Art
Robinhoods of the Art World Lure Scores of Investors in Pandemic – Yahoo Canada Finance
(Bloomberg) — New offerings kept coming over the summer: Banksy, George Condo, Zao Wou-Ki.
A New York startup that allows investors to buy a tiny stake in paintings by world-class artists for just $20 has seen a surge in demand during the pandemic, according to its founder, and has bought 15 artworks since the onset of Covid-19 to feed their appetite. A recent $1.52 million initial public offering of a piece by the American graffiti artist KAWS sold out in a few hours.
“People feel that equity markets are overvalued and they are looking for other places to put money,” said Scott Lynn, a collector who started the company, Masterworks, in 2017.
Masterworks is at the forefront of a burgeoning niche in fractional ownership in luxury assets such as fine art, collectibles, vintage cars and even race horses such as Authentic, one of the favorites in the Kentucky Derby. The startups offer the shares as an affordable way to invest in expensive, rarefied fields that are typically available only to the mega-rich.
Think of it as the art market’s version of the popular trading platform Robinhood Markets, which lets users buy a fraction of a company’s share for a few dollars. It mirrors the democratization movement unfolding in the stock market — except that the assets are inherently more risky and lacking of a track record. Auctions are filled with casualties, and even works by star artists can implode once prices get overheated.
The concept of fractional ownership isn’t new in the art market — or for thoroughbreds. It’s a buyer-beware investment: Robinhood itself is under pressure after complaints from novice investors and is facing a U.S. regulatory probe. But the pandemic has heightened the taste for those risky bets. It’s about the experience and the excitement of owning a part of something unique — even as many will likely take a loss.
“Folks are stuck in the house, bored, and, if they’re lucky enough to be working, aren’t spending money on things they normally would,” said David Ritter, an analyst with Bloomberg Intelligence. “So, they have money to play with.”
James Scollick, 40, an avid user of Robinhood from Los Angeles, discovered Masterworks on Instagram in July and invested $10,000 two weeks later. Half of that went into buying shares of a Condo painting and the rest into secondary-market shares for Banksy’s “Mona Lisa.”
“It felt like a natural way to invest some of my money,” he said.
Masterworks has been luring about 10,000 new users a month during the pandemic, founder Lynn said, and it isn’t alone. Acquicent, a company founded last year to develop a trading platform for fractional-share owners of classic cars, saw an 80% jump in the number of potential investors in the past three months, according to Anthony Citrano, founder and chief executive officer.
“It’s an asset class that 99.9% of people could not touch ordinarily,” he said. “As far as people interested in investing, it’s very hot right now.”
At MyRacehorse, the number of investors has tripled since April, according to founder Michael Behrens. More than 12,000 investors watched a race at Santa Anita Park in California on Zoom recently, some wearing #myracehorsewins T-shirts and hats. In June, the two-year-old company bought a 12.5% stake in Authentic, a colt trained by twice-Triple Crown winner Bob Baffert, in a deal that valued the racehorse at $15 million.
“You have to go into it understanding that it’s not a traditional investment,” Behrens said. “We encourage people to embrace the experiential part of it.”
Otis, a one-year-old firm offering emerging art and collectibles such as sneakers and comic books, is also seeing an increase in demand. Of the 35 pieces it owns, 20 were purchased since March, according to founder Michael Karnjanaprakorn. Shares go for as low as $10. The most expensive offering was a $425,000 painting by Banksy.
“Maybe two years ago this seemed like a very stupid idea,” Karnjanaprakorn said. “People were like, ‘Why would you do that?’ Now it’s a real thing.”
The fractional-ownership companies have different business models, but most file documents with the U.S. Securities and Exchange Commission and host initial public offerings similar to new equity issues. At Masterworks, there’s a secondary exchange market for those interested in quicker returns by trading shares.
In recent months, Masterworks has emerged as an active buyer of works under $5 million even as deals in the broader art market slowed down. The startup acquired 15 artworks for $31.8 million since March 17, compared with five in the previous two years, according to founder Lynn, who added he plans to spend more than $100 million on art this year.
Masterworks buys at auctions or through private sales, planning to hold onto the works for as many as seven years. The company charges a 1.5% annual management fee and takes 20% of the profit when the pieces eventually sell. To keep up with demand, Lynn more than doubled his staff to 40 people since March.
User Aaron Shumaker, 37, has spent more than $200,000 on shares of six artworks at Masterworks in the past year, including by Andy Warhol, Jean-Michel Basquiat and Yayoi Kusama.
“I don’t think I’d feel so comfortable to have one of these works displayed on my wall,” said the Washington, D.C.-based entrepreneur, who hasn’t laid eyes on any of his holdings. “That seems like a lot of risk.”
Instead, he’s happy for Masterworks to store them in a facility with proper security, climate control and insurance, while he hopes to make a financial return on his investment.
The sobering reality is that most art doesn’t go up in value.
“Even great, great artists become overvalued to the rest of the market,” said Jeffrey Deitch, who co-founded an art-advisory service for Citibank in 1979 and has championed street art as a gallery owner and museum director. “There were times when I bought works of art, when I was convinced it would be a great score, and I barely got out alive.”
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Art
Calvin Lucyshyn: Vancouver Island Art Dealer Faces Fraud Charges After Police Seize Millions in Artwork
In a case that has sent shockwaves through the Vancouver Island art community, a local art dealer has been charged with one count of fraud over $5,000. Calvin Lucyshyn, the former operator of the now-closed Winchester Galleries in Oak Bay, faces the charge after police seized hundreds of artworks, valued in the tens of millions of dollars, from various storage sites in the Greater Victoria area.
Alleged Fraud Scheme
Police allege that Lucyshyn had been taking valuable art from members of the public under the guise of appraising or consigning the pieces for sale, only to cut off all communication with the owners. This investigation began in April 2022, when police received a complaint from an individual who had provided four paintings to Lucyshyn, including three works by renowned British Columbia artist Emily Carr, and had not received any updates on their sale.
Further investigation by the Saanich Police Department revealed that this was not an isolated incident. Detectives found other alleged victims who had similar experiences with Winchester Galleries, leading police to execute search warrants at three separate storage locations across Greater Victoria.
Massive Seizure of Artworks
In what has become one of the largest art fraud investigations in recent Canadian history, authorities seized approximately 1,100 pieces of art, including more than 600 pieces from a storage site in Saanich, over 300 in Langford, and more than 100 in Oak Bay. Some of the more valuable pieces, according to police, were estimated to be worth $85,000 each.
Lucyshyn was arrested on April 21, 2022, but was later released from custody. In May 2024, a fraud charge was formally laid against him.
Artwork Returned, but Some Remain Unclaimed
In a statement released on Monday, the Saanich Police Department confirmed that 1,050 of the seized artworks have been returned to their rightful owners. However, several pieces remain unclaimed, and police continue their efforts to track down the owners of these works.
Court Proceedings Ongoing
The criminal charge against Lucyshyn has not yet been tested in court, and he has publicly stated his intention to defend himself against any pending allegations. His next court appearance is scheduled for September 10, 2024.
Impact on the Local Art Community
The news of Lucyshyn’s alleged fraud has deeply affected Vancouver Island’s art community, particularly collectors, galleries, and artists who may have been impacted by the gallery’s operations. With high-value pieces from artists like Emily Carr involved, the case underscores the vulnerabilities that can exist in art transactions.
For many art collectors, the investigation has raised concerns about the potential for fraud in the art world, particularly when it comes to dealing with private galleries and dealers. The seizure of such a vast collection of artworks has also led to questions about the management and oversight of valuable art pieces, as well as the importance of transparency and trust in the industry.
As the case continues to unfold in court, it will likely serve as a cautionary tale for collectors and galleries alike, highlighting the need for due diligence in the sale and appraisal of high-value artworks.
While much of the seized artwork has been returned, the full scale of the alleged fraud is still being unraveled. Lucyshyn’s upcoming court appearances will be closely watched, not only by the legal community but also by the wider art world, as it navigates the fallout from one of Canada’s most significant art fraud cases in recent memory.
Art collectors and individuals who believe they may have been affected by this case are encouraged to contact the Saanich Police Department to inquire about any unclaimed pieces. Additionally, the case serves as a reminder for anyone involved in high-value art transactions to work with reputable dealers and to keep thorough documentation of all transactions.
As with any investment, whether in art or other ventures, it is crucial to be cautious and informed. Art fraud can devastate personal collections and finances, but by taking steps to verify authenticity, provenance, and the reputation of dealers, collectors can help safeguard their valuable pieces.
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Ukrainian sells art in Essex while stuck in a warzone BBC.com
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The Courtauld Gallery at Somerset House has reopened its doors to the public after a fire swept through the historic building in central London. While the gallery has resumed operations, the rest of the iconic site remains closed “until further notice.”
On Saturday, approximately 125 firefighters were called to the scene to battle the blaze, which sent smoke billowing across the city. Fortunately, the fire occurred in a part of the building not housing valuable artworks, and no injuries were reported. Authorities are still investigating the cause of the fire.
Despite the disruption, art lovers queued outside the gallery before it reopened at 10:00 BST on Sunday. One visitor expressed his relief, saying, “I was sad to see the fire, but I’m relieved the art is safe.”
The Clark family, visiting London from Washington state, USA, had a unique perspective on the incident. While sightseeing on the London Eye, they watched as firefighters tackled the flames. Paul Clark, accompanied by his wife Jiorgia and their four children, shared their concern for the safety of the artwork inside Somerset House. “It was sad to see,” Mr. Clark told the BBC. As a fan of Vincent Van Gogh, he was particularly relieved to learn that the painter’s famous Self-Portrait with Bandaged Ear had not been affected by the fire.
Blaze in the West Wing
The fire broke out around midday on Saturday in the west wing of Somerset House, a section of the building primarily used for offices and storage. Jonathan Reekie, director of Somerset House Trust, assured the public that “no valuable artefacts or artworks” were located in that part of the building. By Sunday, fire engines were still stationed outside as investigations into the fire’s origin continued.
About Somerset House
Located on the Strand in central London, Somerset House is a prominent arts venue with a rich history dating back to the Georgian era. Built on the site of a former Tudor palace, the complex is known for its iconic courtyard and is home to the Courtauld Gallery. The gallery houses a prestigious collection from the Samuel Courtauld Trust, showcasing masterpieces from the Middle Ages to the 20th century. Among the notable works are pieces by impressionist legends such as Edouard Manet, Claude Monet, Paul Cézanne, and Vincent Van Gogh.
Somerset House regularly hosts cultural exhibitions and public events, including its popular winter ice skating sessions in the courtyard. However, for now, the venue remains partially closed as authorities ensure the safety of the site following the fire.
Art lovers and the Somerset House community can take solace in knowing that the invaluable collection remains unharmed, and the Courtauld Gallery continues to welcome visitors, offering a reprieve amid the disruption.
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