Money Crimes with Nicole Lapin - SCAM: Knoedler Art Gallery Forgeries

Episode Date: September 26, 2024

The Knoedler Art Gallery boasted one of the finest collections in all of New York City. But its director had no idea that the Knoedler's multimillion masterpieces were fakes -- created by a trio of clever con artists. For more content, follow us on Instagram and TikTok @crimehouse. To learn more about listener data and our privacy practices visit: https://www.audacyinc.com/privacy-policy Learn more about your ad choices. Visit https://podcastchoices.com/adchoices

This is Crime House. Have you ever stood in front of a famous painting in a museum and wondered if it was really fake? Probably not, right? We all just assume they're the real deal. And they are. Most of the time. But what if I told you that at one point in the early 2000s, there were dozens of multi-million dollar forgeries circulating around mansions, galleries, and yes, even museums all around the world? It was a scam that ran for nearly two decades, costing its victims $81 million. To top it off, the scandal took down one of the most prestigious art galleries

in New York City. But there wasn't some genius mastermind behind it all, or some sophisticated organized crime group. No, it was just three regular people and no one saw them coming. As the saying goes, those who don't understand history are doomed to repeat it. That's especially true when it comes to money. If you want to make the right decisions when it comes to managing your assets, you need to know what mistakes to avoid and how to spot a trap. This is Money Crimes, a Crime House original. I'm your host, Nicole Lappin.

Every Thursday, I'll be telling you the story of a famous financial crime and giving you advice on how to avoid becoming a victim yourself. Today's episode is about the Knoedler Gallery scandal. Over the course of nearly two decades in the late 90s and early 2000s, a group of amateur con artists managed to fool one of the world's oldest art galleries into buying dozens of fake paintings. And in the process, they turned the fine art world on its head. Take back your free time with PC Express Online grocery delivery and pickup. Get in-store promos, PC Optimum points, and more free time.

And still get groceries. Shop now at pcexpress.ca. Chiara, it means smart in Italian. Too bad your barista can't spell it right. So you just give a fake name, your cafe name, Julia. But the more you use it, the more it feels like you're in witness protection. Wait a minute.

What kind of espresso drinks does Julia like anyway? Is it too late to change your latte order? But with an espresso machine by KitchenAid, you wouldn't be thinking any of this because you could have just made your espresso at home. Shop now at KitchenAid.ca. When it comes to social status, an expensive art collection is the ultimate way to show off. For the ultra wealthy, there's nothing quite like using art to say,

not only do I have a lot of money, I've also got taste. And in the 1990s, the art scene in New York City was exploding. With money flooding in from Wall Street, the social elite were looking to separate themselves from the pack. And there was no better way to do that than to become the owner of rare, one-of-a-kind pieces from the hottest artists. These people were willing to pay millions to get what they wanted, which also made them an easy target for a trio of very perceptive con artists. I'll start by telling you about one of them, a woman named Glafira Rosales. Now, we don't know much about Glafira.

Unlike the others involved in this story, she only did one public interview. It was featured on Art Fraud, a podcast written by Vanity Fair journalist Michael Schneerson and hosted by Alec Baldwin. But from what she shared about herself, it seems safe to say that Glafira never saw herself becoming a high society con artist. As a kid in rural Mexico, she actually dreamed of becoming a doctor, and sometime in her teens, she moved to Mexico City to study medicine. That is when her life changed forever. Around 1975, 19-year-old Glafira met a guy named Jose Carlos Burgantinos Diaz. Carlos to his friends. He was a Spanish expat who owned the restaurant where Glafira's sister worked as a waitress.

One night, he showed up there drunk out of his mind, and Glafira's sister called her for backup. So, not exactly what you'd call a meet-cute. But it did lead to the start of a relationship, although it doesn't seem like it was a good one. Carlos was demanding and abusive, but Glafira was used to that. Her dad had been the same way, so it was familiar territory for her. Soon enough, Glafira got pregnant and had to put her dreams of becoming a doctor on hold. She and Carlos had a daughter, and in 1983, he decided they were moving to America. At first, they settled in Chicago. They ended up in Houston, chasing odd jobs to make ends meet.

Eventually, they settled in Great Neck, Long Island. It was there that Carlos began his more dubious business ventures. At some point, Carlos got the idea to sell fake antiques. He'd buy used furniture, then use various methods to make them seem older and more expensive. Turns out, he was pretty good at it. He managed to sell some pieces to a few antique shops and things were looking up. But Carlos always had his eye on the next big thing. And one day, he noticed that a shop he and Glafira were selling to had a small art gallery attached. Now, this wasn't some high-end place on the Upper East Side or anything like that, so these were some pretty standard pieces. But they definitely looked good.

They appeared to be new paintings done in the style of famous artists. Flowers in a vase painted like Van Gogh might have done it, that kind of thing. When Carlos saw them, a light bulb went off in his head. If he could take one of these in the style of paintings and age it just like he did his furniture, someone might believe it was the real deal. An authentic Van Gogh was worth way more than an antique chair. Sometime in 1991, Carlos decided to test this idea. But trying to fake something as old as a Van Gogh would be almost impossible. Instead, he tried it with a more contemporary artist named Jean-Michel Basquiat.

In case you're not familiar with his work, Basquiat was part of something called the Neo-Expressionism movement. He cut his teeth making street art before becoming a star in the 1980s. Tragically, his life was cut short in 1988 at the young age of 27. But for Carlos, it was an advantage. Basquiat's chaotic style made it easy enough to fake. His background as a street artist meant there could be unidentified pieces out there, and he wasn't around to say otherwise. It's not entirely clear where Carlos got his hands on a fake Basquiat, but he worked his magic on it and took it to Christie's Auction House.

It was definitely a bold choice. Christie's has been in the fine art business since the 1700s and have sold works by famous artists like Picasso and even Leonardo da Vinci. Amazingly, they took Carlos' painting on consignment with basically no questions asked, and they later sold it at auction for around $200,000. With that in mind, you might be wondering if there's a way to protect yourself if you ever make a big purchase like that. Here's the thing. If you're going to buy from an auction house like Christie's, you should know that they don't authenticate the items themselves. They only sell pieces from established galleries and dealers, so they're trusting that the due diligence has been done already. But we're living in an age where creating fake documentation isn't that hard,

so there's still risk there. Thankfully, you can take out an artwork insurance policy. On top of covering all the usual stuff, like loss, damage, or theft, you can add a forgery provision to it as well. It's not clear if the buyer of Carlos' fake Basquiat had a policy like that. And now that Carlos knew that he could get away with this fake painting scheme, there was no stopping him from doing it again. But he couldn't rely on finding usable pieces off the street. He needed someone who could produce quality frogs at a moment's notice. That person was struggling

artist named Pei Shen Qian. Back home in China, he'd been fairly successful as an artist. But now that he was in the States, Pei Shen was struggling to make a name for himself. When Carlos saw his work, it immediately caught his eye. Pei Shen did mostly portraits, but he also had some impressionist-style landscapes on display. And they were really good. See, in China, copying art is actually seen as a positive thing. There's a centuries-old tradition of up-and-coming artists cutting their teeth by painstakingly recreating the works of existing artists. Carlos could see that Pei Shen had a knack for

in-the-style-of painting. But Impressionism wasn't the style they were going for. As Carlos had discovered, abstract pieces were a lot easier to pull off, which Pei Shen could do in his sleep. He happened to be studying at the Art Student League, the same school where several abstract expressionists had trained a few decades earlier. Think big paint splashes and abstract shapes, something more focused on spontaneous creation than deliberate planning. And Pei Shen could mimic all of them. Pollock, Rothko, Motherwell, all the big names.

It's not clear if Pei Shen actually knew why Carlos wanted those paintings from him, but eventually he was asked to put the original artist's signatures on his In the Style of works. And that was a huge no-no, both in the U.S. and in China. At the same time, Carlos was offering good money, so Pei Shen didn't ask any questions. Now that they had their artist, Carlos could work on improving his forgery skills. The idea was, as long as a couple of details were genuine, the experts were more likely to accept the paintings as the real deal. While Patien got to work, Carlos attempted to establish himself in the New York art scene. He couldn't just show up out of the blue with Rothko's and Pollock's. He had to be seen as a serious dealer, buying and reselling real art.

But he couldn't quite manage it. After Carlos dropped out of two different auctions where he was the highest bidder, he quickly lost the little reputation he'd built up. That meant the operation needed a new frontman, or woman. Glafira was perfect for the role. She was educated yet unassuming, soft-spoken, and kind. Not at all what you would imagine when you think of a con artist. According to Glafira, she told Carlos she didn't want any part of it, but Carlos wouldn't take no for an answer. She says he threatened to take their daughter to Spain and make sure Glafira never saw her again. So, she reluctantly agreed to help him out.

This time, they knew better than to try and start at the top. Instead, Glafira built her network from the bottom up. She attended openings and symposiums. She bought and sold fewer, smaller, less expensive, and real works. She was a lot better at it than Carlos was. She studied and learned, listened and watched, not just the art, but the people around her too. And in 1995, she found the perfect target. Chiara, it means smart in Italian. Too bad your barista can't spell it right. So you just give a fake name, your cafe name, Julia. But the more you use it, the more it feels like you're in witness protection. Wait a minute. What kind of espresso drinks does Julia like anyway?

Is it too late to change your latte order? But with an espresso machine by KitchenAid, you wouldn't be thinking any of this because you could have just made your espresso at home. Shop now at KitchenAid.ca. People who work in the art industry tend to do it for one reason. They love art. That certainly seemed to be the case for Anne Friedman. In 1971, she graduated with a Bachelor of Fine Arts from Washington University in St. Louis, Missouri, before moving to New York City.

But passion doesn't pay the rent. To build a career in the art world, Anne had to be willing to take any job just to get her foot in the door. So she started as a receptionist at the influential Andre Emmerich Gallery. Anne's job was to answer the phones, but she really wanted to be a dealer. Whenever she got the chance, she would work on selling paintings to clients. And it turned out she was great at it. But like a lot of industries at the time, art dealing was a man's game. No matter how good of a saleswoman Anne was, her bosses at Emmerich weren't interested in giving her a shot. So she decided to keep her options open.

And in 1977, she was offered the job of assistant to Lawrence Rubin, the director of the Knoedler Gallery. This was a big deal. Knoedler was the gallery in New York City. It had been in business since the mid-1800s and was responsible for restocking the collections of iconic families like the Vanderbilts and Rockefellers. As Lawrence Rubin's assistant, Anne could finally prove herself as an up-and-comer in the art world. And she did. She was promoted again and again until she became the president of the entire gallery. Then, in 1994, after 17 years of working together, Lawrence decided it was time for him to step down as director. Anne was the obvious heir apparent, but even the Knoedler Gallery wasn't immune to the

boys club. Before Lawrence stepped down, he announced that he intended to hire a male co-director to work alongside Anne. Anne had gotten used to fighting for herself, though. She went over Lawrence's head and asked the gallery's owner for the job. Anne got what she wanted. When Lawrence officially stepped down, she was named the sole director. It was a bittersweet victory. Anne had gotten what she wanted, but it was still clear that she had to fight tooth and nail to prove herself. She needed to get a leg up on the competition, and a year later, she thought she got it when she met Glafira Rosales. The introduction came from a longtime Knoedler employee and friend of Anne's. She said Glafira

had something Anne might be very interested in, a piece by Mark Rothko. But this wasn't just any piece. Glafira allegedly had a hidden gem that no one had ever seen before. Right away, something didn't seem quite right. By this point in her career, Anne knew the important art dealers and collectors on the scene, and yet she had never heard of Glafira before. But Anne hadn't gotten this far by playing it safe, so she invited Glafira to come by her office with the Rothko. And when Glafira showed it to her, it took Anne's breath away. It had to be a real Rothko. But if it was, Anne wanted to know why nobody had ever seen it before.

The story Glafira told was almost as hypnotizing as the painting itself. She told Anne that she represented the actual owner who wanted to remain anonymous. Sometime in the 1950s, the mysterious seller's father, we'll call him Mr. X, bought some pieces through an artist and collector named Alfonso Osario. Allegedly, Osario had taken Mr. X to the studios of many soon-to-be greats like Rothko and Pollock. Of course, he bought their paintings in cash, which is why there was no record of it. Mr. X then took the paintings back to his home in Mexico, where they were seemingly put in storage for decades. After Mr. X's death, they went to his son, Mr. X Jr., who apparently wasn't a fan of abstract art, so he asked Clefira to sell them for him. We know this story is fake, but is there any part of it Anne could

believe? Well, let's say Mr. X really did buy those paintings back in the 1950s before the artists hit it big. That means he probably bought them just for the aesthetics because, generally speaking, buying a piece from an unknown artist is not a good investment. Typically, it takes a long time for a piece of art to appreciate in value, if it ever does at all. Unless you nabbed a piece by a famous artist or someone who's about to hit it big, you shouldn't expect much of an ROI. It's safe to say that Mr. X wasn't buying these pieces to add diversity to his investment portfolio. He just liked the way they looked. So then why keep them stored away for all those years, especially after the artists

became household names? That part of the story definitely raised alarm bells, but there was enough truth sprinkled in to make Anne wonder if La Fira really was being honest. For one thing, the broker, Alfonso Osorio, was friendly with artists from the New York school like Mark Rothko, Jackson Pollock, and Robert Motherwell, who were all living and working in the city at the time. If he introduced Mr. X to them before they burst onto the scene, it was entirely plausible that they could have sold some of their paintings on the cheap. If all of this was true, Anne might have just stumbled upon one of the greatest discoveries in art history,

something that would cement her as New York's biggest dealer. But even though Anne was ready to pounce, she still fell back on some age-old wisdom. Trust, but verify. After Glafira brought in the painting, Anne showed it to a leading expert on Rothko. If anyone could identify it as a fake, it would be him. But according to Anne, he said it was legit. It was exactly what Anne had hoped for. She agreed to sell the painting for Glafira, and this collection's lack of documentation became a mystery to be solved rather than a warning to be heeded. The first few pieces that Glafira brought in sold for respectable prices, hundreds of thousands of

dollars. But within a few years, art by the New York school suddenly became the hot commodity. By 2001, they were going for millions. With that kind of money on the line, people started doing a lot more work to verify authenticity. People like Jack Levy, a board member at Goldman Sachs, who came to Knoedler looking for a painting by Jackson Pollock. Thanks to Glyphira, Anne had one to show him. She was upfront about the mystery surrounding it. This wasn't one of Pollock's known works. In fact, there was basically no record of its existence at all. But she was just as quick

to reassure him that she believed it was the real deal. Levy showed a reasonable level of skepticism. He was willing to pay the $2 million asking price, but he insisted on getting it evaluated by the International Foundation for Art Research, or IFAR. It's not clear how long an IFAR report usually takes, but they are extremely diligent. They spent two years compiling information on Levy's Pollock. The piece certainly looked good. At first, anyway. But when they took a closer look, they noticed it had a strange green tint that no one had ever seen on a Pollock before. It didn't hold up forensically, either. Although the experts determined that the canvas was old, the paint wasn't. And IFAR's researchers also saw right through the story about where the painting came from. For one thing, unlike many artists, Jackson Pollock became famous while he

was alive and working. There's a ton of photos and even video of him in his studio, works lining the walls. The chances that this was the one piece that managed to go undocumented was frankly bizarre. And while Mr. X's broker, Alfonso Osario, wasn't alive to confirm or deny the story, his longtime partner was. He said there was no way this happened without him knowing about it. It probably goes without saying at this point, but I-Far did not accept the painting as an authentic Jackson Pollock. When Levy received the results of IAR's investigation in 2003, he went back to Anne and asked for his $2 million back. Anne stuck to her agreement and refunded his payment. And yet, she still believed the painting was real. She even put that same Pollock back on display in Knoedler.

At the same time, she also pushed Glafira for more information about Mr. X. Conveniently, Glafira had just gotten some new details that explained everything. It turned out she had been mistaken before, and Mr. X hadn't purchased his collection through Alfonso Osorio at all. Rather, he'd gone through an art dealer and gallerist named David Herbert, who was Mr. X's lover. That's why the paintings had been in storage all these years. Mr. X hid the art to hide the affair and his sexuality from his wife. When Mr. X Jr. inherited all of it, he waited to sell until Herbert passed. Of course, because Herbert died in the late 90s, he couldn't corroborate anything LaFera said. For most people, the combination of the IFAR report and this sudden change in story

would have been enough to sever ties. But Anne was in pretty deep at this point. It had been seven years since Glafira brought in that first painting. Anne had sold around 20 pieces to various collectors and even a couple of museums for hundreds of thousands of dollars each since then. To start doubting things now would have been catastrophic for her and the gallery. But what Anne did not seem to realize was that catastrophe was coming, whether she liked it or not. What's the feeling of fall? It's finally catching the sunrise.

And not because you woke up early. No, you woke up nice and late. And you know what? The sun waited. Then you went and got what you love from Starbucks. The new pecan crunch oat latte and new baked apple croissant, and enjoyed that warm apple filling and those nutty flavors with rich brown buttery notes while the sun rose just for you. That's the feeling of fall, and it's only at Starbucks.

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Yeah! Save big on electronics, fashion, and more this Prime Big Deal Days, October 8th and 9th. After the debacle with the fake Pollock painting in 2003, Glafira Rosales was merely exposed as a fraud. But as was typical in art world dealings, things were handled discreetly, so the consequences were minimal. Still, getting exposed like that probably should have been seen as a warning shot across the bow. And yet, Glafira and her partners, Jose Carlos Burgantinos Diaz and Pei Shen Qian,

continued to produce paintings. And Anne Friedman continued to sell them for the next few years. In 2007, she sold one of Glafira's fake Jackson Pollocks to a Belgian hedge fund manager named Pierre Lagrange for a whopping $17 million. Then, sometime later that year, a group called the Daedalus Foundation came into the picture. Robert Motherwell, one of the forefathers of abstract expressionism, had started Daedalus during the 1980s to foster public appreciation of modern art. Before Motherwell died in 1991, he bequeathed all of his works and records to the foundation. Part of the foundation's ongoing mission was to secure his legacy. Naturally, the people who work for it know a thing or two about Motherwell's art. One of those people was Jack Flam, the Daedalus Foundation's

president and CEO. After the debacle with the fake Jackson Pollock, Anne approached Jack about some Motherwell paintings that she'd acquired from Glafira. Jack looked at one of Glafira's Motherwells in passing before and assumed it was authentic. But now that he was getting a closer look, something seemed off. He told Anne to send them to a forensic analyst. In the case of Anne's alleged mother wells, they used some sort of imaging technology, probably an x-ray, and were able to see that one of the paintings was on a previously used canvas. The old painting had been sanded down and painted over, which Motherwell didn't typically do. On top of that, the chemical analysis found a different type of paint than what Motherwell was known to have used at the time.

Once again, Anne was presented with irrefutable proof that Glafira had sold her fakes. And yet, she continued to argue that these paintings were genuine pieces by Robert Motherwell. So, Jack Flam felt he had no choice but to go to the authorities. It took a while, but in the summer of 2009, the FBI started an official investigation. That October, Anne was invited to a meeting with the gallery's owner. She was told that she would be taking an immediate leave of absence. Anne must have seen the writing on the wall. She resigned her position soon after. She wasn't given a specific reason for the parting of ways,

but most people in the room knew about the storm gathering on the horizon. There wasn't anything in the press about the FBI's investigation, but whispers about fakes being sold at Knoedler were starting to spread. It would be another two years before that storm truly broke. In 2011, Pierre Lagrange, the guy who bought that fake Jackson Pollock for $17 million, tried to sell it at Sotheby's, but they wouldn't accept it because of its questionable origins. So Pierre hired his own forensic analyst, which he hadn't done the first time around. This time, they found a yellow pigment used on the painting hadn't even been invented until 1970, almost 15 years after Jackson Pollock died. It was some of the clearest evidence of forgery anyone had found,

and Pierre was furious. He sued Anne as well as the Knoedler Gallery. As stories about the legal battle began popping up in the media, another soon joined them. The Knoedler Gallery was shutting down. It was a shockwave that sent a lot of people scrambling, especially those who had purchased paintings from the so-called David Herbert collection. Every painting Le Fira had ever brought in was now highly suspect. But even now, Anne refused to admit she had been fooled. In an article published in Vanity Fair in 2012, she said that she believed the art world would be thanking her for sticking to her convictions. Then, in 2013, Glafira was arrested by the FBI. Taking the age-old route of following the money trail, they tracked down her foreign bank account. And they were able to identify a financial crime that exposed Glafira as a fraud. Any reputable art dealer works on commission. They don't make money unless the seller does. As a representative

of Mr. X Jr., Glafira should have only been keeping a percentage of the money Knoedler paid for his pieces, somewhere in the range of 5-10%. Except Glafira's bank accounts showed that she was keeping all of it. So the FBI was able to conclude that she was either stealing from her client or there was no client to begin with. Not only that, but Glafira had failed to declare her foreign account on her taxes. In total, investigators determined that she had hidden, and therefore not paid any taxes on, a minimum of $12.5 million of income. It might not have been the whole story, but it was enough to take her into custody. Meanwhile, Carlos and Pei Shen had fled to their home countries, leaving Glafira to fend for herself. She was facing serious prison time, so her best bet was full cooperation.

Glafira testified that Carlos had been the mastermind, and she had only participated out of fear for herself and her daughter. After taking that into account, she was sentenced to time served plus nine months of house arrest and three years of probation. In 2016, an extradition order was issued for Carlos Burgantinos. He had managed to convince the Spanish judge that he couldn't travel for health reasons. As for Pei Xian, being a Chinese national is all the protection he needs. It doesn't seem like either of them will be facing justice anytime soon. In the end, it all landed on Glafira, who was ordered to pay back all $81 million they had swindled from a long list of collectors. Even when you factor in whatever money the FBI found in her account,

it's unlikely her victims will ever get fully repaid. The government can only step in and seize whatever income or assets La Fira has, and this time, there isn't a secret trove of multi-million dollar paintings to make up the difference. As for Anne Friedman, she was never arrested for her role in this. But that didn't stop people from suing her. At least 10 lawsuits were filed against Anne and the gallery. In the end, nine of them were settled out of court. The 10th went to trial in 2016, but was cut short when the parties reached a settlement before the defense even presented their case. The entire thing was a bit of a spectacle, consisting of plenty of he said, she says. It mostly served to highlight the

delicate nature of the high-end art market. For how high the stakes can be, the entire thing rests on a foundation of faith in the so-called experts and the system, and on the instincts and knowledge of others. And as with most things built on faith, it can be painfully easy to take advantage of. That's all for today's episode, but before we go, I'm going to leave you with one final takeaway from today's story. It's a lesson most of us learn at a very early age. Never judge a book by its cover. Whether we're talking about multi-million dollar paintings or the latest investment trend, it's important to look beyond the surface and do your own research.

Some of the people in the Knoedler Gallery scandal were smart enough to do this, and they got their money back without a fuss. But there were many others who might never fully recoup their losses. They took what they saw at face value, and they paid the price. Thank you so much for listening. I'm your host, Nicole Lappin. Come back next time as I take you through another wild story

and offer you some advice along the way. Money Crimes is a Crime House original powered by Pave Studios. Join me every Thursday for a new episode. Here at Crime House, we want to thank each and every one of you for your support. If you like what you heard today, reach out on social media at Crime House on Instagram, at Crime House Studios on TikTok, and CrimeHouse Studios on TikTok, and at CrimeHouse Media on X. Don't forget to rate, review, and follow Money Crimes wherever you get your favorite podcasts. Your feedback truly makes all the difference. Money Crimes is hosted by me, Nicole Lappin, and is a CrimeHouse original powered by Pave Studios. It is executive produced by Max Cutler.

This episode of Money Crimes was produced and directed by Ron Shapiro, written by Megan Hannum, edited by Alex Benidon, backtracked by Sheila Patterson, and included production assistance from Paul Liebeskind and Sarah Carroll.