Unexpected closing of Knoedler gallery arouses suspicion

NEW YORK. A Knoedler & Co. rep told Bloomberg the closure of the 165-year old UES gallery was a "business decision" but the unexpected announcement raised eyebrows as it came one day day after GLG Partners Inc. co-founder, Pierre Lagrange, filed suit in federal court against Knoedler and its former director Ann Freedman for allegedly selling him a fake Pollock back in 2007. Attempts by Lagrange to resell the $17m Pollock at auction in 2010 failed as both Sotheby's and Christie's "refused to accept consignment because of concerns about authenticity." The decision to close its doors may indeed be wholly unrelated to the Lagrange lawsuit but it certainly will not flare well in court.

Warhol Art Authentication Board to be dissolved in early 2012

NEW YORK. After a two-month break from blogging, I had no idea what stories I would find upon my return but this one was certainly a surprise. The Art Newspaper has reported that the Warhol Foundation will dissolve its art authentication board (allegedly to focus on the Foundation's charitable and catalogue raisonné efforts) by early 2012. I say "allegedly" because, notwithstanding the fact that it costs $500,000 each year to run the board, it has repeatedly come under fire since its creation in 1995, especially with respect to its virtually monopolistic role in the art market on the question of the authenticity of purported Warhol works. Although in theory the decisions of the board are neither conclusive nor binding, when a work is declared unauthentic, it is tainted to the point of being unsaleable and you can guarantee that Sotheby's and Christie's will not touch it.

The most recent, and perhaps vehement, attack on the board was the Joe Simon litigation which, although a hard lesson in the costs and drama of litigation, raised the serious question of holding the Warhol Authentication Board (and authentication boards more generally) accountable as a result of the power they have to manipulate the market for a particular artist. The Joe Simon litigation was unique too in its novel way of structuring the claim against the Foundation as an anti-trust suit. Of course the key question in any anti-trust suit is not so much the extent to which the defendant has the power to control the market in question but rather if that power has been exploited to the detriment of the users in that market. The other highly criticized decision of the board was its 2010 downgrade of more than 100 Brillo boxes to "copies," despite Pontus Hulten's claim that the boxes had been made with Warhol's express authorization.

Regardless of one's view of the board, most will agree that the Foundation's decision to step away from the market towards a non-market purpose is a positive one for the Foundation, its members and the market. Whereas decisions on authenticity had been private (except where challenged), work on Warhol's catalogue raisonné is a public one which serves "Andy’s legacy and Warhol scholarship." It could be argued that determining whether a work makes it or not into the catalogue is indirectly a market function but because only 6% of works by Warhol are estimated to have undergonen the authentication process and catalogue researchers will review requests to include a work in the catalogue at their own pace, the Foundation's president Joel Wachs is right in saying that "the market will have to take care of itself."

Fighting forgery: Gala-Salvador Dalí Foundation organizes authentication conference (19-21 June)

The Art Newspaper reports that the Dalí Foundation is hosting a conference on the authentication of works and "fighting forgery through the courts" at Dalí’s summer home and museum a few hours away from Barcelona. Scheduled speakers include Judith Goldman, a member of the Andy Warhol Art Authentication Board, and Veronique Wiesinger, Director of the Fondation Giacometti (the Swiss artist having recently been the object of one of the largest scale forgeries in history). For more information, see here (unfortunately registration is now closed). 

Holding the Warhol Authentication Board accountable

WASHINGTON, DC. The Joe Simon litigation against the Warhol Foundation and Art Authentication Board (see here and here) underscored the impact the Board's determinations can have on the value of a purported Warhol. Although, as previously stated, such determinations on authenticity are not conclusive and binding on the market, in practice, where the Board holds that a work is unauthentic, it is tainted to the point of being virtually unsaleable (Sotheby's and Christie's, for example, will not sell a "Warhol" without Board authentication).

Joe Simon's Red Self Portrait

But with such power must come accountability, which requires establishing the legal basis of a claim against the authentication Board. Following this blog's coverage of the Joe Simon litigation, the Washington Journal of Law, Technology & Arts drew my attention to an article they had written about how this particular suit potentially provided "a framework for pleading antitrust claims against authentication boards" since it was the first to overcome the defendant's motion to dismiss. The article discusses the "potential liability under the Sherman Antitrust Act for art professionals who render opinions on the authenticity of artworks" and the standard that may apply at trial. Resorting to anti-trust principles to plead claims of this kind makes sense if you think about it because these boards have the power, through determinations of authenticity, to manipulate supply and the market for a given artist. The article can be found on the Journal's website or accessed directly by clicking here.

LINKS

 
• NEW YORK. Titian may have been the star at the Sotheby's Old Masters sale but he wasn't alone: 16 auction records were set at the sale, which "totaled $90.6 million, just shy of its $91.8 million high estimate." Three key reasons accounting for the Titian beating the previous record for the artist ($13.6m versus the new record of $16.9m) are the exceedingly few Titians remaining in private hands, the  clear provenance of the painting ("A Sacra Conversazione" has only exchanged hands 6 times) and the fact that it's a "multi-figured" painting (generally, price increases with the number of figures depicted). 
  

  

  A Sacra Conversazione, Tiziano Vecelli (circa 1560)

• Donn Zaretsky points us in the direction of a fascinating article in the FT.com about the "prolific and amazingly persistent" forger Mark Landis. Unbelievably, his motivations were not financial - Landis donated the forged works as a tribute to his parents. Equally surprising is that no criminal liability arises from his actions, however "annoying and disruptive," as no loss was suffered by any of the victims (loss is a required element under the criminal fraud statute).

LINKS

• Judith Dobrzynski reports on the newly-created ad-hoc advisory committee to the NY Board of Regents which is intended to aide the Board in coming up with a revised deaccessioning policy (see here on the expiration of the deaccessioning "emergency" regulations last October and the outcry that ensued).
• Art Market Monitor interviews Judith Pearson and Lawrence Shindell of ARIS art title insurance (see here on Argo Group's takeover of ARIS last November).
• Donn Zaretsky summarises the most significant changes to the federal gift, estate and generation-skipping taxes for 2011 and 2012. According to Forbes, the increase in the tax exemption to $5m means "that, except for the super wealthy, the tax benefits of giving through an estate plan have been wiped out."
• Gerard Malanga, former Warhol Factory assistant, is set to finally have his day in court in the longstanding dispute with the sculptor John Chamberlain over the silkscreen titled "315 Johns," estimated to be worth $5m. Malanga claims authorship and restitution alleging Chamberlain never acquired title and therefore did not have the right to sell it in 2000. Testimony given by Chamberlain's wife suggests the sculptor knew the work was not a Warhol; the Warhol Authentication Board though declared it an authentic piece in 2000, paving the way for its sale. The court, however, is not bound by the Board's declaration.

First the former electrician, now the chauffeur. Just how generous was Picasso?

FRANCE. When I read about the French government's seizure of 271 Picassos worth an estimated $79 million from the artist's former electrician pending investigation of their provenance, I initially decided not to cover the story because the likelihood of 271 never-before-seen authentic Picassos making their way into the market seemed so small. Undoubtedly, the story would make a fascinating civil and/or criminal case -- Le Guennec was Picasso's electrician for just 3 years and there are allegedly no written records meaning the decision will ultimately rest on an assessment of the artist's practises. However, the fact that only one of the 271 works was signed and dated, combined with the peculiarity of it all, suggested to me that only a very mild interest by the art market was warranted at this stage.

Then a second related story came to light -- the unexpected withdrawal from auction of several Picassos given by the artist to his former chauffeur and bequeathed to his wife, Jacqueline Bresnu, cousin of Le Guennec -- and I knew then that I had to cover both! The heirs, which include Le Guennec and his wife, decided to postpone the sale unexpectedly without giving any explanation. ARTINFO reports: "Drouot auctioneer Pierre Blanchet told Libération that "there is no problem with provenance or authentication" and that "the sale will probably take place in another three months." However, it is not known whether Claude Picasso, the only heir recognized by the Picasso Administration to have the authority to sign certificates of authenticity [meaning he holds the droit morales for the artist] authenticated the Bresnu collection. Maya Widmaier-Picasso, the artist's daughter, participated in writing the catalogue for the Bresnu sale, copies of which are now."

The market loves a good story and it doesn't get much better than this so expect higher prices than would otherwise be the case if and when any of these works make it to auction.

UPDATE: Warhol Foundation drops counterclaim against Joe Simon

According to Businessweek, "the Foundation [has] decided not to try to recover its own legal costs from the collector because a search turned up no assets." That's $7 million in legal costs that could have gone towards the Foundation's "charitable mission of promoting the visual arts and preserving the legacy of Andy Warhol."

For background, click here.

"It is important the integrity and provenance of established and aspiring artists is not undermined by the deliberate forgery of their endeavours"

A Tracey Emin forger has been sentenced to 16 months imprisonment by the Manchester Crown Court for making "at least 11 forgeries" and selling works on eBay for £26,000. Given the nature of some living artists' works today, a forgery of a contemporary work can be easier to create from a technical perspective than say a fake of an Old Master painting, especially since a forger is far more likely to obtain the same materials living or recently deceased artists use than those artists used centuries ago (fakes are often discovered as a result of forensic evidence revealing that the pigments in a painting were not available at the time the artist was supposed to have painted the work -- see link from "gold standard" fakes post). However, from a provenance perspective, it's far riskier to pass off as authentic a work by a living artist than it is for a centuries-old painting whose provenance may be undocumented or incompletely documented.

In this case, the forger not only chose to imitate the work of a critically-acclaimed YBA who is also a highly public figure, he then proceeded to auction the work in the most public manner imaginable! That's not just risky, it's plain stupid. And particularly "distressing" for Emin since the forger learnt his trade working alongside the artist herself in her gallery in London.

Warhol authentication and a lesson in litigation strategy

NEW YORK. The U.S. justice system is hardly the breeding ground for David and Goliath-type endings so when Joe Simon went up against the Warhol Foundation and Art Authentication Board all guns blazing, it was only a matter of time before "money, power and legal expertise" dictated the outcome of the litigation. Instead of limiting the complaint to challenging the Board's rejection on two occasions of myandywarhol's authenticity, Simon also sought damages and injunctive relief in federal court "alleging anti-trust violations, collusion and fraud." Despite the abrupt, unsatisfactory ending to the three-year long litigation (not to mention the waste in litigation costs), the case should lead to increased scrutiny of the Warhol Foundation's exercise of its leverage in the market. Technically, the Art Authentication Board's opinion on the authenticity of a work is but one more opinion; however, the reality on the market is vastly different as the major players, including Sotheby's and Christie's, will not sell a purported Warhol without Board authentication. The mere existence of the power to manipulate the entire market for Warhols is not, in and of itself, sufficient to prove the unlawful exploitation of such power. Still, given how prolific Warhol's oeuvre is and the fact that there is more than one collector out there feeling hard done-by the Authentication Board and/or Foundation, this may not be the last time the organization has to retain the services of the preeminent legal minds in the country.

UPDATED: Ouch!
Joe Simon intend to abandon his claims against the Warhol Foundation at the next hearing scheduled for November but counsel for the defendant has made a statement making it clear that the Warhol Foundation will continue to pursue its counterclaim against Joe Simon. According to The Art Law blog, the Foundation's attorneys made the following statement:
"The resources Mr. Simon forced the Foundation to expend litigating against these meritless claims would have otherwise gone to funding its charitable mission of promoting the visual arts and preserving the legacy of Andy Warhol. While Mr. Simon may now prefer not to face Defendants’ legitimate counterclaims, the Warhol Foundation is fully committed to pursuing all its legal rights and claims against Mr. Simon to recover the funds it has been forced to waste and give them back to the charitable causes to which they always belonged."

Semantics

What's the difference between a "fake" and a "copy"? And what about an "exhibition-related copy" and an "exhibition copy"? A story on the Warhol Authentication Board's recent report on Hultén’s Warhol Brillo boxes may shed some light. Personally, I'm still a little confused.

Over 10% of "gold standard" forgeries of 20th century paintings went through Christie's

More than 30 paintings collectively worth an estimated £30 million were recently found to be forgeries of major 20th century artworks. Unsurprisingly, the forger's strategy is believed to have been "to create compositions that would relate to titles of documented works whose whereabouts are not currently known." Experts described the forgeries as "gold standard" but some of the works' inauthenticity possibly could and should have been discovered by the leading dealers and auction houses that sold them -- especially since a painting's provenance or history can apparently be discerned from labels or drawings on the back of it. For example, one of the four forgeries auctioned by Christie's had a fake label for "Flechtheim Collection" and it was this very label that aroused suspicions. I don't doubt how seriously the major auctions houses take issues of authenticity and provenance but it seems to me that failing to detect a fake label is hard to excuse and not comparable to not undertaking the (hugely expensive) expert scientific analysis prior to auctioning a painting (plus, I can imagine that having an expert do so is a double-edged sword because you can inadvertently taint a work that was authentic to begin with).

Malborough Gallery sued over allegations that French dealer is selling fake Chinese ceramics

NEW YORK. French art dealer Enrico Navarra is suing Malborough Gallery in federal court for allegedly embarking on a ""systematic campaign" to deny the authenticity of more than 1,200 ceramic plates by famed Chinese artist Chu Teh-Chun and financed by Navarra and his Parisian business." Malborough is purported to have had the artist (aged 90 and currently ailing...) publicly denounce Navarra's plates as fakes. The motive? Money. Malborough had planned to sell a series of 57 vases by Chu for roughly $200,000 each but Navarra's own plans to sell a vast amount of the artist's ceramic plates threatened the gallery's commercial ambitions because it was anticipated that the market would be unable to absorb the increase in supply for these artworks and thus cause the market price to drop. "Meanwhile, Malborough - which has sold about half of its vases - has raised its price for the remainders to $280,000 each." Malborough did not return the New York Post's call for comments.

The fate of a fake

If you want to know what happens to "fakes" when they're recovered by the FBI or the U.S. Postal Service- the two federal law enforcement agencies that handle most cross-border counterfeit art frauds- click here. 
                                                                                                                                                           The distortions that result from forgeries being traded in the market are twofold: (i) the historical record is distorted both directly and indirectly by potentially leading to the rejection of the most unusual (and often most informative) artworks for fear of inauthenticity and (ii) the market's price allocation mechanism is distorted by artificially inflating the supply of works by a given artist. These distortions combined with the fact that fakes are notorious for making their way back into the market make it pretty clear that what federal and state law enforcement agencies should do with a recovered fake is "shred it, incinerate it, [or] stamp it so that no one will be fooled again," as Catherine Begley, a former special agent in the New York office of the FBI, said. However, as the article rightly points out, this is not always possible as a result of judicial control over the destruction of counterfeit property (a court order is required) and the overlap between stolen works and fakes (the law generally requires that a stolen artwork, even if fake, be returned to its righful owner).