Trust But Verify? Some Lessons From Recent Art Prosecutions

Federal prosecutors in New York are continuing their focus on bringing significant art fraud-related cases. The prosecutions over the last few years appear to have some recurring fact patterns and themes, usually involving allegations that an art agent breached their fiduciary duty to one or more clients in high-value art transactions. The guilty plea last week in the Lisa Schiff art fraud case, involving charges that Schiff bilked her clients of $6.5 million through transactions related to about 55 pieces of art, is the most recent instance of this trend. The Schiff case provides a good reminder to players in the art market that they will be well served to exercise a healthy skepticism about counterparties and ramp up their due diligence processes — or else risk ending up as a victim in the next big case.