Art Law – Page 6 – Illicit Cultural Property

Cornelius Gurlitt has died (but leaves a lot of art behind)

The apartment block in Munich where 1500 works were discovered in 2011

Cornelius Gurlitt, the 81-year-old German man who gained prominence in the fall because he was revealed to have a massive amount of artwork has passed away after a heart procedure.

The Financial Times reports:

Several claims have been lodged on behalf of the descendants of people whose works were allegedly stolen under the Nazis. Among them are the heirs of David Friedmann, a German Jewish businessman, who have laid claim to the Max Liebermann painting “Two Riders on the Beach”. August Matteis, the US lawyer in the Friedmann case, said Mr Gurlitt “never had a role in the claim” because the painting clearly belonged to Mr Friedmann’s heirs.His death removed the tax investigation as a cause of delay because any tax owed to the authorities could be covered by the sale of Mr Gurlitt’s other works. “There must be no more paralysis for the sake of delay,” said Mr Matteis.

The NYT reports on the reaction by German officials:

Monika Grütters, who oversees cultural affairs for Germany’s federal government, issued a statement on Tuesday lauding Mr. Gurlitt for allowing the investigation of his collection. “As a private person, he set an example in his commitment to moral responsibility in seeking out fair and just solutions,” the statement said. “For this step, he was rightly accorded recognition and respect.” The German authorities have held the trove at an undisclosed location, citing security reasons for the secrecy. In February, an additional 238 works — some of them said to be top-quality paintings — were removed from Mr. Gurlitt’s second home, in Salzburg, Austria, and relocated also to an unnamed location. Mr. Gurlitt was last known to have sold a painting in December 2011, when the “Lion Tamer” by Beckmann fetched 864,000 euros, or $1.17 million, at an auction in Cologne, Germany. The auction house, Lempertz, said it brokered an agreement for some of the money to go to heirs of Alfred Flechtheim, a Jewish art dealer who was forced to leave Germany and died a poor man in London in 1937. Although reporters from around the world camped outside his Munich apartment for weeks after his art collection was revealed, Mr. Gurlitt gave only one interview, to the news weekly Der Spiegel. In that conversation, he revealed little about his life, saying that the only thing he had loved were his pictures.

The question now is what becomes of Gurlitt’s estate, as reported by the Wall Street Journal:

Although that investigation will lapse now that Mr. Gurlitt is dead, fresh hurdles abound, mainly surrounding a simple question: who has inherited Mr. Gurlitt’s estate? Christopher Marinello, a lawyer for the Rosenberg heirs, says the family will continue pursuing the case, but that “we’ll have to wait for the estate process to run its course.” It is unclear, though, whom Mr. Marinello should even contact or who will be handling the estate process.

Given Mr. Gurlitt’s perpetually frail state of health, a German court appointed Munich-based lawyer Christoph Edel as his legal guardian late last year. But Mr. Edel’s position was “voided as soon as Mr. Gurlitt died,” his spokesman, Stephan Holzinger, told The Wall Street Journal. Mr. Holzinger says he doesn’t even know if Mr. Gurlitt has a will and that his own contract will only continue for “the next few days.”

Melissa Eddy & Alison Smale, Cornelius Gurlitt, Scrutinized Son of Nazi-Era Art Dealer, Is Dead at 81, The New York Times, May 6, 2014.

Mary M. Lane, German Art Collector in Nazi Loot Uproar Dies, Wall Street Journal, May 6, 2014.

Stefan Wagstyl, Cornelius Gurlitt, Son of Nazi Era Art Dealer, Dies, Financial Times, May 6, 2014.

An immunity from seizure bill makes museums havens for stolen art?

One of the works at issue in the Malewicz v. Amsterdam immunity from seizure litigation, titled Suprematism 18th Construction, by Kazimir Malevich

In a provocatively-titled op-ed in the conversation, Tess Davis and Marc Masurovsky argue that a proposed bill would make American art museums a haven for stolen art by allowing them to “knowingly exhibit stolen art”. Their argument:

On March 25, backed by the art trade lobby, Republican Congressman Steve Chabot reintroduced the Foreign Cultural Exchange Jurisdictional Immunity Clarification Act to the House of Representatives. On its face, HR 4292 asks Congress to “clarify” a small section of the the law. But in truth, the bill goes far beyond mere clarification.

It would instead undo established US law and policy by allowing American cultural institutions to block legal claims to artwork on loan from abroad. Museums would knowingly be able to exhibit stolen and looted art and antiquities. It would leave the rightful owners without any legal recourse to recover their property in US courts.

This bill is just the latest attempt by the less responsible players in the art market to weaken US law. American legal principles have long held that a thief cannot transfer good title. The receipt, possession, and transport of stolen property is a crime. US legislation has carved out a narrow exception to prevent the judicial seizure of art imported for exhibition, but only in very limited circumstances, which it clearly enumerates. HR 4292 would greatly expand this exception by divesting our courts of all jurisdiction over such objects.

Those are strong statements. And it must be said that the text of the proposed bill, at least by my reading, seems to do just the opposite. It makes it easier for Nazi-era claimants to pursue claims against possessors who send their art on temporary exhibition to the U.S.

It clarifies the concept of “commercial activity”; something needed after a 2005 case, Malewicz v

. City of Amsterdam, which saw heirs of Malevich bringing suit against Amsterdam in federal court in Washington D.C.

Since 1965 the Exemption from Judicial Seizure of Cultural Objects Imported for Temporary Exhibition act grants immunity for temporary exhibitions for material being brought into the U.S. if the loan is in the national interest, and the objects are of cultural significance. Rick St. Hilaire and others have supported this clarification. And on its face the clarification seems necessary. Perhaps what Masurovsky and Davis really want is an end to all art immunizations—but they don’t really come out and say that. Instead they accuse Americn Museums of knowingly exhibiting and gathering stolen art. Though there are certainly examples of this on the extreme margins, the examples that the authors use both cut against their underlying position. The Portrait of Wally litigation never involved Federal immunity, only New York State immunity. And the Koh Ker material was not loaned to the United States, it was acquired or up for auction, and the Federal Prosecutors initiated forfeiture actions.

I am not a provenance researcher, and I am not familiar with how in-depth the State Department grants of immunity checks are, but it seems to me the authors have exaggerated their position. Perhaps I’m missing something, but I don’t see any example of any museum in North America being able to knowingly exhibit stolen material.

Federal Investigation into the Knoedler aftermath

A work once exhibited as a Jackson Pollock

Last week Federal prosecutors in Manhatten revealed more details of the sad demise of the Knoedler gallery. In particular the work of two Spanish brothers and the forger Pei Shen QianThough Knoedler is not mentioned by name, that must be the gallery referred to in the indictment as “Gallery 1”. The indictment contains a long list of art crimes including: wire fraud, money laundering, conspiracy to defraud the IRS, tax fraud, false statements, and conspiracy to commit wire fraud and money laundering. The indictment was unsealed after two of the men in the indictment were arrested in Spain. As reported in the NYT:

The art dealer, Jose Carlos Bergantiños Diaz, who has been sought for many months, was arrested by the Spanish police on Friday at a luxury hotel in downtown Seville, according to the official, who is with the Spanish Interior Ministry in Madrid. He asked for anonymity because he was not authorized to speak publicly.

Mr. Bergantiños’s brother, Jesus Angel Bergantiños Diaz, was also arrested, according to another person with knowledge of the case, who spoke on the condition of anonymity because no charges have been announced in the case. It was not immediately clear whether the United States will seek his extradition as well, but some $33 million netted from the scheme was transferred to bank accounts in his name in Spain.

The Spanish Interior Ministry official said that Jose Carlos Bergantiños Diaz, who had an anxiety attack after his arrest and was briefly hospitalized, was being held by the police in Seville. But he is likely to be transferred to Madrid in the coming days, the official said, where he will appear before a judge pending an expected extradition request from the United States.

The indictment itself alleges:

By knowingly and falsely claiming that the Fake Works were painted by these famous artists, Jose Carlos Bergantinos Diaz, Jesus Angel Bergantinos Diaz, Qian, and Rosales were able to trick purchasers and prospective purchasers into paying tens of millions of dollars in total for many of the Fake Works which, as the defendants and Rosales well knew, were essentially worthless, as the defendants well knew, the Fake Works were created not by famous artists, but by Qian, with guidance from Jose Carlos Bergantinos Diaz, Jesus Angel Bergantinos Diaz, and Rosales. Jose Carlos Bergantinos Diaz, Jesus Angel Bergantinos Diaz, and Rosales also created and refined at least two false provenances (i.e., historical ownership records) for particular Fake Works in order to dupe purchasers into believing that those Fake Works were painted by particular famous artists, instead of by Qian. The defendants earned more than $33 million from the scheme to create and sell the Fake Works. To conceal the illegal nature and origin of the proceeds from the scheme, Jose Carlos Bergantinos Diaz and Jesus Angel Bergantinos Diaz, the defendants, and Rosales worked together to launder the proceeds by transferring the proceeds through foreign and domestic bank accounts that they controlled. In addition, as set forth below, to increase the amount of proceeds he kept from the unlawful scheme, Jose Carlos Bergantinos Diaz, the defendant, unlawfully impeded and obstructed the Internal Revenue Service (‘IRS’) by hiding millions of dollars in his unlawful income from the IRS and by knowingly failing to report the existence of the foreign bank accounts that he controlled or maintained an interest in, as required by law.

You can fool some of the art market, but not the IRS. The tale of the Knoedler is a sad one, it was a storied gallery that had a hand in creating the collections of countless American art museums. I was reminded of this a couple weekends ago when we visited the MFA Houston’s special exhibition of John Singer Sargent, which brings together the Brooklyn and Boston collections of Sargent’s wartercolors. The Knoedler was able to sell one exhibition wholesale to Brooklyn in 1909 and then to Boston in 1912. One imagines the Knoedler was not using a serial forger in 1909, but it was this storied history which perhaps allowed buyers of art to avoid asking uncomfortable questions. If such a storied gallery can make so many egregious ethical and legal lapses, what about other galleries. How can we trust with absolute certainty the authenticity of any work? One may almost feel like Lord Byron in describing the Palace and Prison on each hand as he stood on the Bridge of Sighs.

John Singer Sargent, The Bridge of Sighs, c. 1903–04, translucent and opaque watercolor with graphite and red-pigmented underdrawing, Brooklyn Museum, purchased by Special Subscription. — John Singer Sargent, The Bridge of Sighs, c. 1903–04, Brooklyn Museum.

United States v. Diaz et al., 14 Crim217, Sealed Indictment (S.D.N.Y. 2014).
Julia Halperin, Everything You Ever Wanted to Know About the Knoedler Forgery Debacle But Were Afraid to Ask, Artinfo (2011), http://www.blouinartinfo.com/news/story/753301/everything-you-ever-wanted-to-know-about-the-knoedler-forgery.
William K. Rashbaum, Key Suspect in Art Scheme Is Under Arrest in Spain, N.Y. Times, April 20, 2014, http://www.nytimes.com/2014/04/21/nyregion/suspected-player-in-art-scams-is-arrested-in-spain.html?_r=0.

Klerman on ‘Choice of Law and Property’

One of the stolen Mosaics at issue in AUTOCEPHALOUS GREEK-ORTHODOX CHURCH OF CYPRUS vs.GOLDBERG, 917 F. 2d 278 (7th Cir., 1990)

Daniel Klerman, of the University of Southern California Law School, has a new paper titled “Jurisdiction, Choice of Law and Property” up on SSRN. The piece looks at international choice of law generally, but he argues that the situs rule produces bad outcomes with respect to stolen art disputes. Instead, he argues the lex originis rule produces better outcomes. From the abstract:

Jurisdiction and choice of law in property disputes has been remarkably stable. The situs rule, which requires adjudication where the property is located and application of that state’s law, remains the norm in most of the world. This article is the first to apply modern economic analysis to choice of law and jurisdiction in property disputes. It largely confirms the wisdom of the situs rule, but suggests some situations where other rules may be superior. For example, in disputes about stolen art, the state where the work was last undisputedly owned may be both the most efficient forum and the best source of applicable law.

Victoria Reed on Monuments Woman Ardelia Hall

Ardelia Ripley Hall at a ceremony returning a Rubens to Germany

Victoria Reed (Sadler Curator for Provenance at the MFA Boston) has a republished piece in the International Journal of Cultural Property titled: “Ardelia Hall: From Museum of Fine Arts to Monuments Woman“. From the abstract:

Ardelia Ripley Hall (1899–1979) served from 1946 until 1962 as the Fine Arts and Monuments Adviser to the U.S. Department of State. In this role she oversaw the recovery and restitution of movable cultural property that had been displaced during the Second World War. In spite of her vast accomplishments, almost nothing has been written on Ardelia Hall, and little is known about her life. She began her career at the Museum of Fine Arts, Boston, but personal circumstances led to her resignation in 1941. During the war, she was employed by the Office of Strategic Services. The expertise she established as an art historian working with the Roberts Commission at this time led to her appointment at the State Department in 1946. This essay traces for the first time Hall’s remarkable journey from curatorial researcher to adviser on international art restitution.

Victoria Reed, Ardelia Hall: From Museum of Fine Arts to Monuments Woman, FirstView International Journal of Cultural Property 1–15 (2014).

60 minutes tackles the Gurlitt art hoard

The interesting story is how Gurlitt and his father were able to explain and justify the possession of these works for so many years, else keep it so well-hidden. The 30-year German statute of limitations on stolen art claims now also supports his current possession (though if there is any evidence Gurlitt knew these works were stolen would surely be grounds for challenging his possession).

His lawyers claim that with “clear evidence” Mr. Gurlitt will return works to claimants. Gathering that evidence is of course extremely difficult. And how clear is clear:

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Art law in ‘The Grand Budapest Hotel’

Design and proportion are the things that stand out in any Wes Anderson film. But in his new film it is Art with a capital ‘A’ that stands out. Art is the looming plot engine in Anderson’s excellent new film, “The Grand Budapest Hotel”. The film travels back in time through a series of flashbacks, starting first in 1985 at the grave of a writer who had visited the hotel, then to 1968 when that author dined with the Hotel’s owner, Zero Mustafa. And then finally the film flashes all the way back to the 1930s when Zero was a protégé of Mr. Gustave H. (played by Ralph Fiennes). Many critics have pointed out the whimsical nature of much of the film, how it carries us to a simpler time before the horrors of the Second World War and the holocaust. A prison scene with Fiennes and his jailmates using a “throatslitter” to divide sweets made me laugh out loud, and also a little queasy.

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Cornelius Gurlitt to return art to their original owners

Claude Monet's "Waterloo Bridge", which according to the BBC has not been seen in 75 years — Claude Monet’s “Waterloo Bridge”, which according to the BBC has not been seen in 75 years

Back in November, Germany’s Focus magazine reported that German tax officials had discovered a trove of hundreds of works of art by Matisse, Chagall, Picasso, Renoir and others. They were found in the Munich apartment of Cornelius Gurlitt, the son of an art dealer during the Nazi-era named Hildebrand Gurlitt. Well now it seems the inevitable decision has been made by Gurlitt to return the works of art to rightful owners. This seemed the inevitable result, it was just a matter of whether court action would be necessary to compel the return of many of these objects. And it may still, but for now Gurlitt appears to be making fast efforts to settle claims over these works.

The New York Times reports:

Mr. Gurlitt’s lawyers are in talks to return “Seated Woman/Woman Sitting in Armchair” to the descendants of Paul Rosenberg, a French art dealer whose family recognized the work when it was made public last year.

“The agreement is not yet signed, but it will certainly happen,” Mr. Gurlitt’s spokesman, Stephan Holzinger, said.

Christoph Edel, a lawyer appointed by a Munich court to handle Mr. Gurlitt’s health, financial and legal affairs, told the German broadcaster ARD that more deals were coming. Mr. Gurlitt, 81, who has heart problems, underwent surgery recently and has been slow to recover, leading the court to appoint a legal guardian.

But it is also true that the amount of art Gurlitt has in his possession keeps growing larger. Bloomberg Businessweek reports:

In February, another 60 works of art were found in a house in Salzburg, Austria. A preliminary assessment has found no evidence that the pieces in Austria were stolen or looted by the Nazis, Holzinger said at the time.

The Salzburg portion of Gurlitt’s collection is bigger than was initially apparent and contains 238 art objects, including 39 oil paintings, according to the statement released by Holzinger yesterday.

Of the 39 paintings, seven are attributed landscape painter Louis Gurlitt, who died in 1897 and was the grandfather of Cornelius Gurlitt. Among the other paintings and watercolors are works by Claude Monet, Jean-Baptiste-Camille Corot, Pierre-Auguste Renoir, Eduard Manet, Gustave Courbet, Camille Pissaro, Paul Gauguin, Henri de Toulouse-Lautrec, Max Liebermann, Paul Cezanne and Emile Nolde, according to the statement.

Stephen Evans for the BBC has a video with access to the undisclosed location where much of this art is being stored.

“Beltracchi’s forgeries have made the covers of Christie’s catalogs”

This work sold for 7 million euros in 2006, and is a fake

The art forger Wolfgang Beltracchi was the subject of a lengthy 60 minutes profile last night. It was a reminder of how little safeguards protect genuine works of art from forgeries. Fakes defraud the public and dilute an artist’s body of work. When a staged photo counts as the ‘gold standard’ for provenance, the art trade is in serious trouble.

Beltracchi is reported to have been the most ‘successful’ art forger in recent history. He was caught and prosecuted by German authorities. Titanium White was able to do what the art trade could and would not: determine a fake from the real thing. Here’s an interview with forensic authenticator Jamie Martin:

Bob Simon: You actually take little pieces off of the painting?

Jamie Martin: We take very little pieces. We take only the minimum amount that’s required. Smaller than the width of a human hair.

He uses what is called Raman spectroscopy, which can help detect historically inaccurate pigments. That’s what cut Beltracchi’s career short. He was sentenced to six years in a German prison. His wife, Helene, to four. But the chaos they wrought has not been undone. Now, galleries and auction houses who vouched for his forgeries have been sued by the collectors who bought them.

Why then was Beltracchi so forthcoming to 60 minutes producers?

And no one disputes that they are awfully good. Beautiful. This $7 million dollar fake Max Ernst is being shipped back to New York. Its owner decided to keep it even after it had been exposed as a fake. He said it’s one of the best Max Ernsts he’s ever seen.

Beltracchi spent a year and a half in this grim penitentiary, but is now allowed to spend many days at home, where he is launching a new career. Beltracchi is painting again and is signing his works Beltracchi. He needs to get his name out there, which is probably why he agreed to talk to us. He’s lost everything is now facing multiple lawsuits totaling $27 million.

Art forger Wolfgang Beltracchi’s multimillion dollar scam, http://www.cbsnews.com/news/art-forger-wolfgang-beltracchis-multimillion-dollar-scam/ (Feb 23, 2014).

Continue reading ““Beltracchi’s forgeries have made the covers of Christie’s catalogs””

New York Lawsuit shows due diligence pays, as much as $5m

The Shiva bronze statue which the National Gallery of Australia purchased in 2008 for $5 million

A lawsuit filed in New York State court last week could provide one of the strongest disincentives yet to dealing in looted cultural objects. Subhash Kapoor‘s gallery in New York, Art of the Past, has been sued for a laundry list of private law violations; including “fraud, rescission, unjust enrichment, contractual indemnity, and breach of contract” based on the sale of this bronze statue known as Shiva as Lord of the Dance (Nataraja). The plaintiff is the Australian gallery which purchased this work in 2008.

This lawsuit is exactly what should happen when a purchaser with clean hands purchases a work of art from a dealer who knew that a work of art was looted or stolen. I’ve argued before that acquisitions like this defraud the legitimate trade in works of art, and also corrupt our understanding of history.

Chasing Aphrodite asks:

The NGA lawsuit, to our knowledge, is unprecedented. American museums and private collectors have returned hundreds of looted objects to Italy, Greece, Turkey, India, Cambodia and other countries in recent years. In nearly all those cases, dealers had provided standard warranties guaranteeing good title to the objects. And yet not one museum or collector had filed a similar lawsuit…that we know of.

So why haven’t lawsuits like this occurred with more regularity? Here’s why I think they have been rare. They should be happening every time looted art is repatriated. As any first year law student learns, if someone sells you stolen property, every legal system allows you to bring an action against the launderer of stolen property. But this has not happened in the antiquities trade for a couple reasons. First, many curators and museum officials had too much knowledge of the illicitness of objects they were acquiring. A lawsuit like this would have embarrased institutions like the Getty or the Met or the MFA in Boston by raising uncomfortable question about what due diligence was taken before an acquisition. In this case, it seems as if the National Gallery of Australia is comfortable in defending its due diligence procedures to a court. The NGA alleges in its complaint that it undertook due diligence procedures, while also relying on the warranties given by Art of the Past. But the NGA asked the Art loss register if the statue was stolen, examined letters from the previous owner of the statue, consulted the ‘Tamil Nadu Police website’, checked the records produced by the Archaeological Survey of India, and finally consulted with a bronze expert in India who supported the acquisition.

Perhaps another reason that a suit like this is unique, is the secret nature of the art trade itself. Buyers and sellers are anonymous. But that is changing. When you can trace the path of material through the various purchasers, the market for illicit material shrinks. And that is a very good thing, and why we should all watch this suit in New York closely.

NATIONAL GALLERY OF AUSTRALIA v. ART OF THE PAST INC, Docket No. 650395/2014 (N.Y. Sup Ct. Feb. 06, 2014)