Chapter 4: Art Lawyer Mekhala Dave on Art Fraud and the Three Pillars

Mekhala Dave art fraud

We hope you’ve been waiting as anxiously for the next instalment of art lawyer extraordinaire Mekhala Dave‘s next article. Read on for her perspective on artists’ rights.

In December 2014, as I walked into a Nalini Malani exhibition in an art gallery, I was immersed into the irresolute sound of fresh video art. I sat on the seat before the masterpiece and, as the film began to roll, I felt overwhelmed with the sounds of the video. The noises remained piercing and racy, which stirred feelings of unrest and terror in me. I couldn’t comprehend what I saw because the noises had seeped into the wall of my insecurities and evoked a vulnerable side in me. It was that moment which astounded me, made me feel that art is a powerful tool and can be felt in trenches of our minds. This is only one such example of an art piece of being powerful and craving for a viewer’s reaction. Art is important to shape our minds; even if art sensationalises by way of music, dance or visual art, it gets to individuals.

Stop thinking about art works as objects, and start thinking about them as triggers for experiences… Changing ourselves. Surely that must be what we’re after when we look at pictures and watch movies and listen to music. -Brian Eno

Art surpasses a mere inhabiting of aesthetics, to become an incursion of great ideas borrowed from our surroundings. The art of our generation is highly conceptual, with or without a political and cultural narrative, but with individualistic flavours, breaking free of the shackles of the established art milieu. Artists such as Nalini Malani explores political codes on feminism and violence, relating them to mirrors in her projects, such as the aforementioned video art. Like Nalini Malani, artists now have the opportunity to exhibit their art pieces in the increasing number of galleries, art fairs, museums and other spaces. Since the traveling art pieces now affect the global art market, blueprints of communication between artists and galleries, museums, dealers are shifting as well.

Mekhala Dave art fraud

Art law is a newly emerging subject in the field of law that has the opportunity and space to promote art law and cultural policy in the Indian context. The field is laced with contemporary standard issues and practices relating to art crimes like intellectual property rights and preservation and protection of cultural property on an international level. However, it lacks in the evolution of policies of art law on the Indian front. The relationship between artist and the dealer/gallery is critical to the expansion in the art community that symbolises the attitude changes and characterisation of the art market. Tentatively, the most impenetrable problem in the art market today is the art fraud committed by dealers/galleries on a grand scale that leaves artists, buyers and collectors vulnerable and at the mercy of continuing litigious cases. In this chapter, the focus will be on art fraud with respect to fine art within the circle of three pillars: artists, collectors and intermediaries.

In the case of Rajendra Kumar Jain and Anr v. Pankaj Gulati, a dispute arose between the art gallery and a buyer where a deal was struck between the parties to buy two paintings from a gallery for Rs. 20,00,000 and in part make a payment for Rs. 15,00,000 towards the balance Rs. 5,00,000. The condition was that, with regard to the payment of the balance, the buyer had brought the painting of an artist ‘Ara’ with the understanding that if the gallery managed to sell it for Rs. 4,00,000 then Rs. 1,00,000 will be paid by the buyer, but in the event that Ara’s painting is not sold, the buyer will pay Rs. 5,00,000. When Ara’s painting did not sell, the buyer returned the two paintings and instead took two fresh paintings claiming that two buyers were ready to make a purchase.

The buyer then did not get back to the art gallery and instead attempted to auction the two paintings in New York. The art gallery by way of letter requested the auction house to withdraw the paintings from auction because of a dispute and filed a suit in New York Supreme Court for handing over the possession of the two paintings and to make payment in US Dollars. A temporary restraint order was passed by the Court and requested for a suit to be filed in India because the transaction and evidence took place there. The buyer accuses the art gallery of having mala fide intentions in the claims of the suit, since there was a hike in the price of the paintings and that the buyer had made the payment for Rs. 15,00,000 which was the price set for the paintings, documented along with authentication certificates. The Court held in favour of the buyer but the main issue was that the contract between the parties was not recorded in writing which raises concern over the exchange that took place between the art gallery and the buyer, and failure to produce evidence in court of law.

Mekhala Dave art fraud

There is trifling mistrust towards intermediaries and concern for not only shielding artists but also collectors is more apparent. Internationally, the Knoedler case turned heads in the art world; Gloria Rosales, an art dealer, admitted that she defrauded the Knoedler Gallery, a reputed art gallery based in New York that closed in 2011, and Julian Weissman Fine Art in Manhattan, by selling roughly 63 paintings claiming to be from modern artists such as Pollock and Rothko. The paintings were forged by an obscure artist from China who went scot free. However, she admitted to 9 charges including money laundering, tax fraud, and wire fraud, and duped the buyers in paying over 80 million dollars. As “lawsuits kept coming,” two fresh lawsuits were filed by a couple against the Knoedler Gallery for alleged forgery of a purchased Rothko and the other by the Manny Silvermann Gallery in Los Angeles and Richard Feigen’s Gallery in New York, demanded to be paid over USD 1,05,000 for forgery. A buzz in the art world is that Knoedler Gallery acted as co-conspirator with it’s art dealer to sell the artworks to collectors.

It is not unknown that art transactions are informal: often, the artworks are consigned from the artists with the absence of a contract with a lack of due diligence in such transactions. In very few situations will a dealer provide a simple and clear written agreement. The dealer will often negotiate a price and hand over the over the artwork to the collector. In few cases, collectors may absorb from the statutory provision to include contract terms to ensure security of artworks but with poorly drafted terms that are often open to loopholes. With the Salander bankruptcy case, Lawrence Salander, a prominent dealer owner of the Salander-O’Reilly Galleries, was sued by numerous customers and business partners for selling artworks that he did not own and preserve records. He failed to notify the creditors that he did not own the consignor’s art, nor did he pay or inform them. He also solicited investments to purchase artworks or shares of artworks which he resold to other clients. He filed for personal bankruptcy in 2007 and pleaded guilty on 129 felony counts of grand larceny. Such defraud leaves not only the artists frenzied, but also collectors grappling for transparency in the consignment clause of the terms of the contract.

The case of Accidia Foundation v. Simon C Dickinson led to an issue of anonymity between the buyer and seller where the dealer does not make it known to the buyer the identity of the seller, hence triggering the question: whose side is the dealer on if the transfer of ownership is based on an “understanding”? These cases hold ominous legal implications and they will not be softened even when ignorance is pleaded, therefore, flexibility of legal practices in transactions should not be taken lightly. In a highly unorganised art community, when linking the three pillars, not only do artists have a fiduciary relationship with dealers/galleries, but it extends to collectors as well. The contemporary art market is expanding in India, and the three pillars reserve the right to be aware of dealer/gallery activities, firstly clarifying intentions of the parties involved, secondly, transparency in written agreement, thirdly, injecting good faith as propounded in law and additionally, to maintain evidence of the transactions, negotiated to suit both the parties.

Dealers/galleries cannot be blamed for the absolute callous use of legal concepts in the art market as it is the duty of the artists to protect or secure the pieces, it is the duty of the sellers to authenticate for provenance, and it is the duty of the collector to whet the deal before purchasing artworks. If each participant attempts to partake in their duties, there will be more clarity in dealings and businesses. However, glitches in art frauds are multifarious at the backdrop of online transactions and advance of technology which I will talk about in the next chapter.

As before, you may approach either us at The Yellow Sparrow or Mekhala personally (for lawyer-client privilege of confidentiality) at for your queries and updates; she will get back to you each week with answers to your enquiries.

A note to readers: Contributions in the form of your awareness will fuel art law fruition in the current global art market, if you have any incidents or queries relating to art frauds, report to us your tale and build our art community stronger.

Watch this space for more from Mekhala!

Images Courtesy: Mekhala Dave

Leave a Reply

Your email address will not be published. Required fields are marked *