Hang-Ups Art Enterprises, Inc. and its president, Max Klein, have agreed to pay $150,000 into a fund to be distributed to consumers who bought allegedly fake prints from them, as part of a settlement of Federal Trade Commission charges. The settlement the FTC has negotiated with these defendants also contains strong prohibitions against false claims about the nature of any artwork they sell in the future.
According to FTC Bureau of Consumer Protection Director Jodie Bernstein: "Our industry-wide investigation in this area has revealed that it's not only the fly-by-night telemarketers who sell fake art prints. These prints also show up at seemingly reputable art galleries in local communities. To protect themselves, consumers may want to insist, when they buy "genuine, hand-signed" prints, that the purchase be conditioned on an appraisal by an independent expert of their own choice. Consumers also should be wary of promises of great investment returns and high-pressure sales tactics."
Hang-Ups is an Orange, California-based firm sued by the FTC in January 1995 following the agency's industry-wide investigation into fraudulent practices in the marketing of fine art prints distributed by members of the Amiel art counterfeiting ring. According to the FTC's complaint in this case, Hang-Ups and Klein bought and sold purported limited-edition prints attributed to well-known artists, such as Marc Chagall, Joan Miro and Pablo Picasso. The complaint alleged that the defendants conducted public auctions, and auctions for charity or fundraising purposes for churches, schools and other organizations, throughout the western United States. They allegedly represented that the prints were the work of the named artists or that they were authorized by the artist; hand-signed by the artist, and part of limited editions of prints by the artist. These representations were all false, the FTC charged.
The proposed consent judgment to settle these charges requires the court's approval to become binding. It would require the defendants to pay $25,000 within five days of the court's approval and the remaining $125,000 over a 27-month period. In addition, it would prohibit the defendants, in connection with marketing any artworks, from falsely representing;
- that any artwork displaying an original signature or edition size designation is the work of a particular artist;
- that any artwork was authorized by a particular artist or his or her representative;
- that any artwork was individually hand-signed or plate- signed by a particular artist or that it carries an authorized facsimile signature;
- that any artwork is part of a limited edition of prints of a given size by a particular artist; and
- any other fact material to a consumer's decision to purchase the artwork.
The consent judgment also contains various reporting provisions that would assist the FTC in monitoring the defendants' compliance. The Commission vote to file the settlement in court was 5-0. It was filed in U.S. District Court for the Central District of California, in Los Angeles, on Jan. 22. The FTC's Los Angeles Regional Office handled this litigation.
NOTE: This consent judgment is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Consent judgments have the force of law when signed by the judge.
The FTC has developed a free brochure for consumers titled "Art Fraud." The brochure warns that consumers of all walks of life are targeted by fraudulent art scams, explains how the scams typically work and offers tips on how to avoid being victimized. Copies of the brochure, the proposed consent judgment and the January 1995 complaint in this case, and documents related to FTC v. Leon Amiel Publisher, Inc., et al, 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 news as it is announced, call the FTC 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. X950014)
(Civil Action No. 95-0027 RMT (JGx))