One scam ...Many permutations?
In 1999, I was showing with a gallery in Toronto...I was offered a deal, a scam actually, that I turned down, but because it was explained to me, I know how it worked...
The deal (scam) was this...I get one of my paintings on paper appraised...Say, it appraised for one thousand dollars...Then, I agree to produce say 50 to 100 works on paper, for the client...because the client is buying a bulk amount, all at one time, I agree to sell them for 10 percent of what my one work on paper appraised for...So, one hundred dollars times 50 is 5 thousand dollars, or times 100 is 10 thousand dollars...
It meant 5 or 10 thousand dollars to a possibly poor artist, so a few of the scallywags took the deal...They bought 50 pieces of paper & basically formulaically produced shoddy multiples of their work- probably only worth a hundred dollars anyway, but because they had appraised one good piece prior to the multiples, all the works benefitted from the high appraisal number...
Park West is multiplying by 10...The number appears the same as the Canadian number...When criminals run scams, they often use the same numbers game...because criminals are not usually smart nor good with numbers nor original in thinking...It appears the Park West numbers are, take a common print worth one hundred dollars, multiply by 10, then sell it...
The clients who bought the 50 multiples, then had a tax accountant say that they were worth, on paper, 50 times one thousand dollars, appraised value...So, the work was appraised at 50 thousand dollars...Even though the artist only got ten percent of that, 5 thousand...
Then, the client donated the 50 multiples to a big museum type place or any institution...In Canada, you get a huge tax write-off for making an art donation...
So, the client immediately got a tax write-off worth 50 thousand dollars, had shelled out only 5 thousand for the benefit...
The Park West numbers are similar...A common Dali print sells for one hundred dollars on Ebay...Park West sells it for one thousand dollars...It is 10 times the value...The forged signature supposedly adds the inflated amount...I am not sure what the clients in the States or Britain did with their inflated cost multiples, but I wonder if those countries also have tax loopholes for art donations?
Or does the similarity between the Canadian scam & the Park West scam in the States just end with inflating prices by a factor of 10???
Is the point of buying art to re-sell it quickly & make a profit? Was that the clients motivation? Was it for a tax loophole, for eventual donation?
Was it to launder money, from both ends, buyer & seller? Was it for tax avoidance (legal), to move money from one country to another with a better tax deal? Or was it tax evasion(illegal), to hide money?
In Canada, they closed the art donation tax loophole & a bunch of scallywag artists, dealers, appraisers, lawyers & accountants were charged...
I wonder if this is the same scam? Or just a new permutation of it...
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here is a link to the art donation tax loophole in the States...
You get an appraised value on the art you own...Doesn't matter what you paid...You donate the art to an IRS approved institution after holding it for 12 months. You get a tax receipt worth the total appraised value...Even if you paid bubkes...(nothing)...
http://www.theartnewspaper.com/articles/Artists-should-have-same-tax-deductions-as-collectors-when-donating-works-of-art/16501 a link to an article about how artists should get the same tax break as collectors, a fair market value deduction not just a materials cost deduction, on donated art...
The flaw in the art law is this: If a dealer pays an artist 300 dollars for a painting, then the work is now worth, at market, 300 dollars, not more...
Until someone pays more money for that same painting, it should not be appraised at a number any higher than what was paid for it initially...
Why Not? because appraising the work at a higher value than what the market has paid for it is fraudulent...It is attempting to predict the future, a future that does not exist yet...Until cash is paid for that painting by a collector, the market has not established a new value...
The flaw is in art law...Appraisers should not be able to create prices for works based on speculation...
If an artist can only deduct materials costs when donating a work of art, by the same principle, an art collector should only be able to deduct materials costs when donating- materials costs to a collector are how much the collector ACTUALLY Paid for the work...Not some made-up number by an in-house appraiser who is on the take anyway...
If Alex Perez's work sold for 300 dollars to PWG, then that is how much that work is worth...Until such time as someone pays more money for that same work, it should not & cannot be appraised for more than 300 dollars...That is fraudulent...
The flaw is with appraisals that are different from buying & selling prices...If a work has sold for 300 dollars, then how can anyone say it is worth more???It is not worth more, it is worth 300 dollars.
There should be absolutely NO discrepancy between selling price & appraisal prices- this is where fraud rules & lives...In made-up jacked up appraisal prices.
Appraisers know this, & those who don't should. Those who know & still break the rules should go to jail.
The PWG fiasco could not have succeeded without this false belief system, the system that says a work of art could be worth more than what you paid, even though you were unwilling to pay more...
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