Madoff and Conceptual Art Mix in Nonprofit Copyright Suit
A nonprofit set up by the conceptual artist duo Arakawa and Madeline Gins drew down more than $3 million inside a time frame close to the discovery of Bernard Madoff's multibillion dollar Ponzi scheme. The assets for the foundation simply don't exist to repay that amount, according to court documents. But that could change.
October 11, 2017 at 12:59 PM
11 minute read
After the discovery of Bernard Madoff's multibillion dollar Ponzi scheme in 2008, a variety of investors found themselves ensnared in Irving Picard's efforts to recoup funds recently withdrawn from Madoff accounts.
One of those was a nonprofit set up by the conceptual artist duo Arakawa and Madeline Gins. The couple was perhaps best known for their work exploring the idea of not dying through architecture. The $20 million they believed was invested in Madoff accounts proved to be, like so much connected to Madoff, illusory.
Yet their foundation's accounts were still able to draw down more than $3 million inside a time frame close to the discovery of the massive fraud, making them a Picard target.
Any attempt to recover the funds has been frustrated; the assets for the foundation, the Architectural Body Research Foundation, simply don't exist to repay that amount, according to court documents.
But that could change. In a suit, Architectural Body Research Foundation v. Reversible Destiny Foundation, 17-cv-07748, filed in U.S. District Court for the Southern District of New York Tuesday, ABRF's current leadership alleges individuals in control of a second nonprofit, Reversible Destiny Foundation, created by Arakawa and Gins in the wake of the Madoff scandal, are illegally holding on to a valuable piece of artwork created by the couple.
The work of art at issue is the pair's seminal “The Mechanism of Meaning.” Begun in 1963, the mixed-medium work began as an open-ended creative process spanning decades and containing hundreds of paintings, drawings, and other times.
According to the suit, Arakawa and Gins signed over “The Mechanism of Meaning” “in all of its forms, stages, and editions” to ABRF through a deed of gift in May 1987. After Gins died in 2014, four years after Arakawa, the executors of her estate—defendants Ronald Spencer, counsel at Carter Ledyard & Milburn, Michael Govan, director of the Los Angeles Museum of Art, and Gins' brother, Stephen Gins—gained control over her assets.
Gins' estate's initial probate petition identified assets in real estate, deposits, and personal property of nearly $20 million, but did not include “The Mechanism of Meaning” among the assets. More than two years later, the executors filed documents indicating assets of more than $26 million. These assets did not “include the value of any real estate,” the complaint alleges. According to plaintiffs, the “large increase” in assets was potentially due to the inclusion of the work of art as part of Gins' estate.
The current value of the artwork is unknown. But when a portion of the overall work was sold nearly three decades ago, it fetched $3 million. Some art observers believe, given the explosion of the art market since, that the work could now be worth tens of millions of dollars.
Plaintiffs allegedly have repeatedly tried to gain control of “The Mechanism of Meaning” from the defendants, with no success. According to the complaint, the reasons offered by defendants “have been inconsistent, have shifted over time, and lack any logic or legal basis.” They claim, for example, that a representative for RDF declared at one point that no other agreements were in effect because Gins left virtually all her property to the second nonprofit.
Plaintiffs argue that the statement lacks credibility, as Gins, along with Arakawa, transferred ownership of the artwork to ABRF, and therefore was the nonprofits' property at the time of Gins' death.
On another occasion RDF's executive director was alleged to have told plaintiffs that the art work wasn't getting returned because possession constitutes 99 percent of the law.
“Defendants should be aware that wrongful possession of property does not confer actual legal ownership,” the complaint notes.
Carter Ledyard partner Judith Wallace represents the defendants, including her law firm colleague. She did not respond to multiple requests for comment. Spencer also could not be reached.
Dentons partner David Baum, who represents the plaintiff, said in a phone interview, “This is an important work of art, and we look forward to it being returned.”
After the discovery of Bernard Madoff's multibillion dollar Ponzi scheme in 2008, a variety of investors found themselves ensnared in Irving Picard's efforts to recoup funds recently withdrawn from Madoff accounts.
One of those was a nonprofit set up by the conceptual artist duo Arakawa and Madeline Gins. The couple was perhaps best known for their work exploring the idea of not dying through architecture. The $20 million they believed was invested in Madoff accounts proved to be, like so much connected to Madoff, illusory.
Yet their foundation's accounts were still able to draw down more than $3 million inside a time frame close to the discovery of the massive fraud, making them a Picard target.
Any attempt to recover the funds has been frustrated; the assets for the foundation, the Architectural Body Research Foundation, simply don't exist to repay that amount, according to court documents.
But that could change. In a suit, Architectural Body Research Foundation v. Reversible Destiny Foundation, 17-cv-07748, filed in U.S. District Court for the Southern District of
The work of art at issue is the pair's seminal “The Mechanism of Meaning.” Begun in 1963, the mixed-medium work began as an open-ended creative process spanning decades and containing hundreds of paintings, drawings, and other times.
According to the suit, Arakawa and Gins signed over “The Mechanism of Meaning” “in all of its forms, stages, and editions” to ABRF through a deed of gift in May 1987. After Gins died in 2014, four years after Arakawa, the executors of her estate—defendants Ronald Spencer, counsel at
Gins' estate's initial probate petition identified assets in real estate, deposits, and personal property of nearly $20 million, but did not include “The Mechanism of Meaning” among the assets. More than two years later, the executors filed documents indicating assets of more than $26 million. These assets did not “include the value of any real estate,” the complaint alleges. According to plaintiffs, the “large increase” in assets was potentially due to the inclusion of the work of art as part of Gins' estate.
The current value of the artwork is unknown. But when a portion of the overall work was sold nearly three decades ago, it fetched $3 million. Some art observers believe, given the explosion of the art market since, that the work could now be worth tens of millions of dollars.
Plaintiffs allegedly have repeatedly tried to gain control of “The Mechanism of Meaning” from the defendants, with no success. According to the complaint, the reasons offered by defendants “have been inconsistent, have shifted over time, and lack any logic or legal basis.” They claim, for example, that a representative for RDF declared at one point that no other agreements were in effect because Gins left virtually all her property to the second nonprofit.
Plaintiffs argue that the statement lacks credibility, as Gins, along with Arakawa, transferred ownership of the artwork to ABRF, and therefore was the nonprofits' property at the time of Gins' death.
On another occasion RDF's executive director was alleged to have told plaintiffs that the art work wasn't getting returned because possession constitutes 99 percent of the law.
“Defendants should be aware that wrongful possession of property does not confer actual legal ownership,” the complaint notes.
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