Art dealer pleads guilty to wire fraud charges in $86 million scam

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Art dealer pleads guilty to wire fraud charges in $86 million scam
Rudolf Stingel (b. 1956), Untitled. Price realised: USD 6,517,500. Christie's Images Ltd 2020.

by Colin Moynihan

NEW YORK, NY.- For years, Inigo Philbrick, a young art dealer with a gallery in the Mayfair district in London, was a brash fixture within the world of postwar and contemporary art.

Known for traveling on private jets, renting villas in Ibiza and wearing handmade Italian suits, he also was known to draw people into investing with him in paintings by blue-chip artists such as Jean-Michel Basquiat, Rudolf Stingel and Christopher Wool.

On Thursday, Philbrick appeared in ankle chains in U.S. District Court in Manhattan and pleaded guilty to wire fraud, acknowledging that he had duped people while conducting business as an art dealer in New York and other places.

“I knew that my actions were wrong and illegal,” he told Judge Sidney H. Stein, adding that he had been motivated by a desire for money.

As part of his plea Philbrick, 34, agreed to forfeit $86 million and all interest in a 1998 painting by Wool and a 2018 painting by Wade Guyton. He is scheduled to be sentenced in March and faces a sentence of up to 20 years in prison.

An American citizen who attended Goldsmiths, University of London, Philbrick was in his 20s when he opened a gallery and consultancy.

Philbrick specialized not in showing new works or guiding careers but in reselling, or “flipping,” a speculative form of art dealing in which investors buy ownership stakes in artworks and hope to profit when those items are sold.

The deceptions Philbrick was accused of perpetrating had their roots in the opacity of the resale market, where it can be difficult to verify how much works are bought and sold for. As a result, the value of shares in a piece of art is often based on little more than a dealer’s word.

“Inigo Philbrick was a serial swindler who took advantage of the lack of transparency in the art market to defraud art collectors, investors and lenders of more than $86 million to finance his art business and his lifestyle,” said Damian Williams, the U.S. attorney for the Southern District of New York.

From about 2016-19, the complaint in Philbrick’s case said, he misled collectors and lenders and sometimes sold a total of more than 100% ownership in an artwork to multiple investors.

Prosecutors said he also furnished “fake and fraudulent sale and consignment contracts in order to artificially inflate the value of artworks and to conceal the discovery of his scheme.”

In 2016, for instance, Philbrick bought a 1982 Basquiat painting titled “Humidity,” paying $12.5 million in a private sale, prosecutors said. Philbrick later sold shares in the painting to two investors while presenting phony documents citing purchase prices of $18.4 million and $22 million, according to the complaint.

Philbrick was also accused of using the Basquiat painting as part of his collateral for millions of dollars in loans from Athena Art Finance Corp., an art lending business in New York, without disclosing the ownership interests of other investors in the work.

Prosecutors described similar problems with an untitled 2010 painting by Wool and an untitled 2012 painting by Stingel that depicted Pablo Picasso. In the latter case, Philbrick was accused of selling to unwitting investors shares in the painting that totaled more than 100%.

Philbrick’s scheme began to unravel in 2019 as investors learned that he had provided fraudulent documents related to the Stingel and the Basquiat.

By November, investors had filed lawsuits in connection with Philbrick’s activities. His gallery in Miami was shuttered. It appeared that he had vanished.

Then, in June 2020, Philbrick was arrested by U.S. law enforcement agents on the Pacific island of Vanuatu and transported to Guam. Prosecutors said that flight records showed that he had left the United States just before word of the lawsuits began to spread.

This article originally appeared in The New York Times.

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