Art Collector Casts Koons-Gagosian Partnership as Blatant Ponzi

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From Courthouse News Service:

Five years and several million dollars later, a New York art collector claims in court that the sculptor Jeff Koons and the Gagosian Gallery are running a “garden-variety” fraud with all the hallmarks of a Ponzi scheme.

“Ponzi meets ‘The Producers,’” says the complaint, filed Thursday in Manhattan Supreme Court on behalf of Westchester-based art fan Steven Tananbaum.

Represented by attorney Aaron Richard Golub, Tanenbaum says he first contracted with the Gagosian Gallery in 2013 to purchase an original Koons called “Balloon Venus Hohlen Fels (Magenta).”

Nearly 9 feet high and 5 1/2 feet wide, the piece constructed from stainless steel was given an estimated completion date of December 2015.

Tanenbaum says it was only in mid-2015, after he had made a deposit and two payments of $1.6 million apiece, that Gagosian employees announced the first of what would be a series of unexplained delays.

To date, according to the complaint, Tananbaum has put down $6.4 million with only an empty assurance that Koons will finish “Balloon Venus” by “August 2019, almost 70 months after an initial estimate of 27 months.” (Emphasis in original.)

. . . .

As noted in the complaint, even as Tananbaum was battling to learn about the fate of “Balloon Venus,” he contracted with the Gagosian to buy two more Koons pieces, “Diana” and “Eros.”

The collector says he first saw cardboard models of the pieces at Koons’ West 29th Street studio on Nov. 30, 2016, and that Koons himself “assured plaintiff that production of any of these sculptures would be made on time.”

Tananbaum executed the purchase agreement for “Diana” two weeks later and agreed the following January to buy “Eros” as well. Both pieces had estimated completion dates of January 2019, and Tananbaum says he has paid $4.25 million for “Diana” and $2.4 million for “Eros” with no delivery in sight.

. . . .

He says Koons is supposed to bear “the crown in the contemporary art world,” but that his dealings with the man and the Gagosian Gllery have unveiled nothing but “naked, unadorned avarice and conspiratorial actions in connection with the sale of factory-manufactured industrial products.”

“Defendants’ enterprise of ostensible civil corruption bleeds collectors of deposits and payments, drawing on their funding without supplying a product in exchange therefor,” the complaint states. “While the design, manufacture and completion of the so-called Jeff Koons sculptures wallow at best and are continually and fraudulently postponed by a factor of years and contracted collectors wait interminably for delivery, Larry Gagosian and Jeff Koons live extravagant lifestyles financed in part by inappropriate and highly questionable practices underwritten by plaintiff and other collectors.”

. . . .

Meantime the money Gagosian and Koons leech from collectors through “brutal payment plans” is used to fulfill a host of other obligations including “the manufacture of sculptures or other contracted “artistic” obligations commissioned at an earlier date by similarly duped collectors and/or to line the pockets of defendants.”

“The ‘estimated completion dates’ supplied by defendants to the collectors are a sham from the very outset,” the complaint states. “Defendants have and had no intention of completing the sculptures according to a completion and delivery schedule. At heart, this interest-free loan system – unbeknownst to the collectors – is less about creating timeless works of art and more about creating an ouroboros by which defendants maintain a never-depleting source of funds at the expense of eager and trusting collectors.”

Link to the rest at Courthouse News Service

In PG’s staggeringly humble opinion, counsel for the upset purchaser has burst through florid and grandiloquent and is fully into rubicund territory with his complaint drafting style.

We will probably never know what happens behind closed doors, but PG would love to hear the judge’s response to the complaint during the first conference with counsel for plaintiff and defendants. PG can never recall seeing the word, “ouroboros” in a court document. PG wonders why counsel held back and did not utilize the even more obscure spelling of uroborus (which, he seems to recall reflects more accurately the pronunciation of the word).

10 thoughts on “Art Collector Casts Koons-Gagosian Partnership as Blatant Ponzi”

  1. “brutal payment plan” sounds like a failed IQ test. If you find paying for a piece of art becomes a brutal payment plan, perhaps you had no business spending that much in the first place.

    • But now I’m wondering what an original Phidias or a Praxiteles would cost, if a rich guy finds $4 million to be brutal. I mean, if I were going to participate in a “brutal payment plan” I’d really want something to brag about. I wouldn’t settle for less than “smuggled out of the British Museum, and now on display in my secret lair.” Easy for me to say though; my bank account doesn’t have that many zeros in it.

  2. I do have to wonder why, after the first piece he bought from them was already almost a year late, this guy decided to buy two more with vague assurances that they’d be done sometime in the future.

  3. Maybe it’s just me, but I’m thinking of GRR Martin and the looong wait his readers (and publisher) have been waiting for his last two episodes in the Song Of Ice And Fire saga. I gave up on him and the series altogether; but I didn’t shell any money out.

    Wonder if the publisher did?

  4. Fifty cent words for million dollar clients, PG. That’s not how I was taught how to draft a complaint. I would be admonished for using “prior” and “subsequent” when “before” and “after” worked just as well.

  5. So, despite the first purchase order going disastrously wrong, he made two more? That’s the very definition of stupidity.

    The claim that the artist/gallery conglomerate is fulfilling orders with “factory-manufactured industrial products” seems suspect as well–apparently they aren’t fulfilling orders at all. It seems to me that if they were using factory-made pieces, they would be fulfilling their orders.

  6. Perhaps I am just missing it, but I don’t see the Ponzi scheme here. This seems to be garden variety failure to keep commitments. Also, this guy seems to have paid substantial money up front without insisting on any sort of penalty for non-performance. Is it such an honor for Koons to accept your money that it is unthinkable to treat this like a real business transaction?

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