Forgeries: it’s an art

A New York art dealer pleads guilty to running an $80-million art forgery scam.

When Glafira Rosales, a Long Island, NY, art dealer, pleaded guilty in court in September 2013 to running an US$80-million art forgery scam, it was revealed that one of her victims was a prominent Canadian art collector.

David Mirvish, a leading Toronto theatre impresario and son of the late “Honest Ed” Mirvish, the famed businessman, “was forced to acknowledge that three paintings he had owned [in whole or in part], alleged to be by abstract expressionist icon Jackson Pollock, were fakes,” The Toronto Star reported. “Leading scholars and experts believed in these works as did I,” Mirvish said. “The confession of Glafira Rosales is sad news for the art world.”

Rosales, 57, charged with wire fraud, money laundering and tax evasion, admitted she had sold more than 60 fake pieces of modern art since 1994. “She claimed the works had been produced by master artists such as Jackson Pollock, Mark Rothko, [Willem de Kooning, Franz Kline] and Robert Motherwell,” said the National Post, “and sold them to two New York dealers, [who] unwittingly sold them to collectors at steep prices. Rosales made more than US$33 million from the scam, while the dealers earned US$47 million from their sales.”

One of the Pollocks, purchased in part by Mirvish, cost US$17 million, the Post reported.

So far Rosales is the only person charged in the scheme, but she is said to be cooperating with federal prosecutors, who have indicated further arrests could result.

As news emerged that many art experts had authenticated the paintings and drawings, a begrudging respect emerged for the person at the centre of the deception — “an immigrant from China who painted out of his home and garage in Woodhaven, Queens,” The New York Times said. “Ms. Rosales’s co-conspirators are not named in the indictment. But people familiar with the case have identified the painter as Pei-Shen Qian, 73, a Chinese immigrant who came to the United States in 1981 and attended classes at the Art Students League of New York. He was discovered in the 1980s by Ms. Rosales’s partner and former boyfriend, who was named in the government’s papers only as co-conspirator ‘CC -1,’ but is identified in other court documents as Jose Carlos Bergantiños Diaz.”

Qian, it was reported, was not paid well for his obviously impressive abilities, apparently as little as a few thousand dollars for each work.

Many of the counterfeits were sold through Knoedler & Co., a highly respected Upper East Side gallery that closed in November 2011 as the scandal began to unfold. It had been in business for more than 165 years. Several lawsuits, including one by Mirvish, have been launched against the dealers who sold the forgeries. “They have all said that they were convinced that the works were genuine, though they have acknowledged that Ms. Rosales did not provide them with documentation to establish the art’s provenance,” the Times said.

How could such a fraud be so successful? As is often the case, it was based on a plausible lie that eager (and perhaps greedy) dealers and collectors wanted so badly to be true. Rosales, the court heard, told the New York art dealers that she had acquired a trove of never-before-seen works from an owner, who, of course, had to remain anonymous. The owner, she said, had inherited them from his father.

Her story was bolstered by the quality of the forgeries. “It’s impressive,” Jack Flam said in an interview. He’s president of the Dedalus Foundation, the nonprofit organization that authenticates Motherwell’s work. “Whoever did these paintings was very well-informed of the practices of the artists.”

“One of the first experts to publicly identify some of these paintings as forgeries, Mr. Flam noted that not only the works themselves, but also the backs of the paintings and the way the canvases were treated and the frames constructed aped the styles of the artists,” the Times said.

But what really sold collectors on the authenticity of the works was the endorsement by the venerable Knoedler gallery. “The way we look at reality is highly influenced by the context it’s presented to us,” Flam said, noting that once Knoedler anointed the works as being genuine, collectors felt safe to purchase them.

But it wasn’t just dealers and collectors who were duped. Over the years the works were examined by such authorities as the former chief curator of 20th century art at the National Gallery of Art in Washington, DC, and the former conservator of the Mark Rothko Foundation.

“Fake paintings found their way into museum catalogues and books about the artists. A Pollock book published by Taschen included two of the fake Pollocks Mirvish had owned or partly owned, a Green Pollock and the Silver Pollock,” the Star said.

The fraud was detected after a US tax investigation into Rosales revealed that the so-called “original owner” of the works didn’t exist. That red flag led to the scam being discovered and her ultimate downfall.

Art fraud is incredibly prevalent; it’s also very lucrative for the perpetrators. “In the US $80-billion art market, there are estimates that as many as 40% of the works for sale are fake,” CNBC reported in 2013. Forbes magazine, a year earlier, investigated the claim that China had overtaken the US to become the world’s leader in the sale of art and antiques. Not so, said the magazine in an article entitled “China’s $13 billion art fraud.”

According to Forbes, much of the art being sold at Poly, China’s leading and state-controlled auction house, is overpriced, “and that’s before we calculate the explosive growth of fakes, which comprise … as much as eighty percent of the material offered at Poly and a fair share of what one finds even at more respectable houses, like China’s number two auctioneer.” Forbes added that many of the pieces purchased at auction are never paid for when the buyers discover their true value.

The US, the Baltimore Sun reported in 2011, “is the largest consumer of artwork in the world, with a 40% share of the US$200-billion global industry. It’s also the scene of nearly half of the illegal art trade estimated to be worth another US$7 billion worldwide.

Yet other countries pay far more attention to investigating this serious problem. The FBI, which calls art and antiquities fraud a “looming criminal enterprise with estimated losses in the billions of dollars annually,” has an art crime team with about a dozen investigators, the paper reported. In contrast, Italy has several hundred detectives on its Carabinieri art squad.

Helping clients, or yourself, avoid being deceived into purchasing fake art is no easy task.

Conducting effective due diligence, especially by engaging experts prior to finalizing a deal, will help expose fakes, but it’s no guarantee, as the Rosales case makes perfectly clear.

With modern art, there are some interesting techniques that can be used to assess whether a painting is real. Look for fingerprints of the original artist on the back of a piece or, in some instances, on the painting itself, says art critic Brian Sherwin in the Fine Art Views newsletter. Many artists are now doing this to prove a work’s authenticity. Some even include a drop of their blood in the painting and varnish over it. He also notes that some artists are creating unique chemical compounds and applying a small amount in their paintings. The recipe is usually kept with a lawyer, and this information can be accessed if a major deal is underway.

If you or a client do get taken in, however, don’t expect much sympathy. In fact, argues Kelly McParland in the Post, frauds such as those conducted by Rosales are just as likely to elicit schadenfreude. “The victims in this case were people who couldn’t tell whether something was ‘art’ or not unless someone else — an ‘expert’ — assured them of the fact,” he wrote. “Once they’d been told the pieces were genuine, they were free to admire the genius behind them. When it then became established they’d been painted by an old man in his garage in Queens, the genius disappeared and they were just paint on canvas.”

If art indeed is in the eye of the beholder, couldn’t the fake, if it was good enough to fool the experts, bring just as much pleasure as the original? Pleasure maybe, but it will also evoke a great deal of pain, both financial and emotional. Victims, no matter their wealth or their airs, deserve the same understanding and chance at retribution as any other person duped by a fraudster. That’s neither an original thought nor a fake response. It’s just the truth, which in itself is as genuine as it gets.

About the Author

David Malamed


David Malamed, CPA, CA•IFA, CPA (Ill.), CCF, CFE, CFI, is a partner in forensic accounting at Grant Thornton LLP in Toronto.

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