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Art Law

Recent Developments in Art Litigation and Art Finance

Long Disputed Painting Reclaimed As An Authentic Rembrandt

Posted in Art Conservation/Restoration, Art Museums, Current Art Exhibits

An intriguing story recently appeared in the International New York Times regarding a long disputed painting that was recently found to be an authentic Rembrandt after all.  The controversial painting was cut down the middle and through its center in the 19th century and was likely to be sold as two Rembrandt paintings.  During the next 40 years or so, the painting was pieced back together with an entirely different canvas and covered with paint to hide the previous separation.

In 1898, the director of the Mauritshuis Royal Picture Gallery (“the Mauritshuis”) in The Hague in the Netherlands displayed the painting in the museum in which it was entitled “Saul and David,” one of Rembrandt’s most significant biblical works.  Decades later in 1969, a leading Rembrandt authority discredited the painting, after which the painting hung for years in the museum by an accompanying label entitled “Rembrandt and/or Studio,” which was in effect a “serious demotion.”

After several years of close examination and meticulous restoration by the museum’s own team of conservators along with support from researchers from various outside institutions (i.e., Delft University of Technology, the National Gallery of Art in Washington, the Netherlands Institute for Art History, and Cornell University), the Mauritshuis has recently “reclaimed the painting as an authentic Rembrandt, saying it was painted in two stages by the master’s own hand, one of hundreds of surviving Rembrandt paintings.”  It is believed that Rembrandt began the work in 1645 and completed it in 1652.

Shortly after revealing its findings early last week, the Mauritshuis opened its summer exhibition entitled “Rembrandt?  The Case of Saul and David.”  The exhibition is focused entirely on this single work, which depicts the “young hero David playing a harp for an elderly King Saul, who is moved by the music and uses a curtain to wipe away his tears.”  According to the museum’s website, the exhibition “shows how, using the latest technology and research methods, fascinating discoveries were made about the creation, the history and the attribution of the painting.”

To see photos of the painting before and after the meticulous restoration and read further on the restoration and attribution process, click here.

 

Auction Houses And Galleries Listing Platforms Face Increasing Competitive Pressure From eBay

Posted in Art Intelligence

This week Skate’s issued its much anticipated Art E-Commerce and Media Report for Summer 2015.  A key finding of Skate’s latest report is that the listing platforms of auction houses and galleries are under growing competitive pressure from eBay as well as the independent digital strategies of their own clients.

As a result of significant efforts made by a number of auction houses on digital marketing, there is a shift in the power balance away from listing platforms to the auctions.

With eBay coming off a strong marketing campaign during this auction season, eBay is poised to gain more traction with the development of its Live Auctions as a sound alternative to listing platforms.  While generously funded by venture capital firms in 2013-2014, listing platforms will be forced to respond quickly or else see their business model become obsolete.

In view of these recent dynamics happening in the art e-commerce and media space, Skate’s expects the following developments summarized below:

  1. Consolidation across all the segments – a series of mergers and acquisitions in art-media and art-listing platforms already this year immediately followed by consolidation in the online art-trading space.
  1. Continued investment by major auction houses in their digital marketing with Sotheby’s just behind Christie’s in terms of digital audience size in Q3 2015.
  1. Response by major galleries to the digital challenge in the same way as major auction houses already did by investing in their own digital strategies.
  1. With eBay pushing into the art-auction listing space and gaining traction, eBay will increase its market share and listing-space dominance further this year in the United States.

It will be interesting to see how these expected developments evolve in the near future.

To access Skate’s  Summer 2015 Art E-Commerce and Media Report, click here.

 

Richard Avedon: Family Affairs at the National Museum of American Jewish History

Posted in Uncategorized

The National Museum of American Jewish History (“NMAJH”) in Philadelphia is featuring a special exhibition titled, Richard Avedon: Family Affairs through August 2, 2015.

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The exhibition features a series of four portrait murals inspired by the revolutionary atmosphere of the 1960s and early 1970s, and a series of 69 portraits, originally published in Rolling Stone magazine on the eve of the 1976 election. The NMAJH will be the only U.S. venue for this exhibition.

Read more about the exhibition here.

Germany’s Clandestine Nazi-Era Art Market

Posted in Art Recovery/Theft

The Wall Street Journal recently reported on a police raid in Germany that focused attention on an art market where collectors and dealers buy and sell works by artists favored by the Nazis. Read the full article here.

In a coordinated raid, German police recently seized nine “lost” Nazi-commissioned sculptures. If the investigation reveals that the works were in fact commissioned by the state and therefore property of the German government, then those from whom the sculptures were seized could face charges. Read more information about the raid here.

The raid shines a light on the black market for Nazi art and paraphernalia, the sale of which is allowed only under limited circumstances in Germany. While tens of thousands of Germans illicitly deal in Nazi paraphernalia, only 30 to 40 people in Germany comprise the Nazi art market.

Nazi art is frowned upon of course because of artworks relationship with fascist regime and most mainstream art galleries and auction houses in Germany avoid displaying and selling Nazi-commissioned artworks.

Picasso Painting Sets Record At $179.4 Million For Artwork Sold At Auction At Christie’s

Posted in Art Valuation

As recently reported by the New York Times, the spring art auction season continues in full swing in New York this time at Christie’s where Pablo Picasso’s 1955 painting entitled “Les Femmes d’Alger (Version ‘O’)” fetched $179.4 million (including fees) at the auction house’s “Looking Forward to the Past” sale of artworks from the 20th century yesterday evening.

According to Christie’s, the winning bid surpassed the auction house’s estimate of $140 million and was the highest on record for an artwork sold at auction.  The previous record setting auction high also occurred at Christie’s and included Francis Bacon’s “Three Studies of Lucian Freud” paid by Elaine Wynn, co-founder of the Wynn casino empire, in November 2013.

Shortly after the winning bid on the Picasso, Alberto Giacometti’s iconic 1947-51 bronze sculpture entitled “L’homme au doigt (Pointing Man)” sold for $141.3 million (including fees), which represented an auction high for any sculpture.

This was the first time that two artworks with estimates of over $120 million each were offered for sale at the same auction.

Van Gogh Painting Fetches $66.3 Million At Sotheby’s Spring Auction

Posted in Art Valuation

Spring art auction season has arrived in New York this month.  Earlier this week a Vincent van Gogh painting from 1888 entitled “L’Allée des Alyscamps” was sold to a private collector from Asia for $66.3 million as reported by the Los Angeles Times.  While the sale of van Gogh’s painting depicting an outdoor scene with people and trees surpassed Sotheby’s estimate of more than $40 million, it did not break the auction record for a van Gogh painting, which was set back in 1990 when the Dutch artist’s “Portrait of Dr. Gachet” fetched $82.5 million.

Sotheby’s auction of Impressionist and Modern Art earlier this week generated a total of $368.3 million in successful bids.

This spring’s art auction season in New York will highlight some other highly coveted works, such as Alberto Giacometti’s sculpture entitled “L’Homme au doigt” (Pointing Man), which will be up for auction at Christie’s on Monday.  The iconic sculpture is estimated to sell for around $130 million.

Royal Battle Over Four Disputed Paintings Simmers in Spain

Posted in Art Museums, Art Recovery/Theft

I recently came across an interesting piece by the New York Times on a “royal battle” of sorts between the renowned Prado and a new royal museum set to open in fall 2016 that can’t quite seem to settle down over in Spain.  The new museum, the Museum of Royal Collections, is demanding that the Prado give up four paintings, two of which are the Prado’s top attractions, namely, Hieronymus Bosch’s “The Garden of Earthly Delights and Rogier van der Weyden’s 15th century depiction of the descent of Christ from the cross.

The Prado’s response to the demand was strong and clear that the new museum would not be receiving the four disputed artworks.

It has been reported that the disputed art works were taken from the royal San Lorenzo de El Escorial monastery and kept for safekeeping with the Prado by government officials nearly 80 years ago during the Spanish Civil War.  The Patrimonio Nacional, the heritage agency that acts as the administrator of all royal holdings (from antiques, artworks to palaces it has lent over the years), however, is insisting that the paintings be returned to it for the new museum.

Understandably, museums throughout Spain are keeping a close eye on the fight over ownership of the four paintings, fearful that pieces with a royal provenance among their collections could be removed next.  Of the about 1,000 works loaned to other museums by the heritage agency, several have already been recalled.  In particular, the agency’s president has signaled an interest in recalling works by such artists as El Greco, Velazquez and Goya out on loan.

Disputes between museums over ownership of art are not exactly new in Spain.  In a past high-profile case back in 2010, the Prado was unsuccessful in its attempt to reclaim Picasso’s “Guernica” from the Reina Sofia Museum in Madrid.

With deep cuts in state subsidies endured by cultural institutions throughout Spain, the heritage agency’s demand for the recall of the paintings is for financial reasons.  The Patrimonio Nacional spent about $178 million in public money on the new museum.  It is hoped that with the addition of some key attractions among its 150,000 works in the royal collection, more visitors will attend.

It appears clear that the disputed artworks belong to the agency’s royal collection as even the Prado lists them as being on “temporary loan.”  Bosch’s work described as an “ambitious symbol-laden tryptich by the Dutch medieval painter,” was acquired by King Philip II and presented to the monastery in 1593, where it hung for 340 years until it was sent to the Prado for restoration in 1933 and then put on loan for safekeeping in 1936.  As for the van der Weyden painting, Maria of Hungary acquired the work and left it to her nephew King Philip II.  The painting was given to the monastery in 1574, where it remained for 362 years until it was sent to the Prado for safekeeping in 1936.

The disputed paintings, however, remain in the Prado’s possession, which has “forcefully pressed an emotional claim” as well as its “trump card” as the most popular museum in Madrid, receiving 2.5 million visitors this past year.

If you are wondering what the royal family thinks of all this, think no more as it has wisely stayed out of the dispute.  The Spanish deputy prime minister has indicated that the dispute is over and that the paintings will stay – even if that is so, it is apparently not evident to the two “bickering institutions.”

In recent weeks, tensions surfaced again as the agency offered previews of its new museum, which is designed to blend in with the architecture of the nearby royal palace.  The latest “skirmish” took place when the Prado attempted to extend the well-received van der Weyden exhibition a month past its scheduled closing of June 28, but its request was refused.  In recent days, a number of government meetings have taken place in an effort to work out a solution, however, the Prado would not compromise.

I intend to follow this intriguing story as I am very interested in how it all turns out between the two institutions.

The Future of 1031 Exchanges: A Continued Tax Break For Art Investors?

Posted in Art Finance

The International New York Times recently reported on a “little-known” provision in the federal tax code, referred to as a “like-kind” or 1031 exchange (named after the section of the tax code that allows it), which has become an increasingly used tactic among high-end art buyers who are seeking to defer or sometimes avoid federal taxes when upgrading their art work to more elite and marketable artist names.

The exchange tactic essentially enables an investor to defer paying 28 percent capital gains tax on sales of art and other collectibles, such as stamps and coins, by applying the profits from one work toward the purchase of a similar one.  Some liken the process to a no-interest loan from the government in which the investor has access to the money saved for a period of time until the asset is sold.  Two strategies that have made the tax break an attractive tool for art investors in estate planning in which they can avoid capital gains taxes include holding the art work bought with money from a previous sale until they pass away or donating it to a museum.

The use of the tax break has significantly grown in response to soaring prices for art and the increasing number of savvy investors, often from the real estate industry or Wall Street, who tend to view paintings and sculptures as “tradable commodities[,]” according to experts.

The Obama administration has taken notice and is seeking to eliminate the tax break for exchanges of art and other collectibles, which has undoubtedly spread alarm throughout the art world.  The current administration’s focus on 1031 exchanges suggests that a sizable amount of tax revenue is at stake.

Opponents of like-kind exchanges assert that such exchanges were initially intended to avoid the penalization of tax payers whose economic position did not change when assets were exchanged.  Opponents view the exchanges as sophisticated “tax dodges” exploited by investors that were never intended to be a tax tool for affluent art buyers.

On the other hand, proponents of the exchanges say the re-channeling of profits into new investments helps the economy with the promotion of growth and job creation.  Specifically, exchanges stimulate activity for art auction houses, art galleries, and their commissions, as well as financial professionals (CPAs, etc.) and art shippers – a lot of people upstream and downstream who are ordinary working people.  Proponents assert that the 1031 exchanges are based on the principle that it is unfair to tax a “paper” gain, if an investor is simply selling an asset and is quickly reinvesting the profits into the same kind of activity.

It is estimated that the elimination of 1031 exchanges could in some situations reduce gross domestic product by about $8 billion annually, according to an Ernst & Young economic study for the Federation of Exchange Accommodators.

The use of the tax break is expected to continue to grow while the art market remains confident and steady, and where buyers purchase art as an investment, not for aesthetic pleasure, according to experts.  It will be interesting to see what the future holds for 1031 exchanges and the use of same by art investors in the next few years.

 

 

 

Jasper Johns’ Longtime Assistant Sentenced To Prison For Stealing The Celebrated Artist’s Art Work And Profiting $4M From Same

Posted in Art Recovery/Theft, Litigation Issues

In the art news this week, it was reported that celebrated artist Jasper Johns’ longtime assistant James Meyer was sentenced to 18 months of prison by a Manhattan Federal Judge on Wednesday for stealing and profiting from the sale of 37 of Johns’ art works in excess of $4 million.  Meyer was also ordered to pay $13.4 million in restitution as well as forfeit nearly $4 million to the government.

The remorseful assistant had admitted to taking 83 art works from Johns’ file drawer at the artist’s art studio in Connecticut during the period from September 2006 to February 2012.  Meyer had taken more than half of the art works to a Manhattan art gallery to sell without Johns’ knowledge, according to prosecutors.  The art works had yet to be completed by Johns, however, Meyer represented to the gallery owner that they were “finished works” and “gifts” from the artist.  Meyer even went so far as to allegedly create fictitious inventory numbers to give the appearance that the stolen art works were finished works.

The Manhattan art gallery (unidentified by prosecutors) ended up selling 37 of the paintings for nearly $10 million from which Meyer profited in excess of $4 million for his cut.  Under a plea agreement, Meyer had faced 37 to 46 months in prison, but because the Federal Judge believed Meyer to be a “good” person who was genuinely remorseful, Meyer was given a break with the 18-month sentence.

The former trusted assistant had worked for Johns for nearly 30 years from 1985 until his arrest in 2013.

 

Art Prevails Over New York’s Statutory Privacy Law

Posted in Litigation Issues

As recently reported by Artnet News, the New York State Supreme Court, Appellate Division ruled in favor of New York based fine arts photographer Arne Svenson and affirmed the Supreme Court’s decision that Svenson’s photographs of his Manhattan neighbors going about their everyday lives in their homes through open windows were protected under the First Amendment “in the form of art.”

Svenson garnered a significant amount of attention and controversy back in 2013 when his exhibition “The Neighbors” opened at a New York art gallery that was followed by legal action.  Svenson’s neighbors had learned that the photographer had been taking pictures of them inside their apartments using a telephoto lens, without their consent.

A couple of the subjects shown in the photographs originally filed a complaint in the New York Supreme Court back in May 2013 on behalf of themselves and their minor children claiming that Svenson had photographed them and their children without their consent and arguing that they were “frightened and angered by defendant’s utter disregard for their privacy and the privacy of their children,” and further that the photographs were used for commercial purposes for promotion of an exhibition where they would be available for purchase and were also available for purchase online, thereby constituting advertising and trade.

The Supreme Court ruled in Svenson’s favor in August 2013 and the plaintiffs appealed shortly thereafter in September of that year.

In upholding the lower court’s ruling, Justice Dianne T. Renwick of the Appellate Division acknowledged that the subjects in the photographs were unaware that they were being photographed and acknowledged the limitations of New York’s statutory privacy law in redressing this type of “technological home invasion and exposure of private life.”  The court found, however, that the type of “invasion of privacy” that occurred in this situation is not actionable because Svenson’s use of the images “constituted art work” and hence were not considered “use for advertising or trade purposes” under the applicable New York privacy statute.  New York’s right of privacy statute essentially prohibits the use of a person’s likeness for commercial purposes without permission.

Justice Renwick further wrote “however disturbing” Svenson’s conduct may be with the publishing of the subject photographs as works of art, “without any further action toward plaintiffs,” there was no viable claim for “violation of the statutory right to privacy.”

While the fine art photographer’s actions may be legal for now, Justice Renwick believes that legislators need to review this “troubling” issue and possibly draft legislation that prohibits it in the future.  In particular, Justice Renwick writes “many people would be rightfully offended by the intrusive manner in which the photographs were taken in this case.  However, such complaints are best addressed to the Legislature.”

Svenson’s exhibition “The Neighbors” is scheduled to open at the Museum of Contemporary Art in Denver in February 2016.