Market
In a thought-provoking original post, patrick_y explores the pervasive issue of financial speculation and fraud across luxury markets, including art, wine, and high-end watches. He argues that the opaque nature of these markets, combined with a steady stream of eager yet often uninformed buyers, creates an ideal environment for fraudsters. patrick_y's insights challenge collectors to critically examine the integrity of their sources and the true value of their acquisitions.
As long as there have been wealthy people, there have been fraudsters out there trying to cheat them. Industries where fraudulent activities happen are almost always centered around resold luxury goods. The Luxury good industry attracts a certain kind of criminal. A greedy one who enjoys a glamorous world. Because of the large dollar amounts, it’s possible to make many thousands of dollars even on a small revenue, thus making each project quite lucrative. Numbers are abstract and opaque, the market isn’t transparent, so nobody really knows what’s what in the business. And there’s a never ending stream of buyers, specifically new buyers who are often neavou riche whom are so eager to spend their newly acquired wealth that they are very indiscriminate. A perfect combination of lots of money to spend along with little knowledge – an ideal target for a swindler.
Look At The Art Industry
The art industry was filled with galleries, some owned by ethical
people, and more owned by unethical persons.
These unethical people would sell questionable paintings, of questionable
provenance, even complete fakes to unsuspecting millionaires. If I tell a gallery owner, I would like to
own a sculpture by Rodin, he immediately says “I have one.” When I come back to him and say I’d like to
have a little sketch or something small by Picasso, his response, “I’ve got the
right one for you.” This man is/was a
little too eager. And how can one man be
an expert in everything? Most legitimate
gallery owners are experts in only a few subjects. Beware the one who seems to be a mile wide
and an inch deep. Auction houses too
make mistakes all the time. Despite all
the expert consultants whom are hired, sometimes even the experts are fooled. The doctorates with their magnifying glasses
and lab coats are still human. The movie
Incognito, starring Jason Patric, is a great overview of how to forge
art.
Look At The Wine Industry
Wine is perhaps the easiest method to fool wealthy people. Heck, who can really taste the minute differences between wines? I regularly sit with Certified Sommeliers and Advanced Sommeliers to learn about wines and even they can’t always name the varietal and the location with complete accuracy every time. I can think of no easier way to accumulate a large amount of ill-gotten money, than to prey upon a few wealthy people, who know little about wine, who like to indulge in very expensive bottles! Enter main protagonist Rudy Kurniawan, whom was famous for making fake First Growth bottles in his kitchen! He’d use original bottles and inexpensive wines to refill those original bottles and pass them off as the genuine article! There’s a whole documentary about wine forgers called Sour Grapes.
Here’s another 60 Minutes Interview of Bill Koch telling the world about what he and his private investigator found out about fake bottles in his wine collection. Furthermore, he even goes on to mention how auction houses make someone complicit in covering up the fact!
https://www.cbsnews.com/news/billionaire-koch-brothers-crusade-against-counterfeit-wine/
The Auto Industry
Luxury cars are a main course for everyone, A to Z, drug dealers to corporate executives. Everyone needs a car. But, not all cars are the same. Especially used cars – as once they’re used, they’re no longer commodity items. The United States is the world’s largest market for ultra-luxury cars like Rolls-Royce, Ferrari, and Lamborghini. China is the largest market for cars, but USA is still the largest market for ultra-lux machines. Strangely, in the past couple of years, two of the largest dealers of used exotic cars, CNC Motors in greater Los Angeles, and very recently Excell Motors in Boca Raton, Florida, have both decided to defraud their customers and disappear. Literally, all the cars disappeared and all the money disappeared. Some of the owners and employees have even gone into hiding, presumably with the disappeared money and/or cars! All of these individuals had upstanding reputations, were pillars of the community, charitable individuals.
https://www.cbsnews.com/losangeles/news/upland-cnc-motors-dmv-investigation/
The Watch Industry
We are currently at the start of a renaissance for the watch industry. Yes, many auction houses have been in hot water, sued, and even individual employees at auction houses have been sued personally. Numerous dealers have been convicted by courts for selling fake watches. Numerous dealers have been accused of racketeering, including one in Chicago for selling Rolexes to grey market dealers at a premium in exchange for a personal kickback. Rappers have claimed time and time again that they’re buying fakes. One rapper even posted on social media in a plea to Patek Philippe that he has to get onto “the [wait]list” since he ended up with a fake. There was recently a crazy for vintage watches. Oh my goodness, don’t get me started there. That’s another ripe field for fake terms to be made, as well as re-lumed and re-lacquered dials. Combined with a lot of inexperienced buyers (who think they’re very clever) who are willing to sink a lot of money in there… And these dealers and auction houses persist even after years, because very few buyers will ever admit that they’ve been cheated.
Even our ultra-experienced moderator, Amanico, has been lied to by an auction house, here is his post: www.watchprosite.com
Not convinced all auction houses are bad? Think the big names are good? Antiquorum was the biggest auction house for watches until several years ago when they had rumors of financial trouble (and more). Are you certain the big ones are problem free and professional? Here’s another example:
All I can say to all of my readers… Be careful.
Be humble. Admit to yourself that
you’re probably not an expert. My lawyer
friend defines expert as, “an expert in the field, with professional experience,
an individual whom can be called to a courthouse as an expert witness about a
specific topic.” Acknowledge the fact
that if someone really made it their mission to fool you, s/he’d probably
succeed. Then proceed cautiously! Notice all of these "passions" suffer from financial speculators and fraudsters. It's one crazy world out there!
I have seen Sour Grapes, crazy story. Check out Made You Look on netflix about an art counterfeit scam. Ben
As for Experts, how right you are! I can claim I know 4 or 5 watches very well, I will never claim that it is enough to be called an Expert. And nowadays, everybody gives his opinion on everything, even on things one doesn't know... Dangerous. Almost pathetic. Best, my friend. Nicolas
I'll have to put that on my "Watchlist." Thank you for the suggestion and for commenting.
Will things ever become a bit better? Probably not. The internet allows anonymity to reach far and wide. Electronic payments allow money to be transferred almost silently and without identity. And yes, to be an expert, doesn't mean much sometimes... Even if you're able to be an expert witness.
I hadn't read on some of these cases beforehand. Simply follows on your auction house post, buyer beware....
Or just buy new at an AD. But then again, even ADs aren't always angels. There are very few angels in this business.
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