Ponzi Scheme with Paintings
Art as An Asset and Art Speculation
A Ponzi Scheme with Paintings
Lisa Schiff, the once revered art advisor, has recently come into the spotlight for a lawsuit that accuses her of using her advisory firm to defraud clients in a Ponzi scheme. In the past, Schiff was known to be an advisor to the elite, with clients ranging from Leonardo DiCaprio to major corporations, foundations, and institutions. But her world came crashing down when it was revealed in two lawsuits in May 2023, and another damning document filed this month, that Schiff is claimed to have defrauded over fifty clients for sums in the millions. 1
The lawsuit is over how she handled the recent sale of a $2.5 million Adrian Ghenie painting at Sotheby’s Hong Kong. Schiff worked with Barasch and Grossman to acquire an Adrian Ghenie painting.2 The lawsuit claims this was “part of a much larger Ponzi scheme that Defendants were running, taking money from one client to pay another, and to fund Schiff’s lavish lifestyle.” 3
50 Claims Against Schiff
Some 50 new claims against Schiff, as well as a full inventory of works still in her possession, are among the latest revelations to come to light. Around 50 more claims have been made, some worth as much as $1 million. Claimants named include Mira Dimotrova, senior director of Stephen Friedman gallery; David Schrader, head of private sales at Sotheby’s; Maya McLaughlin Art Advisory; and Frestonian Gallery. Grossman is also seeking a further $2.3 million. An undisclosed sum was claimed by the Internal Revenue Service and over $500,000 by American Express.4
894 items, with an estimated market value of £3.1 million ($3.9 million) according to appraisers and advisory group Winston Art Group are currently in Schiff’s inventory. These include works by Damien Hirst, Chris Ofili, Michael Craig-Martin, Barbara Kruger, Sterling Ruby, Tracey Emin, and Robert Mapplethorpe.5
Art Speculation
Flipping artworks has become common practice among collectors and dealers alike. This trend, which originated in the early 2000s, has clearly accelerated over the last decade with the rise of a new generation of collectors who are more prone to see art as a financial asset among others.6
A 2022 study show the market for contemporary artwork has become increasingly speculative, with analysis of auction data showing the number of works being re-sold at auction within two years of being made, more than doubling. In 2022 1,033 ‘wet paint’ lots were sold in auction at Christie’s, Sotheby’s and Phillips, up from 478 offered in 2021 – a 116% increase. This suggests that more art is being bought with an eye on making a short-term return – or, to put it bluntly, that buyers are ‘flipping’ wet paint pieces for a quick return on investment. 7
Lisa Schiff, Art Advisor to the Elite, Faces Millions in Fraud Claims | Art & Object (artandobject.com)
One of the most prominent painters practicing in contemporary art today, Adrian Ghenie’s visually arresting canvases, drenched and dashed in floods of rich color, have become an icon of modern painting. The Collector 4, executed in 2009, belongs to a series of paintings in which the artist explores the role of the obsessive collector, focusing particularly on the Luftwaffe commander-in-chief, Hermann Goering. Channeling themes of greed, desire and malevolence, in the present work the collector lies in his bed, his face bloated and frozen in anguish like a ghoulish death mask. Surrounded by paintings, one of which hangs almost from the hand or jacket of a levitating German soldier overhead, a small ceiling light illuminates the edges of canvases and the corners of the dingy room. The Collector 4 is a powerful example of the artist’s mastery of his chosen medium, drawing upon historical and artistic currents from the 20th century canon to produce stirring and psychologically complex images. Contemporary art: The Collector 4 by Adrian Ghenie | Christie's (christies.com)
New Court Filings Show the Magnitude of Claims Being Made Against Disgraced Art Advisor Lisa Schiff. Artnet News. August 25, 2023.
Ibid.
Ibid.
Ugo Scalia, Art Advisor. Is the art world in the midst of a speculative bubble? Jan 17, 2022.
Art ‘Flipping’ Spreads as Speculation Rises Art & Collections
It's a sad commentary on modern life that even art is being used to defraud people and make money. There are so few institutions that we can trust anymore.
Thanks -- well-known swindle... ;-))
Tom Wolf wrote a wonderful book on the subject “The Painted World”