Sunday, April 10, 2011

Art collector faces prison for inflating values of Mexican artist´s paintings

"Torres de Satélite" by architect Luis Barragan, painter Jesús Reyes Ferreira, sculptor Mathias Goeritz, C-print, 68 x 130 cm.

Mexican painter Jesús Reyes ("Chucho") Ferreira´s works gained notoriety but dubious value this month.

It´s not your $50 billion white-collar Ponzi scam but Irving, Texas art collector Edward Stanton´s ingenuity with an avant-garde, gangster flare for charitable art giving, could put the greedy Texan in a U.S. federal prison for up to three years.
Jesús Reyes Ferreira

Jesús Reyes Ferreira

On 6 April in U.S. District Court in Los Angeles, Ca. Stanton pled guilty to one count of tax evasion. He pledged cooperation, which suggests more prosecutions are coming in trade for his lenient sentence.

He will get minimum jail time (my guess, six months) but a hefty fine, taxes, penalties and interest, a real bonanza for the U.S. Treasury Department at a time when it almost failed making payroll.

Jesús Reyes Ferriera

But it´s not the happy ending Stanton once visualized after the avid art collector conspired with charities to save him an estimated $370,000 in 2003 federal taxes, creating bogus deductions based on inflated values of a dead Mexican artist´s paintings he donated.

In 1990, Stanton decided to buy 1,500 paintings by Jesús "Chucho" Reyes Ferreira at $750 each--$1,250,000, which the Texas collector called the "Milano Collection."

Jesús Reyes Ferreira

Stanton would attempt creating a phony secondary market for them.

The artist died in 1977 (b. 1880) and had exhibited internationally but few had sold at auction. 

Perhaps because Stanton had cornered the market?

Here´s the scam.

Jesús Reyes Ferreira

Stanton donated or feigned donating Ferreira´s paintings at vastly inflated prices when there was no legitimate secondary market. Appraisals Stanton bought were all bogus, according to the U.S. District Attorney´s office.

The charity, known only as "A.A.V.C." in court documents, agreed to appraise a $1,000 painting for $5,000, or in one instance, as much as $23,000, according to the plea agreement of 4 April.

Stanton, who started the tax fraud in 1999, and in later years re-sold and re-titled paintings, often put them back into circulation, churning out new tax deductions. He often bought back the paintings at a nominal price, according to court documents.

He obviously liked them very much.

Jesús Reyes Ferreira

Or, he would sell them to others, who in turn donated them to the same charity at inflated values, activating the same tax fraud. They may face prosecution soon. 

Here´s what Mark Holbrook, a reader of the news release announcing Stanton´s guilty plea, told the Dallas Morning News online: 

"This guy (Stanton) should be put in charge of handling the financing of Irving´s Entertainment Center. He not only knows how to churn the bucks, but can get tax deductions in the process."

Rock on and practice peace and love.

Jesús Reyes Ferreira

Stefan, the ArtTraveler(TM)

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