German Justice: Good News Bad News In 2013, German police seized 1,800 paintings from art collector Itzhak Zarug, alleging claims of forgery and involvement in an international art forgery ring. Following an investigation by German police and over ten experts, all but three paintings have been declared authentic and returned to Zarug. However, while Zarug was cleared of the main charges, he was sentenced to almost three years of time already served for falsifying the provenance of certain paintings and selling a forgery, together with his business partner Moez Ben Hazaz. They were also ordered to pay €1 million in damages from the sale of forged pieces.
You Might Want to Sit Down for This New York State judge denied a motion by the Nahmad family to dismiss a case concerning Modigliani’s “Seated Man with a Cane.” The piece was purchased from Christie’s in 1996, but while consigned to Sotheby’s more recently the possibility was raised that it was looted during the Holocaust. In 2014 Artlyst reported that the painting “was allegedly stolen by the Nazis from Oscar Stettiner, a prominent Paris gallerist” after he escaped Paris in 1939. The Nahmad family has previously denied connection to the paintings, but this has since been disproven.
New Efforts to Protect Cultural Heritage in MENA A few countries in the Middle East and North Africa have been considering new laws and enforcement efforts to protect their heritage. Egypt is debating a bill that would increase penalties for “illegally excavating, stealing, damaging or smuggling” artifacts, according to Arab Weekly. The bill would also replace an existing law that “allows individuals to maintain possession of antiquities they obtained through inheritance”. In Morocco, meanwhile, Morocco World News reported that the Ministry of Culture is promoting a recent decree that designated the important archaeological site of Jebel Irhoud “as an official national heritage site”, as well as a draft decree that seeks to add a variety of other sites to the country’s national heritage list. Finally, the Department of Antiquities in Jordan is poised to create a new unit that will combat antiquities smuggling. The division’s responsibilities, according to Jordan Times, will include “organising archaeological excavations, documenting and registering antiquities…, operating ticket offices at sites and museums”, and “issuing licences for local and international scientific institutions and archaeological missions”.
Another Guilty Art Dealer Early this month art dealer Ezra Chowaiki pled guilty to a count of wire fraud and was ordered to forfeit over $16 million dollars, as well as works of art by Picasso, Chagall, Degas, and many others. In December 2017, Chowaiki was charged not only with wire fraud, but also with conspiracy to commit wire fraud and interstate transport of stolen goods. He was accused of defrauding clients in a variety of ways: selling shares in art he didn’t own, overselling shares, and refusing to return work on consignment. He also owed Sotheby’s almost $3 million for a painting that sold for less than expected.
I Know Him Recent reports by artnet and The Art Newspaper inquire whether the House Financial Services Committee may be working on new legislation that would add art and antiquities dealers to the types of institutions regulated by the Bank Secrecy Act. A memo (seen by @itsartlaw and artnet) sent out by the firm of Pearlstein, McCullough & Lederman states that this would “require dealers to establish Bank Secrecy Act compliance programs and customer due diligence and monitoring programs”, “screen for potential problems or clients against a list generated by the Office of Foreign Assets Control (OFAC)”, and establish “anti-money laundering programs…suspicious activity monitoring programs and reporting processes”. These types of measures are generally referred to as “Know Your Client” (KYC) and aim to prevent money laundering. Any proposed regulations are bound to controversial: an opinion piece in artnet already argues that they would be detrimental for many smaller galleries struggling to stay afloat. That can’t be… fake news?
News in Art ADR Founded by the Netherlands Arbitration Institute in partnership with the nonprofit organization Authentication in Art, the Court of Arbitration for Art (CAA) will be devoted to the variety of art disputes and will launch in June 2018. William Charron, partner with Pryor Cashman, originally conceived of the CAA, having observed how “traditional litigation in art law disputes can be unnecessarily lengthy and costly, and in the end can yield uncertain results that the market simply will not accept”, particularly when it comes to authenticity disputes. He also explained that the point of the CAA is to try to “’flatten the learning curve’ in these – and similar – kinds of cases by having experienced art lawyers be the deciders.” Among the new rules for the CAA are a few key provisions: the default is to have three arbitrators, experts will be appointed by the tribunal itself for “issues of forensic science or…provenance”, and decisions will be made public while maintaining appropriate confidentiality.