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Art Law

Recent Developments in Art Litigation and Art Finance

Update: Indictment of Freeport King Yves Bouvier

Posted in Art Valuation, Litigation Issues

Earlier this month we posted about the arrest of Yves Bouivier, the high-profile Swiss art broker who was indicted for fraud and money laundering.  Recent reports now confirm that a court has ordered a freeze of all of Bouvier’s assets and the handover of a 1951 Mark Rothko painting.  In addition, Swiss police have conducted raids on two freeports owned by Bouvier.

The freeports have come under scrutiny by regulators in recent years.  They are large, maximum security storage facilities that allow individuals to store expensive valuables while avoiding customs duty and sales tax.

Bouvier is currently being held on €10 million bail and denies all charges.

Stolen Picasso Found in NYC to be Returned to France

Posted in Art Recovery/Theft

Pablo Picasso enjoys the unfortunate distinction of being the artist with the “Most Stolen Art” in the world. Lucky for France, recently a long lost Picasso was found in NYC and is slated to be returned to the French government.

Found in a mysterious package from Belgium, labeled as a Christmas gift worth a mere 20-30£ (the equivalent of $37 USD), the work surfaced in NYC last month. The painting (c. 1911) known as “La Coiffeuse” or “The Hairdresser” was originally exhibited at the Musee National d’Art Moderne collection in Paris. After returning to France from a museum in Germany, where it was on loan, the painting eventually ended up in a storage room in Centre George Pompidou. The painting is reported to be valued well over $2.5 M, which was the painting’s value in 2001 when it went missing from the Pompidou.

Interestingly, the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) division, which is not just border patrolling for safety concerns, assisted in the work’s recovery. Lucky for art lovers, HIS is a division that has been active in the recovery of other Picasso’s and countless other cultural treasures.

High-Profile Swiss Art Broker And Businessman Arrested For Alleged Manipulation Of Prices On Art Market In Global Investigation

Posted in Art Valuation, Litigation Issues

As recently reported here, Yves Bouvier, the high-profile Swiss art broker and businessman, who is head of an international art shipping and storage business, was arrested last week in Monaco in connection with alleged fraud relating to works of art.  The investigation that led to Bouvier’s arrest is believed to have centered on the inflation of prices in significant transactions of art works in which Bouvier was involved as an intermediary.

Among the alleged victims is the family of Dmitry Rybolovlev, a Russian magnate, who is the owner of the Monaco Football Club.  Rybolovlev’s family art collection includes works by renowned artists such as Gauguin, Monet, Picasso, and Van Gogh, and is believed to be worth up to $1 billion.

The amount of the alleged fraud from the suspected inflation or overpricing of art works had not been specified and it remains unclear as to the number of affluent international private art collectors who may have been affected by the alleged fraudulent activity.

The investigation is indeed a global one with the potential to spread across several countries and will likely provide some insight into the secret world of affluent international private art collectors.

“Restoring A Legacy: Rothschild Family Treasures” Exhibit Opens At Museum Of Fine Arts, Boston

Posted in Art Museums, Art Recovery/Theft, Current Art Exhibits

A new exhibition celebrating recent gifts of an exquisite European collection to the Museum of Fine Arts (“MFA”) by the heirs of Bettina Looram de Rothschild, who was a daughter of the original owners Baron and Baroness Alphonse and Clarice de Rothschild of Vienna, opened yesterday.  Bettina Looram de Rothschild’s daughter, MFA Trustee Bettina Burr, is among the donors who have made these gifts to the MFA.  The collection of 186 objects, which was looted during the Nazi era and eventually returned to its rightful owners, consists of European decorative arts, furniture, prints, drawings, paintings, and personal objects, consisting of jewelry and jeweled objects, miniatures, and rare books.

It has been reported that the Rothschild family treasures of some 3,500 pieces from the family’s palaces were discovered by Allied forces in Austria’s salt mines after World War II.  Most of the vast European collection was returned to the Rothschild family after Baroness Clarice de Rothschild traveled to the salt mines to identify the family’s art.

While the complete story of the Austrian Rothschild collection may never be pieced together, Ms. Burr noted in a recent article that about 60 pieces are listed on the Art Loss Register (a private database of lost and stolen art works) and she has “a big file, pages and pages, of 3,500 pieces.”

The Rothschild family treasures of the MFA’s new exhibition are said to evoke “the Rothschild taste,” and have been described by Thomas Michie, the MFA senior curator for European decorative arts and sculpture, as “opulent high-style French 18th-century” and “palatial when all together.”

The exhibition remains open through June 21, 2015.

Top Four Auction Houses With Online Art Trading Platforms Lead Global Online Trade Volumes Capturing $144 Million In Combined 2014 Sales

Posted in Art Finance, Art Intelligence

As recently reported by Skate’s earlier this week, four art auction houses with online art trading platforms, namely, Auctionata, Paddle8, Christie’s, and artnet.com AG, generated a combined $144 million in gross merchandise volume (“GMV”) in 2014, which represents on average a doubling of the volume of global online trade compared to 2013.

Berlin-based Auctionata came out on top with 2014 results that provided for an increase in online auction trade volume over that originally anticipated.  Auctionata captured $41 million in GMV sold, which represents a 148% increase in dollar terms to 2013.  These results catapult Auctionata into the top position as the leading global online art trading platform followed by Paddle8, Christie’s, and artnet.com AG.

Paddle8 and artnet.com AG have yet to publish their results, however, Skate’s closely tracks each firm’s online auctions and expects Paddle8 to report about $37-40 million GMV and notes that artnet.com AG is unlikely to exceed $30 million GMV for 2014.

Christie’s experienced a 60% growth compared to 2013 for its online-only sales in 2014 generating $35.1 million GMV.  For further information on Christie’s results, click here.

It will be interesting to see if these top four players for 2014 remain in their respective positions for 2015.  Indeed, the online art trading platform is quickly establishing itself as the way to collect and sell art in the 21st century.



Sotheby’s Caravaggio Controversy – Sotheby’s Specialists Prevail

Posted in Art Valuation, Litigation Issues

Sotheby’s UK prevailed recently in a court dispute over an Old Master attribution. At the heart of the dispute was a painting entitled The Cardsharps, which Sotheby’s attributed to a follower of Michelangelo Merisi da Caravaggio (1571-1610) and sold for £42,000 in 2006 on behalf of consignor, Lancelot Thwaytes.

Following the 2006 sale, it was suggested that the work was actually painted by Caravaggio himself, and thus valued at £10M. The attribution came from renowned collector and Caravaggio expert, the late Sir Denis Mahon, who declared that the painting was in fact a Caravaggio from 1595. After news of the value of the painting hit the press, Thwaytes commenced a negligence lawsuit against Sotheby’s for failing to consult with Caravaggio experts. Sotheby’s defended the suit on the grounds that many specialists had not agreed on the Old Master attribution (and many specialists remain unconvinced that it is a true Caravaggio). Ultimately the Court concluded that Sotheby’s was not negligent in attributing the painting to a follower of Caravaggio. Specifically, the Court determined “I am firmly of the view that Sotheby’s were entitled to come to the view that the quality of the Painting was not sufficiently high to merit further investigation.” Additionally, the court noted that “there is nothing disclosed on visual examination which should have counteracted Sotheby’s view that the Painting was of poorer quality than the Kimbell Cardsharps [an undisputed Caravaggio original] and did not therefore have Caravaggio potential.”

The court concluded that even if the painting had been sold with a catalog entry detailing the varying views of authenticity, the painting would not have sold for much more than the price obtained in 2006 because the weight of authority was in favor of Sotheby’s follower attribution.

Thus, while this case is evidence that reasonable minds can and do differ, the court’s ruling supports the position that the Sotheby’s specialists were correct in their original cataloging of the work.

Dispute Over Andy Warhol’s Prints of Mao Zedong

Posted in Litigation Issues

In a recently filed lawsuit in the New York Supreme Court, plaintiffs allege that certain defendants failed to deliver six out of a set of ten prints by Andy Warhol depicting Mao Zedong, for which the plaintiffs had allegedly paid in full.

In their Complaint, the plaintiffs — Marc Latamie and DM Fountain, Inc. — claim that they fully paid for the set of prints, yet Benrimon Contemporary delivered only four of the ten prints and, despite repeated demands spanning over a year and a half.

Moreover, the plaintiffs allege that Benrimon Fine Art was offering the same prints for sale to other potential purchasers after the plaintiffs had purchased the prints.

The plaintiffs have asserted causes of action for (i) breach of contract, (ii) tortious interference with contract, (iii) fraud, (iv) conversion, (v) promissory estoppel, and (vi) unjust enrichment.

Read the Complaint here.

Picasso’s Granddaughter Privately Selling Art to Finance Philanthropic Projects

Posted in Art Valuation

Marina Picasso, who inherited nearly 10,000 works of art created by Pablo Picasso – including paintings, ceramics, drawings, etchings and sculptures – is bypassing dealers and auction houses to sell the art to “finance and broaden her philanthropy.”

The New York Times recently reported that Ms. Picasso “has been regularly selling her grandfather’s works for years to support herself and her charities,” however, she seems to be “accelerating” her sale of art and  acting more aggressively to “purge herself of her legacy.”

While the private sale of artwork is not entirely unusual, Ms. Picasso’s strategy of selling an undetermined number of works “one by one, based on need” by word-of-mouth advertising is raising eyebrows in the art market.

Read more about Marina Picasso’s sales strategy and strained family history here.

More Trouble for Former Director of the Salander-O’Reilly Galleries

Posted in Art Recovery/Theft, Litigation Issues

Leigh Morse, former director of the now infamous Salander-O’Reilly Galleries, may be incarcerated again for failing to timely pay restitution to the galleries’ defrauded clients, which include celebrity clients like Robert DeNiro.  It has been reported that more than three years have passed since her sentencing but Morse has only paid $22,000 of the $1.73 M restitution order.  It is not clear why Morse has not done more to make the restitution payments.  However, Morse owns a number of properties with her husband some of which are located in Pennsylvania, a tenancy by the entireties (TBE) state.  Owning property as TBE can be used to shield assets from creditors of just one spouse.  However, TBE designation does not protect against creditors of both spouses on joint debt.  It has been reported that Morse who is the operator of Leigh Morse Fine Arts is suffering financially because of the damage her criminal past has had on her ability to sell art.  Morse is scheduled to appear in court in March.  Hopefully, she will have made some payments by then.

Fate Of The Treasured “Cranachs” Continues – Part 2 And The Act Of State Doctrine

Posted in Art Museums, Art Recovery/Theft, Litigation Issues

As noted in the below post, last week the Supreme Court of the United States (“SCOTUS”) declined to hear an art provenance case, Norton Simon Museum of Art at Pasadena et al. v. Marei Von Saher, which has a rather long history as well as the artworks at issue.  The claims involve the fate of two life-size panels, Adam and Eve (collectively, “the Cranachs”), circa 1530, painted by renowned German Renaissance artist Lucas Cranach the Elder.  The Cranachs are part of the permanent collection of the Norton Simon Museum of Art (“Museum”) in Pasadena, California.

As plaintiff in the initial action filed in the United States District Court for the Central District of California back in 2007, Marei Von Saher claims she is the rightful owner of the Cranachs, which were forcibly purchased by the Nazis from her late husband’s family during World War II.  The district court dismissed Von Saher’s complaint as insufficient to state a claim upon which relief can be granted, and such dismissal led to her appeal before the United States Court of Appeals for the Ninth Circuit.

In a detailed opinion last June, the Ninth Circuit reversed and remanded the district court’s dismissal of Von Saher’s action.  The panel held that because the Cranachs were never subject to postwar internal restitution proceedings abroad in the Netherlands, there was no conflict of Von Saher’s claims with any federal policy on recovered art.  The panel held that Von Saher’s claims against the Museum and the remedies sought did not conflict with foreign policy, and instead this was a dispute between private parties.  The panel remanded the case for “further development” on the issue of whether the litigation of the case implicated the Act of State Doctrine.

Under the Act of State Doctrine, “[e]very sovereign state is bound to respect the independence of every other sovereign state, and the courts of one country will not sit in judgment on the acts of the government of another, done within its own territory.” Underhill v. Hernandez, 168 U.S. 250, 252 (1897).  Further, “Act of [S]tate issues only arise when a court must decide—that is, when the outcome of the case turns upon—the effect of official action by a foreign sovereign.”  W.S. Kirkpatrick & Co., Inc. v. Envtl. Tectonics Corp., Int’l, 493 U.S. 400, 406 (1990).

On remand, even if it is determined by the district court that the transfer of the Cranachs is a sovereign act, the district court also must determine the applicability of any exception to the Act of State Doctrine.  The Ninth Circuit panel recognizes that its remand places the district court in a “delicate position” and although the remand “necessitates caution and prudence, [the panel] believe[s] that the required record development and analysis can be accomplished with faithfulness to the limitations imposed by the [A]ct of [S]tate [D]octrine.”

In the next chapter of the case, in view of the Ninth Circuit’s decision, which remains intact after SCOTUS’ refusal to hear the case, it appears that Von Saher’s claims will encounter further complex legal issues on remand that could terminate the case.

For a detailed background and history of this case and the acquisition of the Cranachs by Von Saher’s late husband’s father, Jacques Goudstikker, click here.