The year 2013 ends very much as it began: with money at the center of an art world that is increasingly rotten. It was, after all, only late February when this newspaper received the following email from a prominent public relations company.
“Hi, I hope you are doing well! I wanted to see if you were interested in profiling my client Peter Hort, son of Susan and Michael Hort, in anticipation of the spring’s upcoming art fairs, including the Armory Show, of which the Hort Family hosts the annual Welcoming Brunch. Peter and his wife Jamie are two of New York’s most notable young art collectors, each born into dynastic art collecting families.
“Peter, along with his mother, father, and siblings, has developed a renowned reputation for collecting works from early to mid-career artists, who later become giants in the contemporary art world. Peter, along with his family, also provide grants to emerging artists without representation through the Rema Hort [Mann] Foundation and have a proven track record of helping develop lesser-known artists into superstars.
“In the last three years artists [Rashid Johnson], Jon Pestoni, Alex [Olson] and Keltie Ferris have all seen their prices more than double. Over the last decade, artists Kehinde Wiley, Elizabeth Peyton, and Richard Prince have seen the value of his[sic] work appreciate by more than 100%. The Hort Family Collection, of which Peter Hort is a part, invested early in each of these artists. The Hort Family has a reputation for creating more value for works they collect.
“In regular finance, if you have insider information about a stock, it is illegal to invest in that stock. In the art world, it is not only legal, it is done regularly. Peter Hort, along with his wife and family, are the people who create the insider information.”
Agog at the idea that a noted New York philanthropic family was willing to pump their press profile by admitting their role in a rigged art market, I instantly thought to reproduce the email in a column. A few days later, I had misgivings. After all, I rationalized, I knew some of the players, and I could certainly find far more egregious — not to mention outright criminal — examples of shadiness in the art world. But looking back at a year of unprecedented graft, I find that this email constitutes an important kernel of proof. Proof that, in New York especially, art is no longer just art — it’s crooked finance. The kind of crooked finance that today is not merely accepted among otherwise reputable folks, but encouraged.
A year-end wrap-up of art in Gotham would be meaningless without mentioning the single greatest transformation to have struck the visual arts globally: namely, that the art market has turned into one big corrupt casino, a place where price fixing, market manipulation, bribery, forgery, theft, and money laundering have become as popular as risky mortgages were in 2007. The evidence of this transformation is everywhere, if one cares to look. There are scandals, court cases, indictments, and suspiciously skyrocketing auction records. In China, the world’s largest market for art and antiquities, it’s now widely acknowledged that most auction sales are routinely defaulted on. (According to Forbes, the “vast bulk” of that country’s $13 billion art market activity goes “unpaid,” yet is still widely used for the purposes of “money laundering or the bribing of government officials.”) Today, everyone knows about the importance of China’s economy to the world’s stability; but has anyone thought about the impact that that country’s fraudulent art business may soon have in the U.S. and Europe?
In 2013, the headlines of the world’s major news outlets — which paid only token attention to the art trade until it officially became a plaything of plutocrats — provided a perfect play by play of the toxic effects of funny money in the art world. There were the $80 million Pollock, Rothko, and de Kooning forgeries, as reported in The New York Times, that sank the mighty Knoedler & Co. (one of the nation’s oldest art businesses). That story was subsequently followed by Mexico’s Proceso‘s reporting on the New York shopping sprees of Elba Esther Gordillo, president of that country’s teacher’s union, who was brought low by charges of embezzling and laundering $200 million. During the investigation, Mexico’s Attorney General uncovered a significant New York art connection. Records show Gordillo spent at least $2.75 million at two uptown New York galleries: Leon Tovar and Marian Goodman.
More recently, The New York Times chronicled the November conviction of Vilma Bautista, ex-personal secretary to Imelda Marcos, who it seems has more lives than a movie zombie. Bautista, prosecutors demonstrated, sold a stolen Monet to an English hedge-fund manager for $43 million. But not before implicating a worldwide web of respectable agents, lawyers, bankers, and art dealers who became willing middlemen for a hot masterpiece. Their connivance — and that of many art worlders afflicted with Enron-grade avarice — was summed up by one government lawyer with experienced aplomb: “Everyone held their noses and closed their eyes because it was in their shared financial interest to do so.”
But don’t just take my word for it. Believe the Basel Institute on Governance, a nonprofit research organization in Switzerland, which recently raised the alarm about what it calls “the high volume of illegal and suspicious transactions involving art.” Along with U.S. officials, this organization has rightly identified a perfect storm of chicanery trading as mere financial speculation. The math is bookie simple: Add a virtually unregulated market to the recent emergence of art as an alternative to cash, and you have a business capable of secretly transferring untraced billions in assets anywhere in the world. Consider the recent case against the infamously pomaded Helly Nahmad in this light. The scion of New York’s most powerful art family admitted last month to running a $100 million gambling ring out of his Madison Avenue gallery. Because he copped a plea in exchange for lesser federal charges, what we might have known about the role art played in those transactions is now lost forever to speculation.