SF Investor Accused of Art Scam
SAN FRANCISCO (CN) - In a federal indictment, prosecutors accuse real estate investor Luke Brugnara of mail fraud: ordering and receiving more than $11 million worth of art and then claiming it was a gift.
Brugnara, 50, of San Francisco, allegedly told an art dealer - who is not named in the indictment - that he wanted to buy several works of art for approximately $11 million. He claimed that he wanted to place the art in a museum he was building, according to the indictment.
Brugnara agreed to pay $7.32 million for 16 paintings by Willem de Kooning, $3 million for an Edgar Degas sculpture, $450,000 for a painting by American realist artist George Luks, $160,000 for a drawing by Joan Miro and $145,000 for etching by Pablo Picasso, according to an affidavit by FBI Special Agent Jeremy Desor, included in the criminal complaint .
But Brugnara had almost no income, no assets, no way of paying for the art, and a substantially negative net worth, the indictment states.
The art was packed into five crates and shipped from New York to an address provided by Brugnara in San Francisco. The art dealer traveled to San Francisco to ensure that the art arrived, which seemed to surprise Brugnara, according to the affidavit.
Brugnara had the delivery people leave the crates in his garage. He told the dealer that he was very busy and would arrange a later time to open the crates and inspect the artwork. The dealer's attempts over the next two days to set up a time to inspect the art were to no avail, as Brugnara repeatedly stated he was too busy, according to the affidavit.
Brugnara later told the dealer that she would have to deal with his attorney. He claimed the art works were a gift, the affidavit states.
"Law enforcement authorities obtained a search warrant for Brugnara's home and seized four of the five crates of art that had been shipped to Brugnara. The fifth crate, which contained a work of art worth at least hundreds of thousands of dollars, remains missing," the Department of Justice said in a statement.
Brugnara, who is in custody, was arrested on May 28 in San Francisco and made his initial appearance in Federal Court that morning. He was to appear in court today (Wednesday) for arraignment, preliminary examination and bond hearing.
This is not the first time Brugnara has been in trouble with the law. In 2010, he was convicted of several federal crimes, including filing false tax returns, making false statements, and violating the Endangered Species Act, resulting in a 30-month prison sentence, according to the Department of Justice.
"Brugnara was still on supervised release from some of those convictions when he allegedly committed the fraud offense for which he was indicted" on June 5, the Justice Department said.
The maximum penalty for mail fraud is 20 years in prison, a fine of $250,000, forfeiture and restitution.
According to a 2002 SF Weekly article, Brugnara was a self-made commercial real estate mogul who by his mid-30s had acquired a fortune he estimated at $200 million.
The article called Brugnara "San Francisco's most bombastic and, perhaps, pugnacious commercial landlord."