News

Gregor Kleinknecht comments on Timothy Sammons misleading clients over sales of works by artists in The Art Newspaper

  • September 02, 2019
  • By Gregor Kleinknecht, Partner

In the culmination of a high-profile, multi-year larceny case, Timothy Sammons pleaded guilty to fraud and grand larceny in the New York State Supreme Court in July.

Partner Gregor Kleinknecht, who acted for a client who lost a valuable painting through Sammons, says it was easy to be deceived by the dealer, even if someone carried out due diligence and asked around before entrusting works to him.

“The art and the money were gone and Sammons and his company had insufficient funds to satisfy judgments against them,” Kleinknecht says. The lesson to be learned? Act and obtain advice immediately as soon as you suspect something is awry. “At least some of Sammons’s customers may have been able to retrieve their works had they acted earlier and applied for an injunction,” Kleinknecht says, adding that registering a work with the Art Loss Register as lost or stolen can be a less radical alternative than going straight to court.

Kleinknecht urges sellers to consider whether they really need to use an intermediary but, if a broker is needed, he cautions to avoid letting them take possession of the work or handle the sale proceeds. “The intermediary could then arrange viewings but would not be entitled to retreive the work without the seller’s consent,” he says. “The old saying still applies that ‘possession is 9/10 of the law’.” Instead, consider placing the work with an art logistics company with viewing facilities.

If the agent is based overseas, “advice should be obtained from a lawyer qualified in that jurisdiction,” Kleinknecht says.

Kleinknecht says it is legitimate to ask the intermediary for the details of the buyer and, in the EU at least, “under the new money laundering scheme to be implemented pursuant to the fifth Anti-Money Laundering Directive [to be introduced in the UK and EU next year], this is information on which the intermediary will need to have carried out client due diligence in any event.”

One final, fundamental point: never release a work of art until you have received cleared funds and, Kleinknecht urges prospective sellers, payments should be handled through an escrow arrangement.

The full article is published in The Art Newspaper’s September 2019 edition and here

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