Art World Infamy: Inigo Philbrick – Flight Risk(Ep. 3)

0:02I'm Eileen Kinsella, and this is Art World Infamy, a podcast miniseries from Artnet News.

0:17In the fall of 2019, at many art parties and gallery openings, and especially at that year's edition of the Frieze Art Fair in London, people were asking, where's Inigo? Stories abounded about his sudden disappearance, the empty, shuttered galleries he left behind, and the pileup of legal claims. There were numerous international requests for courts to seize all of his assets. Notably, one of those seizure requests was from the man who had jump-started Inigo's career, his former boss and owner of White Cube Gallery, Jay Jopling. By that time, Inigo had already been accused of a laundry list of wrongdoing.

0:53The allegations included selling the same works to multiple clients, wildly inflating the values of those artworks, overpromising on profits, and securing loans using artwork he didn't actually own but put up as collateral. He had also defaulted on several of those loans, one of which had him on the hook for more than$10 million. It seemed like every day there were new rumors of different countries or cities where he might be hiding out, from the Bahamas to Tokyo to Sydney to somewhere in the South Pacific. All that anyone knew at that point was that he was scheduled to answer to the daunting$13 million Fine Art Partners lawsuit filed in Miami.

1:29Instead, he had vanished. Art journalist Jud Tully was one of the few reporters who confirmed hearing from Inigo in those early days after the troubled dealer had seemingly slipped out of the country by way of Miami. I heard rumblings about where's Inigo, but that was really the start of it. Interestingly, when that started to happen, and he was gone. And because I knew him, I emailed him and I said, you know, what's going on? And he actually responded. So this was in October 27, 2019. So this was after. And there was already, I think, another lawsuit that was filed in London against him by some other former client.

2:19Hi Jud, off the record, for the moment, please, and writing because I've always admired your cool, collected take on art market news, which is so often poorly researched and overly politicized. So it was ready, he's kind of, you know, like buttering me up. If you'd like something on the record, I'm happy to work on that. For the time being, I'm not speaking to anyone else in the press, and I intend to keep it that way. there is going to be a lot more to this than has come out yet the story is going to be a cautionary one with regards to the professionalization securitization and legalization of the art world we are in a period of massive transition where art dealers collectors and investors are attempting to turn the arena into one which mimics the worlds of finance and real estate alongside the change will naturally come impropriety and the need for increased due caution.

3:16And I mean, it's like, where does this coming from? Like, you know, like script writer kind of stuff. But after that, I never heard from him again. Months later, in December of 2019, I was still following news developments on the case while also working on a major feature for Artnet's Art Market Intelligence Report. That feature was my first real comprehensive take on the scandal since it had first broken. After writing about so many of the individual lawsuits and missing artworks, it was intended to present a broader picture of the scope of his fraud. As part of my reporting, I reached out to the woman I knew Inigo was dating at the time of his disappearance, a British socialite named Victoria Baker Harbour.

4:04She had gained some fame and notoriety of her own on a popular British reality show called Made in Chelsea. Victoria had been living with Inigo in Miami and was running a clothing boutique he had opened next door to his gallery called The Space. When her response came in, it was brief. In addition to telling me she was running the store separate from Inigo, she declined to comment on his legal troubles. She added, wish I could be of more help, but I'm in the dark. The steady stream of lawsuits was providing jaw-dropping details about Inigo's brazen actions. Within those early months, the estimates on the scope of his overall fraud were spanning anywhere between$70 million to upwards of$150 million.

4:45Attorney Jud Grossman became well aware of the situation months before. Back in October of 2019, when his name first came across my desk, some existing clients, some new clients all called with the same panic in their voices that something just wasn't right, but it all led back to Inigo. The problems took various forms. His scheme had various iterations, but at its core, he was taking advantage of all of these collectors and investors and dealers in connection with our transactions that they had been involved in together for years. Even though Fine Art Partners was just one of the growing number of victims who had lost money with Inigo, their incredibly detailed lawsuit, which ran over 100 pages, was something of a blueprint of the fraud.

5:30There were contracts for numerous seven-figure artworks from Donald Judd, Yayoi Kusama, Rudolf Stengel, and Christopher Wohl. As well, there was a flurry of emails between the partners, their attorneys, and Inigo, showing their increasing frustration with lack of payments on works they believed had been sold months earlier. The first thing that stood out to me was Inigo's requests for patience and more time to let him fix things. Anytime I've heard those words under similar circumstances, it's been a big red flag that there's probably a big fraud lurking. And sure enough, it was here. I actually spoke to him directly at the time.

6:05He was in touch with a number of our clients. Interestingly, being somewhat transparent, it turns out once a liar, always a liar. And even when he said he was finally coming clean, there were some serious doubts about what he was saying. But for the most part, he was helping piece together the picture of what he had done over the prior year and change. And so in some instances, it was actually confessing, just like you'd imagine in the movies, a face-to-face tearful confession to some of these victims, who, by the way, you know, over time, he was developing personal relationships as well as business relationships, all starting on the business side.

6:42But over time, when things were going well, and the more time you spend together, the more deals you do, the personal aspect blossoms as well. And that happened here. So I do think there really was that emotional component to these confessions, feeling badly to an extent. I don't think he ever truly felt badly, wanting to make it right and trying to be open in the hopes that someone could help piece it together, but really at the end of the day, just leaving a big mess in his wake. With the dealer himself nowhere to be found to answer for his misdeeds, panicked collectors, some of whom were out millions of dollars, started training their legal lasers at each other in an effort to claw back either artworks or money.

7:21For instance, when other investors realized that Fine Art Partners was pursuing the Rudolf Stingell Picasso portrait that had been sold five months earlier and which Christie still had not been paid for, it set off alarm bells with other investors and collectors who thought they were the owners, or at least part owners and backers. The British billionaire brothers Simon and David Rubin believed they were the rightful consignors of the Stingle to Christie's. This was because of a complicated deal in which they loaned Inigo money against the Stingle and several other artworks. The web of lies that Inigo had spun was mind-numbing in its confusion and deception.

7:56There were a lot of moving parts, that's for sure. But quite frankly, being involved in so many of the different matters helped us figure out what that puzzle would look like to take a holistic view of everything. and with each piece in place, figure out the best course depending on the claim, right? In some of the claims, there's a bank involved. In other cases, there's other investors involved who were engaged in a transaction that took various different forms. And so seeing how he was handling each matter a little differently, a little more nuanced, I think helped us figure out what that scheme looked like overall.

8:33Among the victims of the massive fraud were the aforementioned principles of fine art partners, Loretta Wartenberger and Daniel Temple, as well as the Rubin brothers. When they sued, it was under the name of a shell company known as Guzzini Properties, so initially, many had no clue they were involved. In my article that was published in early 2020, White Cube owner Jay Jopling told me via email that he had obtained an injunction in London's High Court to protect his business interests with Inigo. Coincidentally, the same day that Joplin obtained the court ruling, a shell company was granted a worldwide freeze on Inigo's assets.

9:10That company was named Ogini, spelled O-G-I-N-I, which happens to be Inigo, spelled backwards. Another one of Inigo's victims was collector Andre Sakai, a close friend and godfather to Inigo's first child. Sakai invested money with Inigo for shares of two paintings by Wade Guyton. Later on, without Andre's knowledge, Inigo turned around and pledged one of those paintings to Guzzini, which was the Rubin Brothers Shell Company. Sakai demanded that Guzzini return the Guyton, but said that they refused to do so and would not acknowledge his ownership. In another lawsuit filed by a Saudi Arabian entity, they asserted rights to a Yayoi Kusama infinity room that had been on display in ICA Miami.

9:54But fine art partners believed they were the owners of the infinity room. The fallout over who owned what even ended up impacting where artwork should be stored. For instance, all of Kusama's infinity rooms come with an exacting set of instructions over how they should be both installed and de-installed. The hapless storage company that had to deal with the issue had no actual instructions for how to handle the artwork, and it's still sitting in storage indefinitely as the lawsuits play out.

10:26And so those ranged from individual collectors, for example, someone who had purchased a Wade Guyton work long ago. Inigo learned about that through the art scene and tried to get him to consign it, which he ultimately did, but up and went with the work and without any money. In other cases, multiple works were involved. In other cases, for example, we represented a warehouse or two that found itself caught in the middle. So the reach of this fraud was far-reaching because it impacted more than just the owners of the works. It impacted anyone who was involved with the works in any way.

11:03Let's jump back to the auction that sparked the collapse of Inigo's House of Cards. According to the related Fine Art Partners lawsuit, in the fall of 2019, Temple and Mortenberger finally contacted Christie's directly to ask about the$9 million guarantee for the Stingle. They were stunned by what they heard. A Christie's executive got straight to the point, writing in an email, We believe that is a falsified document. First, we have no record of that agreement in our files. Second, Inigo Philbrick Limited was not the consigner of that lot. While their shock over the lie is understandable, it's also mystifying why such seasoned art collectors didn't bother to check the Christie's catalog, even if it was just a peek online.

11:45Auction houses rely on a simple system of symbols, like a circle or a diamond, to denote auction lots with guarantees. A quick glance at the Stingel Picasso, which anyone can do on the auction website, would have confirmed at least six months earlier that no such symbol accompanied the work. In other words, there was never a$9 million guarantee from Christie's. He didn't come up with the blueprint for this. It's been around for decades, and it'll continue to be around. Why he thought he could get away with it using the same scheme that others had tried before was probably a combination of greed and lack of humility.

12:20But the reality is, especially the art financing component that we see play its way in here, gives rise to opportunities for bad actors. And so from Salander O 'Reilly many years ago to Chuaiki shortly before this, and to name just a few, it was a fraud scheme that wasn't original. It wasn't the first. It won't be the last. But it was certainly notable because of its size. The two major art fraud cases that Jud Grossman is talking about resulted in prison sentences for the dealers who carried out the respective schemes. The first was Larry Salander, a once-respected dealer of American art whose roster of clients had included tennis pro-turned art dealer John McEnroe and actor Robert De Niro.

13:02Few people know that De Niro's father was a well-known painter. He gained attention for his bold and colorful figurative paintings. De Niro always said his father was wary of dealers, but his father let Salander handle and sell many of his paintings during his lifetime. In 2007, Salander's business, including his sprawling Upper East Side gallery space, collapsed after an FBI raid. Three years later, in 2010, he pleaded guilty to grand larceny and fraud and was sentenced to six years in federal prison. Salander admitted to misleading investors about phony art resale schemes, selling art without remitting proceeds, and submitting fraudulent loan applications to banks.

13:41With little cash left to be salvaged after the massive fraud, which was estimated at more than$100 million, most victims counted themselves lucky if they could just recover even some of their art. Similarly, in late 2018, a judge sentenced disgraced art dealer Ezra Chawakey to 18 months in prison for an art investment scam that defrauded half a dozen people. These included one of his relatives, high-profile art dealer Heli Namad, as well as former Warhol Entourage member Baby Jane Holzer. When Chawakey pleaded guilty to wire fraud, he admitted he sold stakes in artworks he didn't own, concocted fraudulent agreements, sold clients' artworks without authorization, and took clients' money for the purchase of artworks that he never acquired.

14:26Of course, hindsight is 20-20. But in all of these cases, there was no shortage of either shock or schadenfreude. Whenever one of these cases crop up, people constantly ask me, Why are wealthy art buyers and investors not more careful when million-dollar sums are at stake? Veteran art advisor Todd Levin has his own theories about why this happens. That these people could be so smart, obviously, in some of their business dealings, in their business worlds, whatever they do, whether it's real estate or stocks or whatever it is, I am sure that they go into a deal, That deal is papered by their phalanx of lawyers whose fiduciary responsibility is to make sure that they get the best possible deal of whatever they're working on and all their interests are completely protected, airtight.

15:16having said that, that these same people who are so good at what they do and smart as dealmakers could be so stupid going into these deals on a handshake, not even doing the basic due diligence to see if there were liens or what the legal ramifications were on any of this. They just trusted this young person with basically zero experience because what he dressed well or wore expensive suits or ordered expensive bottles of wine. I don't know why, but that's not the way I do business. And it's not the way I've ever done business. Trust is there always, but it's trust with verification and lots of it.

15:57And how these people could be so smart in some areas of their life and so stupid in others is really the thing. It was less about Philbrick and more about the people who were dealing with him. I was just stunned after I read person after person, you know, different entity after different entity, and all of these people were just this foolish. The lack of caution also speaks to the fact that some ultra-wealthy people with a close-knit circle of equally rich friends assume all of their peers are trustworthy too, creating a false sense of confidence. Case in point, for many of Inigo's investors, they didn't care about the art, only about the potential payoff for putting up a large sum of money.

16:42If the Stinkle had soared at auction, and all the various stakeholders had been paid out their millions, no one would have been any wiser about the massive fraud Inigo was conducting behind the face of that Christie's sale. As an art journalist, Melanie Gurliss sees the absurdity of how the art world often conducts business. It makes you realize there's a lot more smoke and mirrors to it all. And I can't believe, you know, when you buy a house, which is often even less than people buy a painting. The processes you have to go through to make sure, you know, the chains of ownership, you don't have to do that.

17:19It's people taking things for the way they are on a handshake and in some ways that's delightful and charming and what a lovely world we live in but it only takes one or two people to operate in the grey slash red areas then it just doesn't work anymore. And this is why Jud Grossman thinks anonymity can be so problematic. Obviously there are different degrees of fraud, but I think the lack of transparency as a general matter in the art world enables frauds to take place, half-truths, omissions. Not always necessarily like this one where it's such an overt, brazen fraud, where he's forging documents, making up identities and the like.

18:01Sometimes it's just a half-truth. And I think because of the lack of transparency in the art world, which has always been there, always will be, and for legitimate reasons, because of that, you see fraud a little more perhaps than in other industries. A quote-unquote legitimate reason could be the heavy reliance on anonymity and client confidentiality, including by the auction houses. Judd has a good point. While privacy for some art backers and buyers is paramount, the trade-off here of trusting a story that seemed too good to be true was the consequence. As far as half-truths or exaggerations, if Inigo and other art world players tell these stories to get by and lock investors in place, it often works fine.

18:41Who can say how much longer Inigo's perennial house of art cards would have continued if the Stingal Picasso work had sold well and he paid everyone out? Is it a safe bet to say that it would have collapsed eventually anyway? The other area probably, you know, beyond run-of-the-mill contract disputes where there may be a non-payment issue or something was damaged in transit and the like, You see a lot of title claims. That's not always theft. It's not always a smash and grab job. Someone comes in your living room and steals the painting. Usually it's not. Usually it's like in this case, selling multiple interests to people.

19:14Being able to make your way out of that because if you're good at what you do, like Inigo was, and the work appreciates, everybody can still make money and not know what actually happened. And so I think in part because of the commoditization of art, people looking at it in many ways as a pure investment and its own asset class, you see the rise of fractional interest purchases, for example, where someone goes into the transaction never intending to have it on their wall to enjoy it. But as an investment, you see a lot of companies, business models are based on this, Masterworks and others who are quite good at it.

19:51And it's very positive overall. But the rise in those sorts of transactions, the lowering of the barrier to entry or access, increasing market participation by people who really don't know the area that well, I think gives rise to more problems than we were seeing. Not because there's more bad actors, but because more things can just go wrong in those situations. Inigo's actions went far beyond informal contracts or half-truths. It was revealed in extraordinary detail in the confession of Inigo's business partner, Rob Newland. Newland was subsequently convicted and given a jail term in late 2023.

20:28He described witnessing Inigo furiously moving money around. There were several tactics he employed. One is teaming and lading, a practice that involves using the cash from one sale to pay the creditor of his last purchase. Then we have stuffing, a practice in which a buyer gets stuck with overpriced, unsellable work. In my opinion, the worst was bearding, which involves lying about the true buyer of the work. Probably one of the most ludicrous examples of his fraudulent behavior revolved around paintings by Christopher Wool and Wade Guyton. For starters, he was under pressure from co-owner Jay Jopling to sell them.

21:04In order to appease him, Inigo informed him that he had sold both for$4.5 million to an Argentinian collector named Martin Herrero. Inigo smugly told Rob, The bear is off my back. It turns out that Herrero never existed, but in order to keep up the ruse, Inigo and Rob had created an entire persona, fake email and all. Over the course of the ensuing year, they kept up a constant stream of correspondence about monthly payments that were due, or excuses about why they were delayed. All the while, Inigo continued to sell shares of the wool painting to other investors. Given Inigo's penchant for focusing on certain blue-chip names, I wondered about the impact of certain artworks that were caught up in the fraud.

21:49For instance, Christie's, who was not a party to any litigation, was ordered to keep the Stingel Picasso in storage until the claim was sorted. The parties fighting over it eventually reached a settlement on secret terms. I wondered, would the work have a black mark on it now? Would anyone really still want to spend millions on a work that has been so publicly misused and probably devalued? Or will some bargain hunter think it's just a matter of buy and hold all over again until Stingal's star is on the rise once more? Veteran art advisor Todd Levin thinks the fraud hurt more than just Inigo's victims.

22:25That's the worst byproduct of this whole thing. It's not him. It's that he damaged artists' markets single-handedly. I'm not saying he damaged their careers permanently. But for a period of time, he did damage their careers, and he did damage their markets. And that's not something we can ever hold him guilty of in terms of assessing a penalty. But if somebody comes into the art world and essentially damages artists' markets and artists' careers, I think it would be wise to allow some time, modest, couple of years, three years, to sort of just blow over. Eventually, yeah, they'll come back to the market and they will bring whatever at the time is their correct fair market value.

23:14It's not a permanent scarlet letter. But I think it would be wise for all involved to just let the air clear a little bit from this whole thing. and eventually probably engage in a private sale rather than a public auction sale. It's probably best for everybody involved. To Todd, Inigo didn't necessarily possess any special talent as a dealer or market foreseer. It was his ability to convince people to invest their money in rising art stars, but it couldn't go up forever. Well, if you have a particular artist, we won't even have to name a name, but you have a particular artist and that artist is selling for X.

23:54And then you begin to pump up the price of that artist, in this case, in an unethical or immoral manner, depending on how you want to frame that. And then it goes to 2X at auction and then 3X at auction or more even. Sometimes it could be 10X. The people who bought that artist, irrespective of all these, who bought that artist early on in that artist's career and paid probably less, significantly less for that work, begin to see hanging on their wall less and less the artwork they bought. And they begin to see more and more a bag of money. Now, everybody has a different limitation about when that bag of money gets so big that they are just too tempted then to consider perhaps selling it.

24:46because that bag of money has gotten so big that what that money means to them at that point in their life could mean retirement. It could mean getting them out from or under some terrible debt load that they have. It could be taking care of somebody in their family who is very ill, that they don't have the money to do so. It can mean many things, obviously. And everybody has a different limit. But the point is, is that as those prices at auction get higher and higher and on the secondary market as well, they're intertwined. This means that more works by that artist will start to flood the market and you get an increasing supply.

25:25And as we all know, the more you increase the supply at a certain point, demand is going to drop. That's the balance in all natural markets. And when the demand drops, so does the price. So what you get is this balloon, in essence, of the price going up very, very quickly. And suddenly, some people start scrambling and trying to sell things on the secondary market and try to sell things at auction. And somebody like Inigo, whose entire fake dynamic completely rests like a Ponzi scheme on the prices going ever higher. The minute they start to go down, his gig is up. so he has to start supporting all these things coming to market as best as he can to make sure that that price stays at least stable up up up up up so he can keep selling his investors on the fact that they need to hold so he doesn't have to go and pay them out but at a certain point you can't keep all those plates spinning in the air and things start crashing and this goes to the point of what we were discussing earlier in that he didn't have any fabulous ability as a secondary market dealer.

26:47He was just artificially keeping stuff up until he couldn't do it anymore. And then when it collapsed, then he was out of luck. So it had nothing to do with his ability to pick winners or anything remotely related to that. It just had to do with his ability to lie at people and that they believed him stupidly. All bubbles expand and contract in their own unique way. You can't use one to predict another. But the difference is bubbles in and of themselves are also a part of natural markets. But if it's a natural bubble that expands and contracts, that's just the way it goes. But if it's a tweaked bubble that's happening because somebody is behind the scenes manipulating the market, coercing the market, manipulated markets always have bad results.