Hair-raising courtroom dramas in the US
by Georgina Adam |
Illustration by Katherine Hardy
US courtrooms have recently offered us three new dramas, and while they are on very different subjects, two certainly had my hair standing on end. And those two may be illustrative of today’s art market, which is certainly not what it was a few years ago. Are buyers, faced with falling values, going to court to attempt to recuperate their losses? Or are they justified in their complaints? The judges will decide.
The first pits the deep-pocketed Swiss financier and collector Jacob “Jacqui” Safra against Christie’s. In a lengthy complaint filed in January in New York, he blasts the firm for bad faith and fiduciary breaches in valuing and selling parts of his art collection over the past two years.
Let’s take a deep breath and look at the story. According to court documents, in 2022 Christie’s advanced over $63m to Safra against the future sales of various collections, to repay a debt he owed to the hedge fund UBS O’Connor.
The 670 pieces of art included Old Master pictures, furniture and, importantly, a group of 43 love letters from Albert Einstein to his first wife. Allegedly, since Safra did not pay back the advance, the auction house declared him in default, and has been selling off Safra material in order to recoup its money. There are many more moving parts in this story, but I simplify.
In 2023 there were three sales of Old Master paintings, all held “without reserve”—at Safra’s request. They raised around $24m, but the complaint questions Christie’s attributions, saying it led to them selling very badly.
Then Christie’s went on to sell the group of Einstein letters in December last year, which were again offered without reserve and made £441,000—way under their estimate of £700,000-£1m. Again, Safra maintains that Christie’s did little to promote the group, resulting in a disappointing result.
The bottom line is that Safra is seeking damages equal to the difference between the “fair market value” of the works and the hammer price—plus interest.
This is the real hair-raiser: auction doesn’t “do” fair market value—it establishes the price someone will pay in the open market at that moment in time. Sadly for Safra, the market for letters and manuscripts doesn’t seem as good as it was when he bought them in 1996 for $442,500. With inflation, that sum would be $884,686 (£712,667) today.
Christie’s will only say: “The property was sold in accordance with the agreement with Mr. Safra. As this has now moved to litigation, we do not intend to comment further.”
Then there is the complaint filed in February by Justin Sun (of banana fame) against the mega-collector David Geffen. Sun is seeking the return of Giacometti’s Le Nez , which he bought for over $78.4m in 2021. Sun alleges it was stolen from him by his adviser Xiong Zihan Sydney, who sold it to Geffen in a deal worth $65.5m. But according to Geffen’s lawyer, Tibor Nagy, in exchange for the sculpture (which he “knowingly sold”), Sun received two paintings and $10.5m in cash. “After trying and failing to sell the paintings, he now wants to retrade the deal,” Nagy says. “We call that seller's remorse.”
Finally, the other hair-raiser concerns the disastrous exhibition of works “by” Jean-Michel Basquiat at the Orlando Museum of Art in Florida in 2022. An FBI raid was followed by the revelation that all were fakes. The fall-out has been drastic, with the sacking of the museum director, a swathe of resignations and severe financial problems for the institution.
Now, in what seems to be an act of ultimate chutzpah, the owners of the collection are seeking almost $20m from the museum’s insurers, on the basis that the works were covered, fake or not.
But in their court filings late last year, the two insurance companies said: “[The owners] do not have any valid claim to proceeds from this ‘loss’ since there is no loss to begin with.” No loss! Ouch! We await the outcome of these cases, so my hair can return to normal.
06 February 2025