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The Law’s Inability to Deal with Art Crime

There is something quite jarring about the art business. Even the term itself presents two ideas which appear to stand contrary to one another. Art seems to deal in the abstract and spiritual, business in the factual and physical. Artists often use their medium as a way of expressing their distaste for the kind of world which free-market economies have helped create. It is a strange dynamic. Yet the two are entwined in a marriage of sorts. The art business continues to thrive as increasing numbers of wealthy individuals flock to it to capitalise on investment opportunities. And as eye-watering sums of money flood their way into the art market, the opportunistic criminals follow. It is an unsurprising consequence, and yet it appears that criminality seems to play a more central role in art now more than ever before. Should the art world not be better prepared for this? This article shall explore two of the most prominent types of criminal activities in the art world, and examine why the law fails to do a better job of dealing with them.

The Fraudsters

This type of crime has re-entered the public consciousness thanks to the recent scandal involving Inigo Philbrick, a once-promising young art dealer who recently pled guilty to federal wire fraud charges in New York’s Southern District Court. Philbrick was “double-dipping”: selling ownership shares in artworks exceeding 100 percent. To put it simply, he was selling the same work (or the same share of a work) to multiple different people, thus leaving 10 people, for instance, claiming that they owned a 15 percent stake in an artwork. He did this repeatedly: Philbrick swindled multiple colleagues out of multiple millions.

One such victim was renowned art critic and writer, Kenny Schachter, who lost over US$ 1 million at the hands of the man he thought to be a close friend. In a piece written for Vulture Magazine, Schachter provides an impressive and detailed character analysis of the accused while also suggesting that Philbrick forms part of a market which is ripe for illicit behaviour. He cites the opacity and largely unregulated nature of the secondary art market as lending itself to such activities. Given that there is no database which publicly discloses the owners of artworks, it makes the kind of activity engaged in by Philbrick all the more possible.

Upon first glance, the solution seems simple: enforce a more transparent market, in which disclosure is paramount. However, the simple fact is that confidentiality and discretion are valued by those with the deepest pockets. They have no desire to have the details of their private business dealings reside in the public domain. It thus seems that the more transparent the market becomes, the less attractive it appears to potential investors. They will then take their cheque books elsewhere. Here, the market is left in a stalemate.

Foreign Treasures

The second type of crime which never fails to occupy journalists in the art world concerns repatriation and the stealing of cultural property. Looted antiquities leave a sour taste in the mouth. The thought that these objects, which form an integral part of the culture and history of a nation, are traded as commercial entities between the living rooms or (more likely) storage facilities of eccentric collectors thousands of miles away is stomach-churning to say the least. However, the way in which the law deals with it leaves much to be desired. One specific example relates to regulations enforced upon those in possession of Iraqi artifacts.

In an attempt to rebuild diplomatic bridges, the United Nations enforced the Iraq Order in 2003. This law must be adhered to by all member states (of which the United Kingdom is a part). Paragraph 8.2 of said order is rather fascinating and reads as follows:

“Any person who holds or controls any item of illegally removed Iraqi cultural property must cause the transfer of that item to a constable. Any person who fails to do so shall be guilty of an offence under this Order, unless he proves that he did not know and had no reason to suppose that the item in question was illegally removed Iraqi cultural property.”

The above provides much cause for concern. It appears that without any kind of database of missing items, the collector would struggle to know whether their antiquity is (a) Iraqi, and (b) stolen. And yet the law places the burden of proof on the owner to justify not knowing the origin of the item in question. When trying to picture the practicality of this law, it seems baffling how one would go about proving that which they do not know.

It does not seem that anyone has been prosecuted under this law as of yet and it is entirely possible that nobody ever will be. Fortunately, the presumption of innocence is so deeply enshrined into not only English criminal law, but also the European Convention on Human Rights that it is difficult to see the enforceability of the law. In this case, the Iraqi Order is both ineffective and borderline totalitarian and serves to highlight the shortcomings of the law in this area.

The above examples have painted a rather bleak picture of the world of art law and whilst solutions are constantly being proposed, the most that can be concluded for the moment is that the law pertaining to the art world is muddled and in need of serious reform.


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