Art Forgery Is Easier Than Ever, and It’s a Great Way to Launder Money
Credit to Author: Mary Pilon| Date: Wed, 11 Dec 2019 13:11:49 +0000
John Myatt felt like his life was in free-fall.
It was the mid-1980s and at 41, he was a working painter who never made a splash—or a profit—in the London gallery scene. His wife left him, and he struggled to provide for his two young children.
So, he began to forge paintings.
Partnering with art dealer John Drewe, the duo sold more than an estimated 200 fraudulent pieces of art for millions of pounds, ensnaring some of the world's most prestigious collectors, galleries, auction houses, and storied institutions, including London's Tate Gallery.
It was one of the greatest art scandals of all time. Myatt spent countless hours making incredibly detailed "new" works in the style of Marc Chagall, Le Corbusier, Alberto Giacometti, Matisse, and Graham Sutherland, among others. He often scoured flea markets for paints, brushes, and canvases from an artist's time period, in addition to obsessively studying their techniques.
He acknowledges his skill as a forger, but says that much of pulling off the con was "about manipulating the publicity machine or just being in the right place at the right time" in making a sale; promoting the fake story of the creation of the image and how it fit into an artist's body of work; and explaining how the piece had changed hands over the years.
Myatt, who served prison time and is now living and working as a painter in the United Kingdom, is among the handful of art forgers who say the very environment in which their past crimes flourished is, in many respects, just as fertile now. As art prices hit stratospheric highs and Trump-era momentum to regulate anything reaches record lows, the art world continues to be an under-explored haven for illicit activity, that often hangs, literally, in plain sight.
"I think it's just as easy today," Myatt said of forgery in a phone interview.
What is often dismissed as a largely victimless crime befitting of The Thomas Crown Affair (the one starring Pierce Brosnan and Rene Russo, not Steve McQueen and Faye Dunaway) may carry far higher stakes. Art forgery typically elicits images of the pearl-clasping super-rich with jaws dropped at fake Picassos, but the crime is also often linked to money laundering, tax evasion, and drug trafficking. It is the third highest-grossing criminal trade in the world over the last 40 years, according to the US Department of Justice and UNESCO, just behind drugs and weapons. Thomas Hoving, the former director of the Metropolitan Museum of Art, once estimated that 40 percent of the artwork in circulation was fake.
Driving criminal interest is the amount of cash that has been injected in the art world in the years since Myatt's forgery heyday. In some respects, it mirrors the giant pools of money sloshing around in Manhattan or London real estate—funds that are relatively concentrated in a few hands spending it in a few places. Critics contend there's low incentive to catch criminals and that, in some cases, alleged victims may benefit from being in on the con. (Others are so desperate to be in the art market, they're taking on massive debt to do so.)
The global art market in 2018 totaled some $67.4 billion, according to a joint report from Art Basel and UBS, an increase from $39.5 billion in recession-era 2009. And as the super wealthy look for more places to park money while diversifying their holdings, wealth managers and art dealers have welcomed new dollars, with some going so far to pitch (fee-heavy) hedge fund-like investment vehicles that pool money to acquire art.
That's reaped fortunes for some, but not necessarily motivation to catch art criminals. Generally, art—be it real or fake—is being used to move money more than ever, former forgers, law enforcement agents, and experts suggest. And ironically, the forgers are among the most vocal.
"It was a mistake I made and it was time to come to do good things," Myatt said. "To just face up to it."
"I’m trying to do something good out of something bad."
As Russian billionaire and avid art collector Dmitry Rybolovlev faced divorce from his wife, Elena, in 2008, the works that once proudly graced the walls of auction houses and made their way into his own collection were now a financial liability. So Rybolovlev set up an elaborate scheme to park his lofty art collection in an offshore entity, according to the Panama Papers.
Stowing away the works was no easy feat, as during his 23-year marriage, Rybolovlev, whom Forbes ranked as the 224th richest person in the world, had amassed a world-class collection that included works by Picasso, van Gogh, Monet, da Vinci, and Modigliani, among others. But as the marriage buckled, Rybolovlev moved the art to a shell company reportedly set up by the notorious and since-shuttered firm Mossack Fonseca in the British Virgin Islands. That took it out of Switzerland, part of an attempt to shield it from his wife's name or the divorce court there. (Rybolovlev is involved in further litigation with his art dealer.)
While there's no evidence Rybolovlev was dealing in forged works, it's just one of many recent scandals involving the secretive strategies of the art world, and its role in moving money at a time when oligarchs across the world have come under harsh scrutiny. This past May, longtime titan dealer Mary Boone, who was convicted for tax evasion at her gallery, reported for a 30-month prison sentence—a rarity in an industry that often sees large amounts of money shifting hands. Art has a recurring role in the use of offshore shell companies, the Panama Papers showed, including allegations that the true buyers and sellers of major works may often be concealed.
The same goes for the ongoing saga of Jeffrey Epstein. As speculation mounted about Epstein's actual net worth in the days leading up to his death, so, too, did questions around his art assets and how they may have fit into his alleged crimes. Among his art collection were "Parsing Bill," a painting of Bill Clinton in a blue dress; a portrait of himself in a photorealistic prison scene; and a painting of a nude woman. It's unclear what their market worth is, but Epstein was "amused to have in his house fake art which looked like real art," longtime friend and art dealer Stuart Pivar told Mother Jones.
One reason fakes proliferate is simple: It's relatively easy to forge a painting. And if it's perceived as accurate, it can be hawked as an asset and—in some cases—get bought and sold with few or no questions asked.
Especially if the art is moving between hands that are trusted. Of the art authenticity frauds investigated by the FBI in the last three decades, an estimated 87 percent were perpetrated by art world "insiders," a sort of Ponzi scheme via canvas. Among the most notable was the downfall of the Knoedler Gallery, a storied enterprise that closed its doors after 165 years in 2011 amid allegations that it had sold fake works of Mark Rothko, Jackson Pollock, Robert Motherwell, and others, often with little due diligence.
"It's truly shocking," said Peter R. Stern, an art attorney, of the Knoedler scandal. In his line of work, Stern represents galleries, artists and collectors in an array of matters including handling major transactions, aid with estate planning, and conflicts over art authenticity or ownership. "The behavior was awful, but I also think that buyers did little or no homework."
Among the obvious tasks, Stern said, is tracing a work's provenance, the paper trail that shows how it has changed hands since creation. Today, the internet has made it easier than ever to find out more about a work's origins, but it has also made it easier for skilled forgers to create fake art or documents to match them.
"The internet has opened up whole new marketplaces," Tim Carpenter, FBI supervisory special agent who program manages the Bureau's Art Crime Team, said in an interview. "Day in and day out, it's not just people buying huge pieces of art. The money is at the mid-level stuff, passing off those fake pieces as real. Back before online marketplaces and social media took over, you had galleries and middlemen doing due diligence. Now, there's no middleman. You have freer access to bad art."
After decades of art crime cases being handled on an ad-hoc basis, Carpenter's group was formalized within the FBI in 2004. In addition to casework, the unit also conducts trainings to aid in handling art and cultural artifacts. Carpenter said the FBI does not publicly release data on the number of cases it pursues, but noted "we stay very busy."
High-end art can be hard to move, but criminals looking to monetize quickly may go for lower-profile deals that draw less attention. As prices increase for top-tier art, values across the board pull up, as well. "We have a lot of concerns about the explosion of value in the art market these last 10 years," Carpenter said. "There’s a lot of risk and threat there for us."
On a July afternoon in Jersey City, convicted art forger Alfredo Martinez could be found recounting his claims that he got away with faking the works of Jean-Michel Basquiat for nearly 20 years.
Sitting at his desk in a black T-shirt and matching sweatpants, his long, curly dark hair askance, Martinez, 52, looked at a large flatscreen, clicking through images of his "Basquiats." He discussed his oil stick technique and said he used tea to create an aging effect on paper. Power tools, paint brushes, and papers lay scattered about him in his high-ceiling studio at MANA Contemporary, a lofty workspace for artists.
In recent months, recovery from the amputation of five toes on his right foot after an art-related accident had kept Martinez closer to his computer screen than his easel, he said. But it had not dampened his enthusiasm for curating shows for younger artists ("I like the kids"), discussing his time in prison ("looked like Oz, but it felt like Seinfeld"), or sharing anecdotes of being a self-described "street punk" in New York's art scene during Basquiat's heyday ("I would have known him better if I was a big-chested blonde").
The FBI got a tip when Martinez tried to sell $185,000 worth of "Basquiat" art, complete with forged certificates of authenticity, to two dealers in Manhattan. If they had been real, they might be worth millions today. It landed him a 21-month stint in federal prison and a peculiar flavor of infamy in the art world upon his release in 2006. (Martinez said that he was drawn into forgery because of "money. And I was lazy.")
Martinez, for one, talks of auction houses today as "Kabuki theater" and takes a "sarcastic approach" to the art establishment, even as he continues to participate in it. Then, and now, art dealers are eager to take cash from the wealthy, many of whom may not be performing ample due diligence, he said.
"Duh," Martinez said, adding, "You’re literally printing money."
So lax is the current state of affairs that 73 percent of wealth managers, 74 percent of art professionals and 64 percent of collectors said that the art market "needed to modernize its business practices to meet the expected standards of a transparent, trustworthy and developed marketplace," according to a 2017 Deloitte and Art Basel report. It also found that 83 percent of wealth managers "see authenticity, provenance, and attribution issues as the greatest risks in the art market" and 65 percent "felt that money laundering is a serious threat to the credibility of the art market."
This year, the House Financial Services Committee introduced money-laundering prevention legislation that proposed including "dealers in art and antiquities" among the institutions that would be monitored. In recent years, the European Union has also moved on similar regulations. Among the regulatory kerfuffles are freeports, or warehouses where art may be stashed for years. They have long existed in locales like Switzerland and enjoyed generous tax benefits, as they're technically storing art that's deemed to be in transit.
"Certain market prices are getting out of hand," said David Drake, founder and chairman of LDJ Capital, a multi-family office that includes an art advisory as part of its offerings. Drake's firm does not conduct provenance research for clients, but rather handles insurance and financing after the fact.
The upper crust of the art world appears to be trying to distance itself from the industry’s criminal underbelly while also seeking to bolster buyer confidence. Many artist catalogues, including those of Basquiat and Andy Warhol, have refused to admit any new works, concerned that they could be adding their coveted stamp of approval to a work that is inauthentic (while also enjoying control of the supply and demand of the market). Auction houses have tried to fight back by bolstering their forensic efforts, notably Sotheby's with its acquisition of art forensics firm Orion in 2016. A spokesperson for Sotheby's did not respond to requests for comment.
Only a fraction of art that is sold, however, will undergo such robust due diligence. And many works that are being forged are relatively modern, rendering tasks like dating paints and canvas aging effectively moot.
Some forgers, often as part of plea deal negotiations, may turn into informants. Now retired after two decades at the Bureau, Robert Wittman, the FBI agent who investigated Martinez's case in an undercover operation, runs a private art recovery and consultancy firm based in Philadelphia. He estimated that 75 percent of the illegal art market—that is, art that is involved in money laundering or otherwise connected to crime—is fake.
Still, people keep buying.
"Fraud has followed the art world because of the rise in value," Wittman said. "Bank robbers go there because that’s where the money is. That’s the exact same situation in the art market. The growing art values since 1970, they've been through the ceiling. And with paintings selling for $200 million, criminals follow that and decide to get involved."
Ironically, some in the art world mused that Martinez's arrest brought even more attention to Basquiat's work, as his ability to forge and sell the paintings underscored the demand for the artist, who died at the age of 27 in 1988. (In 2017, "Untitled," a 1982 work by Basquiat, fetched $110.5 million, at the time making it the highest sum paid at auction for an American-produced work of art.)
That's all the more reason that Martinez is cynical about the financial froth in the art world today. He noted that in the end, it wasn't the quality of his fake artworks that landed him in prison, but a disagreement with a gallery owner he said hadn't paid him. That owner, Martinez added, tipped off law enforcement. (The FBI agent who busted Martinez has a different recollection of what led to the tip-off. According to Wittman, the buyer had spotted mistakes in the forged certificates. "Usually people who do fake certificates don’t mess them up like that," Wittman said.)
Today, Wittman and Martinez are still in touch, this time as friends.
"When you work undercover, you have to create a relationship with someone, and trust. It's befriending not betraying," Wittman said. "Alfredo calls and I'm happy for him. He got down the wrong path and now it seems like he's doing well."
These days, Martinez sells his own work—original creations and labeled replicas of Basquaits—largely through his website and Instagram, mostly foregoing the use of agents and galleries. He said he's starting to see things differently as his own original work gains attention, including one painting of a gun that is now part of MOMA's permanent collection.
Moving carefully on his injured foot, he walked across his studio to a table where a series of drawings were laid out: figures of people, scorpions. He said they were reproductions of what he had done and had lost, either taken by prison authorities or simply because they ended up in the hands of dealers beyond.
"I guess I’m forging myself," he said.
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This article originally appeared on VICE US.