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Ain’t Nothing Like the Real Thing: Despite Forgery Scandals, the Fine Art Market is Booming




by:
Sheppard Mullin
Sheppard Mullin Richter Hampton LLP - Los Angeles Office

 
February 26, 2014

Previously published on February 19, 2014

On January 23rd, in a rare public appearance, Jasper Johns testified against a New York foundry owner, Brian Ramnarine, who was charged with creating unauthorized sculptures, including a fraudulent Johns “Flag” sculpture which Ramnarine allegedly made from the original mold and attempted to sell for $11 million. Johns testified that the sculpture was not authorized, the signature was forged and the certificate of authenticity was a fake. Ramnarine pled guilty to three counts of wire fraud in Manhattan federal court, admitting that he had tried to sell unauthorized sculptures of Johns and other artists.

Johns is hardly alone; artists, galleries and collectors are all victims of these frauds. In fact, some experts estimate that anywhere from 15 to 40 percent of the objects in art museums are forgeries. Little appears to have changed since 1934, when Time magazine wrote that, while only 2,000 works were ever painted by Corot, 10,000 paintings attributed to the artist were in American collections. Humorists have said that of the 200 paintings by Van Gogh, 500 of these are in the United States.

Recently, the counterfeits scandal in New York involving artists such as Jackson Pollock, Mark Rothko, Robert Motherwell and others, has rocked the art world. It precipitated the abrupt closure of the Knoedler Gallery, which had been in business for over 165 years. At least 40 counterfeit paintings were sold through what was considered one of New York’s most prestigious, reputable galleries.

The pervasive fakes problem prompted some artists’ foundations to establish authentication services. However, the majority of these authentication services, including the Andy Warhol Art Authentication Board, have since dissolved due to both actual and threatened litigation over the boards’ determinations as to the authenticity of individual works. After years and millions of dollars in litigation over the authentication of a silkscreen, Warhol’s authentication board closed its doors in early 2012. Similarly, in 2011, the Roy Lichtenstein Foundation ceased authenticating works due to the fear of litigation and the cost of liability insurance; and the Estate of Jean-Michel Basquiat dissolved its authentication committee in September, 2012. [See our November 2011 post, “Authentication Board to Death by Lawsuits.”]

Notwithstanding forgeries within the post-war and contemporary markets, and the costs associated with efforts by artists and artists’ estates to forestall fakes from entering the market, the works of Twentieth Century artists are more popular, and more expensive, than ever. The art market’s seemingly counterintuitive response to the forgery scandals has resulted in booming sales. Artprice, a French company which calculates global art sales, concluded that sales from June 2012 to June 2013, in the contemporary art market reached their highest total ever at $1.4 billion. Moreover, the market for Warhol in particular, based on Artnet’s calculation of the 2013 gross auction sales, is surging towards its 2007 peak. A spike at the end of 2013 brought the fine art market to 5% higher than in 2012, with revenues exceeding $14.4 billion.

While it is clear that the unprecedented prices for these artists’ works - coupled with high demand - seem to invite mischief, the recently revealed and very public forgeries do not appear to have adversely impacted the art market as a whole, or even the works of the affected artists individually.

For example, Jackson Pollock’s paintings are selling for record prices, even after a counterfeit of his work was the impetus for a well-publicized (now settled) $17 million lawsuit against the Knoedler gallery. On May 15, 2013, Number 19, 1948, sold at Christie’s Post-War and Contemporary sale for more than $58.3 million. On that same night, auction world records were set for 12 artists, and the auction brought in $495 million, the then highest total in auction history, a record since bested in the recent Fall auctions. In the case of Andy Warhol, widely considered to be the most forged American artist of all time, his silkscreened prints have doubled in value in the last five years, and prices for his paintings have increased up to ten times within that period. Last November, a Warhol painting, Silver Car Crash (Double Disaster), expected to sell for $60 to $80 million, sold at Sotheby’s for a record $105.4 million. The previous record for a Warhol work was in 2007, when Green Car Crash (Green Burning Car I) sold for $71.7 million.

With increased attention on forged works, the prices for these artists’ paintings are going up. When notable galleries, such as Knoedler, have fallen victim to forgeries, one might expect a greater apprehension on the part of the art-buying public. However, it appears the opposite is true. Opinions vary as to why prices continue to escalate despite the specter of forgery. Some hypothesize that the sheer proliferation of contemporary art museums has increased the market for contemporary art. Others posit that, because high value works sold through the auction houses have been researched and generally have a known provenance, buyers can trust that their purchases are authentic. Moreover, as world-renowned artists like Jasper Johns are speaking out about counterfeit works, it is hoped that artists can police their markets in order to detect fakes and forgeries. [See our June 2012 post, “The Studious Studio - Business Practices for Artists.”]

Whatever the reasons for the thriving market, the demand for post-war and contemporary art continues to rise and shows no signs of abating.



 

The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.
 

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