• Tue. May 30th, 2023

A Dealer Who Referred to as Out the Art World’s Lack of Due Diligence Is Himself a Victim of Lisa Schiff’s Alleged Ponzi Scheme


May 26, 2023

Parallels among two blockbuster lawsuits involving art fraud raise queries about “ideal practices.”

Incoming Pace Gallery vice president Adam Sheffer. Image courtesy of Pace Gallery.

Is the old adage “practice what you preach” not applicable to the art planet?

Current legal proceedings highlight how apparently complicated it can be even for these steeped in the art marketplace to regularly adhere to that tips.

A prominent New York dealer who has served as an professional witness in lawsuits regarding art offers gone awry has simultaneously allegedly fallen victim to a fraudulent art advisor, it would seem.

Adam Sheffer is a veteran dealer for galleries such as Cheim &amp Study, Pace, and Lisson, who even served as a president of the prestigious Art Dealers Association of America (ADAA) in current years. He is now a private dealer and advisor.

But, even though he was not identified by name, he is referenced in a current lawsuit that sent shockwaves by way of the art planet. It requires the alleged fraud perpetrated by Lisa Schiff, a higher-profile art advisor who has now shuttered her advisory business and has initiated the procedure of sorting out creditor claims, according to papers filed in New York State Supreme Court.

The suit, which Artnet News reported on earlier, accused Schiff and her company, SFA Advisory, of breach of contract, conversion, fraud, breach of fiduciary duty, and conspiracy. The plaintiffs had been identified as genuine estate heiress Candace Barasch and Richard Grossman and, all through the complaint, additional referred to the involvement of “Grossman’s spouse,” even though not especially by name.

The plaintiffs are pursuing their shares of the missing profit from a $1.eight million sale of an Adrian Ghenie painting, Uncle three (2019), tied to the now-embattled dealer. The suit lays out that Barasch purchased a 50 % stake in the painting and that Grossman and his spouse acquired the remaining 50 %, or 25 % each and every.

A Rudolf Stingel painting from 2012 is at the center of the Philbrick case. Image courtesy Christie’s.

But Sheffer also not too long ago emerged as an professional witness in a separate, extended-operating legal matter that also scandalized the art planet. That litigation, filed a lot more than 3 years ago, reflects a dispute more than a multimillion-dollar Rudolf Stingel painting connected to disgraced art dealer Inigo Philbrick, who sold many competing ownership shares in the painting prior to attempting to flip it for profit at a failed Christie’s auction earlier that identical year.

In an affidavit dated May possibly 12, Sheffer as professional witness referred to as out a lack of due diligence on a convoluted fractional art flipping deal gone awry.

Sheffer weighed in on a 3-way fight for manage of the roughly $six million Stingel, by noting that a single of the competing parties, Satfinance, controlled by investor Sasha Pesko, “did absolutely nothing to defend its interests, as it neither retained possession of the Stingel Picasso, nor registered its ownership interest through a UCC-1 nor a filing with the Firms Residence in the United Kingdom.”

The emphasis on due diligence is all the a lot more striking provided that Sheffer himself seems to be a single of the aggrieved parties, while not a plaintiff, in the suit brought against Schiff. That lawsuit was filed at practically the identical time as the affidavit (May possibly 11), in New York State Supreme Court.

But back to the case regarding the Stingel. In the professional witness testimony, Sheffer addressed the part of FAP (Fine Art Partners), a German-owned art investment  company whose claim for the Stingel and other works touched off a firestorm of litigation, and in the end criminal charges, against Philbrick in late 2019 (Philbrick is presently serving a prison term for  the enormous $86 million criminal fraud that he masterminded and eventually pleaded guilty to.)

According to Sheffer, as with Satfinance: “The identical can be stated of FAP: It neither filed a UCC-1 nor a Firms Residence registration, to thereby give notice to the planet, so to speak, of its ownership interest in the Stingel Picasso, nor did it retain possession of the artwork,” according to Sheffer’s affidavit.

When Sheffer took aim at the parties in the Stingel case for not documenting their ownership nor retaining possession of the operate, the suit against Schiff for the Ghenie specifies that no a single other than Schiff had manage or possession of the Ghenie painting immediately after the acquisition was created in 2021.

Neither Sheffer nor his lawyer responded to request for comment or queries about irrespective of whether they documented their ownership interest in the Ghenie. The lawyer for Pesko and Satfinance declined to comment.

Sheffer states in his affidavit that he has “concluded hundreds of transactions among galleries and private collectors, museums, and foundations and [is] versatile in understanding the nuance of a variety of kinds of art transactions based on the artwork (e.g. key versus secondary market sales) and variety of purchaser (private collector versus museum or foundation.)”

Adam Sheffer and Richard Grossman. Image courtesy Patrick McMullan.

Meanwhile, the particulars of the Schiff case, as Hollywood writers like to say, rhyme with these of the Stingel matter.

According to the Ghenie lawsuit: “Upon completion of the sale, the [Ghenie] Artwork was not delivered to any of the Plaintiffs individually. As an alternative, by way of [Schiff] Defendants, it was supposed to have been sent from storage at Crozier Fine Arts to Barasch’s art storage unit at Uovo in Delaware. Even so, instead of sending the Artwork to Uovo, Schiff brought on the Artwork to be sent to Maquette Fine Art’s storage facility in Delaware, with Plaintiffs bearing the pro rata expenses of packing and shipping the Artwork. When upon details and belief the Artwork was placed in a storage unit in Plaintiff Barasch’s name, on a day-to-day basis Defendant Schiff controlled the storage unit and what was in it.”

Whether or not or not everyone filed an ownership stake (and it does not seem that they have) the 1st Schiff complaint tends to make clear that she controlled the sale proceeds and failed to distribute them, such as that she “exercised dominion and manage more than the Artwork, thereby seriously interfering with Plaintiffs’ superior rights of dominion and control…[and] exercised dominion and control more than sale proceeds from the Artwork.”

The lawsuit asserts that Schiff was emailing “Grossman’s spouse” in early May possibly even as “her substantial company network was imploding as a outcome of her undisclosed embezzlement of funds and artworks belonging to Plaintiffs, and others—which came to light on Monday, May possibly eight, 2023.”

Sheffer specified that his affidavit in the Stingel case was submitted in response to counsel for Guzzini Properties. Guzzini is a shell business run by billionaire U.K.-primarily based brothers Simon and David Reuben. The Reubens loaned Philbrick $six million with numerous artworks reportedly pledged as collateral, such as the Stingel. They are amongst the parties in search of ownership or title to the Stingel following the failed Christie’s sale.

Sheffer, who wrote that his compensation for preparing the affidavit is $400 per hour, added that the compensation “is not dependent either on the opinions I express or any outcome in this litigation.”


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