Parallels among two blockbuster lawsuits involving art fraud raise inquiries about “very best practices.”
Incoming Pace Gallery vice president Adam Sheffer. Image courtesy of Pace Gallery.
Is the old adage “practice what you preach” not applicable to the art globe?
Current legal proceedings highlight how apparently tricky it can be even for these steeped in the art market place to regularly adhere to that guidance.
A prominent New York dealer who has served as an specialist witness in lawsuits regarding art bargains gone awry has simultaneously allegedly fallen victim to a fraudulent art advisor, it would seem.
Adam Sheffer is a veteran dealer for galleries like Cheim & Study, Pace, and Lisson, who even served as a president of the prestigious Art Dealers Association of America (ADAA) in current years. He is now a private dealer and advisor.
But, although he was not identified by name, he is referenced in a current lawsuit that sent shockwaves via the art globe. It requires the alleged fraud perpetrated by Lisa Schiff, a higher-profile art advisor who has now shuttered her advisory business and has initiated the course of action of sorting out creditor claims, according to papers filed in New York State Supreme Court.
The suit, which Artnet News reported on earlier, accused Schiff and her organization, SFA Advisory, of breach of contract, conversion, fraud, breach of fiduciary duty, and conspiracy. The plaintiffs had been identified as actual estate heiress Candace Barasch and Richard Grossman and, all through the complaint, additional referred to the involvement of “Grossman’s spouse,” although not especially by name.
The plaintiffs are pursuing their shares of the missing profit from a $1.eight million sale of an Adrian Ghenie painting, Uncle three (2019), tied to the now-embattled dealer. The suit lays out that Barasch purchased a 50 % stake in the painting and that Grossman and his spouse acquired the remaining 50 %, or 25 % every single.
But Sheffer also lately emerged as an specialist witness in a separate, extended-operating legal matter that also scandalized the art globe. That litigation, filed far more than 3 years ago, reflects a dispute more than a multimillion-dollar Rudolf Stingel painting connected to disgraced art dealer Inigo Philbrick, who sold various competing ownership shares in the painting just before attempting to flip it for profit at a failed Christie’s auction earlier that exact same year.
In an affidavit dated Might 12, Sheffer as specialist witness known as out a lack of due diligence on a convoluted fractional art flipping deal gone awry.
Sheffer weighed in on a 3-way fight for handle of the roughly $six million Stingel, by noting that 1 of the competing parties, Satfinance, controlled by investor Sasha Pesko, “did absolutely nothing to shield its interests, as it neither retained possession of the Stingel Picasso, nor registered its ownership interest by means of a UCC-1 nor a filing with the Firms Residence in the United Kingdom.”
The emphasis on due diligence is all the far more striking provided that Sheffer himself seems to be 1 of the aggrieved parties, despite the fact that not a plaintiff, in the suit brought against Schiff. That lawsuit was filed at practically the exact same time as the affidavit (Might 11), in New York State Supreme Court.
But back to the case regarding the Stingel. In the specialist witness testimony, Sheffer addressed the function of FAP (Fine Art Partners), a German-owned art investment company whose claim for the Stingel and other works touched off a firestorm of litigation, and in the end criminal charges, against Philbrick in late 2019 (Philbrick is at present serving a prison term for the huge $86 million criminal fraud that he masterminded and eventually pleaded guilty to.)
According to Sheffer, as with Satfinance: “The exact same can be stated of FAP: It neither filed a UCC-1 nor a Firms Residence registration, to thereby give notice to the globe, so to speak, of its ownership interest in the Stingel Picasso, nor did it retain possession of the artwork,” according to Sheffer’s affidavit.
Although Sheffer took aim at the parties in the Stingel case for not documenting their ownership nor retaining possession of the perform, the suit against Schiff for the Ghenie specifies that no 1 other than Schiff had handle or possession of the Ghenie painting following the acquisition was created in 2021.
Neither Sheffer nor his lawyer responded to request for comment or inquiries about regardless of whether they documented their ownership interest in the Ghenie. The lawyer for Pesko and Satfinance declined to comment.
Sheffer states in his affidavit that he has “concluded hundreds of transactions among galleries and private collectors, museums, and foundations and [is] versatile in understanding the nuance of a variety of kinds of art transactions based on the artwork (e.g. main versus secondary market sales) and variety of purchaser (private collector versus museum or foundation.)”
Meanwhile, the particulars of the Schiff case, as Hollywood writers like to say, rhyme with these of the Stingel matter.
According to the Ghenie lawsuit: “Upon completion of the sale, the [Ghenie] Artwork was not delivered to any of the Plaintiffs individually. As an alternative, via [Schiff] Defendants, it was supposed to have been sent from storage at Crozier Fine Arts to Barasch’s art storage unit at Uovo in Delaware. Nonetheless, instead of sending the Artwork to Uovo, Schiff brought on the Artwork to be sent to Maquette Fine Art’s storage facility in Delaware, with Plaintiffs bearing the pro rata fees of packing and shipping the Artwork. Although upon information and facts and belief the Artwork was placed in a storage unit in Plaintiff Barasch’s name, on a day-to-day basis Defendant Schiff controlled the storage unit and what was in it.”
No matter whether or not any individual filed an ownership stake (and it does not seem that they have) the initial Schiff complaint tends to make clear that she controlled the sale proceeds and failed to distribute them, like that she “exercised dominion and handle more than the Artwork, thereby seriously interfering with Plaintiffs’ superior rights of dominion and control…[and] exercised dominion and control more than sale proceeds from the Artwork.”
The lawsuit asserts that Schiff was emailing “Grossman’s spouse” in early Might even as “her comprehensive organization network was imploding as a outcome of her undisclosed embezzlement of funds and artworks belonging to Plaintiffs, and others—which came to light on Monday, Might eight, 2023.”
Sheffer specified that his affidavit in the Stingel case was submitted in response to counsel for Guzzini Properties. Guzzini is a shell firm run by billionaire U.K.-primarily based brothers Simon and David Reuben. The Reubens loaned Philbrick $six million with a number of artworks reportedly pledged as collateral, like the Stingel. They are amongst the parties in search of ownership or title to the Stingel following the failed Christie’s sale.
Sheffer, who wrote that his compensation for preparing the affidavit is $400 per hour, added that the compensation “is not dependent either on the opinions I express or any outcome in this litigation.”
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