"From the Estate" Art Works: Imagine a World without Con Artists

Introduction

Note: Names changed to protect the innocent.

It is one thing to sell questionably authentic art at sea where no laws exist to protect the buyer, and little willingness of regulatory agencies to engage the con artist. It is another to sell such art one block away from Princeton University over a period of three days. A recent exhibition of one of the Beatles drawings brought a good number of art consumers to the town. Whether the consumers were here to buy or see what the commotion was about is anyone's guess. The answer provided by the company producing the show of what some have labeled "fraudulent" was that those who cry foul just don't get it or that they need a life. They note that contemporary art has no borders and no regulations. If no one is bothered by spending a few dollars on a Warhol cup, why be bothered by spending money on a drawing by a deceased Beatle? The Legal Fine Art 1 gang fails to mention that while a cup may sell for $100, the drawings being offered for sale are at least thousands of dollars and up to $20,000. The purveyors seem to draw a mental blank when apples are compared to oranges. Besides, according to the promoters, the boomers love the Beatles, as well as their children, and even their grandchildren. The promoters argue that the exhibition is set up to bring everyone together right now and have fun. Critics need to move on. Suffice to state that the purveyor's arguments are as slippery and slick as their production. Let us look at another grand slam currently taking place to pickpocket the public's wallet and have the public smile back and say thanks.

The Hook

How does a seller of art bring Princeton potential buyers into their shop? The sellers supply a hook to buyers and reel them in. The hook in this case was "imagine a world without hunger" and a statement that monies received will be provided to Mercer Friends, an organization supplying food to the needy. Sounds like a good cause matched with an art exhibition mixed with a bit of fun.

History

The company producing the Lannon 2 exhibition, Legal Fine Art began operations supposedly 20 years ago blessed and partnered by Lannon's wife Yokel One 3. It began operations under one name and through time changed its name to its current one. It is not known why it the original name was changed or how many changes the name went through over the years. It has offered shows throughout the US and according to some estimates probably does millions of dollars a year in business. Lannon's wife actually admitted to changing some of the works by coloring them and has also used the services of a chromatist (person who colors works of art for a living).

Droit Morale/Copyright Laws

In Europe when an artist dies, his or her artistic legacy passes on to those parties identified as heirs to the artist. In the US copyright laws enable the heirs to inherit the rights of the artist meaning that the heirs may create and sign the artist's name to a work. New works signed Dr. Suess are available for sale at numerous galleries because the family heirs have the rights to produce his works. Lannon's wife accrued those rights upon the death of Lannon in 1980. The sleight of hand here is to offer such works for sale under the concept of from the estate of the artist. For about 99% of the English speaking population in America, "from the estate", usually means that the works were in the estate of the artist when he or she died. What it really means in the present exhibition is that the estate of the artist is legally allowed to produce the works and sign them. In point the estate is telling the buyer that they made the works and the buyer believes that they were made from the artist during his life. Thus, the estate has not defrauded the buyer because it has not made a false claim about a work--a condition of fraud--but has played on the double meaning of or ambiguous nature of "from the estate".

Certificate of Authenticity

The present entity selling the works offers a certificate of authenticity (COA) which states that the work is authentic. COAs are worthless documents when provided by a seller or an estate selling a work. It merely says that the authentic item is authentic, which is a logically meaningless statement. Here the estate is stating that the works being offered for sale from the estate of Lannon are from the estate of Lannon. The statements are biased since of course the estate is going to offer only authentic items. There is no outside party not part of the estate offering the COA, only the seller.

The Music of the Beatles

The production begins as one enters the gallery. The music from the Beatles is softly playing as the entrant to the exhibit slowly makes his way around the room. In addition to the displayed works, there are tee shirts for sale as well as sheet music copies supposedly from the hand of the artist. The works are carefully displayed so that the buyer may walk around unencumbered. The promoters have done this before.

The Stage Managers

As the buyer checks out the various works for sale, the managers of the event intermingle asking the viewers if they are okay and even go as far as patting some on the back. This polished group of grey haired well-spoken male and females not only passed sales school but received an A in their charm classes. It was not clear if they were selling art or a little snake oil.

Supporting a Charity

Start with a nostalgic celebrity sale and add a tablespoon of charity and the presentation begins moving into 4th gear. The problem however is that the only support provided to the charity are the $2 donations the patrons of the exhibition are supposed to provide as they leave the gallery. No where in any document or in any of the handouts does the entity offering the works say that they are contributing the monies from the sales to a charity. The monies going to the charity are the $2 requested by the jar policemen standing watch over the jar at the table before you enter the gallery. The organizers do not apparently provide one penny of their sales receipts to the Mercer St. Friends Food Bank. They even note under "instant Karma" box in their handout that the $2 jar receipts will go to the Friends (hopefully).

The Value of the Works Offered for Sale

Similar to art selling on cruise ships the organizers put forth the note that their art show brings the wealthy and poor together to have a good time and enjoy the works of one of the Beatles. The fundamental question here aside from nostalgia and rubbing elbows with the wealthy in town is (given that many of the works are offered in the multiple thousands and tens of thousands) what would the fair market value be if the buyer decided to sell it? Recent sales and estimates of auction houses indicate that Lannon's works made in the 1970s and examined by outside experts would bring a price of about $750 for a work currently being offered for sale at $20,000. Of the 100 works being offered for sale in the brochure only about seven are listed for $750 and under. Thus, there is about a 90% chance that buying a work from the present organization at their prices would result in a loss to the buyer and the higher the price paid the higher the loss.

The Scam

Please note that the works offered for sale as authentic are noted as authentic from the Lannon Estate. Again they own the right to produce the works, and are stating that the estate which produced the works actually produced the works. There is no misrepresentation and no fraud. What the organizers are doing are hooking the buyers by passing off a sales event as a charity event to help the needy, setting up the buyer's mood with nostalgic music by a deceased celebrity supposedly helping out the widow, and tying into an art exhibition of the celebrity's works. The thrust of the promotion is to get the buyer into buying celebrity status by purchasing one of Lannon's works. The real essence of the production is that Lannon's wife wants to make money and the company producing the show wants to make as much as possible as well. This is a business partnership attempting to make a sale by using music, nostalgia, charity, and celebrity factors to arouse the buyer's psyche to connect to the art and ultimately buy it. The seller wants to penetrate and move beyond the caveat emptor armor the buyer may have when he or she enters the production arena. The buyer's bottom line should be, are the items offered for sale priced according to their value? Auction results establish value for an item. The IRS uses auction house sales to establish the dollar value for a work of art. Auction house results and estimates currently available note that the value of the Lannon works offered are, in some cases, 90% higher than IRS accepted values and auction house estimates. Think about it. Would you buy a car that is priced 90% higher than you could sell it for?

Some Points to Ponder about Buying Art

Purchasing art in today's market is fraught with a mine field of issues. The buyer begins the process with a caveat emptor attitude, a belief that there are regulations and laws to protect the sale and at the same time an assumption that if in the end, the sale is misrepresented he or she could call the cops and get the payment returned or sell the work for the price paid. To begin with it is not always the case that when we buy we place ourselves in the alert for a scam mode. When we want something in today's market, caution is thrown to the wind because we have been raised in a society which has created needs in us not always easily broken down into price bought equals price resold on the open market. Fair market value rarely finds itself in purchases. We want an "X" because it is an icon of status, or like a little child we just want it.

We assume that all purchases are protected and that there is a governmental entity ready to pounce on the bad guys selling questionably represented goodies. There are plenty of protective laws available but they are written in a fashion that they are difficult to enforce. Some enforcement agencies have values which must be reached before their involvement is processed. More importantly some agencies could care less about who is being taken--SEC/Madoff. Madoff was not brought down by the SEC but by a Certified Fraud Examiner who spent 10 years explaining that Madoff's numbers just did not work. White collar crime is rarely prosecuted. In addition to leaving our caveat emptor badge at the door, few if any laws protect the consumer and enforcement agencies really do not enforce. The art consumer is also confronted by foundations which hold the authenticity ace. Foundations are currently getting more involved in establishing the art they are associated with as being authentic or not. The question for the foundations is whether they are acting economically or genuinely trying to establish that a work is genuine. The risk for the buyer is enormous. Recent Warhol and Motherwell authentication board cases demonstrate that a buyer acting in earnest buying a work for hundreds or millions of dollars could lose his investment by the mere assignment of inauthentic on the back of a work recently purchased because the foundation watching over the works of a given artist decided that the work was bogus. Was the call made because an additional work placed in circulation reduces the value of works already owned or was the work really a fake? It is hard to accept the inauthenticity ruling when the board experts made their ruling in five minutes!

Art hanging on a wall makes a nice addition to a family's living space. The problem however is to make sure that there is little risk of loss after the purchase. In today's market high priced art is a risky business since purchases are inherently unprotected and sellers know how to work the system. Rarely does a case of alleged art fraud go to trial under a fraud statute. Most art fraud cases are prosecuted under the wire and mail fraud statutes. If you are going to buy, have it sent through the mail and pay for it with a protected credit card which can reverse charges if the work is turns out to be damaged or misrepresented. Having it sent also gives the buyer some time to think about his or her investment before it arrives. Maybe what looked great with the music playing, and lights shining on your treasure, doesn’t look so good when you open the shipping package in your living space. Without the music and the lights, maybe that $20,000 estate work is really no more than an overpriced reproduction which you purchased for $19,000 more than it is worth?

Photo credit: Wikipedia

1. Name changed to protect the innocent
2. Ibid
3. Ibid

— by John Daab Ph.D.  |  October 24, 2011

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