A criminal investigation is under way into the art dealer's affairs after he vanished with at least $30 million in artworks and money.
According to the Sydney Morning Herald, three customers "bought the piece (the above paint) from (dealer) and are adamant they own it. Yet none is in possession of it and collectively they are missing $120,000".
You must read the entire article - it is definitely and eye opener into murky inner workings of Australian art trade.
You might ask yourself, "how can someone scam so many people with just one single painting?". Well, nobody knows for sure, but my first guess would be abuse of trust and accountability as a plausible factor that could induce people in being conned.
Almost every day, I receive phone calls from prospective customers who wish to sell their watches. In essence, this type of transaction is a straight-forward one - upon inspection, I would make an offer to purchase the watch for a certain amount of money. If the offer is accepted, the personal details of the customer as well as the serial number of the watch are recorded and filed, and a cash-cheque, payable at the Bank across the road, is issued.
Nevertheless, clients sometimes ask me if I would agree to take a watch on consignment. The answer is always NO. And I have more than one reason for not wanting to be involved with consignments.
A consignment is an agreement between the seller and the dealer, where the title of the goods (ownership of the watch) remains with the seller, yet the watch is physically in the dealer's possession. The dealer is entitled to sell the watch on behalf of the seller, keep a profit margin from the final sale amount and pay the rest to the seller.
For laypersons, it would seem that consignment is indeed an advantageous agreement for the dealer: the latter does not need to spend a cent in the process and if the watch does not find an owner, he can always return the unsold item to the seller.
Unfortunately, this is not always the case: When entering into a consignment agreement, the dealer takes on full responsibility for the watch in case of loss or theft, accepts to undertake any eventual repair or restoration and provides a guarantee on performance to the buyer. Being 'locked in price' and 'left at the mercy' of the seller, who can at any time opt out of the consignment contract for any reason whatsoever, is like walking on thin ice. And if I didn't have enough money to buy that watch in the first place, then obviously I cannot afford it (and obviously should not be trusted to take care of it!)
But there is still one more fundamental reason why I would never consider consignment:I do not want to be trusted unconditionally. Taking care of other people's goods is nothing but a burden.
So here is my advice to sellers and fellow dealers that could help everyone save time, money and headaches:
limit your level of trust to an absolute minimum - or even better: trust no one! Always exchange your goods for a real and tangible asset - cash.
"I owe you" is as bad as "you owe me".