Leila Alexandra Amineddoleh has posted an abstract of her latest piece, which appeared in the Spring issue of the Cardozo Arts & Entertainment Law Journal. Amineddoleh, as many readers likely know, teaches art and cultural heritage law as an adjunct Professor at a good portion of New York’s law schools, including I think recently with St. John’s and Fordham. She also is a Partner and co-founder of her own art and cultural heritage law firm, Galuzzo & Amineddoleh.
The authorship of artwork greatly affects its value. For this reason, authentication in art is a complex and sometimes contentious process. This paper examines the history of art authentication, due diligence to ensure that purchasers are not buying forgeries, complex cases without clear-cut answers, and legal tools available to buyers after a forgery has been purchased.
Amineddoleh, Leila Alexandra. “Are You Faux Real? An Examination of Art Forgery and the Legal Tools Protecting Art Collectors.” SSRN Scholarly Paper, May 26, 2015. http://papers.ssrn.com/abstract=2784963.
In case you haven’t seen it yet, 60 minutes examined the rapid fall of the Knoedler Art Gallery in 2011. The piece does a thorough job of giving background on the Knoedler Gallery, the role of the Cataloge Raisonne, and scientific testing.
I found particularly interesting this exchange between Anderson Cooper, and Domenico de Sole, one of the collectors, and the chairman of Sotheby’s which underscores the role of reputation and trust in the art market:
Anderson Cooper: Do you feel you did enough due diligence as a buyer?
Domenico de Sole: My due diligence was to go to the best, most prominent gallery in the United States dealing with a person with a stellar reputation, and pay a price that was reasonable, it was fair.
Domenico de Sole was the person who bought that $8 million fake Mark Rothko and told us he believes Knoedler Gallery and its President Ann Freedman either knew or should have known that this lucrative collection could not possibly be genuine. Greg Clarick is his attorney.
Greg Clarick: The red flags began with the notion that Glafira Rosales, who was an unknown person to Knoedler, who Knoedler never investigated, came in and she started delivering what turned out to be an endless stream of never-before-seen paintings was enough to raise a huge red flag.
Anderson Cooper: Strangers don’t walk off the street into a gallery saying that they have access to a never-before-seen collection of some of the greatest masterpieces
Greg Clarick: That’s right. Second, the works had no provenance.
Anderson Cooper: No chain, no history?
Greg Clarick: They had no history. They had no documents.
Anderson Cooper: So there was no evidence these paintings had ever been painted by the artists?
Greg Clarick: That’s correct.
Not only that, there were no bills of sale, no insurance records, no shipping documents, and no museum exhibitions for any of the paintings. Greg Clarick told us the gallery had motivation to overlook the paintings’ shortcomings.
Greg Clarick: Over the period of this fraud, Knoedler sold these paintings for about $67 million. Knoedler made over $40 million in profit from selling these paintings. And at the same time, Knoedler made essentially no money at all from selling other paintings.
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.