In the past, when one thought of “art” and “risk,” World War II–era looting and restitution often came to mind. While these issues are certainly still prominent, the importance of due diligence and risk management have increasingly come to the forefront as the relationship between art and finance deepens and expands. The 2016 Knoedler forgery trial underscores the importance of due diligence research on all works of art and shows the problems that can arise if the accuracy of information used in a piece’s authentication is assumed but not verified.
Artwork authentication is a threefold process, involving scientific analysis of a work of art; connoisseurship, which is the examination by an expert of the composition, style, and other visual characteristics of a work; and provenance, which involves tracing the ownership of the work back to the artist, and validating that all the owners, dealers, auction houses, galleries, and other parties included in the provenance have been verified and documented through inventories, sales receipts, correspondence, sale or exhibition catalogues, or other means.
Provenance research is central not just to tracing the whereabouts of a work of art over time, but also to the piece’s authentication. It is crucial that those entering into an art transaction—or those who want to be sure proper due diligence has been done on currently owned artworks—have a neutral third party with the necessary expertise, such as K2 Intelligence and its researchers and analysts, conduct thorough provenance and due diligence research prior to any transaction. The below discussion of the issues at the heart of the Knoedler case shows the importance of such an investigation.
In 1995, Ann Freedman, director of Knoedler & Company, one of the most reputable and established galleries in New York, was introduced to Glafira Rosales, a virtually unknown art dealer from Long Island. Rosales told Freedman that she was in possession of a priceless cache of 63 Abstract Expressionist paintings formerly in the collection of one “Mr. X.” Rosales claimed that she had purchased the paintings from Mr. X’s son, who had purportedly acquired them through David Herbert (1920–1995), a well-known figure in New York art circles in the 1950s and 1960s who had connections to many of the alleged creators of the Rosales paintings: Rothko, Pollock, de Kooning, Kline, Still, Newman. Freedman would ultimately sell about 40 of the paintings for a profit of roughly $40 million. Not one of the paintings, however, was present in the artists’ respective catalogues raisonnés. Even more unusual for such a large number of works by such prominent artists, all of the paintings were unknown prior to the point Rosales brought them to Freedman.
In 2003, the International Foundation for Art Research (IFAR) produced a report casting serious doubt on the authenticity of a supposed Pollock purchased from Knoedler by banker Jack Levy that was also accompanied by a provenance including “Mr. X” (Levy subsequently returned the painting and received a refund). Then, in 2012, The New York Times published an article stating that Pierre Lagrange, unable to consign his “Pollock,” purchased from Knoedler, to either Christie’s or Sotheby’s due to its lack of provenance and absence from the artist’s catalogue raisonné, was suing Knoedler. Lagrange ordered forensic analysis on the painting, and the results revealed that two pigments within the painting had not been invented until after Pollock’s death in 1956.
After reading the Times article, other collectors became suspicious of the Abstract Expressionist works they had purchased from Knoedler. One such collector was Domenico De Sole, a prominent businessman and chairman of Tom Ford International and of Sotheby’s, who had purchased an alleged Rothko from Knoedler in 2004 for $8.3 million. In April 2012, he sued the gallery for $25 million in damages. Central to the case was veracity of the painting’s provenance: was there a documented connection between the painting and David Herbert? Or had Rosales, Freedman, or Knoedler & Co. fabricated the provenance?
A careful and thorough review of the David Herbert papers at the Archives of American Art in Washington, D.C. and at the Harvard University Art Museum Archives in Cambridge, comprising an examination of exhibition catalogues, correspondence, advertisements, journals, and sales receipts, revealed that not one artwork mentioned or pictured in the archives matched—in terms of title, dimensions, description, or composition—the details characterizing the Rothko, or the Rosales works more generally.
This lack of findings indicated that the provenance had in fact been fabricated. Purportedly, Herbert was selected as the intermediary in the sale of these paintings from the artists to Mr. X because Herbert was involved in the Abstract Expressionist scene in New York at the time these works would have been created—and his death in 1995 meant that he could neither dispute nor verify his connection to the works.
In September 2013, Rosales admitted that the paintings were indeed fakes; all 63 were painted by Pei-Shen Qian, a Chinese artist living in Queens who has since returned to Shanghai and is unlikely to be extradited. Rosales pleaded guilty to charges of charges of wire fraud, money laundering, and tax evasion.
De Sole et al. v. Knoedler Gallery, LLC et al. went to trial in January 2016. The core of the testimony concerning provenance was that neither the Rothko nor any of the Rosales works were mentioned, illustrated, or alluded to in either collection of Herbert papers. On February 7, 2016, Ann Freedman settled out of court. On February 10, the gallery settled as well.
At its core, the Knoedler case highlights the importance of provenance research for all artwork. Fundamentally, provenance is based on facts and is supported by documentary evidence; it is not based on circumstantial evidence, assumptions, or hypotheses. That is not to say that there will never be a lack of certainty in a provenance; in fact, uncertainty is not uncommon, especially for older works of art. But it is crucial that any uncertainty be identified as such and explained (using a question mark or the qualifications “possibly” or “probably,” accompanied by an explanatory footnote or remark), and not presented as fact. Documentation establishes provenance; provenance cannot be established in its absence.
The case also emphasizes to buyers and investors that all transactions come with a risk that sellers are withholding information, providing (whether knowingly or unknowingly) inaccurate or incomplete information, or simply failing to conduct appropriate and thorough due diligence, and stresses the need for thorough, independent due diligence before any transaction is finalized.