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Criminal charges have been filed against Ezra Chowaiki, the over-extended art dealer who confessed to his silent partner in September that he had been playing fast and loose with clients and their money. Since that time, Naftali Leser sued to recover his Giorgio de Chirico late work that he acquired from the gallery in 2015. Leser’s suit caused the gallery to file for bankruptcy.
On the face of it, Chowaiki’s actions are already a major scandal. The bankruptcy reveals debts of $12m or more against assets of a mere $300,000. What’s worse, Chowaiki is accused of a Producers-like scheme of over-selling shares in paintings that were not his own as well as using the proceeds from sales of works consigned to pay for other works. There also seems to be evidence that Chowaiki was using his clients’ artwork as collateral for loans.
It’s all a bit of mess that will take some time to unwind. Some of the consignors, including Jeffrey Loria, San Francisco dealer Rowland Weinstein, Pierre Sebastien, van Gogh expert Bogomila Welsh-Ovaharov and the painter Joao de Brito, may find themselves helpless to stop the bankruptcy administrator from selling their works to satisfy Chowaiki’s creditors.
The now-notorious art shipping, storage and freeport king, Yves Bouvier, also had a Degas, Danseuse en Rose with Chowaiki that may now be at risk. When the Park avenue dealer declared bankruptcy, the Degas painting wasn’t on the premises.
It was held, along with a number of other works by the disgraced dealer Ely Sakhai. In 2000, both Sotheby’s and Christie’s discovered they had the same Paul Gauguin painting consigned to competing auctions. When the real work was identified, and the fake one withdrawn, a forgery scheme run by Sakhai was uncovered. Sakhai was having paintings copied and using real certificates of authenticity to sell the fakes. Later he would apply for new certificates claiming the originals were lost.
It took until 2005 before Sakhai was sentenced to 41 months in prison.
If Sakhai’s posession of eight of Chowaiki’s works wasn’t enough to cause concern, Leser’s lawyer, Judd Grossman, learned this week from the bankruptcy administrator that a number of the works held in inventory have been marked by the administrator as potential forgeries.
The true extent of Chowaiki’s misdeeds may never be known. If Chowaiki has been routing works through Sakhai for some time—and Sakhai had returned to his former scheme—there could be a number of forgeries floating around the art market. That raises the specter of another Knoedler-like scandal. Indeed, David Dangoor, Chowaiki’s silent majority partner, claims to have been misled in ways that echo the Knoedler case. Dangoor’s move to expedite the FBI charging Chowaiki—and avoiding charges himself—seems to be informed by that previous case and designed to build a firewall between Dangoor and Chowaiki’s creditors.
Dangoor isn’t the only one with an interest in isolating Chowaiki. The art dealer is a member of the distaff branch of the Nahmad family but one who seems to have been kept at a distance (a strategy that seems to have been validated with these recent events.) Whether Chowaiki can rely on his extended family for the kind of legal help and influence that helped cousin Helly Nahmad weather less serious charges in a milder prison environment than he might have had to otherwise.
At this point, we don’t know if there was a long-running scheme to copy works on consignment. So far the scandal is confined to Chowaiki’s taking money from his consignors to settle debts owed to others and stealing works from his clients. The consignors have yet to face the pinch of losing their works to the bankruptcy administrator if they failed to file the appropriate paperwork. As the civil and criminal cases move forward, there’s the potential for a great deal more collateral damage here.