Art Collector Casts Koons-Gagosian Partnership as Blatant Ponzi

In addition to four New York City locations, Gagosian Gallery Inc. has 10 outposts across the globe including Geneva (pictured above). (Image via Gagosian.com)

MANHATTAN (CN) — Five years and several million dollars later, a New York art collector claims in court that the sculptor Jeff Koons and the Gagosian Gallery are running a “garden-variety” fraud with all the hallmarks of a Ponzi scheme.

“Ponzi meets ‘The Producers,’” says the complaint, filed Thursday in Manhattan Supreme Court on behalf of Westchester-based art fan Steven Tananbaum.

Represented by attorney Aaron Richard Golub, Tanenbaum says he first contracted with the Gagosian Gallery in 2013 to purchase an original Koons called “Balloon Venus Hohlen Fels (Magenta).”

Nearly 9 feet high and 5 1/2 feet wide, the piece constructed from stainless steel was given an estimated completion date of December 2015.

Tanenbaum says it was only in mid-2015, after he had made a deposit and two payments of $1.6 million apiece, that Gagosian employees announced the first of what would be a series of unexplained delays.

To date, according to the complaint, Tananbaum has put down $6.4 million with only an empty assurance that Koons will finish “Balloon Venus” by “August 2019, almost 70 months after an initial estimate of 27 months.” (Emphasis in original.)

“It is not clear, four and a half years after the ‘Balloon Venus’ agreement was executed, whether any work has begun on ‘Balloon Venus,’” the complaint states. “Given the tortured history of ‘Balloon Venus’’ alleged manufacture, no trust or confidence can be maintained in defendants’ latest estimate.”

As noted in the complaint, even as Tananbaum was battling to learn about the fate of “Balloon Venus,” he contracted with the Gagosian to buy two more Koons pieces, “Diana” and “Eros.”

The collector says he first saw cardboard models of the pieces at Koons’ West 29th Street studio on Nov. 30, 2016, and that Koons himself “assured plaintiff that production of any of these sculptures would be made on time.”

Tananbaum executed the purchase agreement for “Diana” two weeks later and agreed the following January to buy “Eros” as well. Both pieces had estimated completion dates of January 2019, and Tananbaum says he has paid $4.25 million for “Diana” and $2.4 million for “Eros” with no delivery in sight.

“To date, plaintiff … has not been provided with a single image of ‘Diana’ (or ‘Balloon Venus’ or ‘Eros’) in progress or a concrete date on which ‘Diana’ Edition 1 will be completed and made available for plaintiff’s review,” the complaint states.

In addition to three counts of breach of contract, Tananbaum alleges bad faith and violations of New York’s Arts and Cultural Affairs Law.

He says Koons is supposed to bear “the crown in the contemporary art world,” but that his dealings with the man and the Gagosian Gllery have unveiled nothing but “naked, unadorned avarice and conspiratorial actions in connection with the sale of factory-manufactured industrial products.”

“Defendants’ enterprise of ostensible civil corruption bleeds collectors of deposits and payments, drawing on their funding without supplying a product in exchange therefor,” the complaint states. “While the design, manufacture and completion of the so-called Jeff Koons sculptures wallow at best and are continually and fraudulently postponed by a factor of years and contracted collectors wait interminably for delivery, Larry Gagosian and Jeff Koons live extravagant lifestyles financed in part by inappropriate and highly questionable practices underwritten by plaintiff and other collectors.”

Tananbaum says the refusal of Gagosian and Koons to identify the foundry that is purportedly manufacturing the sculptures keeps collectors in the dark as they manufacture false hope.

Meantime the money Gagosian and Koons leech from collectors through “brutal payment plans” is used to fulfill a host of other obligations including “the manufacture of sculptures or other contracted “artistic” obligations commissioned at an earlier date by similarly duped collectors and/or to line the pockets of defendants.”

“The ‘estimated completion dates’ supplied by defendants to the collectors are a sham from the very outset,” the complaint states. “Defendants have and had no intention of completing the sculptures according to a completion and delivery schedule. At heart, this interest-free loan system – unbeknownst to the collectors – is less about creating timeless works of art and more about creating an ouroboros by which defendants maintain a never-depleting source of funds at the expense of eager and trusting collectors.”

Gagosian did not reply to an email seeking comment, and an email sent to the address given for Koons on the artist’s website was returned as undeliverable. Artnet reported Thursday that he had not returned their request for comment.

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