Forgeries, Fakes, Bootlegs & Stolen Art:

When art is not what it appears to be

For thousands of years art collecting has been a somewhat perilous hobby, occupation or vocation. Art work fakes and stolen art have been documented since at least ancient Rome. The wealthy and sophisticated of ancient Rome often sought to buy classical Greek art work and sculptures. More often then not they ended up buying works by Roman artists made to look old and in the style of classic Greek works. Some of the same techniques used to defraud art collectors today were found to be used in Ancient Rome. The advances of science have a double-edged sword in the area of art fakes. While they have made techniques for the detection of forgeries and fakes an easier and more precise process, the same techniques have been used by the forgers to make their works and forgeries even more authentic looking.

In addition to forgeries and fakes the issue of stolen art has become much more prominent in the American marketplace. Stolen art according to Interpol is the second largest crime in the world after drug dealing. Interpol has reported that 5-6 billions of dollars of stolen art works are traded annually worldwide. It would be reasonable to expect that a fair amount of that stolen art would enter U.S. market, it being the largest and more vibrant art marketplace in the world.

In 1996 ArtNews reported that most of the Russian avant-garde art found in the West were fakes.

What are the remedies available to innocent art collectors or dealers who end up owning or selling stolen, fraudulent or fake art? State law often governs the law in this area. As such this column will deal in generalities. Any specific questions would need to be to be addressed individually in accordance with the appropriate local law.

When an art dealer, publisher in distributor sells an art work in which there is a specific description of the work, for example, this is Red Ruby by Pablo Pacasso, 1921. Most jurisdictions will consider that description to be what is called an Expressed Warranty. Specifically, that the dealer is warranting and that that is the actual title of the work, that is the year in which it was created and that it was by Pablo Pacasso. Deviations from any of those would be a breach of the expressed warranty. If a dealer is not certain as to any of these conditions it can, of course so say and remove its liability. Especially, with older paintings we often see disclaimers such as, attributed to, from the school of, thought to be by, and other such type of limiting language that are effective and useful. If one is unsure of the exact nature of a work, they should not guess but list the appropriate coviats. Generally speaking, a person making an Expressed Warranty will be bound to it and liable for it.

As with most causes of action, the time frame in which relief can be sought breach of an Express Warranty is not open-ended. In many jurisdictions the statute of limitations for breach of Express Warranty is four years from the date of the transaction. Therefore, the seller's exposure will generally be four years from the date of the sale. After that, even though there was a clear breach of warranty, the claim would be barred.

In several areas of law there is something known as the "discovery rule". It states that the statute of limitations only runs from the time that the infraction was discovered or reasonably should have been discovered. If this rule were applied to a case of breach of Express Warranty it would be four years from when the owners found out that the work was not what it was made out to be. However, in most jurisdictions, the statute of limitations for breaches of warranty are strictly limited to the four years from the sale date and are not subject to the discovery rule.

Another area of art frauds covered by statutes are the limited edition print disclosure laws. Thirteen states have enacted very specific and strict statutes as to what must be disclosed when there is a sale of a limited edition print (and in some jurisdictions sculptures). States require that a document, usually known as a Certificate of Authenticity, accompany the limited edition prints (sculptures). These statutes require a variety of information be provided. The areas of required disclosure deal in particular with the true size of the entire edition, other uses of the image and involvement of the artist in the creative process. They require disclosure of the various types and size of proofs such as artist proofs, printer proofs, deluxe editions, European editions, different size paper editions, etc. One must specifically state whether the artist signed the work and must list all other uses of the image. (For those of you, who want more details on limited edition print disclosure laws, I have written a monogram, which outlines all the laws themselves and guidelines for drafting certificates of authenticity. It costs $25 and is available directly from me.). If one violates the print disclosure laws, there are a variety of penalties. Anyone who purchased the print may make a claim against the publisher plus in a number of States there are governmental penalties and fines as well. Often the relief is three times the purchase price of the print plus interest. If a single claim is made that might not be a great deal of money, but if one multiplies the penalties by the full size of the edition and adds in the legal fees the penalties can be quite severe for violation of these statutes.

In regard to stolen art, the issue has become even more complex. Under American law a thief cannot give good title to property. When one buys from a thief, they buy only what the thief possesses which is nothing. As such they are buying nothing and they own nothing. If they want to sell the stolen property they bought from the thief, since they own nothing, they are selling nothing and the person who buys from them also acquires nothing on down the stream of title. You might be the tenth purchaser of a painting that was stolen; you own nothing because everyone in a chain of title from whom you acquired the painting had nothing to sell you. The holder (note I did not say owner) of stolen art has a claim against the person from whom they purchased it and they in turn have a claim against the person from whom they purchased it up through the chain of title all the way back to the thief. If the chain is broken at any point (one is not able to locate the person from whom they brought the work) the last one in the chain becomes the "stuckee". While it might seem unfair that an innocent party is left holding the bag, the courts have found that the person who dealt with the thief is the most culpable and the one in the best position to prevent is the process from beginning and those closest proximity to that person would therefore be the next in line for liability.

If you own a piece of stolen work the bonafide owner, figuratively, can come into your home after ten, twenty, thirty, fifty, or a hundred years and remove the work from your house gallery or museum and repossess it. We have recently been reading about claims made by Holocaust survivors for artworks stolen by the Natzis 50 or 60 years ago and as you see that the claims are still viable.

The holders of stolen art do have a few defenses, however, which they can raise. One is the running of the statute of limitations. The key issue is when does it begin to run. The statute of limitations for stolen art in New York and California runs from the time that demand was made for the return of the work and it was refused. It is a three-year statute from that point in time. Most other jurisdictions in the United States follow the discovery rules. The statute of limitations will run from the time that the art theft victim discovered or should have discovered the whereabouts of their stolen work. The "should have" discovered has brought about a great deal of litigation. It boils down to the of question what affirmative steps does a art theft victim need to take in order to toll (stop) the statute of limitations so that it does not began to run. The courts are not in harmony as to this issue.

The simple answer and advice I always give art theft victims is immediately notify your local police, the FBI, the Art Lost Register in New York and any galleries, museums, or dealers who deal in that type of art. You must periodically keep up with these individuals and organizations regarding status of the case. If you do that, then you are in an excellent position to argue that the statute of limitations should have began to run only with your discovery of the whereabouts of the art.

If you are a holder of stolen art there is an equitable defense avail to you called, latches. You can be raise it if you had undertaken your due diligence as a buyer, but the art theft victim did not act responsibly in reporting the art as stolen. If you as a purchaser of art undertook the appropriate investigations to check the title, in addition to the provenance, of the work, to see if it was stolen art before you bought it, you could argue to the court that it is unfair for the owner to be able to reclaim the work when they did not act appropriately and you did. If they had reported the work stolen you would have found out during your investigation and not have purchased the work. Only as a result of the theft victim's malfeasance do you find your self in the position of owning stolen art.

It is incumbent upon anyone who purchases art who has even the slightest question as to the authenticity of the work, the size of the edition or whether or not a work was stolen to undertake appropriate due diligence at the time of the purchaser or immediately prior to the purchaser to make sure that they are getting what they believe they have paid for.