Art World Infamy: Inigo Philbrick – Nowhere to Run (Ep. 4)

0:01Eileen Kinsella:I'm Eileen Kinsella, and this is Artworld Infamy, a podcast miniseries from Artnet News.

0:15Eileen Kinsella:It was morning on June 11, 2020, in Port Vila Vanuatu, an island nation in the South Pacific. Inigo Philbrick and his then-fiancée, Victoria Baker Harbour, were shopping in a local store when a group of uniformed police officers and marshals suddenly descended on the two. The blood drained from his face as they approached and asked, Are you Inigo? They then quickly hustled him into a car and sped toward the local airport, where he was placed in zip ties and led across the tarmac toward a private jet that was waiting on the runway. Even more surprising, this extraction, as it was called, happened at the height of the global COVID lockdown.

0:52Eileen Kinsella:No one was supposed to be leaving or entering the country. Suddenly, the art dealer's false sense of security, including a belief that he could not be arrested, went up in smoke.

1:12Eileen Kinsella:After stops in Tokyo, New Caledonia, and Australia, Inigo and Victoria had eventually settled in Vanuatu. They did so with the understanding that the small country had no extradition treaty with the U.S. Most people who are familiar with the island only know it because the ninth season of the hit reality show Survivor was filmed there. Roughly six months after he vanished, in May 2020, I started to receive details from several people claiming to know where he was. According to them, the couple was leading a relaxed life on Vanuatu, hiking, taking tennis lessons, and becoming regulars at a local coffee shop.

1:51Eileen Kinsella:They became friendly with some of their neighbors and got involved in animal rescue efforts. They even adopted a puppy that they named Bacchus. One resident of the island, who often saw Inigo when he was getting coffee in the morning, actually sent me a picture that he had snapped of him from behind, so as not to set off any alarms. Another told me Inigo had been inquiring about home insurance and buying a boat via email. He's planning on staying here for sure. He has a big 4x4 truck he paid cash for. In a character letter to the courts, Inigo's neighbour in Vanuatu, expat Karen Adams, wrote, During their time in Mele village, Inigo became very good friends with the native villagers.

2:31Inigo Philbrick:He would give them gifts of food and clothes and offer them money in return for small jobs, as the area had a very low employment rate.

2:40Eileen Kinsella:Inigo soon became ingratiated into Mele village and was well-loved and respected. He was honoured enough to be given the nickname Man Mele. It may be hard to understand, but the local population are very mistrusting of visitors and rarely allow us into their customs and village, so Inigo was extremely touched at their kindness and acceptance. Inigo is a kind and extremely generous person. He wants everyone around him to be happy and content. He finds joy in the simplest of things. A beautiful tree, a kaleidoscopic sunset, a cheap but exquisite bottle of Sancerre picked out at our local Chinese takeaway.

3:21Eileen Kinsella:We miss him. Vanuatu misses him. I truly believe that Vanuatu had the real Inigo Philbrick. When one resident approached Inigo about the scandalous headlines, he told them that it was all civil cases, and that it was doubtful it would ever go beyond wealthy people saying and writing nasty things about him. He made a comparison about the mess he had left behind to people fighting over a carcass and snarkily predicted that they would probably get back more than their share of what they had lost.

3:54Eileen Kinsella:But that's not how the U.S. government saw it. Having bilked people out of millions of dollars, Inigo's underhanded art deals and the scope of his fraud drew serious attention from authorities. The fact that he fled the country when he was due to respond to the first major$13 million lawsuit from Fine Art Partners was a glaringly obvious attempt to evade responsibility. So when Inigo went missing in early 2020, Fine Art Partners went directly to the FBI. They shared all the evidence they had, including detailed copies of art acquisition and sale contracts, as well as extensive email correspondence, laying out their increasing frustration about non-payment and ultimately fraud.

4:35Eileen Kinsella:As Daniel Tumple later wrote to the court, When he disappeared, we also lost our hope to recover this money. All the while that Inigo was missing, investigators had been delving into the paper and electronic trail he left behind. They determined that for years he had engaged in what they called a scheme to defraud multiple individuals and entities in the art market and had lied to obtain sales, funding, and loans.

5:03Eileen Kinsella:Andrew Adams supervised the Philbrick case in his role as chief of the money laundering unit for the Southern District of New York. While he wasn't able to comment specifically about the case, he did share his knowledge on DOJ policy and priorities and investigative techniques as it relates to art crime.

5:20Inigo Philbrick:The DOJ and the FBI as part of DOJ have been doing art-related and cultural property cases for decades and decades. The FBI has had a dedicated team, the art crime team, since about 2004. So about 20 years where agents are specially trained and specifically focused on art and cultural property offenses, forgeries, thefts, and frauds in that space. DOJ, meaning the prosecutors, is a little less formalized, but has had groups of prosecutors in Manhattan in particular heavily focused in this area for about the same amount of time, if not longer. When the FBI gets a tip, when the FBI begins an investigation, their natural partners are the federal prosecutors, and it tends to go towards federal prosecution, the U.S.

6:10Inigo Philbrick:attorney's offices.

6:11Eileen Kinsella:So, where does this process begin? As Deep Throat advises in all the president's men, follow the money.

6:19Inigo Philbrick:As with most frauds, they are fundamentally financial crimes. People are trying to steal money from other people. And the way that those thefts happen can be as varied as the human imagination. So in most cases, you're investigating crime in the art world by looking at the movement of money, how people lost money, how people were induced to send money. And from that perspective, it looks much like any kind of white collar investigation of financial flows. Another way in which the two worlds intersect is the increasing financial sophistication of the art market itself. And the opportunities for investing in art grow along with the sort of growth in those opportunities.

7:03Inigo Philbrick:So grow the opportunities for fraud.

7:14Eileen Kinsella:One of my sources told me about the days leading up to the arrest. He said border control agents had been prowling the area for about a week with a laptop in tow, showing photos and comparing white males for a match. He stated that Inigo either didn't realize how close the end was or thought the virus and riots were helping bury his movements, a reference to both the COVID lockdown and weeks of protests after the murder of George Floyd that year. All the chaos that Inigo had left behind came to a head that June morning.

7:51Eileen Kinsella:When the plane left Vanuatu, the first stop was Guam, a deliberate geographical choice given that it's a U.S. territory. Inigo was then transferred to a federal detention center in Honolulu. Then he was transferred to Chickasha, Oklahoma. Eventually, he was placed in the metro detention center in Brooklyn, where repeated COVID-related delays impacted proceedings. One attorney I spoke to suggested to me that this rambling, disjointed trip back to New York was a form of what's known as diesel therapy, where authorities use repeated prison transfers as a way to try to wear a prisoner down in hopes of extracting information and securing some cooperation with the case.

8:34Eileen Kinsella:Jane Levine is an art industry veteran who was formerly the chief global compliance counsel for Sotheby's. Currently, she is a managing director of Art Risk Group, a recently formed advisory and investigative firm focused on risk issues related to art, antiquities, cultural property, and high-value collectibles. The Philbert case is actually, in some respects, very similar to many historic art fraud cases. In its basic structure, actually, consignment fraud or art investment fraud are actually not new. They are basically at their core Ponzi schemes that we've seen forever. They rely on exploiting trust, reputation, people who make it possible to convince others to part with their art or their money without protecting themselves.

9:26Eileen Kinsella:We've seen this before. Schemes tend to exploit people's inability to definitively track and record unique artworks, and that makes it possible to sell the same work to multiple parties. We've seen this movie before. The Philbrick scheme did manage to combine many of the various types of art fraud structures into one scheme. So we see in this sprawling matter, multiple buyers of one work. We see fraud involving asset-backed lending. There's a little bit of fake documents thrown in. So it's in some ways a tutorial on the various types. Ultimately, the civil lawsuits against Inigo helped provide something of a blueprint for important details of private transactions that would otherwise have remained secret.

10:17Eileen Kinsella:Fine Art Partners was just the start of it. That lawsuit detailed which artworks and how much money was missing based on their own art deals. Andrew points out that there are any number of ways in which art fraud can be flagged by authorities and warrant a closer look, even if they're buried in other legal filings.

10:34Inigo Philbrick:So the way these cases can begin is as varied as the cases themselves. Tips from victims absolutely lead to major cases. Civil lawsuits, too, and FBI and prosecutors paying attention to what's happening in the courts and on the civil side. Often, those are civil cases that have nothing to do directly with fraud. It may be a divorce proceeding. It may be a bankruptcy proceeding, something that gives some insight into a contest over ownership or authenticity. Bank Secrecy Act and financial information from financial institutions can often lead to cases in this space. And that's particularly true with respect to economic sanctions, which has been another area of interest and increased resource across the department, but also in the art and cultural property space.

11:26Inigo Philbrick:purchases by sanctioned individuals or through sanctioned financial institutions can be flagged by U.S. financial institutions. That's information that is fed in very often to the Treasury Department, to a group called FinCEN. FinCEN is a bureau within the Treasury Department, the Financial Crimes Enforcement Network. And what they are largely dedicated to doing is monitoring the U.S. financial system for money laundering concerns. As part of that, financial institutions in the U.S., including large banks, and in some cases including places like precious metals dealers and others that have some connection to the cultural property market, are required to provide information to defense in about suspicious activity.

12:20Inigo Philbrick:And from there, the FBI, the Department of Justice can begin building cases. And from there, DOJ can rapidly get involved. So it truly can come in the door in any number of ways. Red flags that get flagged by financial institutions can be everything from just aberrant activity in a particular account, someone being related to or associated in the media with a sanctioned individual, for example, the use of opaque shell company networks in order to do what would otherwise be relatively straightforward financial transactions, all of those things can contribute to red flags to a suspicious activity report and from there to an investigation.

13:05Inigo Philbrick:Banks, for example, may flag companies that are set up shortly before a transaction happens that seem unnecessary to the transaction or that seem to just place layers of opacity between the ultimate beneficial owners and the transaction itself for no apparent reason from a tax perspective or from a financial perspective. There may be legitimate reasons for doing those things just from a privacy perspective, But when buyers or sellers or intermediaries don't have an easily cited reason for undertaking those kinds of non-transparent steps, it can lead to the sorts of reports that then lead to investigations.

13:57Eileen Kinsella:The first hearing came roughly a month after his capture in mid-July 2020. It centered on his actions in the preceding months and his perceived intentions. He initially pleaded not guilty and was denied bail on the basis of being deemed a flight risk. He was also denied bail at numerous subsequent hearings. After weeks of being shuffled between jails and an extended stay in Brooklyn's notorious Metro Detention Center, in November 2021, Inigo changed his plea to guilty. He was charged with one count of wire fraud, which carries a maximum sentence of 20 years in jail. He was ordered to pay back more than$86 million that was traceable to the fraud.

14:39Eileen Kinsella:It's hard to believe that so many millions of stolen dollars, fraudulent deals, and numerous victims could come down to a single charge of wire fraud. Reflecting back on many of the art crime cases I have reported on, the criminal prosecution often involves charges of wire fraud. In the most recent case of disgraced art advisor Lisa Schiff, as well as Glyphiero Rosales, a central figure in the Nodler forgery scandal, and in 2018, former Park Avenue art dealer Ezra Chawakey spent 18 months in jail. All had pleaded guilty to charges of wire fraud. Why not theft or conspiracy? Well, it seems that wire fraud covers a wide range of activities and serves as a nice blanket charge for a variety of crimes, providing leverage for prosecutors.

15:25Inigo Philbrick:Wire fraud and mail fraud are two different statutes that read almost identically. They are about 150 years old. They're both statutes that were passed shortly after the Civil War as part of an expansion of federal power in the wake of the Civil War. and they are intended to be broad. They're drafted broadly. They have not changed very much in their language in about 150 years. The wire part or the mail part is purely a way of making a crime federal. You're looking for interstate wires. You're looking for the use of the U.S. mails. If you don't have that sort of hook from a federal perspective, then the crime should be a state crime.

16:09Inigo Philbrick:You need to have some sort of federal nexus or federal jurisdictional hook. But beyond that sort of specific aspect, they are extremely broad and intentionally so. They're designed to be flexible. They're designed to capture, again, the broad expanse of human imagination that can be used for bad purposes. There's a judge who is now on the Southern District of New York. previously he had been in private practice and a prosecutor before that, Judge Rakoff. He described the, I think he was speaking of the mail fraud statute, but it's the same as the wire fraud statute, as a favorite of prosecutors precisely because it is adaptable, flexible, and simple in essence, and can be used to combat everything from public corruption to fraud on the art market.

17:01Inigo Philbrick:But the way that it's drafted is that it penalizes, prohibits, schemes. And the particular facts or the particular actions that make up some overarching scheme to separate a victim from his or her money may be quite varied. And it may take many, many steps, and it may involve multiple iterations of sales. It may involve multiple kinds of lies. But if it is all in furtherance of an overarching scheme, then it can be charged as one single count. It comes down to what most people, I think, intuitively think of as fraud. If you are lying in order to obtain money from someone, you are committing a fraud.

17:46Inigo Philbrick:To commit a wire fraud, you need to do that through the use of interstate wires, email, telephone, text message, whatever. If you want to commit mail fraud or if you are committing mail fraud, you'll do that through the use of the U.S. Postal System or FedEx or something like that. but the gravamen here is a lie it can be an affirmative misrepresentation i can tell you something that's literally untrue or it can be a false pretense i can lead you to believe something is true when it is not true for the purpose of taking property from you it could be money it can be artwork whatever it might be but the core is i think what most people sort of feel in their gut as fraud, that's what wire fraud and mail fraud target.

18:33Inigo Philbrick:A wire fraud investigation may ultimately become a money laundering investigation. It may ultimately become a narcotics investigation, depends on what the facts lead you to. But for an investigator, it is a good tool for opening a case. Wire fraud, mail fraud are quite broad. If you're dealing with something that feels like a lie for money, you can use it to open the case and then charge forward from there. Once you've charged the case, if the question or the interest is, if I see an indictment come down with wire fraud, do I necessarily expect that that's just the beginning of a series of new charges?

19:12Inigo Philbrick:The answer is not necessarily. Because it is so broad, it may actually encompass everything that the prosecutor wants to do without needing to go and bring additional charges down the line. One nuance on that that I would note, and it's important in the art context and relates to financial penalties, wire fraud and mail fraud carry forfeiture, which means that proceeds from the crime can be recouped, can be taken away from the defendant and given to the United States. Often it's used to repay victims as part of a restitution. but it is only used to take back proceeds of the fraud. So if I lie to somebody and get$100 ,000 and put it into my bank account and then move that money around to hide it, then if it's just a wire fraud charge, I owe$100 ,000 in forfeiture.

20:09Inigo Philbrick:Money laundering is a more powerful tool from a forfeiture perspective because it takes not just the proceeds, but all the money that's involved in an offense. And so what you will often see are cases that begin with wire fraud or mail fraud and include at some point a money laundering charge. What you get out of that as a prosecutor is the ability to say that$100 ,000 of fraud money was put into a bank account with another $100 ,000. Maybe it's clean, maybe it's dirty, we don't know. But it was used to mask the fact of fraud. It was used to commingle money and then move it through the financial system undetected by banks looking for suspicious activity.

20:54Inigo Philbrick:With a money laundering charge, you can go after not just the stolen money, but the clean money also and say you've got$200 ,000 that you owe. So prosecutors, particularly in New York, where they are quite attuned to this, will often include or be aiming for a money laundering charge on top of, or in addition to, wire fraud.

21:22Eileen Kinsella:It was another six months until Inigo learned his fate in a downtown New York federal courtroom. He was sentenced to seven years in jail, and the two years he had already served would count towards that total. In the end, he was out by spring of 2024. Don't ask me to do the math about how seven years became less than four, but I recall while reading something related to good behavior and prison overcrowding. Despite all of Inigo's assertions about the questionable involvement of other Artworld players, the only other person identified and prosecuted for the fraud was his former colleague, Robert Newland.

21:57Eileen Kinsella:He received an 18-month prison sentence after pleading guilty and sharing a lot of the details about what went down in their fraudulent art business, far more than Inigo ever did. Newland was released after nine months.

22:14Eileen Kinsella:Once Inigo was released from federal prison in Pennsylvania, he wasted no time trying to clean up his public image. He traded in his prison garb for J.Crew-esque fits in a sprawling Vanity Fair profile and photo spread with his now-wife Victoria and daughter Gaia, who was born several months after Inigo's arrest. Based on social media, he's living a relatively normal post-prison life with Victoria in Rhode Island, where he was ordered to a halfway house immediately after prison as part of the terms of release. In one of his posts, he makes light of his ankle-monitoring bracelet, calling it his ball and chain, along with the hashtag, Prisons Without Walls.

22:53Eileen Kinsella:Meanwhile, Victoria gave birth to another baby girl this past May.

23:00Eileen Kinsella:A key part of Inigo's defense strategy was to blame the system, as opposed to his individual actions. After his guilty plea, his attorney, Jeffrey Lichtman, stated, While his actions were dishonest and criminal in nature, he's part of an industry, sick from top to bottom, where this sort of behavior is sadly commonplace.