[MSN] Canada. Couple agree to plead guilty to selling fake artwork, rigging auctions in scam that cost at least $20 million

[Museum Security Network Mailing list]

COUPLE AGREE TO PLEAD GUILTY TO SELLING FAKE ARTWORK, RIGGING AUCTIONS IN SCAM THAT COST AT
LEAST $20 MILLION
    A La Canada couple who operated live auctions on satellite channels that purported to sell
genuine works of art and jewelry have admitted that they ran a scam that defrauded
purchasers out of more than $20 million by rigging auctions and selling bogus artworks.
Among other things, the couple have admitted that they knowingly sold art with the forged
signatures of artists such as Picasso, Chagall and Dali.

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

        In plea agreements that also were filed this morning, Eubanks and Sullivan agreed to
plead guilty to the charges and to cooperate with investigators in an ongoing criminal
probe.

        The couple admitted that the scam involved their television show, Fine Art Treasures
Gallery, that formerly aired Friday and Saturday nights on channels broadcast by
DirecTV and The Dish Network. The couple admitted that the show was a scam because they
rigged the auctions by creating false and inflated bids that fraudulently inflated the
purchase price of the art and jewelry they sold to the public during the live auctions.

        In their plea agreements, Eubanks and Sullivan admitted that they purchased fake art
and that they forged art at a print shop, and later sold the bogus works on their
television show. To support the scam, they created and mailed to consumers documents
such as false certificates of authenticity and false appraisals.

        Eubanks and Sullivan have admitted they and other co-conspirators used the television
show to defraud more than 10,000 victims, who paid more than $20 million for bogus art
products.

        “The defendants in this case have admitted to profiting by preying on the
vulnerabilities of producers and consumers of art through an elaborate criminal
enterprise," said J. Stephen Tidwell, Assistant Director in Charge of the FBI in Los
Angeles. "Today's announcement should send a message to those willing to commit fraud
at the expense of art lovers around the world that the FBI considers art auction fraud
to be a significant and growing crime problem which is being addressed by the FBI's Art
Crime Team, established in 2004, to investigate crimes involving art and cultural
property.”

        Debra D. King, Special Agent in Charge of the Internal Revenue Service's Criminal
Investigation Division in Los Angeles, stated: “The sale of fake and forged copies of
several artists’ bodies of work has left many victims in it's wake, including the
artists themselves and their survivors. The investigation and prosecution of Mrs.
Eubanks and Mr. Sullivan on federal fraud and income tax charges related to this
activity is indicative of the resolve of IRS-Criminal Investigation, in conjunction
with our law enforcement partners at the United States Attorney's Office, the FBI, and
the Los Angeles Police Department, to bring criminals who commit these types of crimes
to justice.”

        Sullivan will be summoned to appear in court for an initial appearance later this
month. Eubanks is currently in state custody on an unrelated matter.

        Once they plead guilty, Eubanks faces a maximum statutory penalty of 10 years in
federal prison, and Sullivan faces a maximum statutory penalty of six years.

        Eubanks and Sullivan have agreed that the government can forfeit nearly $4 million and
various pieces of artwork that have been seized during the investigation.

        This case was investigated by the national Art Crime Team at the Federal Bureau of
Investigation, IRS-Criminal Investigation Division, and the Los Angeles Police
Department’s Art Theft Detail.

http://losangeles.fbi.gov/