Tuesday, November 10, 2015

Due Diligence: INTERPOL's "Most Wanted" Stolen Tapestry Found in Auction Catalog, Seized by Feds

Increasingly commoditized and always discreet, today's art market perilously tempts the black market. Reforms are needed to shine a light on the trade. For now, the marketplace must remain vigilant against money launderersterrorist financiers, and fences who peddle hot art in the cool stream of legitimate commerce.

Steering clear of stolen art requires due diligence. That means that dealers, auction houses, collectors, and associated parties actually must do the investigative diligence required so that they are not directly or indirectly aiding criminal activity. Because the art market is opaque, diligence is needed to discover an object's true chain of custody, transfer, and ownership.

The latest court case demonstrating the need for due diligence is United States v. The Tapestry Known as "The Ambassadors of Rome Offering the Throne to Numa Pomplio."

Before the tapestry surfaced last year in Bonhams' Fine American and European Furniture, Silver Folk and Decorative Arts and Clocks auction, it debuted in 2007 on INTERPOL's "Most Wanted Works of  Art" list. The auction house apparently did not discover this information before it published the piece in its sales catalog.

Bonhams richly characterized the silk and wool textile as "[a]n important Flemish historical tapestry," and suggested that it was part of the "[t]he complete set of the Life of Numa Pompilius," which can be "attributed with certainty to the painter Abraham van Diepenbeeck (1596-1675)." Auction house writers were less descriptive about the ownership history, enigmatically chronicling the chain of title with the nondescript phrase, "Property of various owners."

Prosecutors in the southern district of New York articulated a more complete description of ownership. In a forfeiture complaint filed with the federal district court in Manhattan in May, they declared that it had been stolen--along with a second tapestry--from the home of an identified man in Satiago in October 2006. Chilean investigators reported the theft to INTERPOL, and the international police agency posted the tapestry to its Stolen Works of Art Database under registration number 2007/2882-1.1. 

The United States Attorney in Manhattan wanted the stolen tapestry back to return it to the owner, so his office commenced a civil action to seize the tapestry and forfeit its title to the U.S. government. The legal pleading, verified by the FBI agent working on the case, provided sharp details surrounding the consignment and offer for sale of the tapestry, known formally as the Defendant in Rem:
On or about September 27, 2013, a private art dealer (the "Dealer"), a resident of Santiago, Chile, contacted Bonhams New York Gallery located at 580 Madison Avenue, New York, New York ("Bonhams") via email and inquired into selling the Defendant in Rem at Bonhams.  The email included a color photograph of the Defendant in Rem. 
On or about October 3, 2013, a representative from Bonhams replied to the Dealer's email and advised that Bonhams would be willing to sell the Defendant in Rem at auction with an estimated appraised value between $30,000 to $50,000. 
On or about October 7, 2013, the Dealer agreed to consign the Defendant in Rem to Bonhams in order to be sold at auction on January 23, 2014. 
On or about October 10, 2013, the Dealer mailed the, Defendant in Rem from Santiago, Chile to Bonhams' New York Gallery via DHL Express. On a DHL commercial invoice, the Dealer declared that he was exporting a "carpet" with an approximate value of "$700." 
On or about January 2, 2014, the Dealer executed a consignment agreement with Bonhams under which the Dealer consigned the Defendant in Rem to Bonhams for sale at auction. The Defendant in Rem was included as Lot 1201 in the auction catalogue (the "Catalogue") .... 
On or about January 10, 2014, Bonhams' representative emailed the Dealer advising him that they had received a request for information as to the Defendant in Rem's provenance. 
On or about January 13, 2014, the Dealer responded to Bonhams' January 10, 2014, email stating, in sum and substance, that he purchased the Defendant in Rem from an art dealer in Santiago, Chile in approximately March 2002. 
On or about February 19, 2014, agents of INTERPOL questioned the Dealer in Santiago, Chile regarding his ownership and provenance of the Defendant in Rem. In response to these inquiries the Dealer stated, in substance and in part, and in contravention of his email to Bonhams, that he had purchased the Defendant in Rem in late 2006 or early 2007 from two individuals in Santiago, Chile. The Dealer claimed that he could not state the names of either individual and that he no longer had any documentation regarding these individuals or this transaction in his possession.
The U.S. Attorney's Office accused the dealer of having "knowingly imported the Defendant in Rem into the United States knowing that it had been stolen, converted, or taken by fraud, and facilitated the transportation, concealment, or sale of the Defendant in Rem, knowing the same to have been imported or brought into the United States contrary to law."

The forfeiture pleading alleged violations of 18 U.S.C. § 545 (fraudulent importation of merchandise into the United States), § 2314 (interstate and foreign transport of stolen merchandise), § 2315 (concealment, storage, and sale of stolen property), and/or 19 U.S.C. § 1595a (introduction of merchandise contrary to law).

With the assent of prosecutors, the district court on September 8 ordered the release of the tapestry to the true owner. Today the case serves as another reminder of why conducting a meaningful due diligence investigation into an artwork offered for sale is vital.

Photo credit: Verified complaint, U.S. Attorney for the Southern District of New York

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