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WANTED, TRUE OR FALSE – IS THE MARKET FOR RUSSIAN ART FORGERY BETTER VALUE THAN THE MARKET FOR THE GENUINE ARTICLE?

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By John Helmer, Moscow

Faking of Russian paintings by forgers, certified by fraudsters pretending to be experts, is on trial in St. Petersburg and Wiesbaden, Germany, but until the verdicts are delivered, there is no certainty of value, no reliable pricing. Suspicious canvases are surfacing regularly in all the European capitals, including Moscow. But as the growth in market value of genuine Russian art slows to a halt, with the decline in fortune of Russian art-buyers, has the profit margin in faking become a better line of business to be in – if you are a seller?

Post-19th century art is the best line to be in if you are forger, faker, and fraudster because the genuine materials – canvas, paper, brushes, pencils, and paints – are cheap and easy to get hold of. This is also because there has been less time for real experts to accumulate catalogues of real works, with demonstrable provenance – that’s provable ownership from the artist’s hand, to collector, to gallery wall. The destruction of the Russian civil war, followed by the German invasion, and the persecution of Jewish artists and collectors have provided cover stories for Israeli and other crooks to dig up, or otherwise discover Russian works never known to exist before – because they didn’t.

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Adolph Hitler presents Hermann Goering with “The Falconer” by Hans Makart as a gift on January 12, 1938. The work, painted in 1880, was bought first by Hitler from art dealer Karl Haberstock. How much below market Haberstock asked as his price; what he had paid for the work himself, and to whom; and what Hitler paid Haberstock are questions not easily answered. Nor is whether the work was as genuine as Haberstock told Hitler, and Hitler told Goering. When thieves trade in art, forgers have plenty of camouflage. If the Markart had been faked, and Haberstock was conning Hitler, the current owner of the Makart, the Neue Pinakothek in Munich, had better double-check [1].

Italians, French, British, Swiss, and Israelis have all worked out — many of them faster than Russians because they had a head-start before the Soviet Union collapsed – that what is needed to maximize profit is to corner supply in a commodity the market believes is scarce enough to pay a premium for. Russian art between 1900 and 1930 has been a lucrative corner of the market, because the artists had short lifespans, leaving poor trails of their works and what they did with them.

This business – falshak it’s called in Russian – requires three people: the forger to produce the fakes; the dealer to market them for sale and collect the proceeds; and the expert to sign an authentication certificate verifying what he or she knows to be false. According to evidence given in a St. Petersburg court case now underway, “almost 70% of paintings in the art market by Russian artists of the first half of the twentieth century are fake.” For more details, see [2].

If caught, the culprits may be arrested. But very few go to jail – almost none for as long as they would if they had stolen the equivalent in cash, cars, jewellery, or real estate. Sending the art-fakers to prison isn’t easy, for it must be proven that the expert wasn’t making a genuine mistake; that the seller intended to deceive the buyer; and that the work was in fact faked. And all of this evidence must be gathered before the statute of limitations runs out – that can be as little as 3 years in Russia and Germany; 5 years in France; 6 in the UK and US.

In falshak the risk is not as high as you might think that the cheated buyer can prove that what he’s got on his wall is a fake. The forger, fraudster and liar don’t have to prove the work was true; the victim must prove it false. “Falshak is better business than hashish or cocaine,” a European dealer and specialist in Russian art, comments. “The costs of production are much cheaper. The sale price and profit are great, and the risks of prosecution and conviction much smaller.”

The prosecution of Elena Basner, a former curator at the State Russian Museum in St. Petersburg and expert on the Russian avant-garde, involves charges relating to a painting by Boris Grigoriev, apparently dated in 1913.

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After more than a year of testimony in the Dzerzhinsky District Court in St. Petersburg, there is little doubt it’s a fake. Basner has admitted most of the evidence of her attributions. She says she was paid $20,000 for authenticating the Grigoriev. For a summary in English of the case details, plus claims in defence of Basner that she has been set up by academic or business rivals, read this [3]. At the latest court hearing on April 14, Judge Anzhelika Morozova complained at the prosecutors’ delays.“How long will the prosecution ask for the continuation of the case?.. At the next meeting we will resolve all issues related to the completion of the trial in the case.” For more on the hearing, click [4].

Basner’s defence is that she erred innocently, and in good faith. Her past involvement in certifications has also spilled across the border, where the Fnnish authorities are investigating dozens of apparent fakes with Basner’s warranties attached. No charges have been filed there, yet. How many innocent mistakes can be made before they become provable fraud is the point still to be tested in both the courts of Russia and Finland.

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Left: Yelena Basner; right; German police display one of the alleged fakes in Wiesbaden.

The Wiesbaden case involves three partially named Israelis [5] who are accused of trading faked paintings by Kazimir Malevich, Natalia Goncharova, and Alexander Rodchenko. The Israeli press has identified the name of one of the accused as Yitzhak Zarig [6]. Their dealing establishment in Wiesbaden was called SNZ. Reportedly, their take was €11 million. No evidence of the cost – forgery of the painting, transportation, storage, rent, payoffs to accomplices – has appeared. The mark-up is believed to have been about one-thousand percent (that’s 1,000%).

More than a thousand works were confiscated by the German police as part of their investigation, which began two years before the arrests. The trial has not been completed, and there is no verdict yet.

A source in Spain says he bought paintings by other Russian painters – Alexandra Exter (below, left), El Lissitsky (centre), and Nikolai Suetin (right) – from a dealer in Münster, Germany. It was later revealed the dealer got the works for sale on commission from SNZ in Wiesbaden.

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When the cheated buyer presented his demand to his seller for return of the money, the dealer declared insolvency. Although contracts between the Münster dealer and the SNZ gallery have been uncovered, the evidence of deliberate fraud is based on false information about the provenance of the works. When the dealer sold them to his mark, he didn’t mention SNZ as the source. That discovery took six years to make.

Because of technological advances in detection, and because the US tested, then dropped the first atomic bombs on Japan in 1945, the presence or absence of caesium and strontium isotopes in artworks can determine whether they were produced before or after 1945. There are many other detection methods; this one was first proposed [7] by Basner.

Improvement in detection methods allows more confidence in authentication, comments James Butterwick, a London dealer and specialist in Ukrainian and Russian avant-garde painters. “Ten years ago there were a great many small dealers selling Russian avant-garde works – dealers who wanted to make a quick name for themselves with discoveries and big deals. From the Wiesbaden evidence we know the forgeries were mass produced in their thousands and sold outside the big auction houses. There appears to be less of that now.”

ButterwickButterwick (right) concedes there is little knowledge in the market about how much forgers are paid, and what the mark-up is for falshak. The Wiesbaden case revealed the existence of forgery workshops, with records of who produced the fakes. Details of what these painters were paid are not available. Experts suspect the forger may get $5,000 per canvas; the expert $20,000 for an authentication certificate. But the work may start trading at $750,000, and keep rising until suspicion beats demand.

“No self-respecting dealer would touch these things,” Butterwick says about works he’s certain could not have been produced by the purported artist. He acknowledges, though, that the profit incentive may be big enough to overcome self-respect.

In Moscow, a specialist on modern Russian art agrees; she asks not to be named. “If the artist is alive, faking his work is simply dangerous, because the truth will emerge very quickly. If an artist is well-known but already dead, there is usually a foundation that deals with the study of his work, and provides the statistics, the so-called catalogue raisonné, which is going to identify all his work, from birth to death, so to say. Therefore, the appearance on the market of uncatalogued or freshly discovered work no self-respecting gallery or auction house will accept — without the expertise of the foundation, and that is usually controlled by relatives of the deceased artist. The emergence of a new work always runs into a lot of mistrust, and will be checked very carefully, especially now that there’s the technology to do it. Accordingly, it makes sense in market terms to forge not very famous but deceased artists whose lists of works have blank spots. The costs are scanty, but the benefits can be enormous.”

What if the relatives and friends of the dead artists calculate they can go on making profits for themselves by “enlarging” the supply beyond the catalogue? Chashnik, a student of Malevich, died in St. Petersburg in 1929 at the age of just 28. His son, Ilya Ilich, helped organize the first major exhibition of his father’s work outside the Soviet Union. That was at the Leonard Hutton Gallery in New York in 1979.

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Left: Ilya Chashnik junior in St. Petersburg with US friend and dealer, Lev (Lew) Nussberg; right: the Hutton catalogue of 1979. Nussberg’s subsequent dealings in works by Chashnik, Malevich, and Suetin have led to controversy and litigation. For details, read this [8].

According to the Hutton catalogue and a current expert on Chashnik, there were no paintings in oil by Chashnik in the 1979 show. Can the artist have executed genuine oil paintings, and if he did, where have they been for the past 40 years?

Alexandre ArzamastsevLast month in Paris the Tajan art auction-house offered [9] for sale Russian works by Chashnik and El Lissitsky. The Tajan dealer and specialist for impressionist and modern art is Caroline Cohn; the expert for authentication, Alexandre Arzamastsev. One of two Chashnik works for sale was this one (right), identified as an oil painting titled “Suprematist Cross”. There is a date for Arzamastsev’s recent certificate, but no date for the painting, and no record of its provenance. The price estimate by Cohn was between €18,000 and €20,000. Cohn says the works were sold on March 8. “We don’t have any other artworks by this artist for the moment,” she adds. She was asked to clarify “the provenance of the works you have just sold, and how do you characterize the seller (individual, institutional; Russian, non-Russian) and the buyer (same)? Finally, there is no recognition in Moscow of the name of your expert, Mr Arzamastev – what can you tell me about him?” Cohn refused to answer.

The Chashnik case is far from unique in European modern art. The younger they die, and the more unrecognized and impoverished their short careers were, the easier it can be for their survivors – lovers, children, friends – to make discoveries of hitherto unknown work.

There is the well-known case of Christian Parisot, for example, friend of the only daughter of Amedeo Modigliani; expert on the painter; and also President of the Archives Legales Amedeo Modigliani, and thus keeper of the catalogue of Modigliani’s works. Was he the faker and fraudster he was charged with being by the Italian police in January 2013? For the start of the case, read this [10].

Along with Parisot (below, left) and his suspected accomplice, art dealer Matteo Vignapiano, the police seized 59 fakes including 41 sketches, 13 graphic designs, four sculptures in bronze and an oil painting. The Financial Times [11], the New York Times [12] and other mainstream media reported the arrest, because of its impact on the multimillion dollar market in Modigliani works. There’s been no comparable report of the outcome of Parisot’s case, if it has ended.

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In May 2008, Parisot had been convicted by a Paris court, imprisoned, and fined for selling faked drawings by Modigliani of Jeanne Hébuterne, his partner. The tipoff to the police in that case came from Hébuterne’s great-nephew. But did the Parisot arrest in Italy five years later put a dent in the market for genuine Modiglianis? “There is no doubt,” claimed the New York Times days after the new charges were made public, “that the 1919 portrait of the Italian painter’s lover Jeanne Hebuterne [above, right] on sale at Christie’s is genuine. And Christie’s hopes that if anything, the clamour for genuine works by the Italian artist will have increased. Hence its upbeat predictions for the imminent auction of the key portrait.” That painting of Hébuterne was sold by Christie’s in February 2013 [13] for £26.9 million ($42.3 million).

Still, the profitability of faking is bound to stay ahead of the genuine article, for reason of the combination of volume and margin — the supply of fakes is unlimited, but because it is also controllable and low-cost, compared with the high-priced rarities, so the seller may end up making more money than the genuine trade.

Another con is the forger who claims he’s an artistic genius whose only mistake was, not the faked painting, but the faked signature at bottom or back. This is the case and claim of convicted German forger dealers, Wolfgang and Helene Beltracchi [14]. “I was in prison not for the painting, but for the signature,” Wolfgang summed up. “I regret the wrong signature,” The pair did time for their “mistake”.

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In Moscow Yekaterina Kartseva, co-owner and founder of Privatecollections.ru, says it is difficult to be sure whether the market in fakes is growing or contracting at the moment, compared to the genuine trade. “For sure I can say that such cases [falshak] come up regularly. This trend has emerged since the 1970s and 1980s, in many areas of modern and contemporary art which are easiest to forge. The high-profile cases are rare. Less high-profile cases occur quite regularly. Many of my friends who bought a painting at auction can no longer obtain confirmation of the authenticity, and many auction houses are bombarded with lawsuits. Most problems arise with online auctions, since there it is more difficult to keep track.”

According to Kartseva, “the art market is designed unlike any other. Because of the nature of art as a product, it is certainly more prone to fraud. Also, this stimulates the very high price of some works, when it isn’t clear whether the picture is bought for itself or for the cash equivalent of the asset investment. The market rules are such that there is, and can be until the contrary is proven, the opinion of recognized experts who have the legal right to issue attributions. Notwithstanding, it has often turned out that they deliberately fabricated conclusions. So there is nothing that can surprise me.”

“In Russia, unlike the West, no license is required to give an authenticating examination. All and sundry can do this, though to improve the reliability of the expertise we play a role. In Moscow there are also the Tretyakov Gallery and the Grabar Centre. There is still a problem with the process. Authentication usually ends up with a sentence like ‘a work does not conflict with the brush of a certain author’. There’s no clarity. Often too, the views of some experts do not necessarily agree with the opinion of others.”

Yevgeny Zyablov is chairman of the board of Art Consulting [15] in Moscow. He himself has been the victim of faking of the Suprematist artists Malevich, Suetin, and Chashnik, as this US court case attested [8]. “Our company,” he says, “was created in order to protect investors, so we have a very tough procedure. Therefore, the British market accepts our expertise for the insurance of private collections.”

1799_9Zyablov (right) doesn’t think the trade in falshak is increasing. But one reason for this, he concedes, is because the genuine trade is contracting. “The market has ceased to grow during the crisis. Despite the individual auction records, total sales have decreased repeatedly (by three to four times). During the growth of the market, investors (buyers) had high hopes for value appreciation, and they bought a lot of things that were attributed by some authors without evidence. For example, there was no provenance. Now all these things are ‘out of the market.’”

“The second reason is fairly obvious. If the market itself has fallen in volume, the number of people who want to do fakes and sell them is greatly reduced. Thirdly, expertise on counterfeiting in the market has been developing strongly. The education of market participants has become much higher as saturation in the supply for examination in the market has become obvious. This applies to Russia and to the rest of the world.”

The art market has a paradoxical attitude towards experts, Zyablov points out. “There are cases when artwork does not pass laboratory examination, but then we see that the seller had an institute to expertise it and the work goes on the market, where it is sold and bought. So, first of all, when applying for assessment it is necessary to pay attention to the reputation of the expert institution. Examine all possible institutions. The standard range for technological expertise for a painting is between $2,000 and $3,000, but there are studies which are conducted over a much longer period, so the cost will be completely different.”

The lucrativeness of falshak is creating a market for experts, Zyablov reports; and in this market the cost of the expertise is in inverse relationship to its reliability. “One of the challenges of the market is for those who stand on the side of the investor. The fact that you protect a buyer — noone wants to know about it, and the market tries to hide it. This means the market is fighting against you. Because you [on the buyers’ side] do not miss the controversial things, while those who stand on the side of the sellers are more lenient in their assessments, so the market promotes them. In this way, there is a better business for those who are less strict. Here’s a paradox. The market is trying to raise the reputation of flexible experts, to show that they are the most important, while those who are more exacting, they are treated negatively in the market. In this case, where the trend is protective of the buyer, it’s going against the market.”