- The lawyer Phoebus Struggaris, an art expert and collector, reveals on camera the secrets.
- The scam that rocked New York and became a Netflix documentary.
- The Greek shipowner who took Sotheby’s to court.
- The son of a Greek collector who forged 19 hugely valuable works his mother had acquired.
by Vangelis Triantis
For most people, the world of art is something unknown and mysterious. A “sport” that most of the time appeals to high-budget and art-loving people. For others, it is simply their passion, to the point that they do not hesitate to spend millions of euros to acquire a painting or a sculpture by their favorite artist to adorn their collection.
Although mysterious, the art world is not always what it seems: It is therefore common to observe either true art lovers or sophisticated millionaires simply doing their hobby.
Through this process and attitude to life, there are not a few cases where more or less prominent collectors have fallen victim to well-established fraud, either in Greece or abroad, paying significant amounts of money for works of art that turned out to be fake. And in some cases, especially in previous decades, many people turned to the art market in an attempt to legalize “black” money, having no love for art.
Data Journalists today open the “box” of the fascinating world of artworks and through journalistic research attempt to provide answers to a series of questions that concern both the general and specialized public.
Lawyer Phoebus Struggaris, an art expert and collector himself, answers on camera a series of questions regarding these issues, such as how artworks are priced, cases of fraud, how money laundering takes place, and instructions on what aspiring collectors should do to avoid becoming the next victim.
How the prices of works of art are determined
In order to better understand the world of artworks, one must first understand the way in which their purchase and sale prices are determined. As with all goods, prices are entirely dependent on the supply and demand of works of art. But it is not as simple as it seems. Other factors also play a role in determining the final price: The economic situation of a country, the age, and the real value of an artist.
As lawyer Phoebus Struggaris points out to Data Journalists, “There are three ways in which one could approach the issue of prices. The first is the economic situation of a country.” For example, in Greece, the situation in the art market has been very different over the last 12 years. Greece’s bankruptcy has resulted in a reduction in the disposable income of Greeks and, by extension, the financial strength of collectors.
“In the last 10 years, there has been a freeze in the market. Artists who were very, very high, suddenly lost 90% of their value. The market has suddenly leveled off at a very specific amount that applies to these artists,” Struggaris notes, adding:
“Yes, it has to do with age (meaning the golden period of the artist, which differentiates the prices of the works depending on the time of their creation) and also with the value of an artist. Value is shaped by supply and demand. If I am interested in the Munich School, which I am not, but if in a hypothetical scenario, I was interested in buying an Iakovidis, one would see the fluctuation in prices from 1960 to now. It has gone very, very high, it has gone down, it has gone up… So, if we want to summarize how a price is formed in a work of art, we would look first at the country, its economic situation, where the artistic scene of this country can reach globally, and the third thing has to do with the value of the artist himself on a Greek and global level.”
An important factor in determining the price is whether the artist is alive or deceased. In this case, works of art have a higher value, not simply because the artists are deceased, but because their work has been established in the market and among collectors for many, many years.
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How art purchases are made
Art purchases and sales are carried out in various ways. One of them and perhaps the safest is the large auction houses or a gallery owner (gallerists as they are called in the art market).
“If you are a smart person or you approach an auction house or a gallerist with whom you will talk, you will gain confidence over time, you will find that he has a name in the market – maybe for example a family tradition and you understand that he wants good posterity and not a quick profit – so what he will offer you will definitely not be stolen and definitely genuine, not fake,” notes Mr. Struggaris.
The other way is the so-called “secondary market of artworks”, i.e., the sale between collectors. In this case, however, certain issues arise. According to Mr Struggaris, “this is the most dangerous way” and for this reason, he draws the attention of would-be collectors as there are many cases where prominent collectors have unknowingly fallen victim to fraud.
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The fraud that became a documentary on Netflix
“Made You Look: A True Story of Fake Art” is a documentary that can be seen on the Netflix platform. The documentary tells the story of one of the biggest art forgery scandals to hit US courtrooms: that of the Knoedler Gallery.
This particular gallery was one of the most respected in the art world. It was founded in 1846 and was one of the oldest art galleries in New York. In 2009, the gallery’s then-president Ann Freedman was forced to resign after rumors circulated about the sale of millions of dollars’ worth of fake artwork. The paintings were allegedly the work of artists such as Jackson Pollock, Robert Motherwell, Mark Rothko, and others. The seller of these works was listed as the art dealer from Long Island, Glafira Rosales. It was claimed that the works were part of a hidden collection of a collector who wanted to remain anonymous. The Knoedler Gallery purchased these works for several hundred thousand dollars. It then sold them for tens of millions of euros, making a profit of over 80 million dollars.
As it turned out, the paintings were fake. A Chinese-born painter Pei-Shen Qian based in Queens was creating these fake works in the garage of his home. In 2013, the Liechtenstein-based Hilti Family Trust turned to Justice for the purchase of a painting in 2002. The painting was allegedly by the painter Mark Rothko and was purchased for €5.5 million. Finally, when the painting was examined by experts, it turned out to be a fake. The legal dispute ended in 2021 after eight years and while criminal charges had been brought against several people. Among them were the former gallery president Ann Freedman, gallery owner Michael Hammer, Glafira Rosales, and Jose Carlos Bergantiños Diaz, who allegedly hired Chinese-based painter Pei-Shen Qian to create the works. Eventually, the case ended in a settlement between the feuding sides.
See the Hilti Family Trust lawsuit (pdf HERE)
It was not the only purchase that concerned the US Justice Department. In 2016, Sotheby’s board member and former Gucci executive Domenico De Sole also turned to the courts over a fake Rothko painting he bought in 2004 for $8.3 million. That case too ended out of court with a settlement.
A well-known shipowner and the dispute with Sotheby’s
As far as Greece is concerned, there are many cases of prominent collectors who have fallen victim to fraud. One of them, which has been in the press, was that of a well-known shipowner some years ago. The shipowner had bought two paintings by Konstantinos Parthenis in 2007. However, shortly afterwards he filed a lawsuit before a Greek court against Sotheby’s and its representatives, claiming that they had sold him two fake works. The shipowner was vindicated in the first instance.
Another case that was of great interest to the Greek Justice was that of a well-known gallery in the center of Athens. The owner was charged with selling a total of 32 allegedly fake paintings, including a Picasso painting and paintings by prominent Greek painters such as G. Gaitis, A. Gialina, N. Engonopoulos, Theophilos and K. Parthenis, etc. The collector who had bought them claimed that at some point he wanted to insure them. He then hired an appraiser and a certification research center, who told him that in their opinion about 25 of the 75 works he had bought were fakes. The court nevertheless acquitted the gallery owner on the grounds that she had not intended to deceive since she had carried out all the necessary checks and had been assured by other valuers that the works were genuine.
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Picasso, the electrician, and the 271 works
Another typical case of fraud was the 271 works by Picasso found in the possession of his electrician after his death. These were allegedly offered either while Picasso was alive or after his death by another person who had them in his possession. Their authenticity, however, has been questioned.
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Attention to the certificates
Sometimes a work of art can be questioned by its creator. Indeed, there are works that may have been created by a painter 20 years ago, for example. When he sees them after a long period of time, it is very likely that he will not remember that he had made this work, or, on seeing it again, will not want to admit that it is his own. This is where problems about the authenticity of the work begin to arise.
As lawyer F. Struggaris explains, the best thing to do for someone wishing to buy a work of art is not to trust only the certificates that accompany it as far as its authenticity is concerned, unless they have been issued by prominent persons or serious institutions.
“Don’t just trust certificates. If you look at the way they are written you will be shocked…. As a lawyer, I pay attention to this. Imagine I have seen certificates for 30 artists from an appraiser. What comes down to authenticity is not the certificates but knowing who bought it from whom, the relationship of those who bought it with the artist himself, that family if they have bought published works and to trust who your adviser is,” Struggaris stresses.
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The son’s forgery
Another case of forgery is what happened to the family of a Greek collector. A mother collector had bought about 19 works from a gallery. After some years she wanted to sell them again to the same gallery owner. However, when she took them there, the gallery owner was surprised and told her that these works were fake. The case was brought to court. It was discovered that the collector’s son had unknowingly taken the works down from the walls and forged them. He then sold the originals and put the fake ones back on the walls.
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How “black” money is laundered from works of art
Many of those who entered the art world as collectors did not enter it just for the love of art. In the past, more than a few people bought expensive works of art only to legalize the proceeds of illegal professional activities. To put it more simply, they intended to launder dirty money. In recent years, however, as Mr Struggaris explains, ‘rules’ have been introduced. That is, in order to buy a work of art worth more than 10,000 euros, one has to provide personal details. This was not the case before. However, this fact alone does not prevent those who want to launder money through the purchase of artworks, as it has been observed that intercalated persons and companies are used.
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What to look out for
Mr. Struggaris draws the attention of those interested in buying works of art.
“..I would also say that one needs to be careful when buying, for the simple reason that there is this psychological issue of finding the best deal. Believe me, there is no deal. That is, a gentleman in a truck selling a Gaitis, a woodwork for 500 euros…”
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Is a work of art an investment?
One of the questions that one might reasonably ask is whether the purchase of a work of art is an investment. According to Mr. Struggaris, “Clearly a work of art is an investment when you buy the right work…the only certainty is that the work will go up in value over time.”
He even cites a number of Greek artists who in recent years have become highly valued worldwide.
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Who buys artworks
As for who are the people who buy artwork? It seems that they are either “sophisticated” people who really love art or people who think that doing so will raise their status.
“The reality is that the younger someone is in age and enters this field, the more sophisticated they will become over time… It’s a magical field that you are constantly educating yourself,” notes Struggaris.
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