Devising the Perfect Crime:

Selling Questionable Fine Art at Sea -- White Collar Crime

White collar crime

Criminal investigators break down criminal acts into two categories: street crime and white collar crime. Street crime is identified by violence, brutality, mayhem and uncontrolled outbursts of unacceptable social behavior. Crimes of murder, rape, assault, and robbery fall under street crimes. Such deviant behavior is usually carried out by those individuals who are uneducated, and from a lower strata of society.

White collar crimes are crimes of a non-violent nature, carried out by trusted individuals, usually highly educated and from the upper strata of society. White collar crimes usually involve misrepresentation of products and services falling under various fraud statutes. Mortgage, security, telemarketing, bank, identity and art crimes are examples of white collar crimes. In these cases the criminal intentionally misrepresents a product or service to secure a benefit from an unsuspecting dupe. Selling a forged work of art would constitute a white collar crime since it is being misrepresented as authentic, the buyer is paying for the misrepresentation and the seller knowingly asserts it is authentic when in fact it is a fake.

White collar crimes are usually invisible in that the victim does not know that he or she has been taken or suffered a loss. Even if the cloak of invisibility is removed and the victim realizes that he or she has been defrauded, the criminal process does not operate favorably for the victim. Municipal police forces are not equipped to address white collar crimes since their focus is on street crime. If a complaint is legitimized, prosecutors are not financially equipped to carry out prosecutorial activities when matched against the legal finances of the white collar criminal. If in fact the white collar criminal is prosecuted, chances are he or she will end up in a prison farm or hotel making cookies. In point, the probability of being caught, prosecuted, and incarcerated is very low.

Introduction

Fine art is measured by its level of authentication and appraisal value. Authentication takes place following scientific analysis, provenance and connoisseurship. Sound appraisals are based on hammer prices or auction records indicating what prices were paid for a given work of art. Authentication is never provided by the seller and appraisals are never based on list prices. Authentication is the first necessary step, followed by appraisal. If authentication is not provided or is falsified, the appraisal is worthless.

Normally, sales of fine art take place on shore, regulated by various governmental agencies serving as consumer watchdogs. It is noted that fine art sales are treated as any other consumer sale. There is no special set of standards or laws applicable to art sales as there are in the case of automobiles and real estate. Bogus art is treated in the regulatory environment in the same way as dresses or laptops are. If you buy a questionable work of fine art and are dissatisfied with it because it was evaluated and found to be of questionable authenticity, the government allows you to file a complaint against the selling agency. Is it possible for the selling agency to get around being served with a complaint against selling shoddy or inauthentic merchandise? Yes, and it begins with moving your operation outside the purview of those agencies serving as consumer protection bodies. Consider the following composite picture of buying fine art on the high seas.

Art Piracy Beyond the Territorial Waters

You have just retired and have always wanted to take an ocean cruise to a far away land. You have also found out that many cruise lines have fine art auctions on board where it is possible to buy fine art below what it sells for on land. You and your spouse embark on the cruise and, as the ship sails out, you are approached by the fine art auction representative about attending an onboard art auction. You are pretty impressed to be contacted by an auction house. After all, auction houses seem only for the elite. The representative allows you to view the works and notes that they all come with a Certificate of Authenticity and an appraisal of value.

The representative notes that the purchase prices are likely to be much lower than what you could expect to pay on shore, so that you could probably make some money selling them back on land. The rep also notes that the auction company provides a credit card to make it easy to purchase the art. You are also told that by bidding on works to keep the prices moving up and keep the environment energized, you can gain extra points on the works you ultimately win. You are elated. (This is called shill bidding and would be a violation of any auction, even Internet auctions.)

The atmosphere of the auction setting and process is marked by free-flowing alcohol, with a spirit of gaiety prevailing. You bid on and win a few pieces and sign the sales voucher and can't wait to get home to receive your new found valuable artwork. You believe that your $250,000 art investment will garner a hefty return when sold to a gallery on land. You are comfortable knowing that whatever you purchased is risk-free since the laws of the US protect consumers from fraud and fakery. Are consumers protected when they purchase commodities on the high seas? They are not!

Current policing and prosecution activities relating to white collar fine art crime

It is a well established fact that white collar fine art crime is hard to track and identify. It is difficult to prosecute and ultimately jail the guilty individuals. Those who buy fakes do not know they have been duped until much later, if ever; the questionable art is not always easy to identify as bogus; the producers and/or sellers can easily abscond under a cloud of tap dances and legal manipulations and, even if prosecuted, end up making cute little embroidered napkins in a minimum security country-club like facility.

There are few structures to deter white collar crime from being committed and weak ones to charge, prosecute or incarcerate the white collar criminal. In point, the low probability of getting caught, tried and convicted still constitutes a possibility and therefore would seemingly serve as a form of deterrent. As such, what would diminish this probability even further? What would the perfect white collar fine art crime consist of? It would consist of a systematic and structured process of securing financial benefits via selling misrepresented fine art on the high seas. Take a work supposedly by a famous artist, state that it is authentic, appraise it for far more than it's worth, and sell it at sea. Add a system and pertinent structures protecting such sales from criminal prosecution and you have the perfect crime. What are the system and the structures encompassing the perfect fine art crime?

Selling at sea: who is the regulator and administrator of justice?

Americans live in a structured legal system. If they feel they have been the victim of a crime, they call the police, file a complaint and the system addresses the complaint. If the complaint has some intrinsic value, it will be addressed in a court of law. We are comforted in the belief that a system exists with structures to respond to our complaints. At sea, however, the identification of the regulator and administrator are difficult to establish.

Laws in the U.S. and internationally are complex and nearly impossible for the average citizen anywhere to decipher. Administration of justice is also a difficult issue in that some countries do not have the structures or finances to carry out prosecutions. In point, selling questionable art at sea fits into a major gap in regulatory administration and prosecutorial energies. There is no clear system or structures to respond to crimes at sea. Questions of where the crime took place and who is responsible for carrying out adjudication of the complaint will not be easily answered and processed.

The Role of the Federal Bureau of Investigation

Crimes against Americans at sea fall under the jurisdiction of the FBI. The Art Crimes Unit of the FBI exists to investigate art crimes. Unfortunately, their ability to carry out their responsibilities is dependent on the cooperation of the nation having jurisdiction over the territorial waters in which the crime took place. Some nations cooperate, many do not. As far as the cruise lines responding and cooperating, it is evident from the spate of complaints made that a certain reluctance seems to exist. Recently, when asked for more manpower to investigate the trillions of dollars of Wall Street abuses, the federal government responded in typical fashion by saying there is no money available. One would not be going beyond the pale to assert that if there is no money available to deal with one of the greatest crises in American history, there would not be any money available to process art crimes at sea.

Bringing it back home

Sea cruise vessels and companies using such vessels to sell products to Americans on board are obligated by law to address complaints.

In the case of onboard art sales, the response of the cruise ship lines and the art sellers has mostly been one of 'catch me if you can.'

It starts out with an auction full of alcohol, shill bidding and payments made with credit cards. Note here that when the buyer realizes that he or she just purchased a Rio Rancho homesite in New Mexico currently situated under five feet of quicksand, the seller is sitting in the home office noting that he or she provided all the documents indicating that the buyer accepted the sale as is, and knows that the person buying the questionable item with the gallery credit card cannot cancel the charges even if the work is not what they bought.

Now here is a humdinger of a strategy. The gallery sells a work and labels the sale "as equal to" meaning that when the product arrives, it is not necessarily the work purchased. Imagine ordering a Mercedes and ending up with a Yugo because the contract stipulated it "as equal to." The notion of "equal to" can be almost anything the salesperson provides or represents. The seller leaves the buyer with no recourse since he ordered and agreed to a product equal to and not the product he or she saw and wanted. In point, the gallery and cruise ship company covered their bases in that the buyer can't remove the charges since there is no mechanism on the credit card to cancel because of product problems, and the fact that the buyer accepted an equal product prevents any complaints being processed, since legally the buyer can't really identify the product purchased since the product is unspecified or unidentified. Keep in mind that various governmental agencies have complaint structures for consumers receiving services or products received but not ordered. If you received a laptop and it did not work or was the wrong laptop and the company that sent it refuses to respond to the fact, the Federal Trade Commission or the State Attorney General will accept complaints if justified. The fact that the buyer has agreed to an “as equal to” work from the gallery will prevent the complaint from moving ahead. The regulator would argue that the buyer did not receive damaged goods or services but received what was ordered – an "as equal to" product. The second facet of the "as equal to" strategy is that since most of the fine art is sold framed, the specificity, or the details of the work are never known. The buyer can't claim that he or she received less than ordered because the order specifics were never established. The buyer bought a framed as equal to artist "X". As long as they receive a framed work by "X" the seller may argue that he or she has satisfied the purchase terms. The claim of defective, or damaged cannot be argued because the purchase did not identify specifically what was ordered. It is like purchasing a car under the same conditions and receiving the car without a motor or wheels. The seller could easily argue that you purchased a car, you received a car. The contract did not require that the car was to have a motor or wheels. Again, the strategy places the seller beyond any violation of the law. If the buyer lodges a complaint the regulator would note that the buyer did not practice due diligence or follow caveat emptor. He or she should have requested to have the frame of the piece of fine art removed and checked the purchase order to make sure that the buyer is getting what he or she is ordering.

Dealing with the Seller

You have almost no protection buying at sea since it is unclear who has jurisdiction over the sale of the questionable product. US agencies have little control except sidebar agreements to cooperate; the charge for the questionable work cannot be removed since the credit card issued by the gallery has no mechanism for cancellation, and the product purchased does not have to be what was presented, only "as equal to." The next step is corporate. Corporate does not respond initially. They hope you just go away. It is called stonewalling. You begin a letter writing program that finally gets a response from person "A" who diverts the response to person "B" in a classic structure of "Who is on first." The buyer begins to engage in processes leading to nowhere. The seller really has no intention of returning the money but to try to convince the buyer that the product received was actually better than the product ordered. Here the seller resorts to the expert game. Expert A states in a document that his or her analysis reveals that the piece shipped is much more valuable than the piece ordered. What makes A an expert? He is a member of the ancient order of conceptual estimators. He also notes in his appraisal that he is not responsible for anything written in the report. The use of the expert is to force the buyer to spend money to contradict the expert hoping that the idea of having to spend additional monies will kill the complaint.

The game is delay and the strategy is not to return the consumer’s money. The longer the delay of action, the better chance that the buyer will just give up. In a recent Federal Trade Commission case against credit reporting agencies the complaint was that the agencies maintained a strategy of keeping the complaining customer on hold for excessive periods of time leading the complainant to just give up.

Through a system of selling fine art outside US regulation, cruise ship lines and their vendors have successfully operated a $300 million a year industry. Basing art sales at sea in the absence of any clear set of regulations, standards, or policing of purchases of art products exist in a legal void or conundrum. If you cannot process a complaint for an onboard sale to a policing agency the complaint has no force. Since the payment made was on a corporate card with no cancellation mechanism you can't reverse the charges. Even if you made the complaint back home it would not be processed since you agreed to accept "as equal" products. Corporate sellers of the art product are situated not to accept your complaints but to delay them to the point that you just go away. Some have not gone away but have hired attorneys and ultimately settled. The terms of settlement are always confidential and therefore remain secret. The fundamental question raised is how much did it cost to settle?

Unprotected and unregulated sales, weak or absent policing bodies, corporate structures disabling consumer response, stonewalling complaints, providing so called expert witnesses to contradict or frustrate complaints and shuffling and tap dancing around the ones that get through make fine art selling at sea the perfect crime. Sell fine art for whatever price the consumer wants to pay for it even if it is questionably authentic and not appraised accurately and walk away with not even the remotest possibility of being apprehended. Selling questionable art on the open seas constitutes the perfect crime. The perfect crime is a crime whereby the conditions are present in theory but in practice disappear when an attempt is made to delineate how such a crime took place. Since there is no agency taking or processing the complaint no violation of law is apparent. The perfect crime has become a logical contradiction: it exists but really doesn't exist. Something cannot be and not be. Logically meaningless statements about a phenomenon have no significance. They are empty. The perfect crime is perfect because it did not occur. Will you be the next victim of the perfect crime?

— by John Daab Ph.D.  |  January 14, 2009  |  Print Version - PDF

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