Manhattan art advisor Lisa Schiff, who was accused of embezzling her clients out of millions in a multi-year scheme, pleaded guilty to one count of wire fraud in a New York district court yesterday, October 17.
Last May, Schiff was hit with two costly lawsuits in which clients of her consultancy business Schiff Fine Art (SFA) accused her of diverting profits from the sale of artworks and payments they made to purchase artworks from galleries. The first suit was initially filed by the real-estate heiress Candace Barasch, Richard Grossman and his spouse, who alleged that Schiff had not fully compensated them for the $2.5 million sale of an Adrian Ghenie painting. In January, Schiff filed for Chapter 7 bankruptcy for around $7 million in debt owed by SFA and herself.
The disgraced art advisor has now admitted to defrauding clients of approximately $6.5 million in total based on the purchase and sale of 55 artworks, according to yesterday’s announcement from the United States Attorney’s Office, which noted that she “defrauded at least twelve clients, one artist, the estate of another artist, and one gallery.”
“For years, Lisa Schiff breached the trust of her art advisory clients by lying to them and diverting millions of dollars her clients had entrusted to her,” United States Attorney Damian Williams said in a statement, adding that she “used the stolen money to fund a lavish lifestyle.” Under the terms of her plea, Schiff agreed to “forfeit approximately $6.4 million.” She faces a sentence of up to 20 years in prison. Her sentencing is scheduled for January 17.
Court documents filed last August revealed that in addition to the two suits, approximately 40 entities consisting of former friends, collectors, artists and estates, galleries, and brokerage firms had filed similar claims against Schiff. Plaintiffs included multidisciplinary artist Seffa Klein, Institute of Contemporary Art Boston trustees Brian and Karen Conway, Sotheby’s Private Sales, Stephen Friedman Gallery, and Frestonian Gallery. Some of those claims remain unsettled. Next month, works held by SFA including art by Damien Hirst, Judy Chicago, Dennis Hopper, and Richard Prince are slated to go to auction at Phillips in New York.
“We are disputing pieces of art that the trustees believe should be sold,” Schiff’s lawyer Randy Zelin told Hyperallergic, adding that they are currently working to determine which works were sold on consignment and which were not. He explained that last May, Schiff unsuccessfully attempted to pursue an Assignment for the benefit of the creditors — an alternative to bankruptcy proceedings in which a third-party is assigned the responsibility of liquidating and distributing the assets to creditors.
“It was a disaster, so then in January, SFA filed for bankruptcy involuntarily, and Lisa filed for bankruptcy,” Zelin said.
“We are trying our best to advocate and to cooperate and assist the trustees, and at the same time, if appropriate, assist those people who own the artworks,” he added.
In addition to the debts owed to clients, Schiff also owed upwards of $1 million to the Internal Revenue Service, just over $400,000 to the New York State tax department, and more than $160,000 to the New York City Department of Finance, according to the bankruptcy filings.
“The goal for us between now and January 17th is to be ready to present Lisa as she is, as she was, and as she should be, and allowing the judge to see more than allegations … and just getting to know her as a human being,” Zelin said.
