Fraud, Theft & Restitution
Marion Maneker5April 22, 2009

A Look at Art Loss Register

A few weeks ago, we noticed how the Art Loss Register kept popping up in a variety of fraud, theft and restitution cases. That prompted us to ask Chris Marinello, General Counsel of the Art Loss Register here in New York to sit down with us and walk through the basics.

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We first got interested in The Art Loss Register’s work when we saw that they were involved as a mediator in a restitution case. How much mediation do you do and how does it work?

We do a great deal of that mediation work. But it’s not our core business.

Obviously, our core business is locating stolen art. We have a database of over 250,000 stolen items. These items have been reported to us from various sources – collectors, dealers, museums, FBI and other law enforcement throughout the world. That list keeps getting larger and larger every year as we accumulate these theft notices.

In 1991, when this was founded, it was determined that what good is having a list of stolen art that just keeps getting larger unless someone actually goes out there and looks for the items that are on the list, and that’s what the Art Loss Register does.

The way we do that is we have teams of people in offices throughout the world – we have offices in Cologne, Amsterdam, a main office in London, New York, New Delhi, and Paris. What we do is we go through every single auction catalogue, fine art fairs–like Palm Beach, the Freize fair in London–looking for what’s on that list of stolen artwork.

When we make a match, that’s when it comes to my desk. As a recovery specialist, I then work towards recovering the stolen art.

How does the recovery work?

There’s no two cases that are the same.

I’ll give you a perfect recovery example. We recently were vetting the Palm Beach Fair, and at one dealer’s stand, we noticed a painting. One of our art historians noticed a painting that had been reported stolen by the Buffalo Club in upstate New York. They contacted me. I contacted the dealer.

I had the piece pulled from the show, from the fair. I then contacted the Buffalo Club, who contacted the police. Then I coordinated with the dealer and explained the law to the dealer here in the U.S. about stolen art. I inquire where she got the piece from.

It turned out she bought it from Doyle Gallery here in New York. I contacted Doyle to find out where they get it from. Then I turn over as much information as possible to the police, and then let them run with the potential criminal investigation. We’re a free service to law enforcement, so they appreciate our work.

How do the dealers feel? I assume they’re not getting compensated.

Interestingly enough, part of our service is to encourage dealers to use the Art Loss Register in due diligence searching. In this particular case, I got the dealer back the $6,000 that she paid for the picture by contacting Doyle and saying, “You sold this lady a stolen picture.” They went after their consigner. It goes continually around the chain until you hit the thief themselves, and generally they get arrested.

So by getting the dealers on your side and getting her restitution, you’re increasing participation across the board.

Absolutely, it’s important to have cooperation…in order to solve art crimes and stem the flow of stolen art. It has to be a worldwide effort, and dealers have to cooperate with collectors at museums. Everyone needs to cooperate but it’s been an uphill battle since we were founded. We now have a majority of the art community subscribed to the Art Loss Register.

How are the basic costs paid?

The fair will hire the Art Loss Register and pay us a fee, which generally comes out to our costs. We send art historians with the database on laptops, they go to the fair. It’s really time-consuming. They’re there for a few days beforehand, a few days at the fair, going through every item that’s being offered. We just did that at Maastricht, it’s incredible…we sent teams from three of our offices to the Netherlands to vet the fair. It’s an incredible time-consuming effort.

Do you usually find something?

We found seven there. And we have some very interesting Holocaust cases going on based on our recent efforts there and other stolen art cases throughout the world. I’m dealing with the Italian Caribinieri on one right now.

Are the restitution cases different from stolen art?

They are different, but it’s still stolen – it was stolen by the Nazis, just like it was stolen by a common thief here. Of course, the claims are much older, documentation is scarcer, but there’s a real moral claim there that fills some of the holes in the documentation that are necessary to negotiate one of these claims.

When people think of stolen art, you think of famous cases and what ends up in movies. It seems the bulk of stolen items are fairly low value.

You only hear about the Van Goghs and Picassos…here on my desk behind me is a good 120-something live cases we’ve got going on right now, ranging from $2 million Van Goghs to an $8,000 painting that was taken by the Nazis from a woman in Belgium.

Do you work with insurance companies?

Insurance companies, when they pay out on a piece to their collector or museum, they become the owner of the piece. Most of the major art insurance companies subscribe to the Art Loss Register, and we recover stolen art for them, as well.

Many of the fine art policies allow theft victims to buy back the piece for the payout amount, and we negotiate or at least minor that payout between the collector and the insurance company. A lot of times, insurance companies have destroyed their records, but the ALR saves everything.

We may have records that an insurance company has long ago destroyed, and we can inform the collector, “By the way, we have your policy, and guess what, you can buy the Van Gogh back for the $100,000 that you were paid out 30 years ago.” Most fine art insurance companies, to get business and to maintain business for collectors, do offer that in their policies. Not always, but…

You mentioned the uphill battle about organizing this. Since 1991, it can’t have always been easy to get everyone to cooperate.

Of course, we have the thieves that are unhappy that we’re on their trail. But we have auction houses that–if I’m pulling a piece from Christie’s or Sotheby’s–are not too happy they’re losing out on commissions.

The collector is unhappy because they’re losing out on a sale.

The dealer’s unhappy because they’re not going to buy a piece at a low price that they can go ahead and resell for a high price.

So we’re interfering in the business of art, and it makes a lot of people very unhappy. In fact, I had one dealer approach me at an art fair. “Why don’t you search your collection, your shop, with the Art Loss Register?”

“Because I have $50,000 in this piece, and I have to protect it.”

“What if it’s stolen?”

“I don’t want to know that.”

That attitude is still out there. There’s people and dealers and collectors that don’t want to know, because they like the idea. Move it along. What they don’t realize is it’s only going to get worse. If they put it in the chain of commerce without checking, someday they’re going to get hit with a lawsuit or an inquiry from an attorney, and it’s going to cost tens, twenties, hundreds of thousands of dollars defending a claim when they could have just done a $35 or $75 Art Loss Register search. It’s that simple.

One of the big problems with the art market is how unregulated it is on the sales side, but there are other facets that the market itself needs to confront and build structures to accommodate, like the Register and having people use it, or suffer the consequences of it being opaque and difficult.

And eventually have a piece taken away from them. That’s what happens. I’m telling you, there’s a hundred pieces that are going to be taken away from somebody that paid good money for a work of art, and all they had to do before they buy it was check with us, and we would have told them it was stolen.

But they didn’t do it, and they’re going to lose it.

And the more convenient you make it, the less there is any sort of excuse…

It’s extremely convenient. We now have a website, they go to our website, www.artloss.com, they don’t even have to see my ugly face, they can do it all on the computer, search a piece, and we’ll send them a certificate, let them know that they checked.

Who was behind the founding of the Register?

Insurance companies and auction houses got together and determined that it was time to do something about the problem of stolen art. Out there in the next office, you’ll see we’ve got volumes of art that had been reported stolen by the Art Dealers Association of America, they just kept reporting it.

In the Sixties and Seventies, art theft wasn’t a major problem, but what good is it? We have volumes of these reports.

Then the International Foundation for Art Research took those records, and through IFAR and the insurance companies and the major auction houses, the Art Loss Register was formed, and we were sent out amongst the art world, the reluctant art world, to say, “OK, we’re here, we’re going to clean up your act,” and that’s what we’ve been doing since 1991.

How much progress do you feel you’ve made in the last 18 years?

Incredible progress. We now have a great deal of the legitimate art market searching with the Art Loss Register, reporting losses to the Art Loss Register.

Law enforcement around the world is cooperating with us. We have an excellent reputation in cooperation with major auction houses worldwide, and there’s a lot more work to be done, but we even have the courts that are citing the Art Loss Register searches in major decisions, saying that the Art Loss Register is sufficient due diligence.

So the failure to do it is misfeasance as opposed to not knowing to do it.

Absolutely.

You said there’s still stuff left to do. What would you like to see happen?

We have to get a lot more of the provincial auction houses on board, because the thieves know if they go to Sotheby’s or Christie’s, they’re going to get nailed. So what do they do, they go to upstate New York, to a lot of these smaller auction houses, and we’re signing them up slowly but surely. We’re doing our best to offer them our services at cost. It’s something they can pass on to the buyers and sellers. It’s protection.

People will think nothing about buying a used car, but they’ll take it to the garage first to have it checked out. But they’ll spend $10,000 on artwork without having anything checked. It’s ridiculous. So people need to get in the habit of checking with us before they buy something.

Is there any pattern to the thieves, like the type of operation? Is this people who just happen to know something about the art world or which galleries have poor security? Is it more organized?

Hollywood would like us all to believe that there’s some kind of organized gang out there, some kind of crazed Dr. No-type collector looking to pick off Picassos.

But we haven’t met him yet. We think that art crime is just common thugs, some better than others. We’ve got some moronic art thieves that have been captured on film. We have some very clever art thieves that have managed to get away with some really high-value works and keep them for many, many years, and these works of art sometimes trade in the underworld as collateral for drug deals, weapons deals, international terrorism. We’ve come across all that.

Like car theft, there’s not someone with a sense of, “If you steal these classes of objects…” You’re saying it’s more of an impulse crime? Or are people actively targeting certain types of dealers or galleries?

It’s crime of opportunity. The thieves are trying to get cash, that’s what they want. They don’t want art, they’re not stealing art to hang it on the wall of their flats. They’re looking to get cash out of it, and that’s why they put it back into the marketplace.

They have to be smart enough to know where they can turn a piece of art into cash. Where do they do that, a small auction house?

We find that art tends to travel. They may steal it from upstate New York and try to unload it in Louisiana or bring a piece down to New York or steal something from London and sell it in the Netherlands.

A lot of smaller pieces that are easy to carry…gold items will get melted down, even other commodity metals will get melted down and put into the marketplace. The thieves are looking to get cash, that’s what it’s all about. If they see a gallery that may not have proper security and they think they can pull up to the front of the gallery with a minivan and take a nine-foot painting out of the gallery, it’s been done successfully, but we manage to get it back for the gallery.

It took a few years, but we did it. The thief managed to get a nine-foot painting out of a gallery when no one was looking.

When you have a nine-foot painting in the back of a van, where are you going to turn that into cash?

In that instance, they took it from Madison Avenue here in New York and the picture ended up in San Francisco.

Which has a very large gallery community.

Sure.

There have been stories of Palm Beach galleries having things stolen. I assume more recognizable art is easier to steal because it’s relatively obvious.

Those are my cases, those Picassos. I’m not going to say that thieves read the art trade papers, but they know a Picasso. If they hear that someone’s got a Picasso, then they want it. Picasso is actually the number one reported stolen artist on the ALR database, so we have a number of paintings and drawings that we are working on and have recovered that are Picasso pieces.

Okay. What happens after you discover something was stolen?

A lot of people think that it’s easy to do this, but it’s not. I guess the most important thing is the other services that we offer to the art trade, and that will be mediation services, arbitration. Because when we do have a match, we know that we’re not dealing, in many instances, with a crook. We’re not dealing with a thief. It’s been so many years, we’re dealing with a good faith purchaser.

You have a sticky situation with a high profile consigner.

We have seen, time and time again, big, big cases where both sides will spend $200,000 on legal fees to recover a $400,000 picture. It just doesn’t make sense. It’s ludicrous to go out and always hire an attorney and battle it out in the courts for a picture that’s just not worth it. The Art Loss Register has successfully negotiated over $300 million in claims worldwide without resorting to litigation.

That’s where you add value.

Exactly. We do it discretely, confidentially, we can explain the law, we are completely open, we lay our files out on the table, nothing to hide, we show all parties the facts, the police reports, the law in the various countries that the art has traveled, and the ramifications of not working something out. We try to get the parties in a room, sit down and talk, and if we can work out a deal, it’s in everybody’s best interest.