how to dupe the art market
The Consequences of the Inigo Philbrick Debacle continues. The latest news is that Robert Newland, once a partner and corporate adviser to Inigo Philbrick, has pleaded guilty in a Manhattan courtroom to conspire with him to defraud investors. The judge has yet to decide the length of the sentence, but he could face a horrific 20 years in prison.
How on earth did this happen? The court documents reveal what the victims already know all too well: that Philbrick has sold several shares in artworks to his clients; he invented fake buyers, he forged documents, and he persuaded the art distributor Athena Art Finance to lend him more than $13 million that was never repaid. That sum was secured in a rotating pool of artworks held by a Jersey-based company he founded.
The scandal reveals the weaknesses of the art market: its opacity, its trust-based business and its sometimes lack of diligence. For example, Athena first questioned the origin of Jean-Michel Basquiats in 1982 humiditythat Philbrick wanted to add to the pool. But when told Philbrick owned it (which turned out to be false since he had sold shares to other people), Athena went ahead and accepted it, allowing Philbrick to borrow millions of dollars from the company.
But what did the FBI easily discover? That the alleged seller of the $18 million painting (a “Pennsylvania company”) had never heard of Basquiat and had never sold art. A simple check could have alerted the lender early in the process and avoided the current legal battle over the property.
There’s also a tricky legal battle over Yayoi Kusama’s 2016 infinity mirror room, currently stored in Florida after a German investment company, Fine ArtPartners, made an ownership claim after discovering they were not the only potential owners – a Saudi company called MCVA also claims the same. Don’t hold your breath to allow it to unravel.
So who or what is to blame? “Any scam requires a certain level of trust,” says Judd Grossman, a lawyer representing one side in the Basquiat riots. It seems most of the actors in this sad tale were only too willing to trust Philbrick – aided by his smooth demeanor, good background, and high-flying lifestyle (literally: he apparently spent much of his ill-gotten gains on private planes) and an impressive address book.
Will something like this happen again or are we now looking at a more cautious art market chastised by this saga? Unfortunately probably not. Several other trust jobs in the art world – most recently the Anna Delvey/Sorokin fiasco – show that the chutzpah Some actor will be captivated time and time again by the secrecy of the art market and the sheer appeal of their lifestyle.
But hopefully Philbrick’s story might just convince a few more to increase their due diligence, scrutinize documents more closely, ensure proper contracts and records are in place, and sway less from looking good and making a profit — or in the to let fall of Philbrick, losing – way.