May 31, 2013 6:37 pm

The Art Market: the taxing business of forgery

Dealer arrested in Knoedler case; Hong Kong auctions excel; Gupta boat to Guggenheim
Artworks by Zhang Daqian, Zeng Fanzhi and Sanyu©Christie’s Images

From left: ‘Daoist Goddess Playing Panpipe’, by Zhang Daqian (Chang Dai-Chien); Zeng Fanzhi’s ‘Society’, 2001; ‘Two Standing Nudes’, by Sanyu (Chang Yu), c1929

While the number of lawsuits for allegedly selling fake art brought against New York’s now-shuttered Knoedler Gallery continues to rise, an art dealer accused of supplying the works of art has been arrested on suspicion of tax fraud.

According to the Manhattan district attorney, dealer Glafira Rosales avoided paying tax on at least $12.5m of income from the sale of works purported to be by celebrated artists. She is accused of avoiding taxes on millions of dollars from “dealing in fake artworks for fake clients”, and “gave new meaning to the phrase ‘artful dodger’.” If found guilty, she faces up to 25 years in prison.

Rosales sold paintings that she claimed were by artists such as Willem de Kooning, Jackson Pollock, Robert Motherwell and Mark Rothko – the US attorney tartly points out that anyone selling art should pay tax, “even if the art is counterfeit”. Rosales is also accused of illegally hiding a foreign bank account.

Interestingly, the complaint does not accuse Rosales of forging the works, but does say: “The artwork Rosales sold appears to be as fake as her story about the clients she claimed to represent.”

The case certainly turns up the heat on Knoedler, which is facing six claims, and has already settled one, for selling allegedly counterfeit art bought from Rosales. One disgruntled buyer is Tom Ford chairman Domenico del Sole, who is claiming $25m over a Rothko he bought from Knoedler for $8.3m and which he says is a worthless fake.

Knoedler, New York’s oldest art gallery, was shut down in 2011 after 165 years in business. In a statement, its lawyer Charles Schmerler said: “What is notable is that there is no charge that Ms Rosales knowingly sold any forged work of art ... This development does not affect our core arguments in the litigation.”

Rosales was refused bail after prosecutors argued that she was “a flight risk” and had made “massive amounts of income” selling 63 paintings to two galleries. Rosales’s lawyer was not available for comment.

. . .

As Art Basel in Hong Kong drew to a successful close this week, Christie’s, Sotheby’s and Bonhams also reported good results at their auctions in the territory. Christie’s totalled nearly $100m in two sales of modern and contemporary Asian art, with “Society”, a work by Zeng Fanzhi, making $3.9m. Sotheby’s scored $42m with a single-owner collection of works by the wildly popular Chinese artist Zhang Daqian. This trounced pre-sale expectations of $14m, with the top lot, “Daoist Goddess Playing Panpipe”, making $9.5m.

. . .

The gossip mill had been grindingfor some time, and now it’s confirmed: Paul Schimmel, former chief curator of the Museum of Contemporary Art (MOCA) in Los Angeles has become a partner in the powerhouse gallery Hauser & Wirth. Schimmel and H&W will open a new gallery in Los Angeles, dubbed Hauser Wirth & Schimmel, which is being billed as “a museum-like destination for experiencing art in context”.

Schimmel’s move from the not-for-profit world to a commercial gallery mirrors a rarer move the other way. Dealer Jeffrey Deitch became director of MOCA two years ago, and has since ruffled feathers with what many see as a “dumbing-down” of the programme. This prompted Schimmel to leave MOCA last summer, and he was soon followed by four artist trustees from the museum board. Hauser Wirth & Schimmel has not yet found a space in LA, but plans to open in 2015.

. . .

Staying with Jeffrey Deitch, the MOCA director was a panellist at Intelligence Squared Asia’s debate, held during the Art Basel in Hong Kong fair. Paired with Christie’s postwar and contemporary art honcho Amy Cappellazzo, they defended the motion: “The market is the best judge of art’s quality.” Opposing it were artists Matthew Collins and Rirkrit Tiravanija.

In truth it was a lacklustre and at times sour debate, with only Collins raising spirits and laughter with his description of the “gibberish” an art critic once attributed to him.

His argument that “the ultimate aim of the market is marketing: I’m not against it, but let’s be clear about its motives” – blew the opposition out of the water: at the end he and Tiravanija won by a socking 73 per cent, bettering the 60 per cent that the audience had voted on the way in.

. . .

Deutsche Bank has decided “not to renew its option” on sponsorship of Art Basel in Hong Kong but Swiss bank UBS has stepped in and extended its sponsorship to all three fairs in the group.

Michael West, its Asia-Pacific head of communications, says: “In terms of branding, our sponsorship of the fair did tremendously well, but Deutsche Bank operates in 17 countries around the region and we now have decided to do a touring programme for three years.”

The programme will kick off next year with a photography exhibition drawn from the bank’s collection. According to West, discussions are “under way with major galleries throughout Asia Pacific”.

. . .

Shortly after Sotheby’s announced that it was opening a new private selling space in London, Christie’s is to launch a similar space in Hong Kong. It is on the 22nd floor of Alexandra House, where the firm’s offices are based, and will open at the end of November. The 300 sq metre space “will be used for private treaty sales, selling exhibitions, and also for smaller auctions”, says Christie’s Asia chairman François Curiel: “It’s a lovely gallery overlooking the water, and we will also use it for smaller auctions of watches, jewellery and art, about six or seven a year, in addition to the main sales in spring and autumn.”

. . .

Is the state of Qatar organising a biennale for 2014? According to the French newspaper Le Figaro, an event is being prepared in secret and a “college of experts” will work on the project but, in the longer term, Dr Abdellah Karroum, newly appointed director of Doha’s Mathaf: Arab Museum of Modern Art, might oversee it. Asked about this at the launch of Curate, a new prize being launched by the Qatar Museums Authority and the Prada Foundation, Ed Dolman, QMA executive director, said he had seen nothing in the programme about a new biennale. Qatar is, of course, the biggest buyer in the art market, with a number of members of the royal family, particularly the emir’s daughter Sheikha Mayassa Al Thani, being avid collectors in a number of fields.

. . .

And finally: Subodh Gupta’s giant boat, laden with bags, pots, furniture and even a bicycle, “What does the vessel contain, that the river does not”, currently on show at Hauser & Wirth’s Savile Row gallery in London, has sold to the Guggenheim Abu Dhabi for $800,000. The museum confirmed the purchase, but not the amount.

Georgina Adam is editor-at-large of The Art Newspaper

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