Friday 20 September 2013

Due diligence in art transactions: are informal authentications enough?

A painting said to be by Jackson Pollock and that was
discredited in 2003.
The scandle of art forgery involving the NY-based Knoedler Gallery is now turning  into a defamation suit at the New York State Supreme Court in Manhattan.

Ann Freedman, the former president of the now-closed Knoedler & Co. Gallery, has filed a defamation lawsuit against the famous art dealer Marco Grassi. He doubted on the New York Magazine whether the Knoedler dealer did any due diligence on the works she previously bought from Glafira Rosales, which turned out to be all fakes. 

Ms. Rosales, a Long Island art dealer, claimed to had got them from a previous collector she refused to identify. 

The Knoedler Gallery sold these works over the next few years to trusting collectors at high prices, based on the Rosales' assumptions that it was the collection of around forty unknown works of famous Abstract Expressionists such as Mark Rothko, Robert Motherwell and Barnett Newman.

The outcome was devastating to the art world, since it was discovered that the artworks were painted in a studio in Queens by a Chinese artist for few thousand dollars for each one. The Knoedler Gallery closed after 160 years of business, after many collectors had filed lawsuits for fraud and breach of warranty or some of them had requested their money back, as Jack Levy did in 2002. The Goldman Sachs co-chairman had bought an untitled Jackson Pollock for $ 2 million, bringing it to the International Foundation for Art Research for authentication. IFAR refused to attribute the painting to Pollock and Mr. Levy asked his money back.

Now the defamation suit challenges Mr. Grassi statements on the New York Magazine where he said that "A gallery person has an absolute responsability to do due diligence, and I don't think she did it. The story of the paintings is totally kooky. I mean, really. It was a great story and she just said, 'this is great".

Ann Freedman affirmed she was diligent in her transaction by receving informal authentications. In many case, the opinions that Ms. Freedman gathered were not official authentication, but opinions from 20 experts among which curators from the Museum of Modern Art, the National Gallery of Art and the Solomon R. Guggenheim Museum, that told her the paintings were all authentic based on their own evaluation. 

Is gathering informal authentication sufficient for complying with due diligence in art transaction?

Source: Wall Street Journal, September 11, 2013

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