Stolen Cultural Property: A Due Diligence Primer
The art dealer has a special deal for you. One that he's not offering just anybody. Just you. It's a Cezanne. And the price is $750,000. Cash on delivery. But, you ask, "Why is the price so low? Cezannes have sold for hundreds of millions of dollars." The reply: "I'm going through a divorce and I need cash. For my kids."
Is this deal too good to be true? Short answer: yes. For a longer answer, read on.
In all likelihood, the Cezanne is either stolen or a forgery. If it is stolen, the seller does not have the right to convey title, so if you buy it, your title is void. More than that, law enforcement authorities might be suspicious of your role, wondering if you are knowingly involved in trafficking stolen property. And what will the neighbors think? The longer you look at it, the less appealing this deal seems to be.
Lawyers get involved in transactions like this in many different ways: sometimes before the fact and sometimes after. Preventing a problematic transaction in the first place is optimal, and the best means to that end is effective and rigorous due diligence prior to acquisition.
Provenance and Due Diligence
Not all stolen property scenarios are as obvious as the Cezanne example above. Lesser-known works and lesser-known artists pose significant hazards, which are compounded by the passage of time. And there are significant incentives to trafficking in stolen art. Failures of due diligence can be costly. Stolen cultural property might be subject to return (without re-fund) or even seizure by law enforcement.
In the worst-case scenario, the failure to verify the suspicious provenance could result in criminal charges. Prosecution for possession or transportation of stolen property can be based on a theory of "willful blindness," under which knowledge that an object is stolen is imputed to a defendant who consciously closes his or her eyes to facts that would lead a reasonable person to realize the object was stolen.
Compounding the due diligence challenge is the fact that, as a practical matter, the provenance of cultural property offered for legitimate sale is frequently imperfect. This is especially true when the object is old and has passed through many hands over the years. Records are lost, witnesses die, art dealers and galleries go out of business. The due diligence challenge is significant.
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1. "Void" title can be contrasted with "voidable" title. Under this doctrine, a party who acquires flawed — and therefore voidable — title to property does not automatically lose title when the law is discovered. The acquiring party might defend title on the ground, for example, that he or she is a "good-faith purchaser." Generally speaking, this defense does not apply in the case of stolen property. See Patty Gerstenblith, Art, Cultural Heritage and the Law (Durham, NC: Carolina Academic Press, 2004), 423-24.
2. "A defendant may not purposefully remain ignorant of either the facts or the law in order to escape the consequences of the law." United States v. Schultz, 333 F.3d 393, 413 (2d Cir. 2003).