FTC Wins $2.3 Million Judgment Against Gallery Owner In Phony Art Scam

A federal court in Ohio has permanently banned Cornell Gabos, president of Renaissance Fine Arts, Ltd., from deceptively marketing art works and ordered him to repay $2.3 million to injured consumers, the Federal Trade Commission announced today.

In January 1994, the FTC had charged that Gabos and his Cleveland-based art auction company bilked consumers by selling lithographs and etchings which they claimed were valuable, original art works hand-signed by such celebrated artists as Pablo Picasso, Marc Chagall, Salvador Dali and Joan Miro. In fact, the FTC charged, Gabos knew the art works were worthless fakes. The court, finding that no material facts were in dispute, granted the FTC's request for a judgment without trial.

The FTC's charges against Gabos grew out of an industry-wide investigation of art dealers across the United States. Operation Bogart -- for bogus art -- was a government probe that uncovered an international network of forgers and dealers that flooded the art market with fake prints. Operation Bogart was a joint investigation by the Department of Justice, postal inspectors, the FTC and European police working through Interpol.

The impetus for Operation Bogart was a series of cases brought by the FTC, the Department of Justice, and local law enforcement officials. At the center of the forgery ring, investigators found Leon Amiel Publishers, a prominent art book publisher that once published original, limited-edition prints and scholarly reference works for Miro, Dali and other European masters.

In a massive 1991 seizure at the Amiel headquarters in New York, investigators confiscated more than 75,000 counterfeit art works. The Amiel inventory included more than 50,000 copies of Dali titles and more than 20,000 copies of Miro titles, as well as copies of titles attributed to Picasso and Chagall. On May 12, 1995, three members of the Amiel family were sentenced in New York on federal conspiracy and mail fraud charges.

Following the Amiel seizure, the FTC issued subpoenas to several gallery owners, including Gabos, who appeared to be linked to the fake art network; one of the lawsuits to result from this investigation was the action against Gabos and Renaissance Fine Arts, Ltd. This week the federal court in Ohio held Gabos personally liable because evidence showed that he masterminded a scheme to deceive buyers regarding the authenticity and value of large quantities of prints attributed to Dali, Miro and other famous artists. In total, the court found, Gabos sold more than 3,000 of the counterfeits.

Gabos sold the prints to consumers through his Cleveland gallery and at art auctions in hotels in Washington, D.C., Boston, Minneapolis, Dallas, Atlanta and many other cities. The fake prints, bearing forged artist signatures, often were auctioned for thousands of dollars apiece. They were advertised as museum-quality art works and sold with bogus appraisals and false "certificates of authenticity" that Gabos himself prepared. In its findings, the court described these appraisals and certificates as central features in a "lucrative scheme" to defraud the public.

According to the FTC, Gabos abandoned his Cleveland gallery and moved to Europe after he was charged in 1994. The gallery's contents later were liquidated by a court-appointed receiver. Any money collected on this week's judgment against Gabos may be used for refunds to consumers who invested in the fake art works.

The suit against Renaissance Fine Arts and Cornell Gabos is one of fourteen cases that the FTC has brought since 1987 to combat fraud in the sale of art works. FTC staff said that consumers across the country have lost tens of millions of dollars to art fraud scams in recent years.

Copies of documents associated with these cases, as well as copies of a free FTC fact sheet that offers tips for consumers on protecting themselves from counterfeit art scams, titled "Art Fraud," are available from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest FTC news as it is announced, call the FTC's NewsPhone recording at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTC's World Wide Web Site at: http://www.ftc.gov

(FTC File No. X940048)
(Civil Action No. 1:94CV0157)