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Taking on Art Fraud

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Taking on Art Fraud www.plaintiffmagazine.com JANUARY 2011 americanartgallery.com allposters.com allart.biz Taking on art fraud With the advent of scams executed on the Internet, art law has become a niche for intellectual- property attorneys, but focuses on the tort of fraud BY ANAYAT DURRANI “It is not a matter of painting life, it’s a that a lawyer working for the third largest matter of giving life to a painting.” firm in Sacramento was behind the elabo­ In May 2000, a 1952 orange and rate scheme that took Internet art fraud Richard Diebenkorn was an American green Diebenkorn painting took on a life to a new level. modernist painter in the postwar era. of its own during an eBay auction, attract­ Lawyer Kenneth Walton said when Raised in the San Francisco Bay Area, he ing a closing bid of six figures, one of the he started selling art on eBay, “It wasn’t followed the California school of abstract highest bids online for artwork. Except, it with the intent of doing anything ille­ expressionism, and is most well-known for wasn’t a real Diebenkorn painting. It was gal.” An old Army buddy named Ken his “Ocean Park” series begun in 1967 and a fake. Fetterman, who had been selling art on extending almost 20 years. Diebenkorn When art experts and dealers got eBay for years, introduced him to the passed away in Berkeley in 1993 leaving wind of the historic eBay auction and the concept. Soon they enlisted the help behind his legacy as America’s premier New York Times broke the story on their of a third person, Scott Beach, to 20th century abstract and figurative front page, the scam began to quickly un­ help boost bidding by placing what is painter. He was once quoted as saying, ravel. Eventually it would be discovered called “shill” bids. In a year of eBay art Copyright © 2011 by the author. For reprint permission, contact the publisher: www.plaintiffmagazine.com 1 www.plaintiffmagazine.com JANUARY 2011 auctions, Walton admits he grossed looting and trafficking worldwide – has legal system provides many options for about $60,000. Anxious to push his estimated losses of $8 billion annually. dealing with art forgeries. She said defen­ wins even higher, Walton began comb­ The FBI’s Art Crime Team, started dants can face criminal prosecution ing antique sales searching for his next in 2004, has 13 special agents, and is sup­ under federal laws, including the Racket­ big score. ported by three special trial attorneys for eer Influenced and Corrupt Organiza­ He came across a “great big wild prosecutions. The Art Crime Team also tions Act (“RICO”) and, where applicable, abstract painting” that resembled runs the National Stolen Art File, a federal wire fraud or mail fraud statutes. Diebenkorn’s style and signed the paint­ computerized index of reported stolen “Defendants may also be prosecuted ing “RD52” to pass it off as authentic. art and cultural properties for the use of under state criminal laws that prohibit Practicing what he called “the naïve seller law enforcement agencies worldwide. fraud and forgeries,” said Werner, who strategy,” he pretended he had found the The FBI or US Postal Service han­ posts on the firm’s art law blog. “Art for­ painting at a garage sale in Berkeley and dles most counterfeit art cases, largely be­ gery may also be subject to civil sanctions, that his wife had put the ugly painting in cause the fraud is carried out across state including liability under the Federal the garage where his son put a hole in it lines. Most charges are for mail fraud or Trade Commission Act and state with his big wheel. With the username wire fraud. However, investigating and statutes concerning fraud, material “Golfpoorly,” he claimed he knew noth­ prosecuting art forgeries can be difficult misrepresentation, etc.” ing about art and listed the painting with because to charge mail or wire fraud, a Copyright is the legal right that a close up photo of “RD52” on eBay for seller’s intent to deceive the buyer must artists have as it pertains to how their 25 cents. With the help of shill bids, the be proven. work is used or reproduced. Artwork is painting skyrocketed to $135,858. A soft­ Practice of art law growing protected by copyright as soon as an artist ware executive in the Netherlands was the creates it. Copyright protects an artist’s winning bidder. The practice of art law is a growing right against piracy or unlawful use and But this time the scam went too far. field among lawyers and encompasses allows for additional income from its re­ Walton and Beach plead guilty in Sacra­ multiple legal practice areas as they apply production for the artist. Even so, copy­ mento federal court to wire and mail to the arts. Art law overlaps other areas right remains a looming problem for fraud. Court records reveal Walton held such as contracts, tax, business law, intel­ artists, particularly online where artwork more than 250 auctions on eBay, three- lectual property and trusts. Art fraud is a can be forged, reproduced, and sold. quarters of them fraudulent. Walton and broad term that can include forged signa­ Thomas G. Field, Jr., a law professor Beach were ordered to pay more than tures of artists and the sale of fake art on­ at the University of New Hampshire $94,000 in restitution to previous victims line to shill bids to the sale of phantom School of Law said that if a painting is of eBay fraud. Walton also forfeited his li­ artwork and failure to deliver the artwork. copied and auctioned online, the perpe­ cense to practice law. Interestingly, the M.J. Bogatin is a founding member trator commits forgery and copyright in­ feds were unaware the painting was a fake of Bogatin, Corman & Gold based in fringement. But if the perpetrator only until Walton informed them near the end Oakland and has practiced law in the Bay sells one of their paintings as someone of the prosecution. After nearly two years Area for over 20 years. He has a full-time else’s then they commit only forgery. He as a fugitive, Fetterman was captured in arts practice covering visual art, perform­ said both result in civil liability as well as Kansas and was given a four-year prison ing art, literature, and film and video. criminal liability. Copyright involves fed­ sentence. Walton documented his experi­ While his art law practice does not cover eral law, he said, but forgery is covered by ence in his book, FAKE: Forgery, Lies & art fraud, he said most litigators could state law and also the federal wire fraud eBay. The case marked the first online take on this type of case. statute if it is sold on the Internet. shill bidding case that forced mammoth “I keep a very limited litigation case- “Fraud is something every lawyer eBay to put forth improved bidding load, and not in fraud which requires knows about, including the availability of safeguards. ‘clear and convincing evidence’ to obtain punitive damages, costs and attorney fees punitive damages,” said Bogatin. “But upon prevailing,” said Field. “The problem like any fraud case, if all the elements are is detecting and proving it. Detecting is for Third highest-grossing in the there, and there is no express caveat world the client, and proof for the attorney.” emptor ‘as is’ disclaimer, and the claimed The US Department of Justice lists provenance had been faked, I figure Using intellectual property art crime as the third highest-grossing many litigators would be fully prepared to laws to prevent art fraud criminal trade worldwide, behind only take such a case.” drugs and arms. Art and cultural prop­ Patricia Werner, counsel for Bryan Joseph Gioconda of Gioconda Law erty crime – which includes theft, fraud, Cave LLP in New York, said that the U.S. Group, an intellectual property firm in Copyright © 2011 by the author. For reprint permission, contact the publisher: www.plaintiffmagazine.com 2 www.plaintiffmagazine.com JANUARY 2011 New York has represented some of the prints by Calder, Dali, Warhol, Miro, on the company’s satellite television show largest art auction houses in a range of Lichtenstein, and various well-known that they claimed was from estate liquida­ transactions. He has written in depth artists, many of them signed and num­ tions all over the world. Mobley served as about how the art world can benefit from bered, and carrying certificates of authen­ the on air auctioneer of the program. other industries in dealing with art for­ ticity. All of them were fake, and many Husband and wife team Gerald Sullivan, gery by finding creative means of apply­ sold at prices driven up by shill bids on 54, and Kristine Eubanks, 52, were also ing intellectual property law. He said eBay. Some of the artwork was sold for involved in the scam. They bought the that effective legal protections against $50,000 each. fake and forged art from suppliers, and art forgery are not automatic. Seven individuals allegedly behind had printed and signed the forgeries “The responsibility of litigating two separate but linked counterfeit art themselves, on behalf of the artists like against an art forger usually rests with the rings that included art dealers in Florida, Picasso, Dali and Chagall. Mobley was private party who has been injured; insti­ Illinois, and New York and distributors in charged with two felony counts, which in­ tutions or individual rights owners must Italy and Spain were charged in two in­ cluded conspiracy and willful failure to formally register trademarks and copy­ dictments.
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