Purloined Picassos Chased by FBI Art Sleuths for Wealthy; “Stolen art, stolen antiquities move into a legitimate market very easily.”

Purloined Picassos Chased by FBI Art Sleuths for Wealthy

Stored inside a laptop at FBI headquarters are photos of thousands of paintings, sculptures and artifacts, works by Vincent Van Gogh and Henri Matisse, Pablo Picasso and Paul Cezanne — international treasures worth millions of dollars each. All are missing.

The computer belongs to Bonnie Magness-Gardiner, a PhD in Near Eastern archeology who leads the agency’s art-theft program and considers herself one of the least-likely employees walking through the doors of the J. Edgar Hoover Building headquarters in Washington each morning.

As wealthy investors seek to diversify their assets and Wall Street art enthusiasts like SAC Capital Advisors LP founder Steven Cohen beef up their collections, art crime is a growth industry and an increasingly important target for the Federal Bureau of Investigation.“It’s history, it is high value, it is true crime and it is mystery,” said Robert Wittman, a former FBI special agent and senior investigator on the agency’s Art Crime Team. “We’re dealing with things that have an interest and a value to society and to culture and to civilization.”

Art theft, while impossible to pinpoint its scope, has been estimated by some groups as totaling as much as $6 billion a year globally. Though it has been investigated by the FBI for decades, the agency’s efforts got a boost in 2004 with the creation of the rapid-deployment Art Crime Team.

The black-market in art “is a very large enterprise,” Magness-Gardiner said in an interview. “Stolen art, stolen antiquities move into a legitimate market very easily.”

‘Most-Wanted List’

Her office serves as a hub for federal law enforcement efforts to combat art theft. She oversees the National Stolen Art File, a database of stolen art and cultural property, as well as the FBI’s “Top Ten Art Crimes” — a Most Wanted list for historic valuables.

Made up of 14 special agents and three prosecutors, the team operates around the country, with each agent in the field overseeing a different region. The team got its start after the looting of cultural treasures in Baghdad following the U.S. invasion of Iraq and has cultivated international ties as it does its work.

To date, the team has recovered more than 2,650 items with a value of more than $150 million, according to the FBI.

While museum heists depicted in Hollywood movies may be the perception most have of art theft, it’s the individual collector who is the prime target for thieves, Magness-Gardiner said.

“The idea that there’s a Mr. Big out there somewhere who’s directing all of this burglary and theft from museums I think is mostly a product of our film industry,” she said.

Gundlach Heist

Jeffrey Gundlach, chief executive officer of Los Angeles-based DoubleLine Capital LP, is among the beneficiaries of the team’s efforts, which helped recover more than $10 million in works stolen from his Santa Monica home in September. Six people were charged in January for the theft, according to the Los Angeles County District Attorney’s Office.

The private collector marketplace, which boomed in the years before the 2008 financial crisis, has recovered to near precrisis levels, with more than $56.7 billion in art transactions in 2012, according to The European Fine Art Foundation’s Art Market Report released in March. Private sales, which make up part of the market, are not publicly available.

“Over the last 10 years, you’ve seen an explosion to new levels in the art space,” Jeff Rabin, principal and co-founder of Artvest Partners LLC, an art investment advisory firm based in New York City.

Art Investors

The growth, driven by factors including the integration of Russia, China and India into the global economy, Rabin said, stalled and quickly receded in the immediate wake of the financial crisis. The recovery since then has been dramatic, even as growth has begun to slow over the past year, he said.

Transactions are up more than 50 percent since the start of 2009, according to the market report, which gathers and analyzes data from dealers, auction houses, collectors, industry experts and financial databases to reach its conclusions. The market is up more than 90 percent since 2002.

For some wealth advisers, the uncertainty that followed the financial crisis made artwork an attractive addition to an investment portfolio, according to a whitepaper this year from consulting firm Deloitte LLP and ArtTactic, a market research group for art collectors, funds and institutions.

“The top tier in this country has a lot of wealth right now and with interest rates where they are, they are looking for places to put their money,” Suzanne Gyorgy, the head of Art Advisory and Finance for Citi Private Bank, which works with ultra-high net worth clients on building and maintaining their art collections and gaining liquidity from their assets.

‘Le Reve’

Cohen of SAC Capital Advisors purchased Picasso’s “Le Reve” for an estimated $155 million, according to a person familiar with the transaction. Cohen bought the painting from casino magnate Steve Wynn.

Cohen is among a group of financiers who rank among the ARTnews 200 top collectors. Cohen was joined in the top 10 in 2012 by Apollo Global Management (APO) Chief Executive Officer Leon Black, who bought Edvard Munch’s famed “The Scream” for $120 million at a 2012 auction, and Eli Broad, the former CEO of SunAmerica and founder of The Broad Art Foundation, a lending library of about 1,500 contemporary works for museums.

Wittman, the former FBI agent, now runs a security and recovery consulting firm in Philadelphia. He said the profile of art thieves, particularly in the U.S. where museum thefts are rare, is that of a typical burglar. While they may bring some sophistication to the theft, their knowledge of what to do with the artwork afterward is limited.

Behind Refrigerator

“I can’t tell you how many times in these investigations where you find that these guys are hiding pieces in their closets, behind their refrigerators,” said Wittman, the author of “Priceless: How I Went Undercover to Rescue the World’s Stolen Treasures.” “They are valuable paintings, but they can’t do anything with them.”

At the University of Pennsylvania’s Museum of Archeology and Anthropology, Wittman recalled his work on the FBI team, which began with eight agents, most with limited art experience. The museum holds the first two recovered works of his career: a statue of the ancient Egyptian god Osiris and a 49-pound crystal sphere from China, one of the largest known in existence, that Wittman called “priceless.”

Since the FBI team’s founding, its sophistication has increased. Magness-Gardiner came to the agency in 2005 from the State Department, where she served for eight years as a senior cultural property analyst working to prevent the illicit trafficking of art treasures, including those looted from Iraq.

No Badge

She doesn’t carry a gun or a badge and holds the title of program manager, not special agent. Still, her experience lies at the center of the team’s efforts, coordinating and serving as researcher, analyst and historian for FBI agents in the field.

Annual seminars for the team at places like Sotheby’s (BID) in New York City have complemented meetings with conservators, museum curators and art dealers to teach agents how to authenticate artwork and verify ownership of priceless objects.

Art collectors considering a purchase should do their homework on a piece, its past owners and its seller before buying anything, Magness-Gardiner said. There’s little recourse, particularly in the U.S., if a piece of art is found to have been stolen or forged.

“You’re out of luck unless you can convince the person who sold it to you to refund your money,” she said.

The odds of that happening?

“Pretty dim,” she said.

To contact the reporter on this story: Phil Mattingly in Washington at pmattingly@bloomberg.net

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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