Chasing Myanmar

By MICHAEL MCCULLOUGH          March 21, 2013

The Global Art Market in 2012

I suppose I started to notice it about eight years ago, when art fairs became the major source of income for most new galleries. Before that, collectors were content to visit individual galleries and attend shows based upon the strength of the artists and artwork on view; to a certain extent, they still are. The art fairs, however, offer a broad range of works in a single event which caters more to those who want to “find” works to buy than to those who want to be “shown” them. As a result, the major fairs have become somewhat of a status symbol for galleries to be taken “seriously” by this new breed of buyers, reminiscent of a trend several years ago where artists needed to have a presence on Google in order to sell their art. All of these are the organizing forces of a nascent global market in artwork, where information and public events provide fodder for market participants to adopt certain palates, follow major trends and purchase artwork.

TEFAF, the world’s leading art fair, opened last Friday and held a symposium to review the global art market during 2012. As TEFAF is the first major fair of the season, it’s quite clever of them to assume the wise-old-man role, and I suspect these market reviews will be a regular event at their fairs. In conjunction with this, they released a report, “TEFAF Art Market Report 2013” analyzing trends in the global art market last year. To no surprise, the worldwide art market contracted by 7% in 2012, as the Chinese market beat a retreat and shrank by almost a quarter.

Regrettably, the report suffers two major flaws from which it cannot recover completely. The first is a miscalculation of the estimated size of the private market, an understandable but fundamental error. The second is a failure to detail the volume of sales in each market sector, which is nothing short of lame.

For instance, they say the public market (auctions) makes up 48% of the total market and the private market (galleries) comprises 52%. To people who actually work in the market, these numbers are off wildly; most people estimate the private market to be at least twice as large as the public market. If my estimates are correct – and we know the global public market was at $27 billion last year- then the global private market was around $54 billion, thus the total global market should have been somewhere around $81 billion. To put this in perspective, if the art market were a separate economy then it would rank seventy-fifth, edging out Croatia and just behind Myanmar (which we should still call Burma).

To the second point, the “art market” is broadly defined as fine art, decorative art and antiques; this is a fair-enough definition, but the report fails to compile statistics on the volume of sales within each category. No reason is given for this omission, leaving the reader to wonder whether their statistics on the private market were so unreliable, or unobtainable, that a finger-in–the-air estimate of the total market size was the best they could do, with further examination relegated to the public market. In consequence of this, the report is only useful in its analysis of the trends within each sector of the market but not for comparisons among them.

One interesting observation is that 83% of the total public market by value is centered in three countries: the US, China and the UK. The US regained its leading position with 33% (up 4% on 2011), China dropped to 25% (down 5%), and the UK remained third with 23% (up 1%). What this really means is that the global public market is focused essentially in four cities: New York, Beijing, Hong Kong and London. This is equally true for the private market, as a brief review of the top galleries bears out.

We should also take note of the continuing strength of the high end of the market. In 2012, 66% of the fine art sales on the public market were of works priced over $250,000, even though these works made up only 2% of sales and 4% of total number of artists whose works sold at auction during the year. The top end of the private market, represented by gallery sales over $13 million, reported an average increase in turnover of 55%. The report mentions anecdotal evidence from gallerists that the market continues to be extremely selective, with some galleries reporting greater difficulty in selling low and medium priced works, while other galleries reported strong sales in higher priced works. Indeed, inquire of any artist or gallerist working in the middle market about its strength and you’ll likely get either a blank stare or a burst of profanity; the middle of the art market is sort of like being on the median of a major highway- everything is passing you by and you can’t seem to get off.

Perhaps feeling a need to explain these recent trends, the report suggests that investors are “minimizing risk by purchasing works by the best-known artists at the top end of the market.” This often-proposed explanation of the art market is, at best, incomplete: wealthy collectors choose art based upon their own tastes and preference with little concern for what market watchers think; investors are just following along for the ride. After all, the art market is still a collector’s market, although maybe just barely.

The report also focuses on China, which supposedly became the world’s principal market for art and antiques in 2011 with sales soaring to 30% of the global total. I recall having a good laugh over these statistics when I was in China last year, as sales figures from Chinese auctioneers were never considered by anyone in the market to be vaguely reliable. In fact, Beijing issued regulations last year to clean up an auction industry fraught with fakes, smuggling and non-payments, all of which tend to have an inflationary effect upon the market. TEFAF says the Chinese art market dropped by 24% to $13.8 billion in 2012, mainly due to a slowdown in economic growth in China and a reduced amount of high quality, high priced works coming onto the market. It also seems that many art funds and other speculative investors in China pulled away from the market last year.

Of course, the most under-reported story in the art market last year was Sotheby’s joint venture in China, which gives the company the ability to have its own auction sales on the mainland. Last September, Sotheby’s invested $1.2 million and took an 80 percent stake in a joint venture with state-owned Beijing Gehua Cultural Development Group. The joint venture, called Sotheby’s (Beijing) Auction Co. Ltd., can take advantage of the new Tianzhu Free Trade Zone in Beijing being developed by Gehua. Sotheby’s will likely gain a sharp market advantage in coming years due to the joint venture, thus propelling the company into a dominant spot in both the auction and private sales markets in China. Other perks of the joint venture are Sotheby’s ability to hold sales outside the free-trade zone and, more importantly, their ability to partner with other entities outside of China.

In fact, on Tuesday of this week TEFAF announced that it has entered into “exclusive discussions” with Sotheby’s to explore the possibilities of developing a high-end art fair for China in 2014, via Sotheby’s joint venture. “TEFAF Beijing 2014,” they say, would represent a ground-breaking collaboration between a leading international auction house and the world’s most important art and antiques fair.

Come to think of it, what is the Chinese word for market share?

A Crisis of Confidence?

By MICHAEL MCCULLOUGH          March 14, 2013

The Economics of Authenticating Art

In April of last year, I attended a gathering where Michael Straus of the Andy Warhol Foundation spoke about the foundation’s then recent decision to stop authenticating works by Andy Warhol. It was interesting to hear him say that part of the reason for the decision was the foundation’s confidence that the market for Warhol’s works “can take care of itself.” What this means in practical terms is that galleries, auctioneers and collectors can make their own determinations about the authenticity of a Warhol work when they decide to sell or purchase. Having worked in the art market for a decade and a half now, I’m sure the art market can take care of itself but the problem is that it really doesn’t want to.

Galleries and auctioneers rely on art experts’ opinions because it gives them cover to offer guarantees of authenticity to buyers. Only the criminally insane- though there are some out there buying- would spend millions of dollars on an artwork without some form of an authenticity guarantee. Therefore, if I own an artwork and want to sell it, I must have “the” expert on the artist bless the work; if they don’t then my artwork is practically worthless. To make this more complicated, sometimes the expert doesn’t say “no,” but determines that there is not enough information to form an opinion, which amounts to a vote of no confidence. And if I want to dispute the expert’s “no” or “no confidence” determination then I have to find not one, but two recognized experts who are willing to state that the work is authentic. The net result is that it’s difficult- if not impossible- to contest “the” expert’s authenticity determination. Moreover, sometimes it is the case that there is only one recognized expert for a certain artist’s works. The response of lately by collectors has been to bring lawsuits against “the” experts under various legal notions such as negligence, fraud, antitrust violations, and any other theory their lawyers can conceive. In consequence of this, many of the authentication boards for major artists will no longer authenticate works because too many of them have been sued by unhappy collectors.

What do we say when we want to cast doubt on a long-standing tradition that has ceased to produce useful results? We begin by saying tentatively, “Well, it’s not exactly written in stone.” Authenticity opinions were never meant to be written in stone in the first place, so it was quite predictable that the art market would be faced with this problem. Prices for highly coveted artworks have increased exponentially while the ability of collectors to authenticate those works has remained stagnant. What has changed is that collectors are no longer satisfied with their options.

Several years ago, I saw a cartoon of two art experts looking at a painting by the artist Peter Doig. One expert said to the other, “I’m certain it’s a Doig.” The other expert responds, “I think it might be a cat.” While a great deal of experience and thought might go into an expert’s decision about authenticity, in the end it’s only an opinion along the lines of “Doig” or “cat” at that particular moment in time. That is to say, the experts are offering galleries and auctioneers the ability to avow authenticity subject to future reconsideration while the economic demands placed upon collectors call for assurances on a longer continuum.

As a general tenet of life, people are created equal but opinions are not. When you receive an opinion from a doctor about your health you expect you can rely on it; we know that not every aspect of human body is if fully understood, but we at least expect to be given the variables and a prognosis of the disease. On the other hand, when a stockbroker tells you that a certain stock is a “must buy,” then you should run for the hills because you know something else is coming your way. Experience in life teaches us whom we should trust.

It shouldn’t be a surprise to anyone that art experts’ opinions are rarely meant to be final decisions. Scholarship, they will tell you, changes based upon new information discovered from time to time about artists’ techniques and materials, and new works are found that add to their knowledge of the artist’s oeuvre. An opinion about an artwork is more akin to who will win the World Series this year- it will be a choice of one of two, but no more can be said for certain at this time.

Unavoidably, this is exactly how the courts have treated art experts’ opinions; without exception, all of the lawsuits against art experts over the past several years have failed miserably. Judges and juries are in no position to gauge the authenticity of artwork, so they rely on the trusted experts. The Warhol Foundation was sued twice in the last few years and won both cases, though that smile on the courthouse steps probably cost them several million dollars. This means, practically speaking, that the authenticity quandary is more of an economic problem than a crisis of confidence. A much better reading of the situation would gather that art experts are not being compensated at an appropriate level. Think about other trades where people offer their opinions as a paid service: the credit rating agencies in the financial industry have been subject to vicious lawsuits- and probably justifiably- over the past few years and we don’t see any of those companies getting out of the credit rating business. Why? Because credit rating agencies make barge-loads of money every day- paid for by the very financial institutions that rely on their opinions to sell their wares. Does this sound familiar? If art experts were compensated in the same manner as credit rating agencies then the art market would not be having this debate. The Warhol Foundation should charge five percent of the fair market value of a work in order to authenticate it, and I suspect they would willingly withstand the judicial activism directed at them by any disgruntled patrons.

Just today, I came across another cartoon of two art experts standing in a gallery looking at a taxidermy wolf covered in a sheepskin pelt and enclosed in a glass case. One expert said to the other, “I’m afraid it’s a fake.” How very appropriate.

Our Greatness and Our Goods

A Letter from Deep in the Heart

By MICHAEL MCCULLOUGH          March 8, 2013

Most budget debates in the US Congress are conducted on an astonishingly low cultural and intellectual level, marked by both parties claiming clairvoyance over what is required to “make the country a better place for our children and grandchildren.” While their concern for posterity is always welcomed, it leaves one wondering how the yet-to-be born where regarded when the deficits were created in the first place. After all, it takes a great deal of time and effort to create monumental budget deficits such as the ones we now maintain. And in a sign of utter incompetence, the Congress and President have now left the budget debate in the hands of the bureaucracy to work out; we’re all anxious to see if they can come up with a more rational method of balancing the Federal checkbook.

So far, being “sequestered” – in the budgetary sense- doesn’t seem so bad, but think how strange it is to see budget cuts that don’t disproportionately affect the National Endowment of the Art. Since the Reagan administration, the NEA has been the whipping boy for federal budget excess, as if the small amounts given to arts funding in the US has any real impact on the budget. Perhaps this is because the government’s role in defining and regulating cultural life in America has always been controversial: Americans, true to their pilgrim roots, detest government interference in most areas of life but especially the cultural and spiritual.

Every now and then, usually while visiting Europe, I realize how late the US was to funding the arts. In the early 20th century, philanthropists were creating great museums and libraries, while the Federal government’s support of the arts was- at best- sporadic, leaving many people in the arts community in despair and disbelief. In 1955, President Eisenhower tried and failed to introduce legislation to establish a Federal Advisory Council of the Art, a modest proposal by any means. President Kennedy revived the effort in 1961 but the bill was defeated in the House 166-173 on a roll-call vote (some things never change). Kennedy tried and failed again in 1963, but Congress passed a bill in 1964 creating an advisory body, the National Council on the Art, in the Executive Office of the President. In consequence of this, President Johnson was the first president in American history to employ a Special Assistant to the President on the Arts, a full-time arts adviser. This led to Johnson’s 1965 State of the Union demand for a foundation on the arts and to Johnson’s submission of a bill to Congress in March of 1965 to establish arts funding. Johnson decided that the bill was a “must” piece of legislation and firmly pressed the Speaker of the House to push the Committee of Rules to move the bill to a vote.

The result was the National Foundation on the Arts and Humanities Act of 1965. Johnson stated at the signing ceremony that the legislation was meant to address the curious fact that “[s]omehow, the scientists always seem to get the penthouse, while the arts and humanities get the basement.” The Arts and Humanities Act established the NEA and provided for 26 citizens to serve as advisers to the agency as members of the National Council on the Arts. Members are appointed by the President and approved by the Senate for six-year, staggered terms. Congress has since reduced the membership of the Council to 18 members of the National Council on the Arts and an additional six members of Congress to serve in an ex officio, non-voting capacity for two-year terms.

It’s difficult to know Johnson’s personal thoughts on the arts, and I’m not well familiar with the various biographies of Johnson. It’s unlikely that Johnson’s early upbringing had a major influence on his understanding of the arts; it’s easy to miss Johnson City, Texas while driving on Highway 289 between Fredericksburg and Austin. It seems more likely that Johnson’s approach to the arts was an intellectual one, and this plays out in many of his speeches and writings on the topic.

The legislative files on the Arts and Humanities Act of 1965 in the LBJ Presidential Library- a collection well worth the visit- offer some useful hints at Johnson’s views on the arts. The Johnson White House wrote dozens of letter to supporters of the legislation, but very few written by Johnson himself- most of the correspondence was delegated to aides. However, in a letter from Johnson to one of the early and keen supporters of the Arts and Humanities Act, Dr. Barnaby Keeney of Brown University, he wrote “[w]e have indeed begun to worry as much about our greatness as about our goods- – and it is a giant step forward.”

This theme of intellectual progress is reflected again in Johnson’s first annual report to Congress on the NEA, delivered in January 1967. The first draft of the address, written by aides, was a dry, bureaucratic checklist of accomplishments. To the final draft, Johnson added “[i]n countless American towns there live thousands of obscure and unknown talents. What this bill does is to bring active support to this great national asset.” He continued on to say, “[t]hose who believe that the quality and appreciation of art is one test of a nation’s maturity and greatness will take heart from this report.”

In another letter, written to the actor Kirk Douglas in thanks for his support of the Arts and Humanities Act, Johnson wrote, “[n]o society is truly great unless the arts are alive. If we can help nourish them, then history will favorably record our times.” As memories of the Vietnam War- and of Arthur Miller- fade, perhaps it’s time to reflect more upon Johnson’s support for the arts and his great legacy of arts funding.

Ownership Cui bono

American  Law and Claims to Cultural Property

By MICHAEL MCCULLOUGH          February 14, 2013

There are so many important questions that people who write about cultural property issues never get around to asking. Fascinated as we all are to know the curious circumstance of an object’s removal from a foreign land, the writer never gets around to addressing the more vital questions about the American legal system and how it deals- or does not deal- with ownership rights in cultural property. For instance, does U.S. law provide for a mechanism to deal with a dispute over “looted” cultural property? Does a foreign government have an enumerated right to the return of “looted” cultural property? Many people assume there is- or should be- an absolute right of a foreign government to seek the return of its cultural property. Although this sort of idealism is thought to be central to American jurisprudence, I suggest that American law is chary of the risks involved with entertaining foreign government claims, resulting in the tendency to limit such claims to only the most conspicuous cases.

It is interesting to learn that the word “looted” is mentioned nowhere in the United States Code. Apparently the Congress never deemed the “looted” status of an object something worth considering or worth granting legal significance. Why? My theory is this: the European immigrants to the United States invested scrupulous resource in destroying the indigenous culture of their new home, so much so that the fundamental assumption by the mid-19th century was that all important cultural objects in the United States originated in foreign counties (the corollary to this is that, until relatively recently, there never was any real desire to retain any of the important objects from the Native American cultures). And if all the important objects in your museums and private collections come from abroad, then you really can’t appease every foreign government’s claim of “looting,” which are usually defective on their face for pointing out only the nature of the taking. With the change of a noun or two, we could easily get this discussion on track.

When is a cultural object considered stolen? If an object was stolen, then does the owner have an absolute right to its return? This is a more useful approach to the matter, as the law is not concerned at the outset with how an object was taken- cultural objects have always been taken without consent, and usually by force- but, rather, from whom an object was taken. The difficulty in establishing an individual ownership right in an object considered the property of an entire culture is inherent, but cannot be avoided because, with limited exception, the laws in the United States treat cultural property as personal property that can be freely owned and traded. To put it bluntly, all cultural objects were owned by somebody in a foreign country, and the question in the context of a request for return is whether that somebody is the party making the demand.

Since the 1940’s, US law has prohibited the importation of stolen property: the National Stolen Property Act makes it illegal to transport in interstate or foreign commerce any item known to have been stolen. And an object is stolen if it is taken from its owner without consent and with the intent to deprive the owner of the benefits of ownership. Therefore, in a civil case for the return of an object, a foreign government, or the US government on its behalf, must perfect its claim by proving that the foreign government- and not a private party- owned the object when it was taken. If the foreign government cannot prove ownership in fact, either by deed or by ongoing possession, then US courts will allow them to prove ownership through a law granting the government ownership of all such objects. The only limitation here is that the law granting blanket ownership must clearly and unambiguously declare the foreign state the owner of the objects and the foreign government must actually enforces its own laws as an owner.

At this point I find myself wishing there was a more fitting law attending to the ownership rights of cultural objects taken from foreign countries. The only US law addressing foreign cultural property, the Cultural Property Implementation Act does not prohibit the importation of stolen cultural property unless it was stolen from the inventory of a museum or cultural institution, and the theft occurred after January, 1983; objects from illegal excavations and other takings, as well as objects stolen from museums or cultural sites before 1983, are not covered by this law.

A recent legal case in a Manhattan federal court deals with these very issues and will likely provide us with further guidance once a decision is rendered. The dispute itself is very simple: a man purchased a sculpture at a London auction in 1975. It was kept in his family for thirty five years until his wife decided to sell it at auction in New York at Sotheby’s- hardly a unique story and one repeated time and again during the British Empire’s decline in the last century. The sculpture itself, a sandstone figure of a god, was made in Cambodia over ten centuries ago and was placed in the courtyard of a temple where it stood for most of that time until it was removed at some point that nobody can be exactly sure of. Shortly before the auction was to commence in March, 2010, the Cambodian government asked Sotheby’s to return the sculpture because it was said to be stolen from the temple. The US government then leaned its weight into the debate by seizing the sculpture and starting a legal action in federal court to force the owner to forfeit the object so it could be returned to Cambodia. Not a very complicated story, one would think, on the initial read.

Your first reaction to this tale might be the most useful one; if the Cambodian government actually owned the statute and they can prove it was stolen from them, then they should get it back. If not, then tough luck.

The fundamental question in this case is not really a matter of American law in the first instance, as when an object is stolen in a foreign land, it’s that country’s laws which establish the theft. Once an object is deemed stolen under a foreign law, the National Stolen Property comes into play and the claim can go forward. Which gets to the core of the case against the Cambodian sculpture: did Sotheby’s know that the object was stolen? Or could they have assumed the object was not stolen unless some specific information came to their attention suggesting otherwise? The answers to these questions, like most other things in life, depend upon where you sit.

Sotheby’s believes there was never any proof that the sculpture was owned by the Cambodian government, nor was there any evidence about when the sculpture was removed from Cambodia and by whom. In reading between the lines of their court papers, one can conclude that Sotheby’s either determined or presumed the Cambodian government did not own the sculpture and no specific information in the object’s known ownership history suggested it had been stolen, as there are many reasons why a religious object would have been removed from the country, especially during the time of civil war. Who can argue with a fair assumption on a fair day?

The US Department of Justice believes the temple was built by a Cambodian king in the 10th century and ownership of the temple was passed to successive regimes down through the centuries until the French colonized the region. The French provincial laws from colonial Indochina establish that the temple complex was owned by the French colony, which then passed ownership by succession to the modern Cambodia state. If this is true, it follows that Sotheby’s should have known that the temple complex and all of the structures on it were owned by the Cambodian government.

Sotheby’s argues that the theory of the temple’s continuous succession of ownership from the 10th century onward is undocumented and the French colonial laws are unclear and cannot be recognized under the National Stolen Property Act as establishing the Cambodian government’s ownership in the sculpture. The government, they go on to say, cannot infer knowledge of a theft based upon obscure French provincial laws, and without actual knowledge of the theft they cannot be guilty of importing or handling stolen property.

It’s true that an object can only be considered stolen under US law if the foreign country’s declaration of ownership is clear and unambiguous, as well as actually enforced as such. The US government’s theory of the Cambodian government’s ownership is a novel one and untested by previous court decision. It will be up to the Judge Daniels to decide whether succession in ownership of the temple by political regimes coupled with the French colonial laws are reliable markers of the sculpture’s ownership.

The irony here can’t be avoided: the sculpture may have been removed from the temple to avoid the wrath of the Khmer Rouge, who, in the early 1970’s, were not only slaughtering hundreds of thousands of innocent people but cutting down large parts of Cambodia’s historical past, with particular vitriol for its religious icons. And there can be no doubt that the United States’ illegal carpet bombing of the Cambodian countryside in 1970 played some role in fall of the Cambodian government leading to the ascendancy of the Khmer Rouge regime, although the exact impact is still being debated by historians. Perhaps the sculpture was rescued from the temple by concerned citizens and sold in order to insure its protection- it wouldn’t be the first time a baby was put into a basket downriver in the hopes of its survival. But the resolution of this case depends primarily upon whether the Cambodian government owned the sculpture at the time of its taking.

Writing a Wrong

New York Changes its Laws to Protect Artists

By MICHAEL MCCULLOUGH          February 7, 2013

In an interview in 1976 with Barbaralee Diamonstein-Spielvogel , the great dealer Leo Castelli said, “[t]he function of an art dealer, well, can be various; certainly, a good art dealer, an art dealer who really cares for art and not about making money, should be to find new artists, make them known to the public.” When asked the insightful question about his role in the business of selling art, he responded, “I am more than somebody who wants to sell paintings. The selling of paintings seems to be a secondary thing. I have to, of course, sell them to finance my activity, but the activity really is the important game, my gallery. And I am very happy to just tag along in the midst of tremendous financial difficulties as long as I can keep the gallery going.”

That, in my opinion, is the way that the art market is supposed to work. Not to say that there is anything wrong with art dealers making money- the economics of operating a gallery have changed dramatically since Castelli’s time- but the basic principal should still stand: at no point in the calculation should the dealer’s interest in the artwork be greater than the sum total of the artist’s. The good dealer understands that the primary objective of a gallery is to promote the artist and the artwork, and there is plenty of money to be made along the way. But, there are people pretending to be art dealers in order to have fun, to throw big parties and to make buckets of money, even as the artists’ interests are abandoned as secondary concerns. And when it all goes horribly wrong with these ventures, as it always does, the death knell sounds when the dealer makes the insalubrious choice to pay the gallery’s debts before paying the artist.

Take the case of Sae Hyun Lee, a talented painter from South Korea, who, like most other artist, painted for years before receiving critical acclaim for his work. After several successful solo exhibitions in Europe, Mr. Lee received an invitation in 2011 from Nicholas Robinson Gallery for a solo show in New York. Ten paintings were consigned immediately. Two of the paintings sold before the show was over and Mr. Lee received his commissions, but things went very silent even before the gallery stopped returning phone calls about the return of the unsold artworks. It wasn’t long before the arrival of a terse letter from Nicholas Robinson’s attorneys about how the gallery was out of money and contemplating bankruptcy. Sadly, as it goes, neither the artwork nor the money could be accounted for properly, which means not at all.

This might have been the end of the story, save for the fact that Mr. Lee is represented in Seoul by Chan-kyu Woo of Hakgoje Gallery, a dealer cast from the Castelli mold. Mr. Woo engaged a New York lawyer, Henry Jung to press for the return of the artwork. Mr. Jung is a former Assistant District Attorney and a very good lawyer who had the very unpleasant experience of being my roommate in law school. Only after Mr. Jung filed a lawsuit in federal court last March, the judge issued a temporary restraining order against the gallery, and Nicholas Robinson himself appeared at a court hearing, did it become clear that Mr. Robinson had sold the paintings and spent the $370,000. Unfortunately for Mr. Lee, Mr. Robinson’s pockets were a bit light; in fact, they were empty. “How could this happen in New York, of all places?” asked Mr. Jung.

It’s not supposed to. In the 1960’s, the Arts and Cultural Affairs Law was passed in New York state to give artists certain protections: artworks consigned by an artist were deemed trust property and the proceeds of their sale were considered trust funds. This was done to dissuade irresponsible people from getting into the gallery business. The problem with the law was that it did not include any measures for enforcement and penalties, which, in a perverse way, enabled a dealer to use an artist’s sales proceeds to pay the gallery’s own operating expenses. If the gallery failed financially, the artist lost the money. In essence, a gallery that absconded with artwork or funds was subject to the same penalties as the drycleaner who failed to return your suit, although the dry cleaner would likely be decent enough to speak with you in person instead of through a lawyer, and might even apologize for the inconvenience.

The District Attorney’s offices might seem like the next port d’escale for Mr. Lee, as selling somebody else’s property and taking the money sounds like it should be a crime. Like most other things in life, it’s more complicated than it seems. That is to say, the failure of a dealer to pay the artist becomes a crime only if the dealer’s inability to pay is itself the result of an underlying criminal act. You may recall Larry Salander went to jail because, among other things, he used the proceeds of art sales to pay off prior debts in a Ponzi scheme. It would also be a criminal act for a dealer to use an artist’s money to enrich him or herself personally. In either example, the crime would be grand larceny which in New York State is pedigreed, like most other things, based upon the dollar amount involved. Law enforcement officials are often interested in art fraud cases, as they represent a welcomed break from drug dealers and purse snatchers; nevertheless the criminal nature of the event needs to be fairly certain for them to get involved. At first blush, the failure of a dealer to pay an artist is not necessarily indicative of any crime, perhaps just an unfortunate business decision. As a result, many of these cases are not investigated and artists, like Mr. Lee, are forced to bring civil lawsuits against galleries and gallery owners in order to protect their rights.

Remarkably, the balance of power shifted in October to favor the artists; a new law was enacted in New York giving teeth to the trust property and trust fund provisions in the existing law. Now, the artwork and the sales proceeds are considered property held “in statutory trust” and cannot become the property of the gallery or be subject to any claims by gallery’s creditors. Perhaps more important, the law adds clear penalties for its violation: a dealer who absconds with artwork or an artist’s money commits a misdemeanor criminal offense and is subject to criminal prosecution and fines. I’ll concede that it’s rare for a defendant convicted of a misdemeanor charge to serve jail time for a first offense, but the new law is ripe for judicial firmness in the most outrageous cases and always a peril for the previously tarnished.

Of course, all of this comes too late for Mr. Lee, as American jurisprudence abhors the ex post facto imposition of new criminal punishment for prior acts. Nonetheless, our government in Albany has finally acted to protect one of New York’s greatest assets, its artists, who are no longer subject to the caprice of businessmen who treat the loss of a painting like a bad investment in a barrel of oil or a bushel of corn. Everybody- well, almost everybody- knows that New York City’s vivacity emanates from the young people who come here to share their creativity with the world. How much longer could New York be called “the art market capital of the world” if the law couldn’t protect vulnerable artists?