Buried in this Wall Street Journal story of a young financier who seems to have defrauded the insurance companies he purchased through a private equity firm he owned, is a complex transaction involving a painting thought to be a copy of a Caravaggio:

Before Southport’s first insurance-company purchase had closed, he arranged for a Southport entity to buy a painting, purportedly by Caravaggio, titled “David in the Act of Picking up Goliath’s Severed Head,” according to Delaware court filings. The painting, nearly identical to a Caravaggio in Madrid’s Prado museum, would later play a role in the asset swaps.

The filings show Southport agreed to pay $40 million but put down just $1.5 million, with the rest due more than five years later.

Though it was deemed a likely Caravaggio by a now-deceased Italian art expert, three auction houses have said in the past it was probably a copy painted long ago, according to filings in a Florida court case involving a trust that had owned the painting. […]

As for the purported Caravaggio, Duff & Phelps said $128 million, part of it Freestone’s money, had been funneled into entities that owned rights to the painting. The entities would have value only if the artwork was sold for more than the $38.5 million still owed to the seller.

Young Financier’s Insurance Empire Collapses (Wall Street Journal)