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Insurance News, Summer 2014 (Excerpt on Art Law)

August 5, 2014 Advisory

Art, Yachts, and Insider Plots
David L. Hall, Wiggin and Dana LLP

Suppose your name is Radu and you're a young plumber working in Bucharest during the endless month of February. This is when you decide you've had enough of Bucharest in February. You find yourself in sunny Genoa, and manage to obtain employment with a yacht services company by lying about your maritime experience. The salt air, the turquoise water: this is a real step up from Bucharest. But plumbing is plumbing; your back hurts and you can't get your hands clean. How unfair that you are stooped in a cramped engineering space turning a wrench while carefree yachtsmen are gallivanting around the Riviera.

You're aboard HAPPY WIFE a 75-meter yacht with a Jacuzzi, a master suite, expansive berthing for four additional couples, a galley designed by an Iron Chef runner up, a tender, three Zodiacs, SCUBA gear, and liquor enough to sink a destroyer. That's when it occurs to you: the Picasso in the main salon is just sitting there waiting to be taken. It's probably worth millions. There is an alarm system, but it doesn't work when the power is down, which it often is during servicing. The Picasso is secured to the bulkhead with wall mount locks. But you have every conceivable type of wrench, don't you? You start thinking. There is cousin Niku who is studying fine arts nearby. True, you haven't been in touch for a while, but he'll get over it when he hears about the millions.

Two months later, HAPPY WIFE is back at sea, with new head plumbing, a new bilge water system, and a new Picasso; not a real one, mind you, but a forgery by Niku – good enough to fool the American owner, who has not to date displayed a deep appreciation for cubism. There were a couple of close calls with Niku, who insisted on coming aboard to paint the forgery in situ, but – with the owner away -- you managed to avoid detection. You're feeling pretty smart except for one thing: you don't know exactly how to sell a Picasso. But you are from Bucharest and surely someone there can help.

And so it goes: the unsuspecting American happily sails off with his forged Picasso as the real one enters the stream of commerce in Bucharest. Radu will be disappointed in his take, assuming he enjoys one at all. The theft eventually will be discovered, commonly in one of two ways: the American yachtsman dies and his estate seeks a valuation of the forged Picasso; or a subsequent good faith purchaser of the real Picasso tries to sell it, and someone notices an inconsistency in provenance. But in all likelihood, years will pass before the theft is detected and years more will pass before the intervening transactions are unwound.

A yacht is not the perfect place to exhibit fine art for a number of reasons, starting with the harsh marine environment. A yacht is also a relatively easy target for theft, particularly given the large number of insiders with access, including the crew. But if your main salon requires a Picasso to fulfill its promise, consider enhanced security (such as a security guard and video monitoring) and make sure you have insurance coverage for the full value of the painting.