Andy Warhol's Pop Empire: A Legacy Of Greed And Mismanagement
On February 22, 1987, Andy Warhol died unexpectedly from complications due to a routine gall bladder operation, leaving a will of only eleven pages. In addition to the brief will, Warhol left behind 4,118 paintings, 5,103 drawings, 19,086 prints, 66,512 photographs, a large portfolio of real estate, and cupboards overflowing with antiques and junk that he hoarded over the years.
The will appointed Fred Hughes, Warhol's manager since taking up the post from Paul Morrissey 20 years earlier, as executor of his estate and Foundation chairman. Warhol's will left instructions to set up a Foundation for the visual arts, with three initial directors including Vincent Fremont and Warhol's brother John.
Fred Hughes was given full reign, and began in earnest with a spectacular ten-day sale at Sotheby's in April 1988, which consisted of over 10,000 pieces of clutter Warhol. These pieces raised $25,313,238. Hughes then decided that Pittsburgh would be the perfect place for the Andy Warhol Museum. He announced a substantial gift of works that would be housed in the museum. After a successful wrongful-death lawsuit with the hospital where Warhol had died, the real business of setting up the Foundation began.
Having never run a Foundation before, in 1988 Hughes hired an outsider with no experience in the arts, Arch Gilles from the World Policy Institute, as a consultant. Gilles brought along his law firm, Carter Ledyard & Milburn, to advise the newly formed Foundation on the best ways to distribute Warhol’s funds to the arts community. Carter Ledyard & Milburn have never left.
In March 1990, Arch Gilles became President of the Andy Warhol Foundation for the Visual Arts. Under Gilles, the running costs shot from $400,000 per year to $5 million a year. Its bank balance dropped from $25m to $6m in the first three years of his presidency.
In return for not having to pay estate taxes (a great loss to the taxpayer), the Foundation has to give away five percent of its asset value to charities every year. Therefore, it's in the Foundation's best interest to reduce the value as much as possible. However, as executor, Hughes was paid a percentage of the value of the estate, so it was in his interest for a larger valuation.
The best way forward was for Arch Gilles to expand the Board of Directors and ensconce a member of his legal team as secretary for the Foundation. This was expedited by Vincent Fremont, trading his seat on the board for the exclusive rights to sell the art works from the Foundation, and Hughes was ousted as quickly as possible—but not before a mind-numbing amount of lawsuits to determine the value of the works left by Warhol ensued.
At first, the courts valued the estate to be worth, conservatively, over half a billion dollars. This included the funds raised from the Sotheby's sale and the valuable properties Warhol had accumulated over the decades. The Foundation did not agree to this figure, hired more hugely expensive law firms, appealed, and eventually received a lower estimate. The Foundation argued that they would be selling Warhol's work very quickly and with that amount of work flooding the market, they were entitled to a lower valuation, a ‘blockage discount’.
The Foundation was valuing drawings at $800 apiece at the very same time they were being priced at an average of $25,372 for an insurance claim. Photographs, which were being sold for up to $20,000, were described to the court as drafts with no real value as Warhol was 'not a photographer'. These were valued for estate purposes at five cents apiece.
In 1995, the Foundation's tax returns show a valuation of artwork in their collection at an astonishing low figure of $110,792,252. This is best described in Paul Alexander’s book Death and Disaster.
Decades later the Foundation are still applying the blockage discount and no one seems the wiser.
Protesting the creative accounting practiced by the Foundation, its controller James McCauley left his job at the Foundation, giving evidence to the Attorney General's investigation of the arts charity. James McCauley told New York magazine 'The Foundation routinely under appraised its assets of Warhol art—by hundreds of millions of dollars—so Foundation officials could get by with giving away less money. Members of the Foundation's board of directors engaged in unusual behavior' (such as purchasing art work from the Foundation at heavily discounted prices). 'There's nothing about the Foundation Andy would have been pleased with', says Paige Powell, a close friend of Warhol's. Brigid Berlin, who worked alongside Warhol from the early 1960s until his death, agrees, adding, 'All they're doing at the Foundation is spending Andy's money'.
After an eight-month struggle of near-Byzantine complexity, the Attorney General's office reached an agreement that left Gillies as President, with instructions for the Foundation to file report quarterly to the Attorney General's office. Vincent Fremont's millions of dollars in art commissions were capped by the Attorney General at $950,000 annually. 'We need to protect not only the charitable dollars but also the national treasure of Andy Warhol's artistic legacy', the Attorney General told New York. Sorry to say, despite the efforts of the Attorney General's office, it appears the spending hasn't stopped.
During Vincent Fremont's deposition in a recent court case, when asked about the long investigation by the Attorney General into the high fees charged by the defendants, Fremont replied that he did not see it as a significant event, a dismissal echoed by Warhol President and former tax attorney Joel Wachs and Chief Financial Officer KC Maurer.
To circumvent this cumbersome order by the attorney general, Fremont's commissions over the $950,000 cap were to be 'rolled over' into the next year. KC Maurer admitted that the figure could be between $4 million and $25 million.
Valuations are made by the Foundation's CFO, KC Maurer, whose previous job was running a budget of hundreds of millions of dollars at NASA; Sally King-Nero, who despite having had no previous experience with Warhol's work was hired by the Foundation in 1991 as Drawings Cataloguer and swiftly became a member of the Warhol Art Authentication Board and Co-Editor of the catalogue raisonné; and Claudia de Fendi, who, also despite having no previous experience with either Warhol or print making, was hired in 1991 as Curator of Prints, Co-Editor of the catalogue raisonné of prints and eventually to value the works owned by the Foundation.
As the Foundation is notoriously tight-lipped and opaque about their operations, Richard Dorment's riveting article in the June 20, 2013 issue of The New York Review of Books titled 'What is a Warhol: The Buried Evidence' gives us a rare peek into the process by which they authenticate paintings.
A well-researched, gripping piece, it is both enlightening and horrifying. If you haven't read it, there is a link below and I highly recommend you do. At first one is drawn to the obvious points, such as how the Foundation and its authentication board could possibly have authenticated and sold paintings that had been seized as fakes with bad signatures. These works were deemed to be fake by the artist's estate and initially at least, by the Foundation's own authentication board.
The minutes taken during the authentication board's meetings and published by the Review couldn't be clearer about the status of the works in question, which were 'created under false pretences and the circumstances under which these were made was inherently dishonest'. The board refused to authenticate the works on the grounds, among others, that 'some signatures are bad'.
The minutes continue...
'Paintings: there is no clear edition [presumably a specific group of paintings of whose printing Warhol was aware], so that RJS [Rupert Jasen Smith (an offsite printer used by the artist) ] was making the paintings without his (Warhol's) knowledge, how many does RJS make—should they be out in the world as Warhol's—no they should not be. Conclusion: these paintings should receive a B letter of opinion [meaning they should be denied as inauthentic] or a studio of Rupert Jasen Smith letter [meaning the work was made by Rupert Jasen Smith, not by Andy Warhol].'
Apparently, these are works which, as the authentication board states, Warhol was not even aware of. Yet according to the documents published in The New York Review of Books, some of these paintings were indeed authenticated and sold.
Were those who purchased these paintings from the Foundation made aware of their dubious provenance or was the past simply erased and the works given a spotless record?
When Charlotte Burns of The Art Newspaper asked Warhol Foundation President Joel Wachs and its former sales agent Vincent Fremont these relevant questions, they refused to answer. I was astonished that virtually none of the major papers have picked up on this, as in most parts of the world this sort of behavior would be reported as a major scandal.
Recently the French courts have sentenced both the authenticating party and a dealer who were found guilty in a case involving a fake Ernst painting. In addition, the German authorities recently arrested a group of art forgers who were sent to prison.
In contrast, a case involving the Knoedler gallery, which is accused selling a large group of alleged forgeries, was handled differently. The Manhattan District Attorney did not pursue the purported forger for art crime, but for not paying the tax on the proceeds of the alleged criminal act!
Joel Wachs is delighted to chat about his good works, such as the publication of the catalogue raisonné, which the Foundation undertook seven years before he became President. Wachs says 'The authentication board only gets a work if an owner wants to sell it, while the catalogue raisonné is an ongoing project on which we spend more than a million dollars a year in research, so it's a very different process, one that is completely focused on scholarship as opposed to the market. We're not here to serve any collectors’ financial interests'.
It would seem, however, that the Warhol Foundation did not always see things in this way.
In the June 20, 2013 New York Review of Books, Richard Dorment cited previously confidential Foundation meeting notes: 'In 1994 the Foundation initiated work on a multi-volume catalogue raisonné of Warhol’s art, in part because the project would contribute to the stabilization of the market for Warhol works over time, thus having a direct benefit to the Foundation's long term goal of converting its Warhol works to cash at favorable prices. In the following year the Foundation's Directors set up an authentication committee to pass judgment on artworks attributed to him.'
As the latest Warhol catalogue raisonné was a joint exercise between two of the largest dealers of Warhol's works, Thomas Amman Fine Art and the Andy Warhol Foundation, the use of a catalogue raisonné to drive up prices would seem to make sense.
The copyright for the text of the volumes covering the 1960s is owned by Thomas Amman Fine Art, whose Zurich gallery had concentrated on Warhol’s works from that decade and many of the important paintings of that period passed through their place of business.
The subsequent volumes are edited by employees of the Foundation: two former authentication board members, one of whom conducts the valuations of the artworks sold by the Foundation. Therefore, despite the dissolution of the authentication board, little has changed.
In February 2011 the Honorable Judge Swain made the contents of collector Joe Simon’s letter public, a letter he filed with the court at the end of a long and expensive lawsuit with the Foundation and the multitude of lawyers they had hired to defend themselves.
After the filing of this letter in the public domain, it was a matter of months before the authentication board was disbanded. Vincent Fremont, who had been selling works for the Foundation since 1987, did not have his contract renewed.
Christie's auction house now has the lucrative task of handling the sales of the works owned by the Warhol Foundation and has sold some of these works in highly publicized Internet auctions. Many of these works are simply for the uninitiated or even naïve buyer, such as silk screened underwear or what many feel are Warhol's less important Polaroids. One silk-screened T-shirt sold earlier this year for $47,500.
The 'interesting' pieces are sold privately through dealers at Christie's over an indefinite period, no less than five years.
According to the Foundation's last tax return, the value of their art assets is $194,155,573. Therefore, the Warhol Foundation is very much still in the business of 'selling' Warhols.
One would have hoped for a disinterested party to carry on with the catalogue raisonné.
In response to a recent interview with Joel Sachs in ArtInfo, titled 'How Joel Wachs Built a Pop Empire’ I'm afraid to say that many don't agree. The 'empire' was inherited from the artist, his estate and executors who worked tirelessly for three decades building a portfolio of 95,000 works of art, property and other assets in which Mr. Wachs could sell off to pay for these programs and large overheads.
Mr. Wachs explains that the sole occasion he met Warhol was at the opening of the artist's show 'Andy Warhol: Paintings' at the Margo Leavin gallery on April 3, 1975.
As Mr. Wachs surely is aware, Ms Leavin had purchased the signed and dedicated red self portrait which Warhol had chosen for the cover of his 1970 raisonné and its revisions just two weeks prior to the opening on March 13, 1975.
Ms Leavin was one of Warhol's most important dealers, and is incredibly knowledgeable about the artist's work.
'He saw everything', says Margo Leavin in ArtInfo about Joel Wachs's long visits to her LA gallery. One would assume this would include the Red Self Portrait, which was later sold to Dr Heiner Bastian, who curated the 2001 Warhol retrospective.
This painting was also included in the opening exhibition at Hamburger Banhof museum in 1996. The Red Self Portrait was used in the exhibition catalogue, the advertising poster as well as sold as postcards, with the Warhol Foundation issuing a copyright.
Yet this well-documented painting, along with all in the Red Self Portrait series, were denied by the authentication board.
Mr. Wachs told ArtInfo info that the Foundation wishes to spend more money on grants than lawyers. Having looked through their tax returns from 1995-2012 (2008 seems to be missing) one can easily understand why.
During the Joe Simon authentication lawsuit, the Foundation paid its three 'expert' witnesses an obscene amount of money. Dr. David Teece's Berkeley Research Group received $458,487. Dr. Tancock, from Chambers Fine Art, $103,412. Dr. Reva Wolf, who co-authored the book Andy Warhol, Poetry and Gossip in the 1960s, $34,497.
It appears the Foundation has spent an average of $502,340.769 per year in attorney's costs from 1995-2012. These are filed under 'charitable purposes' and do not include the two years of legal costs during collector Joe Simon's lawsuit, nor the years from 1991-1994 in which the Foundation spent in endless litigation.
With overheads from 1995-2012 at $121,361,088, surely there is a lot of cost cutting to be done.
As the executor of Warhol's estate announced the gift of paintings to the Warhol Museum in 1989, I've discounted the Foundation's creative accounting, which filed it as a gift in 1998.
According to the tax returns which have been filed, this leaves the total amount of grants at $110,611,377. I believe this is approximately 48 cents to the dollar. Of course, this is a great deal of money to be giving to worthy causes, but one would hope that the charity would spend a little less on themselves and give more to others.
In an interview conducted in April 2010, Mr. Wachs exclaimed 'I mean I would do this job for nothing. I love it!'
If Mr. Wachs is to be believed, than his paycheck is a great place to start the much needed cost cutting at this charity.
In 2001, the year Joel Wachs was elected president he received $144,486. In 2002, $242,154. In their last tax return he received $433,664 from the arts charity.
Pamela Clapp, the Programs Director at the Foundation receives $267,445. As she would most likely be responsible for many of the charities' programs, surely Mr. Wachs could take a pay cut.
I understand the average salary of an Art Historian is $61,000-$72,000. Yet the Warhol Foundation pays beyond top dollar.
Neil Printz, whose job description is Art Historian on the tax form receives $207,968 from the charity. Claudia de Fendi, who edits the catalogue raisonné of prints along with Warhol print dealer and publisher Fraya Feldman, is paid $164,131; catalogue raisonné and co-editor Sally King-Nero is paid $145,415.
Further Reading: Richard Dorments "What Is a Warhol? The Buried Evidence" New York Review Of Books
Edited By Paul Carter Robinson © Artlyst 2013 Photos 1,3 Off site printers, creating Warhol paintings, in Tribeca c 1980s. Photo 2 Red Self-portrait, signed and dedicated reverso, c 1965
Further Reading: 'What Is a Warhol? The Buried Evidence' by Richard Dorment, The New York Review Of Books, June 20, 2013.
1. The Art Newspaper: Lawsuit raises questions about Warhol authentication process, Charlotte Burns. May 17, 2013
2. German police break up international art ring, BBC June 13, 2013 http://www.bbc.co.uk/news/entertainment-arts-22890224 ‘A bogus Ernst’ Financial Times, Georgina Adams, June 14, 2013
3. In the GalleristNY, October 20, 2011, Sarah Douglas
4. www.warholfoundation.org/legacy/raisonne.html 5.http://www.margoleavingallery.com/exhibitions/past
6. Sammlung Marx, Two Volume Set (includes Bruno B, purchased from Margo Leavin gallery) Heiner Bastian (Author) Opening: http://www.hamburgerbahnhof.de/text.php?id=96&lang=en( Bruno B exhibited 1996 opening of the Hamburger bahnhof museum
7. (Warhol Foundation tax 990 are listed online: http://www.eri-nonprofit-salaries.com/index.cfm?FuseAction=NPO.Form990&EIN=133410749&Year=2010 )
8. Warhol accountant James McCauley quits over creative accounting, gives evidence to the attorney general. 'Warhol and Peace’, New York magazine, Paul Alexander, http://nymag.com/nymetro/arts/columns/culturebusiness/1726/
9. a b Glueck, Grace (October 3, 1989). 'To Get His Museum, Opening in '92', The New York Times.
10. (Former LA Councilman Joel Wachs now heads Warhol Foundation
Kitty Felde | April 27th, 2010)