Today, the trade in stolen art and antiquities is a six billion dollar a year business, and the second largest crime in the world, exceeded only by drug and gun trafficking. While public awareness about this crime has been heightened by all of the media hype around stolen art from the Holocaust-era, general knowledge about art thefts remains unknown to most art collectors. The International Council of Museums has stated that more than 100,000 art objects have been stolen throughout the world just since the 1980s. This stolen art, along with art looted during World War II, is on the market today. But where does it end up? While much of it is sold for a fraction of its worth to unscrupulous purchasers who know that it is stolen, the majority of it is sold in the art markets in London and the United States through reputable dealers and auction houses to highly regarded art collectors. As a collector, you are at risk.

Art theft exists because there is a market for it, because there are wars, and because art is relatively easy to transport and difficult to trace. During times of war, stolen art was viewed as trophies or restitution. In recent years, subcultures of art thieves have positioned themselves to steal works of art from countries under siege. For many years, art has been stolen from museums and their storage facilities due to infrequent inventory checks, lax security procedures, failure of security devices and fear that reporting the crime to authorities would drive the artwork underground and make recovery impossible. Galleries, sculpture gardens and individual homes that contain art collections, also have been subject to art theft crimes because they lack adequate security systems. Another large contributor to art theft has been the gradual disappearance of some of the international borders in Western Europe, along with their attendant border guards and customs agents.* Finally, the last two decades have witnessed unprecedented growth in the art market. With this market’s growth in the economy, it has aided art theft in becoming an organized crime moneymaker and a favored business with crime societies all over the world. Simply put, where there is money, there is crime.

In the last quarter of the 20th century, the world has seen some of the largest art thefts in history.

• 1990 - The largest single art theft in the United States took place in Boston, at the Isabella Stewart Gardner Museum, when two thieves, disguised as Boston police officers, bound and gagged two museum security officers and made away with 13 paintings, including Rembrandt and Vermeer, worth more than $300 million.

• 1993 - Six works by Picasso and two paintings by Braque were stolen from the Museum of Modern Art, with an estimated value of $52 million.

• 1996 - works estimated at $30 - $45 million by Goya, Vermeer, Rubens, Gainsborough and others were taken.

• 2001 - The largest theft in Spain occurred when thieves knocked on the door of one of the world’s wealthiest women, Esther Koplowitz, attacked a guard who answered the door and made off with 14 works of art, which included Goya and Pisarro.

• June 2001 - Thieves drove through the front door of the museum with a jeep and stole two paintings valued at close to $4 million.

Worldwide resources, such as the International Foundation for Art Research (IFAR), the Art Loss Register (ALR), TRACE, the International Criminal Police Organization, and the Federal Bureau of Investigation have been set up to investigate and recover stolen art. Even so, 90 to 95 percent of stolen art is never recovered.

How Collectors are Involved in Stolen Art Traffic

Collectors who purchase art from reputable art dealers are not insulated from buying stolen art unknowingly. In fact, so-called "good faith" collectors are responsible for acquiring most of the stolen artworks on the market today. Auction houses and dealers have assisted in stolen art sales by keeping their transaction sources secret because of their fear of questioning potential sellers about the provenances of their works of art, and losing clients to competitors. For example, Sotheby’s was sued by the heirs of a Dutch couple, murdered in a concentration camp, for the recovery of a priceless Renoir painting they claimed was stolen by the Nazis during WWII and sold by Sotheby’s predecessor, Park-Bernet Galleries, Inc. in 1969. At the time, Sotheby’s had refused to disclose who bought the painting worth more than $1 million.** An absence of due diligence investigation and inquiry in the art world accounts for the rampant trade in stolen art by reputable art dealers and auction houses. Art dealers with international connections often place stolen art and antiquities in the hands of the world’s most reputable and respected collectors. The problem is so big that some countries are seizing stolen or otherwise illicit works of art from auction houses and are sending undercover agents into galleries.

Countries, such as Switzerland, where there have been notorious auctions held for the purpose of establishing the integrity for stolen and otherwise dubious works of art, also are culprits in helping to legitimize the market for stolen art. Many other countries have laws that protect purchasers of stolen art and encourage art laundering by unscrupulous art and antiquities dealers. Many dealers buy artwork after little or no inquiry into its ownership, allowing them to contend later that they had no idea a work was stolen. Purchasers of works of art often rely on dealers’ representation and warranties without conducting any further investigation of their own, and later claim that they bought a stolen artwork in "good faith." This scenario often results in long legal battles regarding the extent to which the purchaser engaged in due diligence to determine the provenance of the work of art. It should be a purchaser’s responsibility to have the provenance of a work of art researched by the dealer before a sales transaction takes place.

A theft victim’s failure to report also has greatly contributed to the traffic in stolen art. Mandates are not in place to force a victim to report an art theft and there is no central art theft-reporting site or organization. There are many possible reasons why an owner might choose not to report an art theft, such as when the Guggenheim Museum did not report the theft of its painting for fear of driving the artwork further underground. However, the recent recovery of another Chagall artwork, stolen from the Jewish Museum in New York and recognized in a Topeka, Kansas Mail Distribution Center, was a direct result of the museum having had filed an art theft report. If a theft is not reported, then investigation becomes difficult.

Collectors sometimes inherit stolen works of art. A case of collecting stolen art through inheritance occurred when a private collector bequeathed, to his son, three small paintings by Georgia O’Keeffe that had previously been stolen in 1946 from a New York gallery owned by O’Keeffe’s husband, Alfred Stieglitz. The paintings had primarily been displayed in the collector’s home until 1974, when he consigned them to a gallery in New York to be sold. In 1976, the gallery sold the paintings and O’Keeffe was able to locate her stolen property and demand its return. In the end, the court returned two of the paintings to O’Keeffe and let the collector keep one.***

Valuable works of art and the estates of art collectors can be exposed to possible disaster if there had been a failure to carry out due diligence. If property is stolen, the law in the United States prevents the purchaser from obtaining good title in spite of the purchaser’s lack of knowledge of the theft. This legal concept operates no matter how many times a stolen work of art changes hands or is donated to a museum. Innocent so-called "bona fide" purchasers of stolen art will always be at risk to claims from original owner art theft victims. This potential liability makes it essential that prospective purchasers carry out due diligence research before purchasing works of art. Attorneys and other professionals providing counsel to wealthy collectors in estate, investment and trust planning matters are beginning to realize the importance of conducting the appropriate due diligence to ensure that clients’ works of fine arts have proper provenance.

Due Diligence

Due diligence is a way to uncover information and to recognize and address areas of concern when purchasing a work of art. The levels of "due diligence" will vary with the facts of each case, including the nature and value of the "personal property." Many different factors will determine the appropriate amount of investigation that an owner should perform to determine whether or not an artwork had been stolen. However, authorities usually agree that museum staffs, dealers and others in the art trade should be required to do more than individual theft victims to locate and recover their stolen property. Individuals may not be aware of how to make inquiries, have the experience in specialized fields of art, know art world contacts or have information about art valuation techniques.

In the 1995 case, Erisoty v. Rizik,**** a court held that a family who owned a Giaqunito painting stolen in 1960, had been diligent enough to reclaim the painting even though they had made no efforts for thirty years to put the international art market on alert about their loss. The family had only contacted the Washington, D.C. Metropolitan Police and the FBI. The court held that while the family could have been more aggressive, the failure of the purchaser, who was a professional art conservator, to investigate the painting before acquiring it at auction, was more at fault. The court stated that in failing to carry out a due diligence investigation, the purchaser willingly risked that an original owner might surface at any time. The court held that the original owner’s limited attempt to recover the painting represented an acceptable search. In another case, two fifteenth century Albrecht Dürer portraits were discovered in the possession of a Brooklyn attorney, Edward Elicofon. The paintings were removed from the Weimer Museum in Germany for safekeeping during WWII, and in 1946, Elicofon purchased them from a former American soldier who appeared at Elicofon’s door, without investigation or question. After four years of litigation, in 1981 Elicofon was ordered by the courts to return the paintings to Germany.***** Unless due diligence investigations are performed by collectors before they purchase works of art, they will never be safe from the risk of demand for return from original owners.

Provenance Research

As stated above, it is not enough to purchase works of art through a reputable dealer, or to depend on an estate inheritance to be assured of good title to a work of art. The only way collectors can protect themselves and their collections is to research the chain of ownership from the artist through purchasers or other recipients, or "provenances," of works of art that they own or are considering purchasing. Admittedly, provenance research is complex, takes time and costs money; however, protection from a theft victim’s claim through establishing a paper trail is well worth the investment in the long run. About ten years ago, the art market was more concerned with authenticity, quality, rarity and condition than with provenance. Now, being able to produce a record of provenance is the crucial issue in valuation, and freedom from the fear of an art theft victim’s claims.

Until stolen arts registries were put into place in the early 1990s, search for title on works of art primarily consisted of producing bills of sale. This practice was not watertight and there have been many instances of falsified papers accompanying works of art, and forged provenance papers were not difficult to buy. In 1996, fake documentation was found in the archives of the Tate Gallery in London. A benefactor of the Tate who had easy access to the museum’s library and archives changed the records at the museum so that when prospective purchasers consulted them, they would show false provenance.****** There also are reports that false documentation exists at the Victoria and Albert Museum and the British Council. In the United States v. McClain******* case, in which cultural artifacts were smuggled from Mexico into San Antonio, Texas, items were taken from sites to the archaeological institute in Mexico, and documents and permits were forged or backdated.

While performing provenance research is the primary way that collectors can prevent purchasing stolen works of art, the atmosphere of secrecy by which most art sales take place can almost guarantee that some critical information about past ownership will not be available, and that the materials will frequently contain errors. Works created in Europe are often incomplete in their past ownerships. Provenances can contain lapses in ownership because sellers want to keep their transactions concealed. Wealthy families often use auction houses and art dealers to liquidate assets when they are undergoing financial stress. Other sellers may want to limit the IRS from having access to their records, or to deter thieves from knowing about their collections. Provenance records, then, are not guarantees of good title; however, in a court of law, a good faith purchaser who shows a diligent effort in establishing provenance before a purchase may prevail over a theft victim who has not made as much of an effort to report a theft or to recover a stolen art object. It is the collector’s best defense against an art theft victim’s demand.

Part II of this article will be featured in the October issue of chubbcollectors.com. Subscribe today and receive the article via email.

*Paige L. Margules, "International Art Theft and the Illegal Import and Export of Cultural Property." Suffolk Translational Law Journal, 1992.

**"Nazi Art Loot in British Collections," London Times, Mar. 16 1997.

***O’Keeffe v. Snyder, 170 NJ Super 75, 84, A 2d 840 (1979).

****Erisoty v. Rizik, No. 93-6215, 1995 U.S. dist. Lexis 2096 (E.D. Pa. Feb. 23, 1995), aff’d No. 95-1807 (3rd Cir. 1996).

*****Kunstsammlugen zu Weimar v. Elicofon, 536 F. Supp. 846-7, 678 F. 2d at 1161-64 (E.D.N.Y. 1981).

******Alan Riding, "The Newest Trick in Art Fraud: Falsifying Records," NT Times, Jan. 19, 1996.

*******United States v. McClain, 593 F.2d 658 (1979)