Oh My Fraud

Attention: This is a machine-generated transcript. As such, there may be spelling, grammar, and accuracy errors throughout. Thank you for your understanding!

Caleb Newquist: [00:00:00] In 2019, a young and up and coming art dealer named Inigo Philbrick was all anyone in the art world could talk about. He was a savvy deal maker, handsome. People compared him to Justin Timberlake. He loved to party and he was inexplicably successful and knowledgeable in the business for someone his age, only 33. But they weren't gossiping about Inigo's good looks. His new Miami gallery. Not even his drug use or another winning bid at auction? No, the chatter was about something far more mysterious. Inigo had vanished.

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Caleb Newquist: [00:01:03] This is Oh My Fraud, a true crime podcast that features double dealing rather than double homicides. I'm Caleb Newquist.

Greg Kyte: [00:01:10] And I am Greg Kyte.

Caleb Newquist: [00:01:12] Greg, do you know any wealthy people? And I'm not talking like upper middle class folks. I'm thinking like the the one tenth of the 1%. I'm thinking like succession level wealth like and I'm paraphrasing Dave Chappelle here from long ago, but like, our family invented fire, that kind of thing.

Greg Kyte: [00:01:30] Yeah, I well, I don't think I do, but I work for a bunch of doctors and some of some of the wealthiest of the doctors that I work for. They've got, like, an empire, but like, crazy. Like one of the doctors owns, like, storage units all over the country and like, a pig farm and stuff like this. Plus, you know, uncountable real estate investments, things like that. But I still don't think we're talking the top 10th of 1%. Um, yeah. So these guys I know that they got tons of money, but they like, we're not talking like super yachts or anything like that. My closest like if we're, if we're doing like the seven, you know, Six degrees of Kevin Bacon kind of thing. My closest connection to the super rich is that my ex wife's uncle used to be Larry Ellison's private pilot. So that that's, that's that's pretty good. That's kind of a big deal. Yeah.

Caleb Newquist: [00:02:29] Yeah, yeah. Ellison He's probably got. He's probably got a fleet of super yachts.

Greg Kyte: [00:02:33] Yeah, he, I'm oh, he's got all the super yachts and I think he's got, I think he's got a even a fleet of private jets. Yeah. That he's got and, and super funny side note my ex wife's uncle was like a super like hard core fundamentalist Christian and he's flying people across the world to do the most licentious, lascivious acts, no doubt imaginable. And so he'd just pray the whole time that he was flying that. Yeah, that sounds to get it just to get the sin off, right?

Caleb Newquist: [00:03:08] Yeah. Yeah. So I don't know anyone wealthy like that. I mean, that kind of wealth like in the billions, you know, is, is really always hard for me to imagine. Like you can spend millions on homes and land all around the world and and you can fly in private jets to get to all of those places. And you still have an unbelievable amount of money left. So like, essentially it's it's it's virtually impossible to spend all the money. Yeah, it's always kind of like mind blowing to me.

Greg Kyte: [00:03:37] Yeah, absolutely. Well, it's like and yeah, when you think about, like, impossible to spend all the money, the thing that comes to my mind is that Richard Pryor movie that came out in the 80 seconds, Brewster's Millions. I know you've seen it. We talked about it a little bit.

Caleb Newquist: [00:03:50] I love Brewster's Millions. I love that movie.

Greg Kyte: [00:03:52] So the whole like the plot is that Richard Pryor, in order to inherit inherit $300 million, he has to spend $30 million in 30 days. And there's all these rules where you can't just, you know, you can't do a lot of crazy stuff that would just like you can't just like light the money on fire, that kind of thing. And the plot of the movie is that he he couldn't do it or he just barely did it. And he was miserable the whole time. Yeah. Yeah, he was while he was doing it. So. Yeah, yeah.

Caleb Newquist: [00:04:25] Great movie.

Greg Kyte: [00:04:26] Great movie. It was a great movie.

Caleb Newquist: [00:04:27] But one way, Greg, I think that I think most people are aware of this, but I think, you know, wealthy folks the way a lot well, I shouldn't say a lot, but the way some of them like to spend their money is on fine art. So like paintings by Picasso or Rembrandt and like photographs by Cindy Sherman, you know, antiquities from the ancient Egyptians, Greeks, Romans, etcetera. You know, the kind of stuff that you can only get at Sotheby's or Christie's. And there's mysterious people on the phones. And, you know, they're paying millions of dollars for that stuff.

Greg Kyte: [00:05:04] Yeah. And and funny enough, in Brewster's Millions, the the dead guy who willed all this money to Richard Pryor's character specifically said that he couldn't buy a bunch of Picasso's and just use them for firewood. So it it clearly is. Even in the 1980s, when they were writing a film about blowing a lot of money, they knew that the way to blow a lot of money was on Picasso's and Picasso's and photos by Cindy Sherman. Yeah. So yeah that's that's been it's yeah this isn't this is no we're not breaking news with any of that. But what we are at least honing in on for this podcast is that in 2021, the global art market was $65.1 billion. And when there's that much money being thrown around, it's absolutely going to attract interest from a lot of. People and there will be a lot of people trying to get a piece of that action.

Caleb Newquist: [00:06:11] Inigo Philbrick grew up in Connecticut, the son of Harry Philbrick, a highly regarded museum director, and Jane Philbrick, a writer, artist and lecturer. Inigo went to Joel Barlow High School.

Greg Kyte: [00:06:25] Yeah. Joel Barlow High School.

Caleb Newquist: [00:06:27] Oh. Do you know.

Greg Kyte: [00:06:27] Him? No. I've never heard of him before in my life. But it sounds like a pretty fucking fancy high school.

Caleb Newquist: [00:06:34] It sounds like mean public, I guess. Apparently it's a public high school in Redding, Connecticut, still, but a highly regarded public high school in Redding, Connecticut. Nice. And he and Inigo, he graduated with honors from there in 2005. And as you might expect, as as the as the as the child of some arty parents, he was he was an arty kid. And that was that was like his main, you know, his main interest, a lot of influence. A lot of took a lot of took a lot from mom and dad. Yeah. As a young person.

Greg Kyte: [00:07:05] If you if you need to be instilled with art appreciation, have your father's income be solely based on people's appreciation of art.

Caleb Newquist: [00:07:14] Yeah, right. So sadly, Inigo's father divorced his mother in 2006, and by several accounts, this was devastating for Inigo. He resented his dad for leaving his mom and they would later become estranged. Right. But he never.

Greg Kyte: [00:07:32] Yeah, And we all know we all know the famous quote. Hello, my name is Inigo Philbrick. You divorced my father. Prepare to die.

Caleb Newquist: [00:07:40] Yeah, everyone knows that.

Greg Kyte: [00:07:43] Yeah, it's a pop culture.

Caleb Newquist: [00:07:48] But nevertheless, despite this. Kind of the splitting of the family. Inigo did follow in his dad's footsteps by attending Goldsmiths, University of London. He was an art student there. And in 2010, after attending Goldsmiths, he secured an internship at the White Cube, which is a prestigious London gallery founded by a British art dealer by the name of Jay Jopling, who's again, kind of was well known, still is by all accounts.

Greg Kyte: [00:08:22] And I mean, everybody knows Jay Jopling.

Caleb Newquist: [00:08:25] He's the everyone, everyone in the art world. Greg Yeah.

Greg Kyte: [00:08:29] He's, he's, he's that famous relative of Janis Joplin.

Caleb Newquist: [00:08:34] Aw, yeah. Close enough, right? Yeah. Yeah. Prove me.

Greg Kyte: [00:08:39] Wrong. Prove. Prove me wrong.

Caleb Newquist: [00:08:40] Twitter and Jay Joplin, he. He soon became indigo's mentor. Nice. And because Indigo, he demonstrated a lot of talent. Like early on, he was. And he was ambitious. And he quickly became in charge of white cubes secondary market sales. Now what does secondary market mean? And the easiest way to think about it is like basically like used cars are sold on the secondary market was pre owned as opposed to a new piece that was being sold for the first time. And Indigo had a specialty in postwar and contemporary artists. And when he became interested in an artist, he learned everything he could about their work and where they were located and who owned them. And so he became known as kind of a savvy deal maker who had like these really deep knowledge about the artists and their work. And he was he was good at at getting it at a good price and flipping it for a profit.

Greg Kyte: [00:09:49] Yeah. And and before we get too far, let's talk about the fine art market for just a little bit because there's there's certain there's certain collectors who they they get the art because they love the art and then there's certain collectors where they buy the art and it's just an it's just an asset. It's just an investment. And they're just trying to make money like you were just describing. So it isn't so much about the the art itself per se. It's more about the bragging rights associated with winning a particular piece of art at auction and then reselling it later for for a profit. So it's there's a little bit of bragging rights based on how prestigious the work of art is. And there's probably an equal amount of bragging rights or, you know, interest just in the fact that you're making a shit ton of money on turning this thing around. And sometimes, obviously you these people are making like a killing. But just like with all kinds of assets, sometimes you get screwed and you buy, you know, like I think of Bored Ape, the, you know, the what are those things called?

Caleb Newquist: [00:11:08] Yacht club? The Nfts.

Greg Kyte: [00:11:09] Greg The Nfts. Yes, the Nfts. That's where it goes the wrong way is when you buy an NFT. Who who could have seen that coming. But, but, but with, with like, actual physical, tangible art. There's lots of variables that go into what's going to happen with the price over time and including and, and I would say as somebody who knows nothing about it, arguably the most important part is just the popularity of the artist. Yeah. I feel as though Van Gogh has been having a recent resurgence in interest, and I'm sure that that has affected the price of his art in the secondary market. And speaking of Van Gogh, yes, just to put the art market into perspective, in 2021, there was some knucklehead and I call him a knucklehead because I truly believe that he's a knucklehead who bought a wooden cabin among the olive trees and cypresses, which is a painting by Van Gogh. He bought it in 2021 for $71 million. Yeah, that was Van Gogh in 2021. Picasso's. If you just look at all the Picasso's that were sold on the secondary market, all of the Picasso's, their combined value of what they were sold for on the secondary market just in 2021 was $671 million. Unbelievable. Unbelievable. And if you want to talk about flipping art, I found and these are people that I do not know their work at all, I think I saw just a blip of it in the article that I that I found this in. But there is an artist named Flora Yukhnovich, and she was selling her paintings for a meager $40,000 a piece in a little gallery way back in 2018. And those same pieces again in 2021 were selling upwards of $3 million. So somebody who snatched up one of Flora Yukhnovich paintings made, you know, not not a tenfold increase on their original investment, but pretty damn close. Yeah.

Caleb Newquist: [00:13:29] So so if I. If I may just. Add some. Well, yeah, I think what we're getting at here, and we've talked about this in other episodes is there's a lot of speculation going on, right? Yeah. And I think and like I think the, the the most the most recent episode that we talked a lot about speculation was was high stakes, stakes, fraud, high stakes ghost cattle. Yeah. Ghost cows and similar to and I guess this is where it's going to get a little bit crass for the art lovers out there. But this in in the research for this episode like what you hear people say, either on podcasts or reading articles is like this kind of like speculation in the art market. People kind of like pooh pooh it and they don't like it, but it is widespread, and the reason people don't like it is because it kind of reduces artwork, which is supposed to be like art is supposed to be like these cultural touchstones, right? Like these things that have meaning and and are important and people should care about them. But really, what this kind of behavior shows is that it's art is just a commodity, just like everything else. Right. And that's why the speculation and that's and the speculation is is is kind of evidence of the behavior of people speculating on the prices of arts and artists is pretty indicative of that. It is to a large degree, a commodity for many people.

Greg Kyte: [00:14:57] Well, it's just the difference between like like hardcore nerds and Wall Street bros, because totally you've got the same thing. I mean, think about like baseball cards. It's the same thing. There's some people who just feel like if they can hold a, I don't know, Mickey Mantle rookie card in their bare hands and go, I own this, then they feel like that their life hasn't been a complete waste and that their existential crisis is resolved for one day. But there's other people who are just like going, No, I can buy a mickey Mantle today and I can sell it for way more tomorrow. Yeah. And and those people erode the, the, the intrinsic value that the nerds find in that stuff. Baseball cards, comic books, all that stuff. There's people who are in it for the love of the thing, and there are people in it because they want to exploit the other people who are in it for the love of the thing. And and one the one hates the other and the other lives on the one, if that makes sense.

Caleb Newquist: [00:16:01] It does no.

Greg Kyte: [00:16:03] Good.

Caleb Newquist: [00:16:03] As we've noted, because of the speculation, the speculation is inherently risky, right? Yeah. And Inigo Inigo like taking risks. Yeah, he.

Greg Kyte: [00:16:15] Did. And let me just just to back up a little bit to what we were just talking about. What's also crazy when when we're talking, you know, and again, I'm sure this is the case with baseball cards, with comic books, and it's also the case with fine art, which I think is shocking, but it's not infrequent that the people who do buy these famous classical, well known, super high value pieces of artwork, they don't even take possession of the artwork. They don't look at it, they don't hang it on their wall. They put the damn thing in storage in some tax haven just so they don't have to pay taxes or customs or anything like that on it, because again, they're just in it for the money. So they're doing whatever they can to just minimize it, because if they took it out and they put it on their wall, they'd have to buy some command strips to the to put it on the wall without damaging the art or their wall. And then they'd have to box it up again when somebody bought it. And that's overhead. That's unnecessary overhead. Anybody who's in business fucking knows that and is going to minimize that shit as much as they can. Come on, accountants. You know what I'm talking about.

Caleb Newquist: [00:17:34] In October 2011, Due to his early success and burgeoning reputation, Inigo opened his first gallery, Modern Collections in London's posh Mayfair district. With financial backing from his mentor, Jay Jopling. Okay. Um, shortly shortly thereafter, in 2013, Inigo went into business for himself again with Joplin's support. And as we said before, he had a specialization in postwar contemporary artists and a few of them that people may or may not know, but a few that came up frequently in the research were artists like Wade Guyton, Wade.

Greg Kyte: [00:18:17] Guyton.

Caleb Newquist: [00:18:18] Wade Guyton, Wade Guyton, Yeah, Christopher Wool and.

Greg Kyte: [00:18:22] Christopher.

Caleb Newquist: [00:18:23] Wool and Rudolf Stingel. Yeah.

Greg Kyte: [00:18:25] You're kidding me.

Caleb Newquist: [00:18:26] Rudolf Stingel Oh, the art people are gonna. They're gonna. They're. They're kind of after you, Greg.

Greg Kyte: [00:18:31] They will. I just. We had a lot of people just bounce out of this podcast.

Caleb Newquist: [00:18:35] I have to say, though, I researched because I didn't know him either. And so I researched these guys and their work is very, very interesting, I have to say. It's nice. Yeah, so cool. Like cool stuff. Anyway, according to Art News quote, Philbrook would take a strong position on an artist, learn as much as he could about where all the work was and make sure he had pieces to offer. These high quality works were often priced aggressively. He developed a reputation for driving up artists, artists, markets, often establishing new benchmarks.

Greg Kyte: [00:19:10] Which is nuts because when you. What does that sound like?

Caleb Newquist: [00:19:14] What does that sound like?

Greg Kyte: [00:19:15] Greg It sounds like pump and dump stock stuff where or you could say.

Caleb Newquist: [00:19:21] Or you could say it sounds like speculation.

Greg Kyte: [00:19:23] Or it sounds like, well, no, no, no, because it's not just speculation, it's speculation. Plus trying to manipulate the market in which you have speculated, which that's the whole pump and dump thing, where it's like you buy up a bunch of stock and then and you're saying, man, this is the this stock's the shit. Everybody needs to get in on this. And so then people start going, Oh, I need to get in on it. And then you go, Yeah, and guess who's selling it? Me. Now that everybody's interested in it. And then you dump all your stock and it's kind of like he does that with these artists as well. Because again, like we said, there's lots of factors that go into the value of a piece of fine art, and a lot of it is how much interest do people have in it? So if you're able to to learn all this stuff about some, you know, maybe not super obscure, but relatively obscure artists and you gather all this stuff and then you go, Man, this guy's amazing. And then people like, he is amazing and that's going somewhere. And I got to get a piece of that. And then you sell all your stuff. It's the same thing, but it's not illegal, right?

Caleb Newquist: [00:20:21] So I think that was the point I was about to make, which is the key difference is that the art market is completely unregulated, completely unregulated. So during this time of his rapid ascent in the art world, Inigo was living lavishly. He lived in an art filled Mayfair flat with his girlfriend, Francesca Mancini, who's an art dealer and perfumer. And she's from a, well, well-to-do family.

Greg Kyte: [00:20:48] A well diffused, well diffused family. She's like a it's like basically an atomized family. That's right. It's not the nuclear family. It's an atomized family.

Caleb Newquist: [00:21:00] A well-to-do family who he'd met at Goldsmiths. He wore tailored Italian suits and liked very expensive watches. One watch in particular that came up in a New York Times article is a 5990 paddock, and I had a hard time pinning this pinning the price on this watch down, but I'm pretty sure it's at least a six figure watch. So like, I don't know, people who know watches are probably like, Yeah, the Nautilus anyway.

Greg Kyte: [00:21:32] And also just for the listeners out there, there's a clock on your phone.

Caleb Newquist: [00:21:40] There is, and it works really well. Keeps very good to you.

Greg Kyte: [00:21:43] It perfect like it's the exact time.

Caleb Newquist: [00:21:47] But depending on the phone still may be overpriced.

Greg Kyte: [00:21:51] Possibly, yeah. Oh, well, I'll tell you what, nobody's paying six figures for their iPhone, especially not for their Android. And those also have clocks on them. Those androids, they're really coming along.

Caleb Newquist: [00:22:07] All right. Someone else who is a big supporter of Indigo during this time was another known personality in the art world. Kenny Schachter And I hope I'm pronouncing that right. Um, I am right.

Greg Kyte: [00:22:20] Yeah, that's. Yeah. It's not Shatner. It's not. It's not Shatner Like William Shatner. It's no N There's no. N no, it's. Schachter Got it. Kenny. Kenny. Kenny. Good old Kenny. Schachter Yeah.

Caleb Newquist: [00:22:34] And Schachter is, is a character, and he was described in The New York Times as an artist, gadfly and columnist, which is a pretty kind of flattering trio of terms, I would say. If, if The New York Times described me that way, I would be very happy with it for what it is, right?

Greg Kyte: [00:22:50] Well, and what's interesting and and one of the articles that I read about this, he describes himself as being someone who who like was interested in the fine art world, but he didn't come from the money that was required to be in the fine art world. So he was in it as much as he could. But then he and he was in it enough to be considered an insider to where he could write about the inside of the. So he just like like the door was cracked open just enough for him to say he was on the inside. And then he was like writing about everything he saw. So. Right. So I think gadfly I think gadfly is a great description. It is, Yeah.

Caleb Newquist: [00:23:34] Yeah. Uh, Kenny and Inigo first met in 2012, and after he bought a painting from him, the two quickly became friends, and for years they sat together at auctions, traveled the world together, going to art shows with Inigo frequently chartering, chartering, chartering, chartering private jets for the occasion. Schachter frequently used Inigo as a background source for his Artnet columns. He was a that's where he is a or was a writer.

Greg Kyte: [00:24:08] Yeah, that's where he, that's where he Gadfly And that's where he gadfly, yes, gadfly. That's where he gadfly, yeah, yeah.

Caleb Newquist: [00:24:15] And he covered, he covered Inigo's galleries, he covered their shows and they also continued to do art deals together on the on the secondary market. Yeah. And of course, they were, they were partying. And for the next several years, Inigo's Mayfair Gallery was thriving with more than 100 million pounds in revenue in 2017. And that same year, his girlfriend Francesca, they gave birth to a daughter and his his reputation and prospects were continuing to grow and he was continuing to make deals.

Greg Kyte: [00:25:01] But Caleb. Then comes 2019 where Daniel Temple and Loretta Virton Burger Partners. Am I saying that right? Goddamn right.

Caleb Newquist: [00:25:13] Sounds. Sounds fantastic.

Greg Kyte: [00:25:15] It's so Tumpel and Virton Burger were partners of surprise. A German art financing company by the name Fine Art Partners, which in German is fine. Art partner, Burger Vision. Is it? Yes. Yeah. Wow. Prove me wrong. Twitter. So fine art partners. We're trying to sell a painting that that they had bought with Inigo's help. The piece was a photorealist portrait of. Of all people. Pablo Picasso. And you know what? Photorealism is right? Caleb. I mean.

Caleb Newquist: [00:25:56] Before I did the research of this, I, I maybe would have been able to guess, but I now I do know what a photorealist painting is. Yeah. And it is a it is a painting of a photo. And and it, and it's very realistic. It's very realistic. Like if you I don't like all the stuff in the show notes you'll you'll find you'll find this painting but it is it looks like a photograph. Yeah it is.

Greg Kyte: [00:26:23] And that that remarkable that always bothers me when I see something and I go is that a is that a photo or is that a is that a photo with a filter or is that a painting? Yeah. And that's a that's the the question that will haunt humanity forever. And so this, this Photorealist portrait of Pablo Picasso was painted by Rudolf Stingel, which was one of Inigo's inner circle of artists that he he was after that he specialized in. And so here's here's the details of all this. Fine art partners had paid $7.1 million for this particular photorealistic painting, and they did that in 2016. And now 2019, they're looking to sell it. And Inigo was their man. And Inigo was like, Hey, I can make a deal with Christie's auction house to guarantee a $9 million sales. Now, you might be asking yourself, how in the world can you guarantee 9 million at an auction? Great question. Here's how it works is that you make a deal with Christie's where they say we're going to for sure, make sure you get your 9 million bucks. Even if people bid less than 9 million, you get 9 million. But Christie's only makes a deal like that when they assume that they'll be able to get significantly more than the 9 million, because once they put in the guarantee, then obviously Christie's is risking a lot. So if it comes in over the 9 million, which Christie's is betting on, then Christie's gets a way bigger cut of the the funds that come in in excess of that $9 million. And as a matter of fact. Inigo told Fine Arts partners that he thought that it was going to get $14 million, which is almost double what they originally paid for their original investment in this. And then listen, on May 15th, 2019 at Christie's in New York, Lot 33 be Stangl's photorealistic portrait of Picasso sold for a shocking $6.5 million, which was horrible for for really for Christie's right not so much for anybody but Christie's.

Caleb Newquist: [00:28:56] I mean. Yeah yeah. Effectively yes. I mean I think that's right. Here's the thing. Fine art partners they they they the paintings sold for less than they paid for it. But right as you point out, they didn't take a loss. He he hedged it. Yeah, he hedged it. And so it was it ended up being the smart play.

Greg Kyte: [00:29:17] Yeah. So so fine art partners they were disappointed because because like I said, if it did go for over 9 million, they still would have got a cut of whatever was above the 9 million. So they were a little bit disappointed. But Inigo was like, Don't worry about it. We have the guarantee. It was a great thing to do. That was a smart move that I did for you guys. You're welcome. And he was like, Here's a here's a copy of the contract with with Christie's. He gave it to Daniel Temple showing the $9 million guarantee. But then Temple noticed that Christie's website had listed the sale for 6.5 million, not the 9 million. And Inigo explained that the auction house must have had an internal reasons for listing it at the not guaranteed price. But apparently the traditional manner is that if it's guaranteed, you say that it was sold for the guaranteed price because effectively it was it was just sold kind of partly to, you know, because that's really what it was sold for. Right, Right. Right. But months went by and fine art partners had not received their $9 million for the Stangl photorealistic painting of Pablo Picasso and Inigo. He explained that some funds had had that they'd been tied up and had been dealing with Inigo for years, since 2015. So this is, you know, 4 or 5 years later.

Greg Kyte: [00:30:58] And he's always been a straight shooter. So they they accepted that excuse. But this was the third painting that Inigo currently owed, owed them money for. And Inigo blamed the holdup on this other guy, Leonard Friedland. This Russian collector who was also the co-owner of Phillips, which was another auction house. So Daniel Temple eventually contacted Christie's himself to find out where the missing money was. Attaching the documentation, the guarantee that Inigo had given him kind of going, hey, I got this guarantee. I'm supposed to get $9 million where bitch better have my money. Here's my stuff. And a few days later, what happened is Christie's lawyers sent him an email. And in the email. Christie's lawyer said, We believe that this is a falsified document. And it went on to say that Christie's listen, Christie's had no record of that document in their files, period. And the Inigo Philbricks company was not listed as the consignor on that painting and that Christie's hadn't even sold it on his behalf. They they were saying they sold it for somebody who wasn't fine art partners. And fine art partners is saying, no, I got a contract that says you owe me $9 million for selling my art. And their records showed that the painting belonged to someone completely different than fine art partners.

Caleb Newquist: [00:32:47] Now the art world being a very small place. This episode with fine art partners soon resulted in other investors and partners of Indigo coming forward, alleging that they were the true, true owners of the Stingel. Okay, wait.

Greg Kyte: [00:33:06] So we're talking multiple other parties. Yes. Not not just one other person, but a bunch of people.

Caleb Newquist: [00:33:11] Yeah. So here we go. A flurry of lawsuits followed with each party making its claim to the work. So according to an art news article from early November 2019, both guzzini part excuse me Guzzini Properties Limited and an entity owned by Alexandre Pesko, who is a friend of Inigo's. His entity was known as SAT Finance. They also both claimed ownership along with FAP. So three three parties are claiming ownership of the Stingel. But this is weird, right? Like how? How. How would this even happen? Um. Fap fine art partners. They claimed in their lawsuit that after it had purchased the Stingel painting in 2016, Philbrook sold it without their knowledge in 2017 to Gazini properties. And it was Guzzini who consigned the painting to Christie's for the sale, not Inigo. Okay, gotcha. Guzzini, meanwhile, claimed in its lawsuit that they had purchased the painting along with two others from Inigo for 6 million. Guzzini also claimed that prior to the sale to fap in 2016, Inigo sold a 50% share of the painting for 3.35 million to PESCO, but that he never paid a charge that Persico's attorney denied. Okay, so. So.

Greg Kyte: [00:34:35] So let me see if you.

Caleb Newquist: [00:34:36] Did you follow all that?

Greg Kyte: [00:34:38] Yeah, I think so. So what happened is fine. Art partners. The German guys? Yep. They. They bought the thing legit for $7.1 million back when they bought it. Seems that way. Yes. But then Inigo, he. Even though he didn't own it, he's a broker. So he goes to Guzzini and says, Hey, I got this sweet, sweet stangl that I can sell you. How about $6 million? So Guzzini says, Hell yeah, we'll buy it for $6 million. But then he but then it was like, Well, but you can only get 50% of it because I already sold half of it to PESCO, which was the other one, the SAT finance guys. I already sold part of it for 3.35 million to PESCO. So that's how all three of them had their fingers in it, is that he sold half of the painting to one person, sold all of it to the other person without them knowing that he'd sold half of it to somebody else. It's pretty fricking convoluted. Yeah, but it is selling. He's selling a lot of paintings that aren't his for a lot of money.

Caleb Newquist: [00:35:38] That's right. So you've got all these people claiming to own the painting and, you know, given up to this point that Inigo has had a good reputation and good relationships with all these people, you'd think he'd he'd quickly clear up this confusion. Yeah, but then he stopped communicating with everyone and.

Greg Kyte: [00:35:59] Was always, always a good sign. Yeah.

Caleb Newquist: [00:36:03] Oh, we can't find him. Great.

Greg Kyte: [00:36:05] Huh? Nothing wrong here.

Caleb Newquist: [00:36:07] Yeah. And when. When. When Fine art partners sent someone to. To Inigo's new Miami gallery that had opened earlier that year to locate him, they found it closed. And the walls bear another great sign.

Greg Kyte: [00:36:22] That's a that's always. That's always good, I think. Would you like to see. With the news of the stangl spreading throughout the art world, and even more so with Inigo completely missing and not to be found. More and more accusations started to come in. So in October 2019, there was a court filing by state finance investment. That's Pascoe's people, and it accused Inigo of misleading it into paying $12.2 million towards the purchase of humidity, which is a painting by the artist Jean-Michel Basquiat, Basquiat, Basquiat, Basquiat, Basquiat. Jean-michel Basquiat. Very good. As we mentioned, PESCO and Inigo, they were. They were tight. They'd even been so tight that they had vacationed together and they'd done a whole bunch of successful art deals prior to the fiasco with Basquiat. And it it took some persuasion. But in 2016, Inigo finally convinced PESCO to do the deal and to purchase humidity for 18.4 million. And when the deal was done, Inigo sent PESCO a bill showing that the purchase price was 18.4 million. But in finances court filings, it claimed that Inigo had actually purchased it for 12.5 million, which means that rather than contributing two thirds of the purchase price, the 12.2 million to get a $18.4 million piece of art SAT finance had contributed 97% because they contributed 12.2 million towards a piece that was actually purchased for 12.5 million.

Caleb Newquist: [00:38:22] And what no one knew amidst all this wheeling and dealing. Inigo had a secret. He had been borrowing a lot of money and he had accumulated a lot of debt. By the end of 2018, he owed $20 million to two different art finance companies, one of which was Guzzini properties. So how did that happen? Yeah, starting right.

Greg Kyte: [00:38:52] So he so he kind of screwed guzzini in two ways where it's like he sold him something that he didn't have and he also is.

Caleb Newquist: [00:39:01] So the Guzzini.

Greg Kyte: [00:39:02] Guzzini.

Caleb Newquist: [00:39:03] Deal is kind of the Guzzini deal is kind of complicated and we're not going to get into it because it's a pretty convoluted deal. But essentially, like when they purchased the Stingle, there was there was kind of a financing element to it. So they gave him a bunch of money with the understanding that, you know, that they were going to be repaid at some point. And again, it's kind of a convoluted deal. So I'm not I don't have the details. But nevertheless, how did Indigo get 20 million in debt is the question. Yeah, So let's get into that. Starting in 2016, Indigo approached Athena Art Finance, a boutique lender that took art as collateral for loans and but before Athena would loan Indigo any money, they conducted due diligence including research into the provenance, provenance, provenance, provenance.

Greg Kyte: [00:39:58] Great city in Rhode Island.

Caleb Newquist: [00:40:00] Yes, indeed. Research into the provenance that is the origin and history of ownership of the artwork that Indigo would post as collateral. And they also conducted their own appraisal. And perhaps most importantly, Athena would only loan the money if the borrower was the sole owner of the work.

Speaker4: [00:40:23] Gotcha. Okay.

Caleb Newquist: [00:40:25] In March 2017, Athena opened a $10 million line of credit with an entity solely owned by Indigo, secured by what they called a pool of artworks, including a Christopher Wool. And later that same month, Indigo requested and Athena accepted basquiat's humidity to be added to the collateral pool. And when Athena asked Indigo for a list of works that had shared ownership, the Basquiat was not on that list, despite the fact that he had already had two ownership partners. Yeah. Who, remember, don't know about each other. Right. And one of those was was PESCO. Yeah. Okay. In in April of 2017, the next month, based on the information he provided and the approval of the Basquiat being added to the collateral pool, Athena extended Indigo an additional three, $3.25 million.

Greg Kyte: [00:41:25] Yeah.

Caleb Newquist: [00:41:26] So fast forward back because we're kind of jumping around a bit. But fast forward back to September and October of 2019, right when the Germans remember fine art partners, the the German investor group, they learned that Christie's had sold the Rudolf Stingel painting of Picasso on behalf of someone else. And at this time, PESCO SAP Finance had contributed 97% of the money, not the two thirds, like Inigo had told them to purchase basquiat's humidity. At this time, Inigo approaches Athena art Finance to ask, quote, What would happen if he defaulted on his loan.

Greg Kyte: [00:42:10] Another another great sign that everything's going, going, going great.

Speaker4: [00:42:15] Yep, going great. Yep.

Greg Kyte: [00:42:16] And then it's like you you can't there's three. It's like three strikes now. You can't find me. I have tons of debt. And right before I left, I said, Hey, what's the worst that can happen to me if I stop paying you back? Those are no red flags here.

Caleb Newquist: [00:42:31] A complaint filed by the FBI then reads, quote, Later that month, Philbrick admitted to the art finance company Athena, they don't name him. They don't name him in the complaint. But that's okay. That's who they're referring to there. Yeah. Admitted to the art finance company in substance and in part that Philbrick was not the sole owner of the Basquiat, the wool and another painting in the collateral pool and began trying to negotiate a payment plan or a settlement of the art finance company's claims with the respective co-owners of the artworks on or about October 14th, 2019, the art finance company sent Philbrick an official notice of default on the loan contract.

Greg Kyte: [00:43:15] So coming full circle to where we started in the story in late 2019, everybody was looking for Inigo Philbrick, but he was nowhere to be found. And when he failed to appear in court hearings in both Miami and in London, that's when the search for Inigo really got ramped up and rumors flew around about where he might be, including Thailand, South Africa, South America, the Bahamas, Cuba and other places that are even more far flung than those. But his friend and sometimes business partner and now victim Kenny Schachter wrote in one of his Artnet columns in December of 2019 that he had exchanged direct messages with somebody who he believed was Inigo and that Schachter believed that Inigo was actually in Sydney, Australia, in route to a micro island in the Pacific Ocean. And as more details were revealed about the lawsuits and court filings, it was learned that Inigo had orchestrated a bunch of similar deals where he'd either sold more than 100% interest in an artwork and collected the money from investors who were unaware of each other and unaware, obviously, that he was selling more than 100% interest in a piece of art. And among these works we had an untitled 2010 painting by Christopher Wool, a 1988 painting by Donald Judd, a Yayoi Kusama installation that sold to the Saudi royal family and another immersive work by Kusama titled All the Eternal Love I Have for the Pumpkins, which I want to know what that is because there's everything about that title that makes me curious about the the strange sexual fetish that Kusama has for gourds.

Caleb Newquist: [00:45:20] It it's great. You should check it out.

Greg Kyte: [00:45:22] I will. I will Google it immediately. Yeah. And and there's there's tons of others that were overlooked in the research because we just an exhaustive list would bore you and would take too long. But we're talking about millions and millions of dollars in artwork that's that's in question through all of these again, like we said, the flurry of litigation that came in. So in March 2020, Kenny Schachter wrote a very long account of his friendship with Inigo, the art world's mini Madoff, as he called him for New York magazine. The article recounts much of what we talked about in today's episode, but also includes a whole bunch more salacious detail, including Inigo's drinking his drug use, his keeping of company with prostitutes, as well as his breakup with his long time girlfriend and baby mama, Francesca Mancini. And then about how Inigo hooked up with a British reality TV personality, Victoria Baker. Harber It's a great read. It's a firsthand front row account and you can find a link to it in the show notes. But here is one particularly eyebrow raising bit from that article about how Inigo started his day. Inigo Inigo. Inigo. Inigo Each and every morning the young art dealer would shout at himself at full volume in the shower to fire himself up for the daily dealing tasks at hand. He related this to me endearingly, while Baker Harbor recounted this unusual habit with more than a little alarm. The young man was clearly under a great deal of pressure. Maybe its meaning changed as his elaborate facade fell to pieces. He even had a sweatshirt with Inigo Inigo Inigo printed on it that his girlfriend had made for him. The guy was a nut job and he was clearly he was crumbling internally from a psychological perspective.

Caleb Newquist: [00:47:24] He was cracking.

Speaker4: [00:47:25] Yeah, yeah.

Greg Kyte: [00:47:26] But then finally, in June 2020, Inigo Philbrick was apprehended on the Pacific island nation of Vanuatu, about 8400 miles from New York, where he had been charged with wire fraud and aggravated identity theft. And when he finally arrived in New York in July, he was denied bail after both his mother offered up her house and his now fiancée, Victoria Baker. Harber offered up some of her family's real estate in the Bahamas. After nearly a year and a half in jail, Inigo pleaded guilty to one count of wire fraud in November of 2021. The final tally for his scheme was 86 million bucks. Early in 2022 Inigo's. Business partner Robert Newland, a British citizen, was arrested for his role in the scheme. He pleaded guilty to one count of conspiracy to commit wire fraud in September of 2022. And as of this recording. Robert Newland, that guy, he was still awaiting sentencing. And Inigo Philbrick was sentenced to 84 months in prison in May of 2022. He is serving his time in a federal correctional institute in Pennsylvania, and he's scheduled to be released in early 2026.

Caleb Newquist: [00:48:57] So, Greg, did we learn anything here? I mean, this is like because I just want to say like this, I know there's lots of accountants listening and they probably are like, why are these guys talking about this? Like, it's just it seems I don't know if it's I mean, it's a fascinating case, right? Yeah. And I and I know there are there are accountants out there that deal with high net worth individuals and who probably invest in artwork. But in general, I'm just curious, Greg, what did we learn from this?

Greg Kyte: [00:49:30] Well, I think we learned a ton. And I think that accountants should should take note of some of the things from this particular case. Specifically, it's all about because there's all those fraud, all those audit assertions that have to be taken care of when you when you perform an audit on a client. And one of those is the the the assertion of rights, who owns what. And that's what this entire fraud was about, was who owned what. And I'll tell you, legal documents are the devil. And Caleb, I mean, everybody knows this.

Speaker4: [00:50:11] Yeah.

Greg Kyte: [00:50:12] Legal documents are are so convoluted. They're first off, they're written in language that's far more difficult to comprehend than Shakespearean works. Yes, they.

Caleb Newquist: [00:50:25] And that. And that's by design.

Greg Kyte: [00:50:27] Yeah. Yeah, exactly. And and they get so like they're so convoluted because they have to if it's a good legal document, it's going to describe every possible outcome of this legal arrangement. It has to describe it in very exact language. And, and because one of my with my day job, I am the comptroller for a group of medical office buildings. And a lot of my job is overseeing transactions where someone buys membership units from someone else. And so I not only review legal documents on a weekly if not daily basis, but I even a lot of times my lawyer will send me basically like fill in the blank documents that then I sort of alter on my own kind of junior lawyer in training sort of paralegal. Yeah, yeah, kind of. And it's funny because it's not. I did have to look into it. It's not it's not practicing law without a license because I am actually representing the party that's drafting the document. So it's not I'm not practicing law. I'm just I'm just altering some legal documents for the company that I'm an agent of. But I'll tell you, when you start getting into negotiation where there's just back and forth and people go, no, we need to change this. Oh, we okay, we'll change that, but we have to change this too. And then they go, okay, I like that. But tweak this language as soon as there's probably about three back and forths, everybody just gets into this negotiation fog and negotiation fatigue where they don't remember anything that they've already requested to be changed and all of the language just turns into like just jibber jabber that you're that all all you care about is when are we going to fucking sign these things? And that's it.

Greg Kyte: [00:52:14] And the other thing is nobody when you're dealing with a transaction, like when when Inigo sells a fractional portion of an interest in a painting to someone, you're looking at your purchase of that fractional piece of artwork. You I don't think anybody is saying, Hey, I also need to see all of the I also need to get the contact information for each of the other fractional owners and then you contact them and say, Hey, how much of this do you own as well? No, just nobody does that. That's that's due diligence beyond what's. Well, maybe not what's reasonable or expected, but is due diligence beyond what anybody friggin does. Yeah. And and that's maybe not now though. Maybe not now. But what's interesting is you mentioned provenance in terms of the people making the loans where artwork is, the loan is secured by artwork. And I go, Gosh, if I was doing provenance, that's exactly what I would do is I would I would do that. But I think that the way that Inigo got around that was, again, just by forging some legal documents to say, I own it because because remember how they wouldn't loan if the piece of art had multiple owners, it had to be owned just by one person.

Greg Kyte: [00:53:34] So again, he probably just forged some legal documents. And again, nobody's going even if there's a notary on there, nobody's going to the other parties and saying, Hey, did you actually sign this? Hey, is this really purchased? They're going, Oh, I got a legal document, so I'm good. My, my, my folder is full for this loan. So we're good to go. And to top that off. Like again, my what I deal with at work is I deal with again, it's medical real estate, but the real estate is owned by the LLC and people have an indirect ownership in the LLC through sorry, indirect ownership of the real estate through membership units in the LLC. So when when membership units trade hands, it's not a real estate deal. It's a financial instrument deal. Because real estate, when whenever there's a loan with real estate, like when you bought your house, you had to get title insurance, right? Caleb Everybody's got to get title insurance. When you get a loan on any real estate, every lender is going to require that you get title insurance because that's the whole purpose of title insurance, is that then if there's a bunch of people say, No, I own that land, no, I own that land. It's the title insurance problem, not the bank's problem, not the person, not not the person who thinks they own the property's problem. It's the title insurance company's problem, right?

Speaker4: [00:54:51] Yeah, right. Yeah.

Greg Kyte: [00:54:52] But I don't know any other field that requires that type of assurance when a deal goes through. I don't even know other fields where that type of insurance is even available. I mean, I'm sure I know you can get insurance on anything, but in terms of just a matter of course that's not even there. And to top it off, uh, my my legal documents that I that I review, the best that they come to that is that the seller just has to certify that the membership units that they're selling that they what it says something like they're free and clear of all encumbrances and. That's right. And that's it. There's no there's no search that's made there's no no research into making sure that they're free and clear of all encumbrances. Just the person selling them is going, Yeah, there's nothing. We're good. I own these outright. You're good. And and I realized, Caleb, on top of this, since I'm the middleman for all of these deals of membership units, kind of like Inigo was the middleman for his stuff, I realized that I could. I could easily. With where I sit, I could make two sets of purchase documents and I could like somebody who's buying. I could say, Yeah, you're buying, you know, 321 membership units in our LLC, even though the seller was only selling 284 membership units. And then I just pocket the difference between what they bought and sold. And because, again, nobody's nobody's cross-checking this. Nobody's looking back to go. How many total membership units are outstanding in this LLC? Nobody does this. So Caleb, in answer to your question, what have we learned? I have learned a new way that I can steal a shit ton of money based on my position at my day job.

Speaker4: [00:56:38] That's fantastic.

Greg Kyte: [00:56:40] It is. I mean, really.

Speaker4: [00:56:41] What's.

Greg Kyte: [00:56:42] Such, such applicable learning here? Yeah. On on the oh, my fraud podcast.

Caleb Newquist: [00:56:47] I think one last thing I think before we wrap up but it is it is I think the art world is you know as we as we said at the top of the show, like owning artwork is for some people it's about the art. It's about, like I said, this this cultural touchstone that they have a, that they get to possess. Right? Yeah. And the appreciation of that and, and the beauty of it. But in, in the world where speculation kind of rules and flipping in the art world, everything is so the lack of regulation is just like it just people are completely exposed, completely exposed. And like what you're talking you're talking about real estate where it's just like, oh my God, it's so tightly regulated. Like you can't like, like you say when you buy a house like everybody who's bought in a house, remember like, oh, the signing day where you're signing all the paper. Like, I don't I don't know how it works in the fine art world, but like, something tells me it's not that buttoned up. Like, no, like stuff is moving. Stuff is moving fast. Right?

Greg Kyte: [00:57:55] I assume in my mind it's more like buying a car where somebody just signs a title, right? And then hands it to you and it's like, done. Legal deal. Done.

Caleb Newquist: [00:58:04] Yeah. And I think I think, you know, if, if, if you, if you kind of like if you kind of like move in and out of this particular world, I guess the lesson that if it were me, I'd be like, oh, we got to do our homework. Like if you, if you're, if you're, you're, if you're like an accountant or a lawyer or whatever, like you're done, you're done doing these deals fast, like after, after this like, and that's, that's what if you read if there's there's tons of great reading in the show notes but like that's I think that's a big a lot of takeaway from a lot of people in these articles being quoted is like, oh, people are going to be more careful. But we'll see because the art world also kind of has a reputation that this is the kind of thing that happens every once in a while. And and it just. It doesn't really change that much. So I don't know. This was. This was a relatively big one. Yeah. I don't know. Yeah. Yeah.

Greg Kyte: [00:59:01] That's interesting. The, like, the risk of something like this happen is just part of, part of the risk that you do in business being in this market at all. Yeah. Crazy.

Speaker4: [00:59:11] Yes, sir.

Greg Kyte: [00:59:12] Well, that's it for this episode. Remember, if you like this episode, it's comedy. And if you didn't, it's art.

Speaker4: [00:59:20] And also remember.

Caleb Newquist: [00:59:21] Shouting your name in the shower to get ready for your day is totally fine. Totally normal. Yeah. No one will judge you for it. No, No.

Speaker4: [00:59:27] One. You're good.

Greg Kyte: [00:59:28] Yeah, it's fine if you. If you want to drop us a line, maybe just an email that says your name with an exclamation point after it four times in a row. You can do that. Send it to Oh, my fraud at Earmark cpe.com. And Caleb, if people want to reach out to you, where can they find you? Out there in the in the ether.

Caleb Newquist: [00:59:49] I'm on Twitter at Newquist and on LinkedIn Backslash. Caleb Newquist Greg, you're on Twitter. You're on LinkedIn, right?

Greg Kyte: [00:59:56] Yep. Basically same thing. I'm Twitter at Greg Kyte and I'm on LinkedIn. Same thing. It's backslash. Greg Kyte You can search me. Greg Kyte CPE I'm on there. So yeah, we'd love to. We'd love to interact with you also, you know, leave a review because those are fun.

Speaker4: [01:00:13] Yeah.

Caleb Newquist: [01:00:15] Leave a review if you like this podcast. Oh, My Fraud is written by Greg Kyte and myself. Our producer is Zach Franc. If you like the show, leave us a review. What? Share the podcast with a friend. Rating the show and leaving reviews helps other people find it. Also, be sure to subscribe on Apple, Stitcher Spotify or wherever you listen. And for the accountants out there, if you listen to the podcast on Earmark, you can earn free CPE. Isn't it wonderful, Greg?

Greg Kyte: [01:00:42] Dude, I, I am so far ahead on my CPE for the next reporting period because of Earmark. It's amazing. So that's a ringing endorsement. Five five stars recommend to all.

Caleb Newquist: [01:00:59] Join us next time for more avarice, swindlers and scams from stories that will make you say oh my God.

Greg Kyte: [01:01:03] Oh my fraud. Oh my fraud. Oh my fraud.