Stolen-Art Recovery Services: When Do Finder’s Fees Become Blackmail?

Camille Pissaro’s “Le Quai Malaquais, Printemps” (1906) was looted by Nazis from an Austrian family in 1940. Surviving family members say Art Loss Register located the painting for free, but it would not reveal the location until its owners agreed to a hefty “finder’s fee.” (Photo: Christie’s)

The Art Loss Register, a for-profit company that calls itself the “world’s largest private database of lost and stolen art,” has evolved over the years into the de facto authority when it comes to successful art recovery.

As reported in the New York Times last September, the ALR helps fill a “gaping void”—billions of dollars’ worth of art stolen each year but law enforcement lacking the resources to prioritize finding it. The sole private practitioner within that niche, the ALR for more than 22 years has come to wield incredible power in today’s largely unregulated art market by becoming the primary locus of due diligence, both for victims needing to report art theft and for art buyers seeking assurance that prospective purchases are legitimate.

It is within this context that ethical paradoxes have come to light contributing to a major shakeup in ALR management and the creation of a new rival company, Art Recovery International.

Since 2007, the ALR has drawn criticism for its hardball tactics and alleged ethical lapses. Julian Radcliffe, the chairman of the ALR, testified under oath that he lied to a client who engaged the ALR to check the background of a painting, telling the client the painting was not stolen when, in fact, it was. According to Radcliffe, all went to plan. He only lied so stolen art would end up successfully recovered, the mission of the ALR.

The significant finder’s fee that Radcliffe demanded on this, and every such recovery, is inconsequential. He does not split the finder’s fee with his unwitting ALR client-accomplice.

Antiques Trade Gazette writer Tom Flynn has asked, “Am I missing something here, or is there not a conflict of interest where a company offering ‘due diligence’ checks also stands to profit when an item comes back to the market. … If a dealer cannot lodge a bona fide inquiry with the leading provenance-checking database without running the risk of having the wool pulled over his eyes, what future for the already endangered concept of due diligence?”

Commentator Derek Fincham wonders if the misled ALR client “… may have some kind of claim against the ALR itself” and whether “this kind of misleading information would give dealers pause when they are considering whether to consult the database.”

Perhaps contemplating such a possibility, Radcliffe later put out a statement claiming that in his whole career he had only lied under “extraordinary circumstances”—twice in the last 15 years.

Adding to the ALR’s recent challenges is its changed position concerning recovery of Nazi-looted art. In the past, Holocaust art claims were investigated pro bono, but about five years ago, in the middle of a case in Germany concerning a looted Pisarro painting, the ALR reneged and decided to charge a finder’s fee based on the painting’s value, reportedly 20 percent of the first million, 15 percent of the second million and 10 percent of any additional value.

Other parties involved in the case balked at the new fees and proceeded to work without the ALR. Showing up at a previously arranged meeting, Radcliffe discovered the other parties had already met. “We realized we had been cut out,” he said.

The other parties, in seeking to extract their own finder’s fee from the original owner, were later charged under the German criminal code with “demanding with menace,” the U.S. equivalent of blackmail.

“To me, this constitutes a threat,” said the Pisarro’s original owner. “If I don’t obey your demands, the Pisarro will disappear again as it did in 1938.”

An un-indicted American professor, working with the accused, could not understand the Pisarro owner’s point of view. “Her response is so irrational. … She simply cannot recover the painting without us.”

The ALR argues that finder’s fees are justifiable, legal and needed, since unlike other agencies involved in this kind of restitution work—such as the FBI’s Art Crime Team and the Holocaust Art Restitution Project—they receive no financial donations or tax assistance. Critics counter that good public policy requires disinterestedness in all matters of art restitution.

Still, most agree the art world is safer with the ALR than without it. Robert Wittman, former head of the FBI’s art-crime unit, told the New York Times. “They do serve a purpose—they’re the only private database. … When they get into trouble is when they overstep that role and try to act as if they’re the police.”

Today, the most troubling problem facing the ALR may be the recent loss of two key employees and, even more telling, the October 2013 announcement by longtime ALR general counsel, Chris Marinello, that he has left the registry and set up a rival company, Art Recovery International. In his announcement, Marinello said that his new venture “will be run ethically, responsibly and with respect for the rule of law.”

Worthologist Matthew S. Wilcox is the vice president for trusts & estates at Freeman’s Auctions in Philadelphia, Pa. A graduate of Bowdoin College, he holds a Master’s degree in Art History from UNC-Chapel Hill and a Graduate Certificate in Museum Studies from George Washington University. An accredited member of the Appraisers Association of America and an active estate appraiser, Matt speaks and writes frequently about the art and appraisal profession at estate planning councils, tax groups and bankers associations.

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