselves by ensuring that the party on the other side of a swap has clear legal title and the right to transfer the title of the exchanged art. For example, art that a museum trades for another work must generally be deaccessioned in accordance with the donor’s bequest, the institution’s collection management policy and any applicable state museum laws. The downstream-buyer of the relinquished work will likely not know that the selling dealer acquired the work through a museum exchange.]
December 7, 2009 - Preliminary charges vs 9 in Paris auction sweep
THE NEW YORK TIMES - An auctioneer and several commission agents associated with the prestigious Paris-based Hôtel Drouot, a large umbrella organization for smaller auction houses selling fine art, antiques and antiquities, are the subject of a police investigation and preliminary charges for their involvement in an alleged stolen art ring. French authorities discovered stolen art, frames and furniture including a previously misidentified Gustave Courbet painting in the homes of the targeted auction house employees, who have allegedly been involved in these art thefts since 2001.
December 5, 2009 - Italian police seize £90m art stash from Parmalat founder
TELEGRAPH - Italian officials seized numerous artworks by Cezanne, Degas, Picasso and Van Gogh worth an estimated $150 million dollars hidden by Calisto Tanzi, the founder of the bankrupt dairy company Parmalat. Prosecutors are investigating whether Mr. Tanzi, who denied owning valuable art assets and has been convicted for market-rigging and other charges, had offered to sell some or all of his collection.
December 3, 2009 - U.S Marshals seize Degas, Miro works at Art Basel Miami
BLOOMBERG - As Art Basel Miami Beach 2009 opened, U.S. Marshals seized over $6 million dollars worth of art including paintings by Degas, Leger, Miro and Klein from the booth of Zurich-based Galerie Gmurzynska. The Marshals executed a private default judgment for over $750,000 dollars that the New York-based gallery Edelman Arts, Inc. (litigating as an assignee of XL Specialty Insurance Corp.) obtained in the United States District Court for the Southern District of New York against Galerie Gmurzynska for purportedly damaging a Robert Ryman painting while it was on consignment. This is the first time that art has been seized at Art Basel Miami Beach, one of the largest, most important modern and contemporary international art fairs.
[ARIS Commentary: The U.S. government’s seizure of art from the booth of a Swiss gallery to satisfy a New York federal court order represents the current trend in the international art market to treat art as a financial asset akin to inventory in other industries. Although the U.S. Marshals Service will most likely try to auction the impounded art and use the proceeds from the sale to satisfy the judgment and legal fees, the seized art may be unsalable due to surrounding ownership disputes. For instance, the seized art may have been consigned to the gallery and thus subject to title claims brought by consignors and the gallery will most likely file suit to recover possession of the impounded art.]
December 2, 2009 - Prince of Liechtenstein threatens major Royal Academy show
THE ART NEWSPAPER - Prince Hans-Adam II of Liechtenstein has stated that unless the UK government promptly grants an export license for an Alonso Coello painting, which the Prince purchased from the collection of Lord Northbrook in London in 2006, he will not lend over 100 artworks for the planned September 2010 exhibition of the “Liechtenstein Collection” at the Royal Academy of Arts. For nearly three years, the Coello painting has been impounded in London while HM Revenue & Customs investigates the Prince’s export license application for the Coello work, one of nine paintings sold from the Northbrook collection. In addition, HM Revenue & Customs must generally allow a UK buyer (in this case the National Gallery has expressed an interest and a desire to conduct fundraising) to match the £2 million pound purchase price the Prince paid for the Coello painting.
[ARIS Commentary: Many European countries including the United Kingdom have broad customs regulations for cultural property, which make it time-consuming and difficult for foreign buyers to export newly purchased art. In this context, foreign buyers may not obtain clear legal title to art exported without a proper license or to art that is subject to an on-going licensing investigation.]
November 24, 2009 - Recovered Warhol 'Heinz 57' crate leads to arrest
BLOOMBERG - James Biear has been charged with criminal possession of a Francis Picabia drawing as well as mail and wire fraud for stealing and selling an Andy Warhol sculpture from the home of his employer, Kenward Elmslie, grandson of publisher Joseph Pulitzer. Mr. Biear represented to two art dealers and the down-stream purchaser, a New York collector who paid $220,000 dollars for the Warhol crate, that the Warhol work was a gift from his uncle and that he had clear legal title and the right to transfer the title to the work.
November 24, 2009 - Expanding personal investment options: Trading and borrowing against fine art
ART DAILY - Given the uncertainty in the financial markets, many investors are diversifying their portfolios by including up to ten percent in art, which today is widely recognized as a viable, traded asset class. Industry experts suggest that currently it is an opportunistic time to buy certain kinds of art across various price points. In addition, owners are increasingly using their art to borrow against, and many lenders are allowing borrowers to maintain possession and display their art collateral in their home or office. To protect themselves, art lenders are requiring appraisers to follow USPAP (Uniform Standards of Professional Appraisal Practice) in appraisals.
[ARIS Commentary: USPAP guidelines provide that encumbrances, ownership interests and the provenance of the personal property may have an economic impact on the value of the art. In order to assure the efficacy of the USPAP appraisal, clear legal title should not routinely be assumed and the use of extraordinary assumption or hypothetical condition in the appraisal can create acceptability issues.]
November 21, 2009 - German auction house pulls painting disputed in Nazi-era restitution claim
STARTRIBUNE - Lempertz, a Dusseldorf-based auction house, withdrew a painting from an upcoming sale in light of a WWII reclamation claim made by the estate of Max Stern (see ARIS News, November 5, 2009, November 22, 2008). The estate is seeking to recover hundreds of paintings that Mr. Stern sold at the same Lempertz auction house in 1937 pursuant to Nazi orders. Since that time, Lempertz has repeatedly sold and attempted to resell artwork owned by Mr. Stern.
November 16, 2009 - Validity of verbal deals under dispute
THE ART NEWSPAPER - Moscow-based art dealer Gary Tatintsian has sued Luhring Augustine Gallery, co-owned by Roland J. Augustine, past President of the Art Dealers Association of America, in the Supreme Court of the State of New York for breach of contract and unjust enrichment. Mr. Tatintsian, who over several years acquired $10 million dollars worth of art from Luhring Augustine Gallery, alleges that the gallery failed to supply certain artworks in accordance with the parties’ amended verbal agreement. Luhring Augustine Gallery has filed a motion to dismiss disclaiming the validity of an amended agreement.
[ARIS Commentary: This litigation between sophisticated art market insiders, that is an international, Russian art dealer and respected, contemporary New York gallery, highlights the challenges in the old-world art industry model in which parties traditionally relied upon handshakes and oral agreements in art transactions ranging from thousands of dollars to multi-million dollar deals. Buyers should be aware that when acquiring, consigning or selling art without a written agreement the statute of frauds doctrine, which provides that certain kinds of contracts must be memorialized in a signed writing, may invalidate verbal purchase agreements if and when contested in court.]
November 13, 2009 - UK museums can return looted art
BBC - The Holocaust (Stolen Art) Restitution Act allows museums in England and Scotland to return artworks stolen during WWII to claimants and their heirs in accordance with recommendations of the Spoliation Advisory Panel. Before this law was enacted, British institutions had to make ex-gratia payments to claimant families based on the valuation of the looted artifact in the national museum’s collection.
November 10, 2009 - Henkel heir, mistress settle suit on $48 million in two Hirsts
BLOOMBERG - Udo Fritz-Hermann Brandhorst, heir to the Henkel AG & Co. fortune and a major art collector, and his former New York-based art dealer mistress, Venetia Kapernekas, agreed to an out-of-court settlement resolving their ownership dispute of various artworks as well as custody of their daughter. In February 2009, Mr. Brandhorst blocked Ms. Kapernekas’ sale of two Warhol paintings she consigned to Sotheby’s in London -- one which Mr. Brandhorst gifted to Ms. Kapernekas and one which he gifted to their daughter. Ms. Kapernekas claimed an ownership interest in two Hirst works worth an estimated $48 million dollars on the basis that Mr. Brandhorst acquired the works as investments for her benefit.
November 10, 2009 - Ancient texts heading back to Vienna
COURTHOUSE NEWS SERVICE - A bible and commentary dated 1516-1517 that was stolen during the November 1938 pogroms in Vienna, Austria was pulled from a June 2009 auction at Kestenbaum & Co. in New York and is being restituted by the Swiss consignor to the Jewish Community of Vienna. U.S. Immigrations and Customs Enforcement discovered the provenance of the books and that the books were stolen property that had been smuggled into the USA.
November 5, 2009 - Providence couple embroiled in search for Nazi art
MUSEUM SECURITY NETWORK - Agents from the Art and Antiquities branch of U.S. Immigration and Customs Enforcement (ICE) searched Mr. and Mrs. Bissonnette’s home and seized pursuant to a warrant evidence related to the sale or transfer of art illegally imported into the country. Last year, the First Circuit Court of Appeals affirmed the Rhode Island District Court’s decision that Mrs. Bissonnette must return a Winterhalter painting that she inherited from her stepfather to the estate of Max Stern, a German Jewish art dealer, who sold off his inventory including the Winterhalter painting pursuant to Nazi orders during WWII (see ARIS News, November 22, 2008). During settlement negotiations with the Stern estate, Mrs. Bissonnette shipped the painting to Germany. The painting has since been returned to the Stern estate and is now on loan to the Montreal Museum of Fine Art. ICE officials have not commented on the nature of the investigation.
October 27, 2009 - Auction house Ritchies forced into bankruptcy
THE GLOBE AND MAIL - Ritchies, a Canadian-based auction house, has been forced into bankruptcy. For several months, Ritchies has been in financial distress and has failed to pay consignors for their artworks sold in May 2009 (see ARIS News, July 22, 2009).
October 22, 2009 - Nazi looted paintings discovered at Southern Methodist University, future home of the George W. Bush Presidential Library
FORBES - Two paintings by Spanish master Bartolome Esteban Murillo that were stolen by the Nazis in 1941 from the Rothschilds home in Paris were discovered in the collection of Southern Methodist University’s Meadows Museum. It is unclear whether the paintings, which are valued at around $10 million dollars, were properly restituted after WWII before being donated to the museum. The museum has agreed to list the updated provenance of the pictures on its website in accordance with Nazi-era research and disclosure guidelines promulgated by the American Association of Museums and the Association of Art Museum Directors.
October 22, 2009 - Creditors seize Dutch museum’s art collection
ARTINFO - ABN AMRO has seized $48 million dollars worth of art from the collection of the Scheringa Museum to satisfy the museum’s namesake founder Dirk Scheringa’s outstanding debts. Mr. Scheringa, an avid art collector and owner of DSB Bank, which filed for bankruptcy in the Dutch courts, pledged his art collection to secure financing. It is unknown whether ABN AMRO will try to sell any of Mr. Scheringa’s art. In April 2009, it was widely reported that ABN AMRO had similarly seized valuable art used as loan collateral by Dutch businessman Louis Reijtenbagh (see ARIS News, April 27, 2009, April 22, 2009, April 17, 2009, and April 3, 2009).
October 8, 2009 - Breaking: Astor trial concludes; Anthony Marshall convicted of theft
THE WALL STREET JOURNAL - Anthony Marshall, the son of the late New York philanthropist Brooke Astor, was convicted of stealing millions from his mother’s $200 million dollar fortune including several of his mother’s artworks as she suffered from Alzheimer’s disease. Mr. Marshall’s attorney was also convicted of five charges including fraud, conspiracy and forgery.
[ARIS Commentary: The Astor case magnifies on a large financial scale the common challenges facing family estates that include art collections. For instance, family members often dispute among themselves which family member owns and has the authority to sell artworks in the estate especially when the decedent’s last will and testament is amended by an elderly person having questionable mental capacity.]
October 7, 2009 - Dispute over Schiele painting heads to trial
COURTHOUSE NEWS SERVICE - The United States District Court for the Southern District of New York held that there is a factual issue for trial in the WWII art restitution case involving Egon Schiele’s painting entitled the “Portrait of Wally.” The U.S. government seized the picture over ten years ago when it was on loan from the Leopold Museum in Vienna to the Modern Museum of Art in New York. At issue is whether the painting was stolen by the Nazis in 1939 from the Jewish owner Lea Bondi. The painting is currently being stored in a warehouse in Queens, New York.
October 5, 2009 - US Department of State investigates Museo del Prado
THE ART NEWSPAPER - The U.S. Department of State is investigating whether the Museo Nacional del Prado in Madrid, Spain violated a federal law that prohibits trafficking of artworks nationalized by the Cuban government and owned by U.S. citizens. Under U.S. law, trafficking is broadly defined and includes possession. The museum exhibited two paintings by Spanish artists that were owed by the Florida-based Fanjul family before they fled Cuba and the Castro regime expropriated their vast art collection (see ARIS News, February 25, 2009).
September 14, 2009 - The art of the lawsuit
CRAINS CHICAGO BUSINESS - For over twenty years, numerous clients have sued Chicago-based art historian and dealer Richard Love of R.H. Love Galleries for mishandling their funds and assets including failing to deliver sold paintings, making false representations about art investments and refusing to pay consignors for sold artworks. The most recent lawsuits against Mr. Love were filed in state court in Illinois and involve up to $3 million dollars.
September 13, 2009 - The dealer; the $10m and the missing art treasures
THE OBSERVER - Former leading U.K. antiquities dealer Robin Symes is being sued by his late partner Christo Michailidis's family for allegedly selling without authority a multi-million pound collection of Eileen Gray art deco furniture and other objects. Mr. Symes was convicted and served jail time in 2005 for illegally selling a £3 million pound Egyptian statue.
September 12, 2009 - Stolen art by Warhol is sought in California
THE NEW YORK TIMES - Ten paintings by Andy Warhol from the artist’s “Athlete Series” were stolen from the home of Richard Weisman, a California businessman and art collector. Experts predict that the stolen pictures, which Mr. Weisman tried unsuccessfully to sell in 2007, will be difficult for the thieves to sell because of the iconic nature of the portraits and the insular market for Warhol works.
September 9, 2009 - Spain cannot shake suit over Nazi looted art
THE COURTHOUSE NEWS SERVICE - The United States Court of Appeals for the Ninth Circuit held that the government of Spain cannot claim sovereign immunity in defense of a WWII restitution claim for a painting by Camille Pissarro, which it acquired in 1993 as part of the $327 million dollar acquisition of the art collection of Baron Thyssen-Bornemisza. The appellate panel found that the lower court must determine whether the plaintiff must first seek redress in Spain or Germany before litigating in the United States.
August 26, 2009 - Glaser heirs reject UK spoliation ruling
THE ART NEWSPAPER - The heirs of Curt Glaser are seeking to appeal the U.K. Spoliation Advisory Panel’s recommendation to the Courtauld Gallery not to restitute eight drawings. This is the first time that a party proceeding before the Panel has rejected the Panel’s findings. Given the Glaser heirs’ pending WWII-related art claim, it will be risky for the museum to lend or exhibit these drawings in another jurisdiction.
August 24, 2009 - Aboriginal busts withdrawn from auction
ARTINFO - Sotheby’s withdrew from auction in Melbourne, Australia two Aboriginal busts with a combined pre-sale estimate of over $500,000 U.S. dollars in light of protests by Aboriginal leaders. The leaders urged Sotheby’s and the consignors not to profit from the sale of Aboriginal works and to return the sculptures to the indigenous community
August 19, 2009 - Appeals court overturns Holocaust looted-art law, but Norton Simon suit continues
THE LOS ANGELES TIMES - The United States Court of Appeals for the Ninth Circuit ruled that a California law allowing claimants to sue museums and galleries until 2010 for recovery of Nazi-looted art is unconstitutional. The plaintiff (the heirs of Jacques Goudstikker) may still pursue their restitution case if they can prove that they filed their case within California’s general three-year statute of limitations, that is, within three years after discovering that the Lucas Cranach the Elder painting at issue – valued at $24 million dollars – was in the collection of the Norton Simon Museum.
[ARIS Commentary: California’s special Holocaust statute of limitations, which is one of the state’s four Holocaust-related laws the court struck down on constitutional grounds, highlights the tension between federal laws setting foreign policy for WWII reparations and state laws regulating museum practices and the art market. As a result of this tension, parties can incur substantial legal expense and years of litigation over threshold legal and jurisdictional issues in WWII-related art title disputes.]
August 11, 2009 - Instant art on the auction block
THE WALL STREET JOURNAL - Polaroid Corporation is seeking permission from the U.S. Bankruptcy Court for the District of Minnesota to liquidate the company’s photography collection through Sotheby’s in private and public sales. After filing for Chapter 11 bankruptcy protection in December 2008, the company sold the majority of its assets but excluded from the sale its thousands of iconic photographs, which have not yet been appraised.
August 8, 2009 - A Brancusi masterpiece, mired in a custody fight
THE NEW YORK TIMES - Two brothers, two high-profile art collectors and Romania are involved in litigation in New York, Oslo and Paris over a 1913 Brancusi sculpture worth an estimated $40 million dollars assuming clear legal title. Since 1976 when the work was exhibited at the National Museum of Art of Romania, the government of Romania has claimed title to the statue as a national treasure. Brothers Alexandru and Alvaro Botez, whose grandparents acquired the work in 1914 from the artist, allegedly agreed to sell the work in 2005 to Norwegian businessman Mr. Sveaas and then in 2007 to Studio Capital, a Belize company owned by Mexican financier Mr. Martinez. The current location of the sculpture is unknown.
August 5, 2009 - Leibovitz may have better luck in bankruptcy court
BLOOMBERG - In light of photographer Annie Leibovitz's financial challenges, which include a pending $24 million dollar breach of contract lawsuit brought by an art lender and a federal tax lien of over $1 million dollars (see ARIS News, July 30, 2009, February 24, 2009), legal experts suggest that Ms. Leibovitz should file for bankruptcy to preserve her assets and to satisfy her creditors' liens.
July 30, 2009 - Lender sues Annie Leibovitz
THE NEW YORK TIMES - Art Capital Group, Inc., a specialized art finance company, has sued photographer Annie Leibovitz in Supreme Court of the State of New York for breach of a $24 million dollar loan agreement (see ARIS News, February 24, 2009). According to the lender, pursuant to the parties’ agreement in exchange for the credit line the lender obtained the right to sell Ms. Leibovitz’s right, title and interest to all of her photographs as well as her two homes. The lender is seeking a declaratory judgment to compel Ms. Leibovitz to provide access to her homes to appraise and value her assets.
July 22, 2009 - Auction-house partnership going, going, gone
CANWEST NEWS SERVICE - Sotheby’s has terminated its seven-year auctioning partnership with Canada-based Ritchies due to a number of instances of Ritchies not timely paying its consignors following a Sotheby’s-Ritchies joint sale in May. With the association scheduled to renew on August 1, 2009, Sotheby’s commented that “failing to promptly pay consignors after a sale is a ‘cardinal sin’ in the auction business . . . and Sotheby’s [will not] renew this agreement.” Sotheby’s has assured payment to the consignors who have not yet been paid.
[ARIS Commentary: The Ritchies incident highlights the continuing economic pressures in the art market. The incidence of consignors not being paid and the title exposures to the buying and selling market had been most evident to date in the private sector. See ARIS News and Commentary May 7, 2009 (discussing then-latest lawsuit stemming from the bankruptcy of Lawrence Salander and the Salander-O’Reilly Galleries brought by defrauded consignor John McEnroe and others against downstream buyers); see also ARIS News and Commentary November 20, 2008 (“Jail sentence for Memphis antique gallery owner who cheated consignors”) and ARIS News July 15, 2009 (updating new charges in the Salander-O’Reilly Galleries matter).] July 15, 2009 - Art dealer Salander faces new charges as former deputy arrested
BLOOMBERG - The New York County District Attorney’s Office filed additional charges against Lawrence Salander and the now defunct Salander-O’Reilly Galleries as well as new charges against Leigh Morse, the gallery’s former director, for her role in defrauding investors, consignors and artists (see ARIS News, May 7, 2009, March 27, 2009, March 15, 2009, February 10, 2009, November 19, 2007, November 6, 2007 and November 5, 2007). The criminal indictments name twenty-eight victims including the artist estates of Gaston Lachaise, Elie Nadelman and Robert de Niro Sr. in what has been called the largest art fraud case in New York City’s history. District Attorney Robert Morgenthau noted that “the moral of this case is, be careful who you consign your artwork to.”
July 15, 2009 - Court removes an obstacle for Fisk University in struggle over Stieglitz art sale
THE NEW YORK TIMES - The Court of Appeals of Tennessee held that the Georgia O’Keefe Museum lacks standing to prevent Fisk University from selling artworks donated by Ms. O’Keefe. Over fifty years ago, Ms. O’Keefe donated the ninety-seven-piece Alfred Stieglitz Collection plus four of her own paintings to the university, stipulating various conditions including that the works could not be sold and must be displayed together. The museum alleged that because the proposed sale violated Ms. O’Keefe’s gift conditions, ownership of the collection should revert to the museum as the successor in interest to the O’Keefe estate.
[ARIS Commentary: If the Georgia O’Keefe Museum decides not to appeal, the lower Tennessee state court must decide on remand whether to permit Fisk University to sell a 50% stake in the O’Keefe-Stieglitz art collection for $30 million to the Crystal Bridges Museum. The on-going litigation involving Fisk University demonstrates the multitude of practical and legal challenges in enforcing donors’ restrictions on gifted artworks as well as the deaccessioning dilemma facing institutions that lack liquidity but own valuable art assets.] July 10, 2009 - Red faces in Paris as ‘destroyed’ Cartier-Bresson snaps resurface
THE INDEPENDENT - The widow of French photographer Henri Cartier-Bresson is warning sellers and buyers that several prints donated to the French government that were supposed to have been destroyed in 1991 have reappeared on the art market. The prints were part of a collection of over five-hundred images damaged by a flood while being stored by the Centre National des Arts Contemporain. Rather than being destroyed by the museum according to the photographer’s instructions, some or all of these prints may have been stolen or recovered from the trash.
July 8, 2009 - Nazi-era claim rejected in court
ARTINFO - The United States District Court for the Eastern District of Louisiana granted summary judgment for Sarah Blodgett Dunbar, ruling that she was the owner of an Oskar Kokoschka painting that she inherited in 1973 from her mother, who purchased the work in 1946 from the art dealer Otto Kallir. The heir of Oskar Reichel sought restitution of the painting claiming that the Nazis confiscated it in 1939 when the painting was consigned to Mr. Kallir (see ARIS News, May 30, 2009, January 24, 2008). Following Louisiana’s Civil Code provisions, the court held that even if the work had been stolen or sold under duress during WWII, Ms. Dunbar acquired clear legal title because of her open and continuous possession of the painting for more than ten years.
[ARIS Commentary: Louisiana is unique among U.S. jurisdictions in its adoption of a civil code containing a prescriptive ownership period similar to European jurisdictions such as France, Germany and Switzerland in which a party may acquire clear legal title to stolen art if the party has maintained unchallenged possession of the work for a certain period of time (even if the transferor did not have clear legal title). The general rule in other United States jurisdictions is that a thief cannot obtain clear legal title to stolen art and for this reason good faith purchasers and other downstream parties cannot obtain clear legal title to the work regardless of how long these parties have possessed the artwork.]
July 7, 2009 - Judge denies Jackson’s mother
THE WALL STREET JOURNAL - A California state court judge named a lawyer and record executive listed in Mr. Jackson’s will as temporary special administrators of the estate until an August hearing, when the court is expected to appoint permanent executors and rule on the validity of the will. Mr. Jackson’s estate consists of millions of dollars in assets and debts (see ARIS News, June 28, 2009).
[ARIS Commentary: It may be challenging for executors to the Jackson estate to manage their fiduciary duty and sell the art and other property in the Jackson estate to pay off creditor debts. Executors will most likely have to sign a full warranty of clear legal title to offered assets (even though they may lack knowledge, information and documentation about potential liens encumbering Mr. Jackson’s property). If any objects are sold with an unknown title defect such as a creditor lien, then the sales transaction may be unwound at any time in the future – even after the estate is settled – based on rescission of a public auction or an indemnity claim brought by a buyer in a private sale, creating uncertainty and lack of finality to the estate proceedings.]
See also “Jackson worth $100M more than he owed?”
The Seattle Times, July 6, 2009.
July 1, 2009 - Merkin art to be sold as hedge in Madoff case
THE WALL STREET JOURNAL - J. Ezra Merkin, a hedge fund manager charged with concealing over $2 billion dollars worth of client investments with Bernard Madoff, has negotiated the sale of several Rothko paintings and Giacometti sculptures for $310 million to an unidentified buyer (see ARIS News, April 14, 2009, January 8, 2009). Mr. Merkin highly leveraged his art collection; PaceWildenstein art gallery, which represents the Rothko family, has a $42 million lien on several of Mr. Merkin’s Rothko paintings and HSBC Bank USA, N.A. has a $19.3 million lien on several of Mr. Merkin’s other artworks. New York Attorney General Andrew Cuomo approved this sale of Mr. Merkin’s art assets, which are already the subject of a freezing order, provided that after paying liens, commissions, taxes and other fees the remaining $192 million sales proceeds are held in escrow for potential restitution of defrauded investors.
See also “Merkin selling art frozen in lawsuit for $310 million,”
Bloomberg, June 30, 2009.
June 29, 2009 - Czech institute to help recover Jewish property
REUTERS - Nearly fifty countries and non-governmental organizations participating in the Prague Holocaust Era Assets Conference have agreed to improve efforts to return artwork and other property looted by the Nazis and to form a permanent standing committee based in Terezin, Czech Republic to monitor WWII restitution claims.
See also “Holocaust conference urges more efforts on looted art,”
Bloomberg, June 29, 2009.
June 28, 2009 - Michael Jackson’s estate: The fallout will be monumental
USA TODAY - Legal experts expect it to take years to settle the estate of Michael Jackson given the complicated task of assessing the value of Mr. Jackson’s estate which includes various expensive artworks, and the amount of outstanding debts owed to creditors as well as an estimated $80 million in estate taxes owed to the state and federal government.
[ARIS Commentary: Given the complexities surrounding the Michael Jackson estate, it may be difficult to determine whether legal title to the estate’s assets are affected by loan pledges, gift promises to beneficiaries or other creditor rights. In addition, property in the estate may become subject to bankruptcy protection. It will be particularly challenging to value Mr. Jackson’s art and memorabilia assets since unlike all other asset classes in which uncertain title adversely affects property value, art appraisers have traditionally assumed (without inquiry) that the artworks they are valuing have clear legal title. The Michael Jackson estate may well have a proper basis to seek lower values of the art assets for estate tax purposes based on the difficult-to-determine risks of liens and encumbrances; however, this may also impact the estate’s ability to sell these assets at fair market value.]
See also “Large tax bill looms for Jackson estate,”
MSNBC, July 10, 2009.
June 25, 2009 - Art insurance: Clean as a Rockwell
MARTINDALE - Collectors and investors of art are advised to consider acquiring title insurance for their potentially "defective art." Title insurance protects parties from losing their art due to title claims and spending money on legal fees to defend their art ownership. Parties are increasingly seeking to mitigate the art title risk given the facts that nearly all art has some gap or question in the provenance or chain of title, U.S. jurisprudence does not always favor good faith purchasers, and art market is non-transparent and unregulated, characteristics which can produce a variety of different kinds of title risks.
June 24, 2009 - £1.5m Pissarro painting looted by Nazis withdrawn from auction
TELEGRAPH - Christie's withdrew a Pissarro painting from auction due to a family dispute between two heirs of Samuel Fischer, the original Jewish owner of the painting. The Nazis looted the painting during WWII, and a Swiss court restituted it to Mr. Fischer's granddaughter in 2007; however, Mr. Fischer's great-grandson alleges competing ownership rights to the painting. The heirs failed to agree how to split the proceeds from the sale before the scheduled auction.
[ARIS Commentary: The Fischer case highlights the expanding nature of title risks tied to historical theft such as family disputes after restitution or other settlements and the challenges when art is pulled from auction including negative publicity, non-refundable marketing expenses, potential decrease in value of art and varying but significant collateral effects such as the destruction of a reverse IRC Section 1031 art exchange when the relinquished property is to be auctioned at or near the end of the exchange period.]
June 23, 2009 - Art restitution conference in Prague
THE NEW YORK TIMES - An internationally-attended conference on Holocaust-era assets will be held in Prague, Czech Republic, this week, the purpose of which is to assess efforts to recover looted artwork since the 1998 Washington Conference on Holocaust Era Assets was held and to define new ways to improve provenance research and restitution efforts around the world.
See also “Heirs race to find Nazi-looted art before time runs out,”
The Washington Post, June 22, 2009.
[ARIS Commentary: The Prague conference is likely to renew public interest in and continue to spur WWII-related art ownership claims.]
June 18, 2009 - Debbie Reynolds’ Hollywood museum enters Chapter 11
THE WALL STREET JOURNAL - Debbie Reynolds’ Hollywood Motion Picture Museum, a non-profit corporation owning the largest private collection of Hollywood memorabilia worth an estimated $60 million, has filed for bankruptcy in United States Bankruptcy Court for the Central District of California. The museum leveraged the collection to secure a $1 million loan and is seeking bankruptcy protection to prevent the lender from selling off memorabilia in the collection to satisfy the outstanding debt.
See also “Hollywood memorabilia caught in Olathe man’s legal mess,”
The
Kansas City Star, June 24, 2009.
June 17, 2009 - Mixed fortunes for Judaica in wake of Madoff
THE ART NEWSPAPER - J. Greenstein & Co., Inc.’s Judaica auction sale, which had twice as many lots as usual, included many objects consigned by Jewish victims of Bernard Madoff’s financial Ponzi scheme who are seeking to raise capital (see ARIS News April 20, 2009, April 14, 2009, January 8, 2009). Judaica objects have inherent title risks because such ceremonial items often have no provenance history, are not traceable, are frequently faked or forged, and were looted during WWII from synagogues in Europe. After WWII, many Judaica objects were mistakenly given to new congregations and pillaged congregations are now seeking restitution of their ceremonial objects.
June 14, 2009 - Signed, sealed, delivery: Stamp sold for $375K
INDYSTAR - The estate of J. David Baker sold an 1869 Lincoln stamp for $375,000 after the United States District Court for the Southern District of Indiana held that it was the rightful owner of the stamp, which was stolen from Mr. Baker’s home in 1967. An insurance company and an individual, who allegedly bought the stamp twenty years ago at a flea market, also asserted title to the stamp.
June 11, 2009 - 24 charged in crackdown on Native American artifact looting
LOS ANGELES TIMES - After a two-year investigation, federal and state law enforcement officials have arrested and charged twenty-four people with stealing and trafficking ancient Native American artifacts from federal public and tribal lands located in the Four Corners area in violation of the Archaeological Resources Protection Act (ARPA) and the Native American Graves Protection and Repatriation Act (NAGPRA). This case represents the largest Native American artifact theft case in United States history involving excavators, dealers and collectors and over 200 objects such as pottery, masks and jewelry worth over $300,000.
See also “Arrests made in operation targeting network selling stolen
Native American artifacts,”
Federal Bureau of Investigation, June 10, 2009.
June 9, 2009 - 2 paintings found in Toronto Goodwill bin could fetch $50,000 each
CBC NEWS - Waddington’s auction house in Canada plans to sell two paintings by the 19th century European painter Federico del Campo that were dropped off at a Goodwill facility. Goodwill does not know who donated the works and whether the donor was aware of their attribution or value. The paintings will be sold with no information or documentation about their ownership history.
June 4, 2009 - Ukraine suffered “colossal” looting during World War II
THE ART NEWSPAPER - New research suggests that the Ukraine suffered tremendous, previously unrecorded losses of cultural property during WWII. According to experts, most of the missing artworks are important pieces, many of which may be the subject of restitution claims in the future.
June 4, 2009 - Huge bequest by literary agent
THE ART NEWSPAPER - Over two thousand drawings and other art objects from the estate of Joseph McCrindle were gifted to more than thirty museums in the United States and Europe. The total collection is estimated to be worth approximately $20 million.
[ARIS Commentary: It may be challenging for executors and recipient museums to document the chain of title for art objects in the McCrindle collection given the fact that Mr. McCrindle acquired most of the works in the 1960s and 1970s before the advent of heightened art transactional and due diligence standards. Similarly, in accordance with current Internal Revenue Service auditing trends (see ARIS News, March 2, 2008), the charitable gift tax deduction and appraisal of the McCrindle art collection will likely be scrutinized by the Art Advisory Panel of the Commissioner of Internal Revenue because the works have not been in the public domain for several decades and were acquired before the art industry began to focus on art title risks.]
June 4, 2009 - Attorney in contempt for helping client sell Picasso
COURTHOUSE NEWS SERVICE - The United States Court of Appeals for the Fifth Circuit has upheld a civil contempt order against an attorney who advised his client to sell a Picasso painting, which was subject to a freeze order in a fraud case brought by the Securities and Exchange Commission. The appellate court confirmed that the work was covered by the freeze order because the work was in the defendant’s possession in his home even though the defendant’s mother owned the painting. The painting was sold for over $400,000 to raise cash for the defendant’s living expenses and litigation costs. On remand, the United States District Court for the Northern District of Texas will likely order the painting to be delivered to the receiver, but it is unclear whether the buyer, United Financial Markets, Inc., will receive a refund of the purchase price.
[ARIS Commentary: Attorneys, advisors, and other stakeholders should be aware of the potential for personal liability when selling or advising clients to sell art that may be encumbered by liens such as bankruptcy seizures or freeze orders. Similarly, parties should proceed with caution before signing absolute warranties of clear legal title to consigned works when they lack sufficient personal knowledge and documentation to make such representations accurately or where there is uncertainty in the legal determination bearing on clear title to the offered work.]
June 3, 2009 - Yale sued over Van Gogh painting seized by Soviets
THE WALL STREET JOURNAL - The great-grandson of a Russian industrialist has countersued Yale University in United States District Court of Connecticut to recover Van Gogh’s “The Night Café” (see ARIS News, May 30, 2009, March 24, 2009). The parties disagree over whether seizure of the painting in 1918 amounted to theft and if clear legal title to the painting passed to any subsequent owners including the university.
[ARIS Commentary: Historical theft claims, especially those involving state confiscation of property without compensation, present complicated title risks for downstream owners and buyers because of different interpretations of factual circumstances and unsettled doctrines under United States and international law such as due diligence obligations when acquiring art and whether public exposure of the art impacts when a statute of limitations period begins.]
May 30, 2009 - Massachusetts judge rules in favor of Museum of Fine Arts, Boston regarding Kokoschka work
ART DAILY - The United States District Court of Massachusetts has ruled in a declaratory judgment action brought by the Museum of Fine Arts that the museum is the rightful owner of an Oskar Kokoschka painting, which the heir of the Austrian Jewish owner Oskar Reichel alleged was sold under duress during WWII (see ARIS News, January 24, 2008). The court held that the heir’s restitution claim was barred by a three-year statute of limitations and that Mr. Reichel’s sale of the painting to the art dealer Otto Kallir in 1939 was a voluntary uncoerced transaction.
See also “MFA wins legal claim to valuable painting,”
The Boston Globe, May 30, 2009.
[ARIS Commentary: The Museum of Fine Arts case reflects a growing trend by museums and other non-profit institutions to seek to quiet title to art in their collections by filing declaratory judgment actions, efforts which reduce the risks associated with owning art with uncertain legal title, but require the institutions to expend often limited financial resources on litigation costs that they cannot recover even when successful in the court proceedings. See, e.g., Toledo Museum of Art v. Ullin, 477 F. Supp. 2d 802 (N.D. Ohio 2006); The Detroit Institute of Arts v. Ullin, No. 06-10333, 2007 WL 1016996 (E.D. Mich. Mar. 31, 2007); ARIS News and Commentary March 24, 2009 (discussing lawsuit brought by Yale University to retain ownership of Van Gogh painting).]
May 27, 2009 - Antiques Roadshow painting sale halted after claim it was stolen
NORTHAMPTON CHRONICLE & ECHO - Sotheby’s pulled from a New York auction a Winslow Homer portrait in light of ownership claims that the painting was stolen more than twenty years ago from the Blake family estate in Ireland. Before the sale, Sotheby’s conducted extensive due diligence on the picture, which had been featured on the popular television program Antiques Roadshow, including checks to ensure it was not stolen and contacting members of the Blake family.
[ARIS Commentary: Despite extensive public exposure of a work and due diligence research by an international auction house, unanticipated title risks may still encumber art and as a result the work may be unmarketable until the claim is settled and stakeholders may become entangled in lengthy, expensive litigation.]
May 22, 2009 - Changing the art on the White House walls
THE WALL STREET JOURNAL - President and Mrs. Obama are in the process of redecorating the private residence, offices and public rooms in the White House with modern art created by African-American, Asian, Hispanic and female artists on loan from federal museums as well as private galleries and individual collectors.
[ARIS Commentary: Individuals and galleries loaning their art for public display at the White House for the prestige of being connected to the Obama administration and to increase the market value of a particular artwork should be aware of potential title risks associated with public exposure and exhibiting their art at a high-profile location.]
May 22, 2009 - National Gallery settles suit over Soutine painting
THE WASHINGTON POST - The National Gallery of Art in Washington, D.C., and the estate of Lorette Jolles Shefner have reached an ownership agreement regarding the 2004 sale of a Soutine painting. In its complaint filed in the United States District Court for the Southern District of New York, the estate alleged that two Soutine experts fraudulently induced Mrs. Shefner to sell them her painting for well below fair market value, who in turn immediately resold the work for double the price to the National Gallery of Art, and that the museum conducted little to no due diligence on the ownership history of the work or how the experts acquired the painting. Pursuant to the settlement, the estate will retain title to the painting, the museum will recover the purchase price and the painting will remain on loan at the museum for seven years.
See also “Soutine suit settled over bargain ‘beef,’”
Artinfo, June 1, 2009.
[ARIS Commentary: The Shefner case reflects the continued heightening of due diligence obligations of downstream buyers to investigate clear legal title to artworks outside of the WWII historical theft context. The Soutine painting is the first work that the National Gallery of Art has deaccessioned from its permanent collection on the basis of a non-WWII related title claim. Under the changing industry standards, good faith buyers are charged with having certainty that the seller did not acquire the work under fraudulent circumstances, an issue which is heightened in the current market where buyers are attempting to secure works at below market values, and face the risk of rescission of the transaction, loss of the object as well as loss of the gain in value over time.]
May 21, 2009 - Esmerian property removed from American Folk Art Museum
MAINE ANTIQUE DIGEST - Sotheby’s took possession of several artworks that the renowned jeweler Ralph Esmerian loaned and promised to gift to the American Folk Art Museum. Mr. Esmerian is heavily indebted to the auction house for purchasing art on credit (see ARIS News, May 1, 2008). Sotheby’s has seized approximately $20 million worth of Mr. Esmerian’s art and is involved in litigation with Halsey Minor over the May 2008 sale of Mr. Esmerian’s “Peaceable Kingdom” painting by Edward Hicks for allegedly failing to disclose its financial interest in the painting (see ARIS News, September 3, 2008).
May 18, 2009 - Mogul’s $3 million paddle battle lands bitter bidders in court
BLOOMBERG - A collector has sued Christie’s in United States District Court for the Southern District of New York seeking a declaratory judgment that he was the successful bidder of a Sam Francis painting, which was part of the May 13, 2009 Post-War and Contemporary Art Evening Sale. The collector alleges that he holds legal title to the painting because the auctioneer orally accepted his $3 million telephone bid and then dropped the hammer and that it was improper for the auctioneer to reopen bidding and accept a higher $3.2 million bid from someone in the room.
May 18, 2009 - 2 disputed Indian wampum belts pulled from auction
THE NEW YORK TIMES - Sotheby’s pulled from auction two ceremonial Indian wampum belts consigned by the estate of a private collector in light of ownership claims raised by the Onondaga Nation. Native American Indian leaders allege that the sacred belts, which record the nation’s laws and customs, are community property of the Onondaga Nation and that for this reason a collector cannot acquire the title to or the authority to sell or transfer such objects. Both belts were deaccessioned before 1970 from the collection of the Museum of the American Indian and exhibited at The Metropolitan Museum of Art in 1983.
[ARIS Commentary: Consignors should ensure that they have clear legal title before offering art for sale privately through a dealer or gallery or at public auction. Liens or encumbrances might infringe on the title to offered artworks unbeknownst to the consignor even when the work has been part of a private collection for decades or exhibited at leading museums.]
May 7, 2009 - John McEnroe sues dealer over a Gorky
COURTHOUSE NEWS SERVICE - John McEnroe and Morton Bender have sued art dealer Joseph Carroll in New York state court for conversion, unjust enrichment and restitution in connection with a Gorky painting in which Mr. McEnroe and Mr. Bender each allegedly own a 50% interest through their dealings with Lawrence Salander (see ARIS News, March 27, 2009, March 15, 2009, February 10, 2009, November 19, 2007, November 6, 2007, November 5, 2007). The complaint alleges that Mr. Carroll acquired the painting in sham transactions with Mr. Salander and thus Mr. Carroll did not acquire legal title to it even as a buyer in good faith under the New York Uniform Commercial Code (UCC).
[ARIS Commentary: The latest lawsuit stemming from the bankruptcy of Lawrence Salander and the Salander-O’Reilly Galleries and now brought by both Mr. McEnroe and Mr. Bender illustrates a larger, developing trend in art law jurisprudence in which consignors and collectors who have been outright defrauded or whose consignment agreements have been breached in other ways are suing downstream buyers (or seeking indemnity from property and casualty insurers under all-risk homeowner’s policies under theft or conversion doctrines) for loss of their artwork based on the theory that the UCC provides little to no protection to buyers who should have been aware of improprieties surrounding the art transaction. As different courts begin to struggle with the limits of voidable title doctrines under the UCC, some courts have carved out “red-flag” exceptions to the traditional UCC protections afforded good faith purchasers for example when the sales price was obviously below market value, the negotiations or procedure of the sale were outside industry norm or controversial, or if no or inadequate steps were taken to verify the ownership history. See Zurich American Insurance Co. v. Felipe Grimberg Fine Art, No. 08-1300, 2009 U.S. App. LEXIS 9937 (2d. Cir. May 7, 2009); Brown v. Mitchell-Innes & Nash, Inc., No. 06-7871, 2009 U.S. Dist. LEXIS 35081, at *7-8 (S.D.N.Y. Apr. 24, 2009).]
May 6, 2009 - Dealer returns painting lost in Nazi-era forced sale
BLOOMBERG - Richard Feigen, a leading New York art dealer, has returned an Italian baroque painting from his personal collection to the heirs of Max Stern, a Jewish art dealer who was persecuted during WWII (see discussion of other art restitutions to Stern heirs, ARIS News, April 21, 2009, November 20, 2008). Mr. Feigen purchased the picture in 2000 from Lempertz auction house in Cologne, Germany, the same auction house that liquidated Mr. Stern’s gallery in 1937.
May 4, 2009 - Fremont settles suit over Ansel Adams prints
THE WALL STREET JOURNAL - Fremont General Corporation, a former mortgage lender, has agreed to allow the California Insurance Commissioner to keep $4.1 million in sales proceeds from a 2008 auction of Ansel Adams prints allegedly owned by Fremont Indemnity Company, an insurer which the State of California took control over in 2003. Several months after the auction, Fremont General Corporation filed for bankruptcy protection. The Commissioner argues that Fremont General Corporation did not have title to or the right to sell the Adams works because it improperly acquired possession of the collection from its insolvent subsidiary.
April 28, 2009 - Hart Galleries owners sentenced to 14 years
HOUSTON CHRONICLE - Mr. and Mrs. Hart, the owners of an art and antique gallery in Houston, Texas, pleaded guilty to stealing more than $4 million from their clients. After filing for bankruptcy in 2003, criminal charges were brought against the Harts for failing to pay consignors for their sold objects.
April 27, 2009 - ABN Amro secures Reijtenbagh art collection
NRC HANDELSBLAD - ABN AMRO secured one of the most valuable paintings by Rembrandt in Mr. Reijtenbagh’s art collection, which was used as partial collateral to secure a €52 million loan with ABN AMRO as well as more than $340 million in loans from Credit Suisse and JPMorgan Chase & Co., who both sued Mr. Reijtenbagh in New York state court (see ARIS News, April 22, 2009, April 17, 2009, April 3, 2009). Although ABN AMRO agreed to seek repayment of the rest of Mr. Reijtenbagh’s debt through his non-art assets, Credit Suisse and JPMorgan Chase & Co. continue to seek reimbursement for Mr. Reijtenbagh’s outstanding loans from missing artworks.
[ARIS Commentary: The Reijtenbagh case illustrates how large, global banks are vulnerable to art title risks (from historical and contemporary theft to traditional liens and encumbrances) when borrowers use their art as security for loan transactions. Bank auditors and loan risk managers should be cognizant of the fiduciary duty to recognize exposure to art title risks. ARIS expects to see increasingly stringent risk management requirements surrounding the global art title risk within financial institutions and from outside auditors both when banks use art as loan collateral and set reserves for these loans and when banks value their own corporate art collections for balance sheet purposes.]
April 26, 2009 - Gideon Welles’ heirs battle over Lincoln artifacts
HARTFORD COURANT - The Welles, Brainard and Smith branches of the family of Gideon Welles, Secretary of the Navy under President Lincoln during the Civil War, are suing each other in Connecticut state court over ownership of historical documents and artifacts discovered in an attic in 2004. In addition, two boxes containing valuable Welles papers were stolen in 2006 and are still missing. The United States National Archives and Records Administration has indicated that the U.S. government will claim title to the official government letters from President Lincoln to Secretary Welles if the stolen papers are found.
April 25, 2009 - More artworks sell in private in slowdown
THE NEW YORK TIMES - Many collectors are choosing to sell their art in private sales to maintain their anonymity (and keep confidential what may be their financial need), to prevent the uncertainty surrounding auction sales and to meet liquidity needs more quickly.
[ARIS Commentary: There has been a systemic shift in the art marketplace with more art being sold in private sales and less art being sold in public auction sales. This change – driven by distressed sellers, who have seen the value of their real estate, stock and other investment holdings collapse – has augmented the lack of transparency in the art market and correspondingly increased buyers’ title risk exposure.]
April 22, 2009 - De Young selling tribal art as family squabbles
SAN FRANCISCO CHRONICLE - As part of the on-going Annenberg family dispute that is the subject of
several court cases in California, Florida and New York (see ARIS News, October
6, 2008), the city of San Francisco and the de Young Museum of Fine Arts have
agreed to sell 76 works from the Jolika Collection of Papua New Guinea art,
which was gifted to the museum by Mr. and Mrs. John Friede, one of the Annenberg
heirs. Proceeds from the sale are earmarked to settle
a portion of the inheritance dispute. Mr. Friede’s half-brother, Thomas Jaffe, however,
opposes the sale of the 76 works as well as the sale of a $10 million Bonnard
painting jointly owned by the heirs.
See also “San Francisco fights to protect Jolika collection,”
Artinfo, April 22, 2009.
April 22, 2009 - Dutch bank challenges JPMorgan, Rijksmuseum over masterpiece
MSN NEWS - ABN AMRO has sued businessman Louis Reijtenbagh in a district court in
Amsterdam to secure Mr. Reijtenbagh’s art collection, which was used as loan
collateral. Mr. Reijtenbagh has allegedly double-pledged his art collection to
both ABN AMRO and JPMorgan Chase & Co. (the latter of which has sued him in the
United States District Court for the Southern District of New York) and has sold
a Dutch Old Master painting to the Rijksmuseum, which had been used as loan
collateral (see ARIS News, April 17, 2009, April 3, 2009).
See also “ABN AMRO joins race for Reijtenbagh art-source,”
Reuters, April 23, 2009.
April 21, 2009 - U.S. seizes Old Master lost in Nazi-era forced sale
BLOOMBERG - United States Immigration and Customs Enforcement seized a 17th century Dutch portrait from a New York gallery and returned it to the estate of Max Stern, a Jewish art dealer persecuted by the Nazis. The seizure marks the first time that law enforcement authorities have seized a WWII Nazi-Era work based on a forced auction sale and follows the ruling in the United States Court of Appeals for the First Circuit (see ARIS News, November 20, 2008) that WWII Nazi-Era forced sales constitute an illegal taking. Although registered in the Art Loss Register database, the work was not identified as stolen. It is unclear whether the London dealer, who sold the work to the New York gallery, will be reimbursed by the prior seller.
April 20, 2009 - Two judges on Madoff case may spur assets battle, lawyer says
BLOOMBERG - The federal judges presiding over Bernard Madoff’s criminal and bankruptcy cases may have divergent approaches to handling Mr. Madoff’s assets including his art collection (see ARIS News, April 14, 2009, January 8, 2009, January 2, 2009). The United States District judge presiding over the criminal case has temporarily frozen more than $100 million of Madoff’s assets. The United States Bankruptcy Court judge has appointed a trustee to manage the collection and distribution of Madoff’s assets to Ponzi scheme victims.
April 20, 2009 - Christie’s sets up corporate sales division
ARTINFO - Christie’s has created a division to assist corporations facing mergers, bankruptcies and insolvency with selling their art collections. The auction house expects sales of corporate art to accelerate in the coming year due to the financial downturn.
[ARIS Commentary: Christie’s new division focused on the sale of insolvent corporations’ art collections and the legal wrangling over dispersal of the Madoff art assets exemplifies the increasing incidence and significance of distressed sellers introducing art into the marketplace. The Madoff criminal and bankruptcy cases also highlight a potential conflict between treating title to artwork purchased with criminally misappropriated client funds as void and bankruptcy court-authorized sale of debtors’ art assets to satisfy creditor claims. In addition to this potential conflict, title defects may predate the debtor’s purchase of artworks and impair clear title despite a bankruptcy court-approved liquidation sale of the work.]
April 17, 2009 - JPMorgan Chase claims rights to Rijksmuseum-owned painting
ARTINFO - JPMorgan Chase & Co. has asserted a financial interest in a 17th century painting by the Dutch master Berckheyde, which was used as loan collateral by defaulting-borrower, Dutch businessman Louis Reijtenbagh (see ARIS News, April 3, 2009). The Rijksmuseum acquired the painting from Mr. Reijtenbagh in September 2008 in what it alleges was a legal sales transaction for full value. The picture is currently on loan to the National Gallery in Washington, D.C.
[ARIS Commentary: The Rijksmuseum’s acquisition of the Berckheyde painting aptly shows how the lack of transparency in the art market adversely affects even world-class cultural institutions. The museum most likely had no knowledge when it purchased the work that Mr. Reijtenbagh, a well-respected financier, had pledged the work as collateral and that it was encumbered by JPMorgan Chase & Co.’s creditor lien. Since the painting is currently on loan to a museum in the United States, if the bank files suit in a United States federal or state court, it will likely ask that the work be seized and the museum prevented from taking the work back to the Netherlands until the ownership dispute is resolved.]
April 16, 2009 - Art dealer claims he was swindled
COURTHOUSE NEWS SERVICE - A Beverly Hills art dealer has sued the seller of a stolen Granville Redmond painting for fraud in United States District Court for the Central District of California. Before buying the work, the dealer attempted to verify that the painting was not stolen by checking with law enforcement authorities and stolen art databases and hired a private investigator. Los Angeles police subsequently seized the picture from the down-stream purchaser.
See also “Stolen painting leads to lawsuit,”
Maine Antique Digest, June 16, 2009.
[ARIS Commentary: The lack of transparency in the art market affects not only individual collectors but also commercial dealers and galleries who buy and sell art as inventory and who, as transaction principals, regularly do not have access to complete or accurate information about prior owners and the provenance history of works given the nature of the art industry. Contemporary art theft (one of many global art title risks) is a $6-billion-a-year industry on the rise, with a significant number of art thefts going unreported to law enforcement authorities and stolen art databases.]
April 14, 2009 - Rothko collector charged in Madoff scandal
ARTINFO - The New York Attorney General has charged Ezra Merkin, an investor and art collector, with fraud for concealing investment of $2.4 billion of his clients’ money with Bernard Madoff. Since 2003 Mr. Merkin has assembled an important collection of Mark Rothko works valued today at $91 million (see ARIS News, January 8, 2009).
See also “Madoff middleman Ezra Merkin charged with fraud for secretly
steering $2.4 billion in investor assets into Madoff’s Ponzi scheme,”
State of New York, Office of the Attorney General, April 6, 2009.
[ARIS Commentary: Fraud charges brought against Mr. Merkin are another example of a financial scam involving a collector with art holdings (in this case valuable, well-known Rothko paintings) encumbered by creditor liens and subject to potential government liens or seizure. Future buyers of Rothko works seeking to take advantage of lower prices from distressed sales and the dip in the art market should be aware of title risks related to Rothko works.]
April 13, 2009 - MOMA sued over German works
THE NEW YORK TIMES - The Museum of Modern Art (MOMA) is being sued by the heirs of the German expressionist artist George Grosz in New York federal district court for restitution of three Grosz works. The complaint alleges that MOMA knew or should have known that the histories of the works trace back to several “sham transactions” involving the estate of the artist’s Jewish art dealer as well as Dutch and German art dealers who laundered art stolen during WWII. MOMA has not presently commented on the pending litigation.
See also “George Grosz’s heirs sue MOMA on paintings,”
Courthouse News Service, April 13, 2009.
April 9, 2009 - Colorado investment manager accused in Ponzi case
USA TODAY - The Securities and Exchange Commission has charged Shawn Merriman, a Colorado investment fund manager, with defrauding clients of $20 million in a Ponzi scheme. Mr. Merriman allegedly used investor funds to purchase nearly 200 artworks by Old Masters such as Rembrandt and Rubens as well as similar collectibles including a vintage automobile and sports memorabilia. Government officials have seized Mr. Merriman’s art collection and $7 million of his assets.
See also “Local money manager faces Ponzi-scheme allegations,”
Denver Post, April 9, 2009.
[ARIS Commentary: The Merriman Ponzi scheme, although on a smaller scale than the Madoff Ponzi scheme (see ARIS News, January 8, 2009), is equally devastating to victimized investors and one of the many financial frauds to come to light in recent months having an impact on the art market. Fraudsters such as Mr. Merriman and Mr. Madoff often used misappropriated client funds to acquire valuable artworks and in turn have created complicated liens and encumbrances on millions of dollars worth of artworks that have since entered or that will eventually enter the art market.]
April 3, 2009 - JPMorgan sues Dutch investor Reijtenbagh over loan
REUTERS - JPMorgan Chase & Co. sued the wealthy Dutch Reijtenbagh family in New York state court seeking a temporary restraining order to enforce its rights to valuable artworks by artists such as Monet, Picasso and Rembrandt used as collateral on a $50 million loan. The bank claims that Reijtenbagh breached the loan agreement by transferring artworks without authorization from the defendant’s apartment in New York to outside of the United States.
[ARIS Commentary: Given the current financial environment, it is increasingly common for individual collectors and corporate or nonprofit entities to use their art as collateral and security to obtain loans (see ARIS News, February 24, 2009). As borrowers – like the Reijtenbagh family in the JPMorgan Chase & Co. case – who have possession of their art used as loan collateral default on their commitments and transfer or sell their art in breach of loan agreements, ARIS predicts there will be an influx of art with undisclosed creditor liens in the market and down-stream, good faith buyers will increasingly and unwittingly acquire artworks encumbered by bank claims.]
March 27, 2009 - Art dealer is charged with stealing $88 million
THE NEW YORK TIMES - Former top New York art dealer Lawrence Salander was arrested and indicted for stealing up to $100 million from collectors, artists and investors. Mr. Salander’s alleged fraudulent behavior includes selling the same art (to which he lacked title) multiple times and double-pledging art as loan collateral, failing to reimburse consignors for sold art, and defrauding art investors, with the implicated artworks spanning from Renaissance Old Masters to 20th Century American works. Mr. Salander and his defunct gallery have been protected by bankruptcy proceedings since November 2007.
See also “New York County District Attorney’s Office, News Release,”
March 26, 2009.
[ARIS Commentary: The Salander-O’Reilly Galleries matter highlights that $88 million to $100 million worth of inventory in the art market, which ties back to Mr. Salander’s and the Salander-O’Reilly Galleries’ activity over a fifteen year period, presents risks of title claims. The financial and reputation-related risks to good faith buyers who purchase works unknowingly tied to Salander-O’Reilly Galleries is heightened when one recognizes the long-standing art industry practice of sellers, through their art advisors, dealers and other agents, withholding their identity from buyers and the cumulative effect of this practice on clear legal title to subsequent buyers.]
March 27, 2009 - A tug of war over Robert Motherwell
THE NEW YORK TIMES - Competing lawsuits were filed in the Supreme Court of the State of New York and the U.S. District Court for the Southern District of New York between the Dedalus Foundation, which protects the legacy of the artist Robert Motherwell, and Joan Banach, former Foundation curator, collection manager and board member. The Foundation alleges that Ms. Banach stole at least 10 works (some of which she sold without authority and some of which she still has in her possession) and is seeking return of the Motherwell works as well as $5 million in compensation plus punitive damages. Ms. Banach alleges that the Foundation unjustly terminated her because she challenged the Foundation President’s judgment about the authenticity of works attributed to Motherwell and is seeking reinstatement of her Foundation position as well as an undetermined amount of monetary damages.
March 24, 2009 - Yale sues to retain ownership of Van Gogh painting
THE NEW YORK TIMES - Yale University has filed a declaratory judgment action in U.S. District Court in Connecticut to quiet title to Van Gogh’s “The Night Café” and to block the heir of the Russian industrialist Ivan Morozov from reclaiming the artwork. The painting was seized during the Communist Revolution and later sold by the Soviet government before being donated to the University by an alumnus almost fifty years ago.
See also “Russian aristocrat’s heir reclaims Van Gogh painting ‘looted’ by
Lenin,”
Telegraph, May 28, 2009.
[ARIS Commentary: The Yale University lawsuit reflects a number of recent trends in art title cases and increasing burdens on museums and other non-profit
institutions, who when discovering artworks in their collections with title defects are seeking more control over the dispute through filing preemptive legal actions to remove clouds over ownership (see ARIS News, February 28, 2008, January 24, 2008, December 7, 2007). In recent years, historical repatriation claims have grown beyond the WWII context to include title claims based on other historical events such as WWI, the Russian Revolution, the Cuban Revolution (see ARIS News, February 25, 2009) and the
Chinese Opium Wars (see ARIS News, March 3, 2009). These cases reflect a growing
global attitudinal shift and increase in title risk exposure for art around the world, are adding to the fiscal pressures on museums and other non-profit entities, and require complex risk-management decisions to be undertaken by management and trustees since the next generation of historical restitution
claims include unsettled international law issues involving reciprocity of state actions and the application of different government’s laws on property, forum non conveniens, choice of law and statutes of limitations.]
March 24, 2009 - New York court orders return of $600,000 book stolen in WWII
BLOOMBERG - The U.S. Southern District Court of New York has ordered a collector to return a 16th century book worth an estimated $600,000 to the German Stuttgart Staatsgalerie. The book, which was taken by a U.S. army captain from Germany during the end of WWII, was purchased for $3,800 in good faith eight years ago from an art dealer in St. Louis, Missouri.
March 24, 2009 - Museum sued for return of rare stone tablet
COURTHOUSE NEWS SERVICE - Edward Low is suing the Ohio Historical Society Museum in Ohio state court for conversion of a rare stone plate, which he found in the ground in West Virginia in 1942. The museum has had physical possession of the tablet since 1971. At issue is whether the plate was gifted to the museum or loaned for research and public display purposes.
[ARIS Commentary: In light of the current debate over the practice of deaccessioning artworks from museum collections (as evidenced by the controversies surrounding the National Academy Museum and the Rose Art Museum (see ARIS News, January 27, 2009)), as well as the long-term fiscal challenges facing museums, the issue of lender and donor restrictions has become increasingly important for non-profit institutions. Museums should be cognizant of title risks and potential claims connected to artworks donated and loaned, especially where there is no documentation of the gift or loan, the gifting documentation is vague or contains burdensome provisions, the loan agreement is for an indefinite period or the artwork is “abandoned” or the subject of “stale loans” where donors and lenders cannot be indentified or located.]
March 19, 2009 - Theft claim halts sale of Zoffany portrait from Versace’s Como villa
THE TIMES - A Johann Zoffany painting in the collection of the late fashion designer Gianni Versace was allegedly stolen 30 years ago unbeknownst to Mr. Versace. Heirs of Major George Maule, who is depicted in the portrait, identified the work from an article publicizing the Sotheby’s London auction. The picture, which had been in Versace’s collection since around 1994, was recently attributed to Zoffany and was not listed in any stolen art databases.
March 15, 2009 - Who owns Arshile Gorky pirate painting?
COURTHOUSE NEWS SERVICE - Morton Bender has filed suit in New York federal court to reclaim his 50% ownership stake in a Gorky painting, as well as monetary damages for conversion and unjust enrichment. Mr. Bender alleges that without his knowledge or consent Joseph Carroll entered into sham sales transactions with Mr. Salander, who owned the other 50% in the work. Edelman Arts, who currently has possession of the Gorky painting, displayed it for sale at the March 2009 Armory Show in New York. It is not known how and when Edelman Arts acquired the painting.
[ARIS Commentary: ARIS predicts that in the coming months and years there will be more litigation against innocent down-stream buyers, who unknowingly acquire artwork with financially-related liens and encumbrances (see ARIS News, February 10, 2009). Edelman Arts, who may or may not have known about Mr. Bender’s alleged 50% interest in the work, intended to sell the Gorky work at the Armory Show.]
March 13, 2009 - Mary Boone sues collector
ARTINFO - Mary Boone Gallery is suing an Ohio collector in New York state court for failing to pay for a work by Will Cotton. The collector allegedly agreed to purchase the work for the discounted price of $32,000 but later tried to cancel the transaction.
[ARIS Commentary: It is not uncommon for buyers to renege on payment of their art purchases after the sale. This occurrence has increased as the financial global downturn has impacted even the wealthiest art buyers. For instance, Sotheby’s sued Halsey Minor for non-payment of three paintings worth $16.8 million (see ARIS News, September 3, 2008). It is, however, unusual for private art dealers and galleries to sue their clients for failing to pay for purchased artworks. Litigation is generally considered a last resort if extended payment terms, exchanges or discounts are not viable options. When buyers default in their payment of artwork, title to the work becomes clouded and uncertain unless and until resolution can be achieved through litigation, settlement negotiations or some other means.]
March 3, 2009 - Bidder refuses to pay, stating protest of looting
THE WALL STREET JOURNAL - The winning bidder of two animal fountainheads allegedly looted from China in
1860 has refused to pay for the works as a form of political protest. The
statues sold for €31.4 million at Christie’s Paris auction of designer Yves
Saint Laurent’s art collection. The Tribunal de Grande Instance in Paris denied
a Chinese foundation’s request to stop the sale in light of its repatriation
claim and ordered the group to compensate the defendants for their legal fees.
Christie’s, who engaged in discussions with the Chinese for many months but
stated that the legal ownership of the fountainheads was clearly confirmed, has
not indicated whether it will sue the bidder for payment, return the works to
the consignor, or offer the works to another buyer most likely at a discounted
price.
[ARIS Commentary: As one art dealer noted, the Chinese animal head case
brings to the forefront the notion that has been brewing for some time in the
art market, that is that people are more sensitive to issues of provenance and
that if a work lacks pedigree, it cannot be sold and there will be problems.
Despite the French court ruling allowing the sale to proceed and the protest bid
made by the Chinese patriot, China has vowed to continue to seek the return of
the sculptures through all necessary channels including litigation and
diplomatic relations. This case presents continuing, difficult political, moral
and legal questions under international and various state laws. It will likely
involve protracted litigation and expensive defense costs irrespective of the
validity of arguments countering China’s title claim to the sculptures, i.e.,
that any applicable international cultural property conventions do not apply
retroactively or that the statute of limitations has passed over 100 years after
the looting.]
See also “China-art sales may drop as bidder refuses to pay,”
Bloomberg, March 3, 2009.
March 2, 2009 - Gagosian Gallery and Chris Burden hit legal obstacle in launch of glittery show
LOS ANGELES TIMES - The Gagosian Gallery entered into an agreement with Stanford Coins & Bullion, a company owned by the alleged fraudster Allen Stanford, to purchase $3 million worth of gold bars through Dillon Gage Group, a rare coin dealer. The gold blocks were to be shown in an upcoming exhibit at Gagosian Gallery’s Beverly Hills showroom; however, as a result of a temporary restraining order freezing Mr. Stanford’s assets obtained by the Securities and Exchange Commission (SEC) in U.S. District Court for the Northern District of Texas, Dillon Gage Group has not sent the Gagosian Gallery the gold bars or refunded the $3 million purchase price.
February 25, 2009 - Fanjul family statement on U.S. Department of State investigation against Bruno Scaioli
THE EARTH TIMES - The U.S. State Department is investigating whether Bruno Scaioli, an Italian-Argentinean art dealer, has violated Cuban sanctions legislation, which bars individuals from trafficking in property confiscated by the Castro regime. The Fanjul family, whose art was seized by the Cuban government after they fled the country in 1961, believes that Mr. Scaioli has at least one of their paintings.
[ARIS Commentary: ARIS predicts that in the coming months and years there will be an increase in historical theft claims related to artworks seized by the Fidel Castro regime after 1959 and sold by the Cuban government on the international art market to raise state funds.]
February 25, 2009 - Huillier indicted and arrested in Scottsdale
MAINE ANTIQUE DIGEST - Robert Huillier, an antique appraiser based in Scottsdale, Arizona, has been indicted and arrested on fraud and theft felony charges for allegedly defrauding approximately 70 individuals out of $2.5 million in cash and property. Victims have reported that Mr. Huillier failed to return consigned property, pay proceeds from the sale of consigned property and reimburse funds invested in antiques and other estate property.
February 24, 2009 - That Old Master? It’s at the pawnshop
THE NEW YORK TIMES - Owners of valuable artworks are increasingly leveraging their art as collateral to secure cash. A number of lenders specializing in high-end art loans have seen their business grow by approximately 40% in the last six months. Loans against art are typically based on a proportion of the art’s valuation with interest rates ranging from 6% to 16%. If the owner defaults on the loan, the lender typically asserts the right to sell the art and collect the proceeds, which can often result in title claims and litigation.
[ARIS Commentary: With more collectors, galleries and artists facing financial challenges and using their art as collateral to obtain much needed cash, buyers should be aware of the risk of inadvertently purchasing art encumbered by creditor liens. Not all lenders maintain physical control and possession of art used as collateral for loans. Moreover, lenders and owners often dispute the term arrangements in their loan agreement. Despite apparent title risks to buyers, owners and lenders, experts predict that there is a real and growing need for art loans in the market.]
February 10, 2009 - Stuart Davis’ son wants Dad’s paintings back
COURTHOUSE NEWS SERVICE - The son of American modernist painter Stuart Davis has sued Joseph P. Carroll, the buyer of 16 of his father’s paintings, in New York Southern District Court for conversion, replevin and unjust enrichment, and is seeking $3 million in damages and return of 8 of the pictures. Mr. Davis alleges that Mr. Carroll knowingly illegally acquired Davis paintings that were on consignment with Salander-O’Reilly Galleries at prices far below fair market value around the time that the gallery was near financial collapse. Mr. Carroll may have already resold the Davis paintings at issue in the lawsuit.
[ARIS Commentary: This is the first widely reported case stemming from the Salander-O’Reilly Galleries bankruptcy in which a consignor is seeking redress from a down-stream buyer after not being paid by the gallery for the purported sale of consigned works.]
February 10, 2009 - Collector says dealer snookered her for a Julian Schnabel painting
COURTHOUSE NEWS SERVICE - A private collector is suing art dealer Mary Dinaburg in New York Southern District Court for fraud, negligent misrepresentation and unjust enrichment, and is seeking compensatory and punitive damages. The collector alleges that Ms. Dinaburg sold her a John Wesley painting for $118,000 and then converted it by reselling it the next day without her approval. Although the collector contends that the resale of the Wesley work was illegal, she accepted from Ms. Dinaburg a $200,000 credit. The collector contends that Ms. Dinaburg induced her to purchase for $290,000 (using the credit plus a cash advance) a Julian Schnabel painting, which is only worth around $100,000.
January 27, 2009 - Brandeis to close art museum, sell Warhol as endowment slips
BLOOMBERG - In light of the financial crisis and economic recession, Brandeis University is closing its Rose Art Museum and selling over 6,000 works in its collection. Most of the collection was donated and consists of contemporary American works by artists such as Jasper Johns and Andy Warhol. The university is taking this unusual step as part of larger cost-cutting initiatives to preserve its educational mission.
January 22, 2009 - Art worth millions confiscated from Australian dealer
ARTINFO - For several months, investors and consignors have unsuccessfully sought to recover money for their sold artworks from Sydney art dealer Ronald Cole. As a result, Australian police raided and seized over 400 paintings worth millions of dollars from Mr. Cole's gallery and private properties. Like many other art dealers, Mr. Cole noted that he is suffering from financial problems in a difficult market.
January 15, 2009 - Auctioneer arrested, felony charges filed at state level
MAINE ANTIQUE DIGEST - Over 80 former clients have filed complaints against auctioneer Timothy W. Conroy for failing to return unsold consigned works and failing to pay sales proceeds. The Attorney General for the State of New York has instituted criminal proceedings against Mr. Conroy for felony grand larceny and breach of a stipulation to pay debts owed to consignors now estimated at over $400,000. Convictions for charges against Mr. Conroy pending in the courts in both Onondaga and Cayuga Counties carry up to seven years in state prison and authorize local authorities to shut down Mr. Conroy's auction business.
See also "Consignors say Conroy owes them money,"
Antique Week, December 12, 2008.
January 8, 2009 - Wary art dealers, collectors swap galleries for cheap storage
BLOOMBERG - Individual collectors, galleries, dealers, museums and other businesses with art holdings are downsizing and cutting costs by storing their art in specially designed warehouse facilities, which charge rent according to square footage. Several art and antiques storage companies have recently expanded and are benefitting from the recession.
[ARIS Commentary: Parties storing their art in warehouse facilities should be aware that art handlers and storage companies may obtain a lien and seize their art pursuant to UCC or state law (after following statutory notice requirements) to satisfy outstanding fees. Warehouse liens will become more prevalent as individuals and entities who had previously sought to reduce expenses by storing their art become insolvent and unable to pay their bills. Buyers should be cognizant of potential title claims brought by parties whose artwork was previously stored, seized pursuant to warehouse liens and sold by storage companies.]
January 8, 2009 - Merkin's art advisor bought expensive Rothkos, lost millions
BLOOMBERG - Numerous collectors have approached Ezra Merkin seeking to buy his $150 million Rothko collection. Mr. Merkin is a New York financier who lost over $1 billion of his and his investor’s funds in the Madoff Ponzi scheme. Several of Mr. Merkin’s former clients have sued him for fraud in New York state and federal court and obtained an order barring him and his funds from withdrawing, liquidating or dissolving assets.
See also "N.Y. judge restrains Merkin from shutting down funds in Madoff lawsuit," USA Today, January 7, 2009.
[ARIS Commentary: Art transactions involving sellers (such as Mr. Merkin) facing liquidity problems and high-stake financial litigation present serious title risks. Such parties may not have the right to sell their artwork or other tangible personal property given the interests and liens of creditors and other aggrieved parties.]
January 2, 2009 - Art imitates crunch, with few exceptions
THE WALL STREET JOURNAL - The economic downturn that dramatically took hold in the fourth quarter of 2008 has impacted the art market broadly – from private dealers to the auction houses as well as the museum community facing fiscal challenges. However, choice works are still realizing record prices. Notably, ownership due diligence is significantly increasing in art transactions. In October 2008, the auction market disclosed for the first time in the sales catalogue that a title insurance policy was paid for by the seller accompanying a work sold at auction in order to mitigate risk for the seller and buyer and to facilitate a higher valuation of the offered work.
January 2, 2009 - Bernie Madoff’s gift to the art market
ART MARKET MONITOR - Despite initial predictions for 2009 as lacking in a bankable supply of quality art sales, high-end works will likely come to market as a result of sellers needing liquidity to settle their estate, divorce or debts. Many well-respected collectors were victims of the Madoff $50 billion Ponzi scheme, and their only liquid asset is art. The bankruptcy of Dreier LLP will also bring to market Mr. Dreier’s and the firm’s estimated $30 to $40 million art collection.
December 10, 2008 - Sotheby’s pulls Belafonte’s Martin Luther King papers from NY auction
HAMILTON SPECTATOR - Three important papers related to Martin Luther King, Jr., consigned by the performer Harry Belafonte, including a handwritten draft of Dr. King’s 1967 anti-Vietnam speech estimated to be worth $750,000 to $1.3 million, were pulled from auction. The King estate alleges that Mr. Belafonte improperly acquired a collection of Dr. King’s papers; Mr. Belafonte argues that Dr. King and others legally gifted him these items.
December 10, 2008 - Dreier update: client funds missing, details on Dreier’s art collection
LAW - Marc Dreier, sole equity partner of the law firm Dreier LLP, may attempt to sell artwork from his personal and the firm’s collection to settle debts arising out of several civil and criminal cases. The collapse of Dreier LLP is expected to involve claims of loan defaults and former clients seeking a return of their escrow funds. The U.S. Attorney’s Office has already filed criminal charges against Mr. Dreier in tandem with charges brought by the Securities and Exchange Commission (SEC) for allegedly defrauding several hedge funds of over $100 million. The SEC has filed a temporary restraining order in the U.S. District Court for the Southern District of New York to freeze Mr. Dreier’s and Dreier LLP’s assets including all of the valuable artworks located at the firm’s headquarters in New York City.
December 8, 2008 - $235,500 demanded for Nazi-looted art
COURTHOUSE NEWS SERVICE - The 1991 buyer of a French cubist painting is suing Christie’s in U.S. District Court for the Southern District of New York for selling the painting, which was allegedly stolen during World War II from the Parisian art dealer Paul Rosenberg. The Rosenberg family has demanded return of the painting and Sotheby’s has refused to sell it. The buyer is seeking to recover the present value of the painting or the $235,000 purchase price plus interest.
November 27, 2008 - In Mexico, an ownership fight sends an art collection into hiding
THE NEW YORK TIMES - Natasha Gelman’s collection of Mexican art, including famous works by Frida Kahlo and Diego Rivera, is the subject of a title dispute in a Mexican court among Robert Littman (an American curator to whom Mrs. Gelman bequeathed by will all of her artwork), Jerry Jung (Mrs. Gelman's cousin who is challenging Mr. Littman’s handling and control of the collection) and Francisco Fuentes Olvera (one of Mr. Jung’s lawyers who purchased under Mexican law the succession rights to Mrs. Gelman’s estate from her half-brother). Last spring, Mr. Littman removed the Gelman collection from the Cuernavaca Museum to an undisclosed location. The parties continue to dispute inheritance and trust and estate issues under Mexican law and whether the lower court judge’s decision wrongly ignored applicable law. Simultaneously, a Mexico City prosecutor has filed criminal charges against Mr. Littman.
November 20, 2008 - Jail sentence for Memphis antique gallery owner who cheated consignors
AUCTION CENTRAL NEWS - The owner of a Memphis gallery, Crump-Padgett Antique Gallery, which filed for bankruptcy in June 2004 in U.S. Bankruptcy Court, has been sentenced to jail for not paying hundreds of clients (both collectors and dealers) for the sale of their consigned jewelry, antiques and other objects, as well as evading state sales taxes. Ms. Padgett owes creditors approximately $1.4 million but is only liable to restitute a fraction of that amount because liquidation of the gallery’s inventory did not satisfy all of the debts owed, and following Tennessee law, the state criminal court judge set restitution based on the defendant’s ability to repay.
[ARIS Commentary: With the weakening art market, it is inevitable that countless dealers and galleries will eventually seek bankruptcy protection. Consignors are increasingly at risk of having a total or partial monetary loss of their property. Cases so far have involved dealers and galleries who, once thought to be financially solid, sell consignors’ artworks before filing for bankruptcy and do not pay the consignors, leaving consignors to pursue remedies for theft and as unsecured creditors in bankruptcy proceedings. Often bankruptcy liquidation sales of galleries’ inventory – which according to bankruptcy law includes consignors’ artworks – fail to raise sufficient funds to fully repay creditors. In addition to placing the consigning owners at financial risk, purchasers who buy previously consigned works (sold by defunct or bankrupt dealers and galleries) are likely to face claims that the work is stolen property whose clear title cannot pass to the innocent buyer following the precedent of Frigon v. Pacific Indemnity Co., No. 05-6214, 2007 U.S. Dist. LEXIS 17813, (D. N.D. Ill. Mar. 14, 2007).]
November 20, 2008 - Court rules painting was ‘stolen’ by Nazis
THE PROVIDENCE JOURNAL - The First Circuit Court of Appeals has affirmed Rhode Island Chief District Court Judge Lisi’s decision to return a Winterhalter painting to the estate of Max Stern, a persecuted German Jewish art dealer. This case is historic because it is the first time a U.S. court has recognized that a forced sale is equivalent to a theft. It will be relied upon as legal precedent by future WWII claimants, as well as the Stern estate to pursue restitution of hundreds of other missing artworks.
November 20, 2008 - The fine art of surviving the crash in auction prices
THE WALL STREET JOURNAL - Over the past few weeks, prices of contemporary, modern and Impressionist artworks decreased by approximately 30%. In addition, the disparity in prices between average and exceptional works has greatly widened. The recent decline in the art market has caused auctioneers and dealers to institute changes to their business models, including making cutbacks to their organizations, seeking to sell only targeted, high-end artworks and putting the risk of sale back onto collectors by not offering guarantees.
[ARIS Commentary: Despite the burst of the art-market bubble, some commentators have suggested that the volume of art sales points to the strength of the art market as opposed to any weakness. There are opportunities for buyers to obtain reasonably priced art at auction or through galleries and dealer. As certain collectors, who have bought a particular artist in bulk or leveraged their collections take financial hits, exceptional artworks will also come to the market, many of which may not have been traded for decades. Buyers will thus have the opportunity to purchase reasonably priced, great artworks and structure sales transactions according to their own terms, including purchasing title insurance to ensure that they acquire clear legal title.]
November 14, 2008 - Suit proceeds against Christie’s auction house over fake Basquiat
LAW - A Supreme Court of the State of New York has allowed Mr. Guido Orsi – who purchased a fake Basquiat work for $185,000 from Tony Shafrazi Gallery, Inc. – to sue Christie’s under theories of fraud and fraudulent inducement. Mr. Orsi alleges that Christie’s listed the work in its February 1990 catalogue as an authentic Basquiat picture with the provenance “acquired directly from the artist” even though the Authentication Committee of the Estate of Jean-Michel Basquiat raised concerns about the authenticity of the work before the sale and had asked Christie’s to withdraw it. If Mr. Orsi prevails, the court indicated that the plaintiff could seek remedies under UCC §2-721 including damages for loss of profits, which could amount to $2 million (the current value of an authentic Basquiat painting), as well as punitive damages.
[ARIS Commentary: This case raises important issues about the relationship among authenticity, provenance and legal title to art. As some commentators suggest, see
The Art Law Blogspot - Fraud on the (art) market?, the case will have far-reaching legal implications because of the liabilities which auction houses and potentially other parties will have for giving private warranties of provenance and opinions of authenticity upon which subsequent purchasers in the chain of title may rely. Although there are legal differences between insuring title versus insuring authenticity, the fact patterns supporting legal title and authenticity are usually interrelated. A third-party guarantee of legal title through title insurance is the only true means to avoid the type of long-term title (provenance) related exposures this case highlights.]
November 13, 2008 - Lehman to sell $8 million of art to pay creditors
BLOOMBERG - Lehman Brothers Holdings, Inc., which filed for bankruptcy last month, plans to sell $8 million of its art warehoused in New York and Paris. As a means to stop art-handlers from seizing the art under New York and French law in order to satisfy overdue bills, Lehman has asked the U.S. Bankruptcy Court to allow Lehman to pay the $20,000 of unpaid handling and storage costs. Barclays PLC, which has acquired Lehman's North American division, holds a right-of-first-refusal lien on all of the artworks held in Lehman's former Manhattan headquarters.
November 10, 2008 - Artworks show up in Beverly Hills pawnshops
ARTINFO - High-end pawnshops in California have seen a surge in their business, including artworks signed by leading artists such as Picasso, Rauschenberg and Warhol. As in the real estate mortgage market, the pawn lending market has experienced decreased redemptions of loans and increased customer defaults.
November 4, 2008 - Auction season opens with little enthusiasm
THE NEW YORK TIMES - As anticipated by dealers, collectors and art advisors, the art market is showing signs of turmoil amid the global financial crisis. The important fall auction season began with mixed results. A handful of works sold above pre-sale estimates including Malevich's "Suprematist Composition," which sold for the record-price of $60 million under a pre-auction irrevocable bid. The majority of works sold far below their estimates, which were set this summer. Many other works failed to sell entirely.
[ARIS Commentary: Initial fall auction results suggest that select works will continue to sell at high prices but that buyers are more tentative in their decision-making process. The market also shows concrete signs that liquidity exigencies are taking hold on the sale-side of the auction market, especially for less than top-tier works, as sellers have become nervous about lukewarm responses to pre-sale estimates. ARIS has seen an influx of artworks in the market that have been used to bridge liquidity needs and are encumbered by a variety of traditional liens, as well as an increasing frequency of these works moving through the private sector, compounding title exposures to buyers.]
October 30, 2008 - Minneapolis Institute restitutes Leger painting
ARTINFO - After a decade of researching the WWII provenance of a Fernand Leger painting in its collection, the Minneapolis Institute of Arts has returned the work to the French heirs of the original owner, Alphonse Kann. The painting (worth an estimated $2.8 million) was bequeathed to the museum in 1961 by a patron who purchased it in the early 1950s from a then-leading gallery in New York. The restitution decision follows the museum's receipt of a claim for the painting in 1997.
October 6, 2008 - A collection of tribal art is embroiled in a modern family feud
THE NEW YORK TIMES - A New York court has ruled that Sotheby's may take possession of 54 works in the Jolika Collection that John Friede used as collateral to secure a $25 million loan from Sotheby’s. The New York court also placed a restraining order on 99 other works in the collection. The 4,000-piece Jolika collection worth $90 million is the subject of on-going litigation in Florida between John Friede and his two brothers and in California between John Friede and the de Young Museum of Fine Arts in San Francisco to whom John Friede allegedly gifted the entire collection.
October 1, 2008 - Wrangling over resales
ARTINFO - The use and enforcement of resale clauses in the contemporary art market are rapidly increasing. A relatively little known practice until recently, these clauses are incorporated into gallery or artist bills of sale for primary market transactions. The clause requires the buyer to offer the work back to the dealer or artist (some clauses are limited to a specific period after the primary market sale such as five or ten years) and prohibits the buyer from reselling the work in the secondary market unless the dealer or artist has first declined to exercise its right of first refusal. Dealers, artists, collectors and advisors hotly debate the merit of such agreements from a market-control standpoint.
[ARIS Commentary: The withdrawal of "Flower Ball Blood (3-D) V," 2007, by Takashi Murakami from auction at Christie’s London in June 2008 highlights the trend of using resale clauses and the risks which this trend poses to secondary market buyers (or possessors by other means of ownership such as by gift or descent) who, due to the non-transparent nature of the art market and existing transaction standards, will not know whether a resale clause is tied to the work and whether it has been honored. The Murakami case remains in litigation in a Tokyo District Court.]
September 23, 2008 - De Young Art Collection embroiled in family feud
ARTINFO - The 4,000-piece Jolika Collection is the subject of a title dispute between brothers (John and Robert Friede and Thomas Jaffe) and the M.H. de Young Memorial Museum. Courts in Florida and California have issued contradictory orders as to which brother owns the works and when the works can be sold. The museum alleges that it owns and acquired title to the entire collection through gifts from John Friede. Mr. Friede, however, who allegedly used the art as collateral for $30 million liens to his brothers, has said that he cannot sell or transfer any of the artwork until the IRS has assessed inheritance taxes owed.
September 22, 2008 - International stand-off over tribal art sale in Paris
ANTIQUES TRADE GAZETTE - The Mexican Embassy obtained a court order halting the auction in Paris of 85 lots of Pre-Colombian objects worth an estimated €5 million. The Mexican government alleges that the works were illegally exported from its territory. The auctioneer accused Mexico of acting in bad faith because almost all of the works came from well-known private collections with fully documented provenances.
September 21, 2008 - Beaverbrook saga goes back to court
THE GLOBE AND MAIL - The heirs of Lord Beaverbrook and the Beaverbrook U.K. Foundation are appealing a judge’s decision granting title to 85 of 133 artworks in Lord Beaverbrook’s hundred-million-dollar collection to the Beaverbrook Art Gallery. The title dispute focuses on whether the artwork was gifted or has been on loan to the gallery since the 1950s and 1960s. Litigation in the case has been on-going since 2006, and the parties have incurred over $5 million in legal costs.
September 15, 2008 - Who owns the artworks of Martin Ramirez?
MAINE ANTIQUE DIGEST - The estate of the artist Martin Ramirez (1895-1963) has filed suit in New York to recover 17 Ramirez works, which a therapist acquired 45 years ago while Ramirez was an adult patient in a California psychiatric hospital. The estate alleges pursuant to California law that no one, including specifically prohibited hospital personnel, could have acquired legal title to Ramirez works while he was involuntarily committed because he lacked the capacity to consent to gift or otherwise transfer his artwork. The therapist, who attempted to sell the works at auction in New York, has filed suit in California seeking a declaratory judgment to quiet title.
September 3, 2008 - Sotheby's sues CNET founder for $16.8 million in fees
BLOOMBERG - Sotheby's is suing Halsey Minor, the founder of CNET Networks Inc., for failing to pay $16.8 million for three paintings, including Edward Hick's "Peaceable Kingdom." Mr. Minor plans to file a counterclaim alleging that Sotheby’s failure to disclose its financial interest in the Hicks work affected the price. Ralph Esmerian had pledged it to Sotheby’s and Merrill Lynch as loan collateral, plus also promised to donate it to the American Folk Art Museum.
September 2, 2008 - Lorello pleads guilty
MAINE ANTIQUE DIGEST - A former state employee plead guilty to stealing thousands of historical documents and artifacts from the New York State Library and Archives. Following an investigation by the Attorney General, Mr. Lorello was ordered to pay restitution to buyers who unknowingly purchased stolen items from him on eBay or at collector’s shows and have returned the stolen items to the state.
August 26, 2008 - Lawsuit over disputed Warhol will go forward
THE NEW YORK SUN - A New York state court rejected John Chamberlain's request to dismiss a lawsuit filed by the former Warhol assistant, Gerard Malanga. The litigation raised questions about the legal title and authenticity of the painting known as “315 Johns.” The court found that the statute of limitations did not bar Mr. Malanga from seeking to recover the painting and/or punitive damages for the alleged $5 million dollar purchase price.
August 25, 2008 - A case of conflicting principles that's as good as gold
THE VANCOUVER SUN - A Canadian court divided title to five rare gold coins between the heir of the purchaser and the heir of the owner (who reported the coins stolen ten years ago) based on evidence of proof of ownership. The parties agreed to ignore the British Columbia law, which provides that good title passes when goods are sold in the open market, because all other Canadian provinces follow the legal principle that one cannot pass better title than one possesses.
August 19, 2008 - Ex-lawyer found guilty in stolen art trial
THE BOSTON GLOBE - A former Massachusetts lawyer was convicted of knowingly possessing six stolen paintings. Mr. Mardirosian stored his client’s stolen paintings in Switzerland for twenty years before agreeing to return (via intermediaries and a shell company) a Cezanne work in exchange for title to the remaining works. The parties dispute whether Mr. Mardirosian legally acquired title to the works in lieu of a finder’s fee or through illegal extortion.
August 18, 2008 - New Jersey makes claim for a Jefferson letter; collector sues for its return
MAINE ANTIQUE DIGEST - Last spring, a letter by Thomas Jefferson was pulled from auction after the Attorney General of New Jersey claimed it was a public record belonging to the state. Former President Jefferson’s letter dated 1807 was addressed to the New Jersey legislature. The consignor sued the auction house to release the letter but the auction house has refused to do so until the parties reach an agreement or a court issues a non-appealable order
August 8, 2008 - North board admits talks about painting's future are at impasse
THE SUN CHRONICLE - A small town in Massachusetts and the local school board disagree on who owns and whether to sell a Russian painting donated over fifty years ago. The donor's family has threatened to sue if the work (worth an estimated $1 million) is sold, even if the proceeds are used to fund school art programs. Officials acknowledge that the painting will not be sold anytime soon given the on-going dispute.
August 4, 2008 - Chief Nazi-loot researcher sees art claims mounting in Germany
BLOOMBERG - The lead German researcher (managing the German government’s agency tasked with helping museums address looted art claims) stated that he expects the pace of restitution claims not to slow down but rather to continue at the same pace over the next 10 years. During the Nazi regime, an estimated 650,000 works of art were plundered and displaced from their original owners.
July 22, 2008 - Estate is owner of stolen paintings
MUSEUM SECURITY NETWORK - A federal judge has ruled that three paintings by Courbet, Hamilton and Hassam stolen more than 30 years ago will be returned to the estate of the heirs of the original owner. The paintings were stolen by gunned robbers from Mrs. Persky’s Rhode Island home in 1976. The successor to the insurance company, which paid the insured for the theft claim, asserted title to the paintings. Other parties involved in the dispute included the estate of the heirs to Ms. Persky’s estate, the alleged good faith purchaser, as well as the lender who had possession of the works for 10 years.
July 16, 2008 - Authorities seize Ferreira collection Lichtenstein
ARTINFO - Federal agents seized a Lichtenstein work from a Los Angeles private collector, who purchased the work in 2007 for $1.3 million from a gallery who had the work on consignment from another local gallery. The painting is one of 30 works owned by Edemar Cid Ferreira (who recently went bankrupt in connection with the collapse of Banco Santos) and according to Brazilian officials is believed to have been illegally exported in a money-laundering scheme. The 2007 purchaser is suing the two galleries for breach of contract for the defective title and encumbrances on the work.
July 10, 2008 - Senate panel close to deal on donations of artwork
THE NEW YORK TIMES - The Senate Finance Committee has proposed amendments to try to loosen restrictions imposed in 2006 on "partial gifts." Partial gifts allow collectors to claim tax deductions for donated increments of artwork promised to be fully gifted over time. Proposed amendments include provisions: Making all partial gifts subject to binding contracts to prevent heirs from reneging on gifts after donor's death, giving collectors 20 years as opposed to 10 years to donate full ownership, permitting subsequent deductions on increased valuations rather than capping valuations at the first partial gift, and requiring the IRS Art Advisory Panel to approve appraisals.
July 5, 2008 - Art theft! Lawsuits! Spielberg!
LAS VEGAS SUN - Norman Rockwell’s "Russian Schoolroom," which was stolen in 1973 from Mr. Solomon, while it was on display at a Missouri gallery; purchased in 1988 at a New Orleans auction by Ms. Cutler; and then sold in 1989 to Mr. Spielberg, represents the inherent problems associated with private indemnities in art transactions. Mr. Solomon only listed the stolen work with the FBI. The New Orleans and Missouri auction houses are no longer in existence, both went bankrupt. Ms. Cutler claims to be a good faith purchaser. Costs in the legal case, involving title to the painting, have already exceeded the work’s current $700,000 value and the case is expected to continue.
July 4, 2008 - Private collectors hit by Nazi art claims
DUTCH NEWS - The NRC Handelsblad Dutch newspaper recently reported that private collectors, not just museums, are increasingly being targeted by claimants alleging that their family’s art was stolen during World War II. Most such collectors bought their art in good faith through regular channels. Since a work cannot be sold once it has been identified as “stolen,” collectors are being forced to return the work, reach a settlement, or litigate.
June 26, 2008 - Suit claims a Warhol is not, well, a Warhol
THE NEW YORK TIMES - Former Warhol assistant, Gerard Malanga, is seeking title to a painting previously thought to have been created by Warhol. Mr. Malanga claims that he and two friends created the work depicting Chamberlain in 1971. He also claims that he lost track of the work’s storage location and was shocked to learn from Mr. Chamberlain that he had sold the work for $5 million dollars in 2004.
June 26, 2008 - Betrayal, theft and a family feud in the art world
MUSEUM SECURITY NETWORK - Chicago police arrested the daughter-in-law of the late op-artist, Viktor Vasarely, for removing hundreds of Vasarely works from a gallery’s storage facility. Ms. Taburno-Vasarely insists the works belong to her and that she was protecting the works from the gallery owner, who was trying to sell them without her authority. Since 1995, the Vasarely heirs and foundation have been involved in litigation in France over title to the bulk of the artists’ works.
June 14, 2008 - A wake up call for the antiquities market
INTERNATIONAL HERALD TRIBUNE - The Association of Art Museum Directors’ June 2008 report has already impacted the art market. The guidelines encourage museums to only acquire an antiquity if they have solid proof the object was outside the source country by 1970 or was legally exported thereafter. In recent auctions, sales of antiquities with well-documented early provenances have grossly exceeded pre-sale estimates. Prices for such works are expected to continue to rise in the next three to five years.
June 8, 2008 - Why the rise of the private museum is rewriting the rule of the market
THE ART NEWSPAPER - Private collectors are increasingly buying art to build their own private museums. This new trend is changing the dynamics of art transactions. Dealers are now giving special access, discounts, and attention to those opening up independent exhibition spaces. Dealers noted, however, that they are mindful of conducting due diligence on private museum buyers, who might say anything to gain access to material or sell works from their collection in the future.
May 30, 2008 - Art deals more often involve art of litigation
LAW.COM - Lawyers are spending more time litigating disputes involving works of art. They attribute this trend to the increased prices for works, art deals spanning international borders and the growing number of new, well-funded collectors. The informal traditions of art transactions involving little more than a handshake are now deemed inadequate protection given the financials and litigious environment of today's art market.
May 22, 2008 - Search continues for Picasso etchings reported stolen from Gallery Biba
PALM BEACH DAILY NEWS - Thieves burglarized and robbed two well-known Picasso etchings from Gallery Biba in Palm Beach, Florida. The two stolen works, "Le Repas Frugal" and "Jacqueline Lisant," are worth an estimated total value of around $450,000. Police are investigating whether the thieves were familiar with the gallery’s layout and inventory.
May 22, 2008 - 19th century painting found in raid
CAPE COD TIMES - Police seized a 19th century painting by Robert Farren from a residential home in Cape Cod, Massachusetts. The homeowner, who is a building inspector, was promptly arrested and charged with two counts of receiving stolen property. Investigators discovered the painting during a raid to recover stolen coins and jewelry, but they believe the painting was part of the same heist. Officials are now attempting to identify the owner of the painting.
May 19, 2008 - Experts fall out over Van Gogh's 'last painting'
GUARDIAN NEWS - An alleged Van Gogh painting stored in a bank vault in Athens, Greece is the subject of an authenticity and title dispute. The picture, which might have been one of the artist’s last paintings, was looted by the Nazis from a French Jewish family and “liberated” by a Greek resistance fighter in 1944. Under Greek law, the work most likely belongs to the current possessor and not heirs of the original Jewish owners.
May 18, 2008 - Switzerland returns plundered Constable painting to Jewish family
EUROPEAN JEWISH PRESS - An art gallery in Geneva, Switzerland, is returning a 19th century painting by John Constable to the heirs of the Jaffe family. The picture entitled "Dedham from Langham" was confiscated from the Jewish collectors, John and Anna Jaffe, in Nice, France and sold at auction in 1943. It was donated by a private collector in the 1980s and has been exhibited at the gallery ever since.
May 1, 2008 - Esmerian kin claim antique jewelry collection isn't his to sell
BLOOMBERG - New York jeweler Ralph Esmerian’s sister and her four children are suing Mr. Esmerian claiming that the special jewelry collection that he pledged as loan collateral to Merrill Lynch is property of the family's trust. One of the most important pieces in the collection allegedly owned by the trust is a diamond brooch once owned by Napoleon III and recently purchased by the Louvre for $10.7 million.
April 24, 2008 - Malevich heirs reach amicable settlement with Amsterdam
ARTINFO - After years of litigation involving a long-standing dispute over whether the 1958 dealer had authority to sell the Russian avant-garde artist Malevich’s collection, the city of Amsterdam and the heirs of the artist have reached a settlement. The heirs will take title to five of the most important works and the rest will remain in the city’s collection.
April 21, 2008 - Put a diamond under stress, and you might crack
INTERNATIONAL HERALD TRIBUNE - Christie’s auction of Ralph Esmerian’s collection of rare jewels, which Merrill Lynch accepted as collateral for $177 million in loans, has been canceled. Mr. Esmerian disputed Merrill Lynch’s low valuation of the jewelry and has filed for bankruptcy, in the wake of breaking his promised gift of Edward’s Hick’s “Peaceable Kingdom” to the American Folk Art Museum to satisfy debts owed to Sotheby’s.
April 14, 2008 - Is street turmoil coloring art market?
THE WALL STREET JOURNAL - Art dealers remain cautious about the strength of the art market. Signs that it might be softening include the fact that Sotheby’s accounts receivables doubled in 2007, allowing buyers more time to pay for their purchases, and it along with Christie’s are still paying high guarantees to secure masterpieces and supply for their big sales.
April 9, 2008 - Should you invest in art?
VILLAGE SOUP - Art is an investment class, which has seen tremendous growth in recent years. However, there are numerous risks associated with holding art as an asset, including its subjective pricing, lack of short term liquidity, as well as complicated legal and tax issues related to estate planning and charitable gifting.
April 5, 2008 - Museum arranges to return stolen art to Italy
THE GRAND RAPIDS PRESS - The Grand Rapids Art Museum in Michigan is repatriating two Italian 14th century panels. The museum acquired the pair in 1947 from a reputable New York art dealer. An article published in 1978 first put the museum on notice that the panels were stolen in 1902 from a 16 panel altarpiece in a church in Abruzzo, Italy.
April 3, 2008 - At odds over art
THE NEW YORK SUN - The philanthropist Eli Broad’s decision to leave his art collection to a private foundation instead of the Los Angeles Museum of Art reflects the tension between museums and wealthy donors over whether donated works should be on public view and whether a donor’s collection should be kept together. Mr. Broad’s announcement illustrates the new trend in creating private family foundations that operate as lending libraries to museums and other educational institutions.
April 2, 2008 - France to cut red tape, provide free loans to revive art market
BLOOMBERG - The French Cultural Minister introduced reforms to increase France’s position in the global art market, which fell to fourth place behind China. She hopes her plan allowing guaranteed minimum prices and interest free art loans will also benefit private and corporate collectors.
April 2, 2008 - Art museums struggle with provenance issues
THE CHRISTIAN SCIENCE MONITOR - Across the country, art museums are struggling with how to handle the continuing problem of acquiring objects or receiving gifted objects, which may have been looted or smuggled and/or have gaps in their provenance history, especially in light of several recent high profile legal actions against museums.
April 1, 2008 - London dealer forced to return Souzas
THE ART NEWSPAPER - An English court ordered a London dealer to return two paintings worth £350,000, which had been missing since the 1990s. The judge found that the dealer failed to meet the burden of proof to establish that he was a good faith purchaser because he did not keep detailed or accurate records about the sales transaction.
March 26, 2008 - Scotland Yard seizes £10m old masters
GUARDIAN NEWS - Scotland Yard seized two works by an 18th century Italian artist worth £10 million, which were illegally exported from Italy without the necessary licenses for important paintings. The Crespi family sold the pictures in 2005 to an Italian dealer, who later sold them to an English dealer, who allegedly sold them to a US buyer.
March 21, 2008 - Mortgage crisis hits cultural institutions
LOS ANGELES TIMES - Several major cultural institutions in California, including the Los Angeles County Museum of Art whose losses are approaching $2 million, have mounting financial problems due to the sub-prime mortgage crisis and resulting soaring interest rates on construction bonds. In most cases, interest rates have more than doubled since 2007.
March 21, 2008 - Painting looted by Nazis is recovered by family of murdered Polish owner
TIMES ONLINE - A 17th century Dutch painting was pulled from a Christie's auction after it was discovered by the Polish Embassy in London that it was stolen from an antique dealer, who was murdered in the Warsaw ghetto. The heirs of the original owner and the consignor negotiated a settlement agreement and the painting is to be sold at Christie's next month.
March 20, 2008 - Art forgery operation broken up by FBI and Spanish police
GUARDIAN NEWS - Seven individuals, including art dealers from Italy, Spain and the United States, have been charged with creating and selling fake prints purportedly by Picasso, Miró, Dalí and Chagall. The international art forgery ring made around $5 million dollars in the sale of thousands of fake works, with fake certificates of authenticity, on eBay and in galleries, including some in Florida and Illinois, to thousands of collectors around the world.
March 19, 2008 - Russia votes to return looted stained glass to Germany
ARTINFO - The Russian lower house voted to return six 14th-century stained-glass windows that were taken from a German church by Russian forces during World War II. The upper legislative house and the president must still approve the bill. For decades, Russia and Germany have argued over what to do with artworks illegally looted during World War II.
March 17, 2008 - Monet, Rodin among masterpieces stolen near Paris, AFP says
BLOOMBERG - Five masked thieves robbed a French art dealer at gunpoint in his home in Le Pecq, west of Paris, France. The thieves took approximately 30 paintings by masters, such as Monet, Cezanne, Corot and Sisley and a sculpture by Rodin. According to police, it is the second time this dealer was robbed.
March 7, 2008 - Museum wants stolen Pissarro returned
ABC NEWS - The Faure Museum in Aix-les-Bains, France has asked a New York woman to return Pissarro’s ”The Fish Market,” which was stolen from its collection in 1981. The current possessor insists that because she bought it in good faith for $8,500 from a US dealer, she should be compensated for returning it.
March 6, 2008 - U.K. art report says 60% of February sale lots missed estimate
BLOOMBERG - ArtTactic, a U.K. research company, reported that 60% of lots from the February 2008 London contemporary art auctions failed to reach their minimum estimates, and ten lots accounted for 70% of total sales at Christie’s and Sotheby’s, which signals a slowing demand in the middle of the market.
March 4, 2008 - 'Peaceable Kingdom' painting by Edward Hicks leaves American Folk Art Museum
ANTIQUES AND THE ARTS - As a result of a lawsuit, Edward Hick’s painting "Peaceable Kingdom" will be sold by Sotheby’s in a private sale to satisfy the folk art collector Ralph Esmerian’s debts. Mr. Esmerian double pledged it as loan collateral to Merrill Lynch and Christie’s and promised to donate it to the American Folk Art Museum.
March 2, 2008 - Inflated art appraisals cost U.S. government untold millions
LOS ANGELES TIMES - IRS audits of museum donations and donors’ tax deductions revealed that the government lost $183 million from inflated appraisals in the last two decades. Experts believe that this represents a fraction of the problem with overvalued appraisals, whose frequency and inflated amounts have grown in recent years.
February 28, 2008 - Untouched by Nazi hands, but still...
THE WALL STREET JOURNAL - Two cases brought by leading museums in New York and Massachusetts may require the federal courts to address whether a "forced sale" involving some type of Nazi coercion is akin to a theft invalidating a current owner's title to their paintings. There is presently no legal definition of a forced sale, and at least two district courts in Ohio and Rhode Island have reached different conclusions about involuntary sales.
February 25, 2008 - Show it or sell it: Museums are urged to put unseen artefacts on the market
THE TIMES - A new policy for England’s museums and galleries will encourage the de-accessioning of artwork. Rather than keep works which are peripheral to a museum’s core collection, The Museums Association says that museums should sell un-exhibited works in their collections. Donors may dislike this policy change because many gifts were made assuming that they would not be sold.
February 23, 2008 - Ruling to come on art collection
THE NEW YORK TIMES - The fate of the Fisk University’s 101 piece art collection will be decided within 30 days. The court recently struck down the University’s $30 million dollar deal with the Crystal Bridges Museum of American Art to sell a 50% stake in the collection as going against the donor Georgia O’Keefe’s wishes. The court must now decide whether the University has forfeited its right to the collection and if so whether to return it to the artist’s estate.
February 22, 2008 - Stolen art turns up in Bristol
EAST BAY RI - Three long lost stolen paintings discovered in the home of a Bristol attorney have sparked a complicated dispute between the attorney, a Barrington art dealer, an insurance company, and the heir to the stolen paintings. The paintings were used as collateral for the attorney’s loan to his art dealer brother, who reportedly was unaware that the pictures were stolen in 1976.
February 11, 2008 - Art worth $163.2M stolen from Zurich museum
USA TODAY - Three masked men stole four oil paintings by Cezanne, Degas, Monet, and Van Gogh worth about $163 million from the E.G. Buehrle Collection in Zurich, Switzerland. There is a $90,000 reward offered for information leading to the return of these works stolen in Europe's second biggest art robbery ever.
February 8, 2008 - A Warhol surfaces and is headed for court
THE NEW YORK TIMES - A SoHo gallery is suing a Brooklyn man, who claims he purchased a Warhol painting at a flea market, to recover the picture, which was stolen from the gallery in 1998. Both parties have claimed title to the Warhol painting and intend to take their dispute to court.
February 7, 2008 - Russians reveal hoard of 46,000 art treasures stolen by Nazis
BLOOMBERG - The Russian government has published on a new website details about 46,000 art works that the Nazis looted from Russian museums during World War II. This information will help scholars, the art market, and law enforcement agencies locate Russia’s missing treasures, which are subject to title disputes.
February 4, 2008 - Tax scheme is blamed for damage to artifacts
THE NEW YORK TIMES - In addition to destroying archeology sites and illegally importing looted artifacts into the United States, the federal investigation of several California museums is focused on potential tax fraud violations. The IRS is investigating whether smugglers and dealers sold artifacts to their clients and then helped them arrange for inflated appraisals and for the items to be donated to museums for inflated tax deductions.
January 29, 2008 - The Russians are right to be nervous
THE TIMES - Russia agreed to participate in an exhibit now on display at the Royal Academy in London because the UK enacted immunity from seizure legislation. But the law may not serve its intended purpose of protecting Russia from claims for property appropriated during the Revolution. English courts are empowered to strike the law if it is deemed incompatible with property rights granted by the Human Rights Act and international law.
January 29, 2008 - Nazi victim's heirs lose patience with Sweden on art
BLOOMBERG - In Sweden’s first restitution case, the heirs of a Jewish businessman are seeking to recover a Nolde painting from Stockholm’s Moderna Museet. In July 2007, the Swedish government told the museum to resolve the claim in accordance with the Washington Conference Principles. To date, the parties have still not reached a settlement.
January 29, 2008 - A history buff uncovers thefts of american history treasures
THE NEW YORK TIMES - Since 2002, a New York state librarian has stolen hundreds of artifacts from the state’s collection and sold them at trade shows and on eBay, which does not guarantee the legality of items advertised or the ability of sellers to sell them.
January 24, 2008 - Fed agents raid California museums for looted artifacts
FOX NEWS - Federal agents raided four California museums searching for looted antiquities that were illegally imported from Southeast Asian and Native American sites. Authorities believe that Robert Olson and the owners of Silk Roads Gallery arranged for the donation of smuggled objects and inflated gift tax deductions for their clients.
January 24, 2008 - MFA sues to bolster claim to disputed 1913 painting
THE BOSTON GLOBE - The Museum of Fine Arts in Boston filed a declaratory judgment asking the court to name it owner of Oskar Kokoschka's 1913 painting "Two Nudes (Lovers)". The museum disputes Claudia Seger-Thomschitz's claim that her uncle, Oskar Reichel, sold the painting under duress in Vienna in 1938.
January 23, 2008 - Art raid swoops on Samsung camp
SHANGHAI DAILY - South Korean officials are investigating whether tens of thousands of paintings stored at Samsung warehouses were purchased using an illegal company slush fund.
January 18, 2008 - Collector returns art Italy says was looted
THE NEW YORK TIMES - After 18 months of heated negotiations, New York philanthropist Shelby White is the first private collector to agree to return to Italy 10 allegedly looted ancient objects, which she purchased in good faith. Italy may still pursue claims for other antiquities in her collection, which were not cataloged for The Metropolitan Museum of Art's 1990 exhibit.
December 19, 2007 - Russia cancels U.K. art show. Cites lack of guarantee
BLOOMBERG - The exhibition, “From Russia”, scheduled to open at London’s Royal Academy of Arts on January 26, 2008, has been cancelled by the Russian government after the British government failed to offer a legal guarantee of immunity from third-party confiscation.
December 7, 2007 - Museums ask New York federal court to reject claim on Picassos
THE NEW YORK SUN - The Museum of Modern Art and the Solomon R. Guggenheim Foundation have both asked a Federal District Court to declare them the owners of two Picasso paintings after lawyers for Julius H. Schoeps requested that the museums return the paintings.
December 6, 2007 - Sotheby's won't sell Salander works
ARTINFO - Sotheby’s, Inc. has filed a notice with the court withdrawing its bid to sell artwork connected to the Salander-O’Reilly Gallery. The withdrawal follows concerns of ownership, voiced by a committee representing the gallery’s unsecured creditors.
November 20, 2007 - Lloyd Webber Foundation wins dismissal of Picasso art lawsuit
BLOOMBERG - A New York Supreme Court Justice ruled that Julius Schoeps cannot sue the Andrew Lloyd Webber Foundation for restitution of a Pablo Picasso painting because Schoeps was not appointed to represent the estate of his great uncle, Berlin banker Paul von Mendelssohn-Bartholdy. Christie's was scheduled to sell the Picasso a year ago when Schoeps sued, claiming that the painting was forcibly sold by his great uncle. Christie’s had valued the painting at $40 million to $60 million at the time it withdrew the painting from auction.
November 19, 2007 - Robert DeNiro says gallery stole father’s paintings
NEW YORK POST - Lawyers for Robert DeNiro are planning to take legal action against Lawrence Salander and Salander-O’Reilly Galleries to recover twelve paintings by Robert DeNiro Sr. These painting were entrusted to Salander-O’Reilly Galleries by Robert DeNiro on consignment. The paintings were allegedly used by Salander-O’Reilly Galleries to settle a $5 million debt with Benucci S.R.L. in June of 2007.
November 6, 2007 - Salander case may change art market
THE NEW YORK SUN - The Salander-O’Reilly case draws mounting attention to the unregulated nature of the art industry and the significant limitations of the Uniform Commercial Code as a way to secure art transactions. Salander-O’Reilly Galleries, LLC, and its owner have filed for bankruptcy protection as a result of creditors having now filed more than fifty-three claims against the gallery and its owner totaling in excess of $43 million.
November 5, 2007 - Salander-O'Reilly Galleries owner files bankruptcy
BLOOMBERG - Lawrence and Julie Salander have filed for personal bankruptcy. Lawrence Salander is an owner of the Salander-O’Reilly Galleries LLC in New York. On November 1, 2007, creditors asked a judge to force the gallery into bankruptcy. Days later, the Salanders’ filed for bankruptcy, claiming over $50 million in personal debt, most of which is owed to other galleries and art institutions. New York prosecutors are also investigating the business operations.
May 19, 2007 - Spielberg faces new battle over Rockwell painting
THE WALL STREET JOURNAL - This past week, art dealers with earlier ties to the work went to court to claim it back. These new developments pit two art dealers -- both of whom claim ownership prior to Mr. Spielberg's acquisition -- against each other. That's throwing the fate of the painting into limbo.
Wednesday, February 22, 2012 
