By David Jenkins.

The office of tourism for Vanuatu, an island country near the Australian coast, boasts that on their shores, “couples, families, adrenalin junkies and serenity seekers will all find plenty to do.”[1] As of late, the office of tourism may want to add one more variety of visitor to that list: fugitive art dealers. On June 11, 2020, agents from the United States Department of Justice worked with local authorities to apprehend Inigo Philbrick, a Miami based blue-chip dealer specializing in contemporary art, right in the middle of one of Vanuatu’s artisan markets.[2]

Philbrick had been on the run since last October, having fled the U.S. after investigations began into complaints that he had sold artworks he did not own, sold overlapping shares in the same art, and took advantage of a lack of oversight in the market to hide his fraud.[3] His arrest signals the beginning of the end to a scandal that has dominated the attention of the art world for some time now, with charges by the United States Government in the Southern District of New York amounting to more than $20 million in fraud.[4] The history of the man behind the alleged crimes and how his fraud could manifest in today’s art world tells a fascinating and potentially cautionary tale about the modern state of the art market.

Rise of the “Wunderkind”

Most would likely not find themselves in a position to potentially defraud wealthy individuals and organizations by the age of 33, but Philbrick’s background and history in the art industry do much to explain how one could rise to prominence so quickly. Philbrick is the son of Harry Philbrick, the former director of the Aldrich Contemporary Art Museum in Ridgefield, Connecticut and founder of the nonprofit art organization Philadelphia Contemporary,[5] and Jane Philbrick, a widely exhibited artist and part-time lecturer at the New School’s Parsons Fine Arts School of Art, Media, and Technology with a Master’s in design from Harvard University.

Philbrick Junior attended Goldsmiths University in London, a prestigious institution specializing in art and design, which also happened to be his father’s alma mater.[6] In 2010, following his education, Philbrick began an internship under fellow Goldsmiths alum Jay Jopling at White Cube, a contemporary art gallery in London.[7] Within a year, Philbrick went from intern to director of secondary market sales.[8] By 2013, he was opening his own gallery in London, with support from Jopling, which would later establish a second location in Miami in 2018.

Philbrick quickly earned a reputation among international collectors and investors as a rising expert of “fashionable contemporary artists like Rudolf Stingel, Wade Guyton, and Christopher Wool.”[9] By 2017, Philbrick’s gallery was reporting a turnover of roughly $130 million, a wealth which Philbrick did not handle quietly.[10] The young dealer became known for flaunting his success with frequent trips on private jets, $7K suits, $55K watches, and record setting bids at auction.[11][12] While such rapid and pronounced success is something to watch on its own, the manner of Philbrick’s fall from grace is perhaps even more remarkable.

The Mechanics of the Scandal

Philbrick’s legal troubles center around two alleged crimes: wire fraud and aggravated identity theft.[13] These charges allege that Philbrick defrauded his clients by providing them with “materially false and fraudulent pretenses, representations and promises” as well as using false names and signatures in the process of creating a contract of sale.[14] To better understand both charges and how Philbrick came to accrue them, it is helpful to first look to the ecosystem in which he did his business and how it centers more around the word “market” than the word “art.”

Philbrick operated primarily within the secondary art market, selling artworks that had already changed hands any number of times to investors, collectors, and groups who may have never actually been in the presence of the very art they were buying.[15] Descriptions of secondary art sales can often end up sounding more like stock trading than the exchange of paintings and sculptures. Such sales often involve clients paying dealers like Philbrick millions of dollars for total or partial ownership stakes in artworks for the purpose of selling them again once the price has sufficiently climbed (a practice often known as “flipping”), all without the parties involved ever actually taking possession of the art.[16]

For instance, while plenty of museum and gallery patrons may recall experiencing one of Yayoi Kusama’s “Infinity Rooms,” the same patrons might be surprised to learn one such infinity room, “All the Eternal Love I Have for Pumpkins” has had its title traded through a dealer like Philbrick.[17] Indeed, that separation from what one might initially recognize as a market for speculation and investing may play a part in what can allow for such a scandal. The secondary art market has fewer regulations and protections than those in other financial markets, leading to buyers and sellers both having little verified information on who they are dealing with or the actual state of the title in question – a problem exemplified by Philbrick’s case.[18]

The principal wrongdoing Philbrick is accused of in the charge of wire fraud is lying to his clients about ownership, availability, and prices of artworks, often resulting in the sum total of multiple parties’ supposed ownership shares in a work exceeding 100 percent.[19] While the secondary art market might have fewer regulations than other markets, it is still true that, as US attorney for the Southern District of New York Geoffrey S. Berman so plainly put it, “you can’t sell more than 100 percent ownership in a single piece of art.”[20] The charge of identity theft connects to these same sales, as Philbrick is accused of using fake and fraudulent contracts to artificially inflate the value of art and to try and cover his tracks concerning the rest of the fraud.[21]

The Hammer Drop: The Stingel Painting

Rudolf Stingel, “Untitled” (1956). Screenshot from Christie’s online catalogue for the New York Post-War and Contemporary Art Evening Sale in May 2019. Source: Christie’s.

The case that can be said to have opened the floodgates was that of Rudolf Stingel’s “Untitled” (1956), a photorealistic painting of Pablo Picasso.[22] In 2015, Philbrick signed a deal with financial services provider Fine Art Partners to sell them the painting for $7.1 million as part of an arrangement to resell the work together at Christie’s for a supposed guaranteed price of $9 million.[23] The following year, Philbrick sold the same work again, this time for a fifty percent share, to Satfinance for $3.35 million, and then again to another investment firm by the name of Guzzini Properties for $6 million.[24] Guzzini proceeded to consign the work to Christie’s, where it sold for $6.5 million on May 15, 2019.

The problem for Philbrick came when Fine Art Partners did not receive any money for the sale and took the initiative to get in touch with Christie’s. The auction house informed the firm that not only had they never signed any guarantee for the sale of the Stingel, but regardless Philbrick had not been the work’s consigner of record.[25] Fine Art Partners, after subsequently finding much in question about their history of dealings with Philbrick, ultimately filed suit in Florida civil court against the Miami-based dealer on October 4th, 2019 for breach of contract, claiming they had been deprived of artworks including Donald Judd’s “Untitled” (1976), two untitled works by Christopher Wool (1989 and 2010), Yayoi Kusama’s “All the Eternal Love I Have For the Pumpkins” (2016), and Wade Guyton’s “Untitled” (2007).[26] When the time came for Philbrick to appear in court in Miami, he was nowhere to be found and his gallery was left locked and empty. News began to spread that Philbrick had fled the country.[27]

Following Fine Art Partners’ suit, a number of other claims came forward against Philbrick in both the United States and England, painting a troubling picture of a man who defrauded his clients and then defrauded more to make up for what he could not cover from his previous machinations.[28] Guzzini Properties, represented by Mazzola Lindstrom LLP, filed an in rem suit in New York courts on October 30th, 2019 to recuperate the Stingel painting to which Satfinance and Fine Art Partners stake claims.[29]

Painting by Wade Guyton

Invoice by V&A Gallery to Inigo Philbrick for a half share of Wade Guyton’s “Untitled” (2006). Screenshot from Exhibit C to the the Complaint filed in V&A Collection, LLC v. Guzzini Properties Ltd., No. 1:20-cv-01797 (S.D.N.Y. filed Feb. 28, 2020).

Beyond Fine Art Partners and the Stingel painting, Guzzini Properties is also involved in a federal suit brought by the V&A Collection, involving the sale of an 2006 artwork by post-conceptual American artist Wade Guyton.[30] In June 2013, V&A Collection purchased a 50% interest in the work. In October 2019, the Collection learned that Guzzini claimed to have purchased the artwork in a June 28, 2017 agreement with Inigo Philbrick Limited. The Collection notified Guzzini of its ownership interest in the work, over which Guzzini claimed to have physical possession, custody, and control. However, it was revealed that in November 2019, Guzzini transferred title to an undisclosed third party. The Collection has brought suit to assert conversion claims against Guzzini for interfering with its ownership interest. On June 19, 2020, the Southern District of New York issued a summons to Guzzini, in order to allow the Collection to effectuate service through the Hague Convention and moot any service-related issues in connection with Defendant’s forthcoming dismissal motion.

Painting by Jean-Michel Basquiat

Jean-Michel Basquiat, “Humidity” (1982). Screenshot from the Complaint filed on June 12, 2020 in Athena Art Finance Corp. v. that Certain Artwork By Jean-Michel Basquiat Entitled Humidity, 1982, In Rem, No. 1:20-cv-04669 (S.D.N.Y. filed June 18, 2020).

Further, Athena Art Finance Corp., a speciality lender in the business of providing loans with art put up as the collateral, filed suit against Philbrick on June 18, 2020 in the Southern District of New York for the right to sell Basquiat’s “Humidity” (1982), which Philbrick, via companies he owned, used as collateral for a loan totalling $13.5 million, a loan on which he defaulted.[31]

What otherwise might have been a simple legal matter of collecting the collateral for an outstanding debt has been somewhat complicated by the fact that other parties also claimed an interest in “Humidity”. In particular, Satfinance, the very same group involved with the Stingel scandal, claimed ownership of the painting through an agreement with Philbrick where the two would purchase the work jointly and Satfinance would be granted full title,[32] and claim through which Satfinance had previously obtained an injunction against the sale of the painting by Athena.[33] While the injunction has been removed and Athena now only seek a declaration that they may proceed with selling the artwork,[34] the story of Philbrick offering ownership of the same artwork to multiple parties, only to have said groups end up in court with each other, paints a troublingly familiar picture.

The End of the Line

While the allegations piled up throughout October and November of 2019 leading up to his disappearance, the United States Government and the FBI branded Philbrick a fugitive in October 2019 with outstanding claims amounting to more than $20 million in fraud.[35] He was eventually located on the Pacific island of Vanuatu just last month, where he reportedly had done conspicuously little to conceal his presence, using his real name around the island, making a name for himself in the local community, and even occasionally boasting of his past involvement in the art scene.[36] He was taken into custody to be transported to Guam and then transferred to Manhattan to appear before the court for the Southern District of New York.[37] As of July 13, Philbrick has been indicted by a Grand Jury for both the count of wire fraud and of aggravated identity theft, and been ordered to forfeit any property “that constitutes or is derived from proceeds traceable to the commission of said offense”[38] On July 14, Philbrick pled not-guilty and a virtual pretrial conference was scheduled for July 29, 2020.[39]

Takeaways

While the full ramifications of Philbrick’s case will not be clear until the dust settles, some have come away from the scandal with an eye turned toward a lack of transparency and regulation in the art market. In an interview with Artnet News, Judd Grossman, attorney for Aleksandar Pesko of Satfinance, put forth, “the problems that can arise due to the lack of transparency in the art world are magnified in cases like this, where bad actors look to find a way to pledge the same art to multiple players, ostensibly for different purposes.” As confirmed in the July 2020 report by the U.S. Senate’s Permanent Subcommittee on Investigations on the effects of lax U.S. tax law and anti-money laundering regulations in the art market: “the art industry is largely unregulated.”[40] The art market is a place where transactions involving millions of dollars are regularly made, and when, as artist and Artnet columnist Kenny Schachter stated in an interview with Vulture, “there is no centralized database of artworks’ ownership and nothing resembling title with regard to a work of art, as with real estate and cars,” the market can be left heavily relying on a sense of trust. When one bad actor like Philbrick can call into question an assumption that a dealer is selling no more than 100 percent ownership of a work, that trust could very well waver.

Whether and to what degree the art world will change in response to this scandal remains uncertain. This entire saga, as posited by Grossman, “may turn out to be one of the most significant frauds to rock the art world in recent memory, right up there with Salander-O’Reilly and Knoedler.”


Endnotes:

  1. Top Attractions, Vanuatu Travel Experiences (last visited July 5, 2020), https://www.vanuatu.travel/au/experiences.
  2. Eileen Kinsella, ‘He Didn’t Hide Who He Was’: Locals Describe Disgraced Art Dealer Inigo Philbrick’s Carefree Life on the Lam on a South Pacific Island, Artnet News (June 17, 2020), https://news.artnet.com/art-world/how-inigo-philbrick-spent-his-final-days-on-vanuatu-1887746.
  3. Eileen Kinsella, What Did Inigo Philbrick Do? How One Precocious Dealer Allegedly Swindled the Art Market’s Savviest Players Out of Millions, Artnet News (Mar. 12, 2020), https://news.artnet.com/art-world/inigo-philbrick-intelligence-report-2020-1800972
  4. Scott Reyburn, Art World Wunderkind Arrested Months After Fleeing the U.S., N.Y. Times (June 13, 2020), https://www.nytimes.com/2020/06/13/arts/inigo-philbrick-arrested-art-dealer.html
  5. Brainard Carey, Harry Philbrick, Praxis (Mar. 17, 2018), https://museumofnonvisibleart.com/interviews/harry-philbrick/.
  6. Reyburn, supra note 4.
  7. Jacob Bernstein, The Talented Mr. Philbrick, N.Y. Times (Mar. 13, 2020), https://www.nytimes.com/2020/03/13/style/inigo-philbrick.html
  8. The Primary Vs Secondary Art Market, One Art Nation (July 12, 2017), https://www.oneartnation.com/the-primary-vs-secondary-art-market/.
  9. Reyburn, supra note 4.
  10. Id.
  11. Colin Gleadell, Young Artists All the Rage at Phillips Sale, Artnet News (Oct. 15, 2014), https://news.artnet.com/market/young-artists-all-the-rage-at-phillips-sale-126252.
  12. Bernstein, supra note 7.
  13. Complaint at 1-2, U.S. v. Inigo Philbrick, No. 1:20-mj-04507 (S.D.N.Y. Apr. 30, 2020).
  14. Complaint at 2, U.S. v. Inigo Philbrick, No. 1:20-mj-04507 (S.D.N.Y. Apr. 30, 2020).
  15. Bernstein, supra note 7.
  16. Bernstein, supra note 7.
  17. Alex Greenberger, Florida Court Temporarily Forbids Yayoi Kusama ‘Infinity Mirror Room’ at Center of Inigo Philbrick Suit from Leaving Miami-Dade County, ARTnet (Jan. 23, 2020), https://www.artnews.com/art-news/news/yayoi-kusama-inigo-philbrick-injunction-1202676084/
  18. Id.
  19. Bernstein, supra note 7.
  20. Reyburn, supra note 4.
  21. Id.
  22. Complaint at 8-11, U.S. v. Inigo Philbrick, No. 1:20-mj-04507 (S.D.N.Y. Apr. 30, 2020).
  23. Kinsella, What Did Inigo Philbrick Do?, supra note 3.
  24. Bernstein, supra note 7.
  25. Id.
  26. FAP GMBH & Co. KG v. Inigo Philbrick Et Al., No. 2019-027931-CA-01 (Miami Dade Cty. Ct. filed on Sept. 20, 2019).
  27. Bernstein, supra note 7.
  28. Id.
  29. Guzzini Properties, Ltd. v. UNTITLED BY RUDOLF STINGEL, 2012, in Rem et al, No. 656467/2019 (N.Y. Sup. Ct. filed on Oct. 30, 2019).
  30. V&A Collection, LLC v. Guzzini Properties Ltd., No. 1:20-cv-01797 (S.D.N.Y. filed Feb. 28, 2020).
  31. Athena Art Finance Corp. v. that Certain Artwork By Jean-Michel Basquiat Entitled Humidity, 1982, In Rem, No. 1:20-cv-04669 (S.D.N.Y. filed June 18, 2020).
  32. Satfinance Investment Ltd. v. Inigo Philbrick & Ors. [2020] EWHC 1261 (Ch).
  33. Id.
  34. Id.
  35. U.S. v. Inigo Philbrick, No. 1:20-mj-04507 (S.D.N.Y. terminated on July 14, 2020).
  36. Eileen Kinsella. ‘He Didn’t Hide Who He Was’: Locals Describe Disgraced Art Dealer Inigo Philbrick’s Carefree Life on the Lam on a South Pacific Island, Artnet News (June 17, 2020), https://news.artnet.com/art-world/how-inigo-philbrick-spent-his-final-days-on-vanuatu-1887746.
  37. Alex Greenberger, Inigo Philbrick, Dealer Behind $20 M. Art-World Scandal, Arrested by FBI, ARTnews (June 12, 2020), https://www.artnews.com/art-news/news/inigo-philbrick-arrested-fbi-vanuatu-1202690953/.
  38. U.S. v. Philbrick, No. 1:20-cr-00351 (S.D.N.Y. filed on July 13, 2020).
  39. Docket Report, U.S. v. Philbrick, No. 1:20-cr-00351 (S.D.N.Y. filed on July 13, 2020).
  40. U.S. Senate Permanent Subcommittee on Investigations, The Art Industry and U.S. Policies That Undermine Sanctions, 2 (2020), at https://www.hsgac.senate.gov/imo/media/doc/2020-07-29%20PSI%20Staff%20Report%20-%20The%20Art%20Industry%20and%20U.S.%20Policies%20that%20Undermine%20Sanctions.pdf.

Additional Readings:

About the Author: David Jenkins is a student at the University of Texas School of Law. He graduated from The University of Texas at Austin with a B.A. in English Literature and a minor in government. David is currently the President of the Texas Law Art Association at the University of Texas School of Law and a regular volunteer at local art institutions in Austin, Texas.