[MSN] Art scam

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http://www.latimes.com/news/local/la-me-artfraud6mar06,0,4950893.story?track
=ntottext
Couple charged in major TV art scam
Husband and wife admit to $20 million fraud using faked works and rigged
auctions on 'Fine Arts Treasures Gallery.'
By J. Michael Kennedy
Times Staff Writer

March 6, 2007

A La Cañada Flintridge couple who ran televised art and jewelry auctions
have admitted to running a scam that bilked buyers out of more than $20
million by selling bogus artworks and forging the signatures of such
notables as Picasso, Chagall and Dali.

In documents filed Monday in Los Angeles federal court, Kristine Eubanks,
49, and her husband, Gerald Sullivan, 51, were each charged with one count
of conspiracy to commit mail fraud, wire fraud and interstate transportation
of stolen property. Eubanks was also charged with tax evasion, and Sullivan
was charged with one count of failure to file tax returns.

Federal investigators said they hoped the two will lead them to other scam
artists who continue to defraud customers and artists who believe they are
dealing with legitimate merchants.

"These individuals were major players in the television art auction
business," said FBI Agent Chris Calarco, who specializes in art fraud. "As a
consequence, they know a lot of people in that universe."

Assistant U.S. Atty. David Willingham, who has been involved in the
investigation since it began last year, said he hoped the two would lead
them to other suppliers. "They had to get this stuff from someplace," he
said.

The couple admitted their operation involved the television show "Fine Arts
Treasures Gallery," shown Friday and Saturday nights on channels broadcast
by Direct TV and the Dish Network. They told investigators they rigged the
auctions by creating false and inflated bids for art and jewelry sold during
the live auctions.

The two also admitted, according to court documents, that they purchased
fake art and forged copies at their print shop, then sold the bogus works on
the television show. Further, they admitted to sending customers false
certificates of authenticity and false appraisals.

In all, the government estimated the show defrauded more than 10,000 people
who paid more than $20 million for the fake art and jewelry. Willingham said
both had agreed to cooperate with investigators in this type of fraud, which
he described as "rampant."

"These defendants have agreed to cooperate and are very familiar with this
arena," he said.

Meanwhile, those who were bilked expressed relief that at least Eubanks and
Sullivan would be punished.

Artist Charlene Mitchell, who was instrumental in getting the investigation
started, was most critical of Eubanks, who was the public persona of the
operation.

"I can't understand how somebody could be committing that many crimes across
the country and think they would get away with it," said Mitchell, who said
her art was forged and sold on the auction show. "How does one get in bed at
night after committing so many crimes? It's beyond a normal person's realm
of thinking."

Those sentiments were echoed by Tom Cogliano, a Bay Area auto dealer who
spent more than $50,000 for six pieces auctioned off on the "Fine Arts
Treasures Gallery." He and his wife, Mary Ann, later donated a print,
ostensibly by Salvador Dali, to a charity fundraiser, only to have an
appraiser declare it phony.

"I think it's fantastic," he said. "What's disheartening is that it took so
long to take these people down. The wheels of justice are slow, but
fortunately they got these people."

Cogliano said he hopes to recoup at least a small amount of his investment
from the nearly $4 million seized when Eubanks and Sullivan were arrested
last September.

The rest of the money, the FBI's Calarco said, was apparently spent on
television airtime and other costs designed to make the show appear
legitimate.

He said investigators also seized almost 1,000 pieces of art during a raid
last September.

Eubanks is already in custody. At the time of her arrest last September, she
was on probation after pleading no contest to using the credit cards of a
dead business partner to rack up $144,000 in bills. She had been given
probation after agreeing to repay the money, but was immediately sent to
jail because of a judge's stipulation that her record remain spotless.

Sullivan's initial court appearance is scheduled for later this month. Once
they plead guilty, Eubanks faces a maximum penalty of 10 years in federal
prison, and Sullivan faces a maximum of six years.

Both have agreed that the government can seize the nearly $4 million and
various pieces of artwork that have been taken during the investigation.

But Robert Lauson, a lawyer for several of those who were bilked, said
Sullivan filed for bankruptcy last week.

"I just hope there's some money for my clients," he said.


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