On December 15, 2017, a complaint was unsealed in federal court charging Manhattan art dealer Ezra Chowaiki with wire fraud and transportation of stolen property. He allegedly used his art gallery located on Park Avenue to defraud art dealers and collectors of millions of dollars.
According to court papers, until November 2017 Chowaiki was the president and the minority owner of a private art gallery located on Park Avenue in New York City. He founded the gallery in 2004, and through it he has purchased, sold, and taken consignments of art, as well as hosted exhibitions featuring works of art and sculptures by artists such as Pablo Picasso, Alexander Calder, Marc Chagall, and others.
Chowaiki lost control of the gallery in or about November 2017 when it filed for bankruptcy and was taken over by a trustee to oversee its liquidation.
Authorities allege that between 2015 and 2017, Chowaiki, through the gallery, engaged in a scheme to deceive dealers and collectors of fine art into sending him money or valuable artwork under the pretense that Chowaiki would engage in legitimate transactions such as the purchase, sale, or consignment of those artworks.
It is alleged that Chowaiki did not and often could not conduct the transactions as promised, and that he instead kept funds and artwork for himself and the gallery or sold them to others both in and outside the United States, without authorization.
The charging document identifies several victims and deals gone wrong. The first victim, identified as Victim-1, is a business in the Cayman Islands managed by an art dealer who does business in Tokyo. It is alleged that in June 2017 Chowaiki informed Victim-1 that it could buy a 50% interest in a sculpture for $900,000 and that Chowaiki had a buyer lined up to buy the sculpture immediately for $2.15 million; Victim-1 would be paid $1.075 million. Victim-1 wired $900,000 to London but was later informed that Chowaiki did not have an ownership interest in the sculpture; it was owned by someone else and had been consigned to an auction house in London. Chowaiki returned $200,000 of the $900,000 to the victim.
Another company, identified as Victim-2, was informed by Chowaiki that it could buy for $312,500 a 50% ownership in a painting, which would be resold for a profit, split between Chowaiki and Victim-2. The money was wired to Chowaiki, who later informed Victim-2 that the gallery had never acquired the painting and could not sell it. No money was returned.
Victim-3 is a collector in New York City who agreed to sell a work of art to the gallery in exchange for title to another painting. Rather than take possession, Victim-3 consigned the new painting to the gallery to sell. The consignment was ultimately canceled, and neither the painting nor the funds were returned. Another art dealer claims that he bought the painting for $500,000 and that it has not been returned.
Two victims, identified as 4-A and 4-B, were informed that they could buy a 50% interest in a painting for $375,000 each. They both agreed, but they were never given title or received back any funds. A London gallery reported that it had bought the painting from Chowaiki and had resold it to a collector.
Victim-5 wired $1.2 million to Chowaiki in March 2015 to buy a painting. Victim-5 then consigned the painting to the gallery. A London gallery claimed that it had purchased the painting from the gallery, but Victim-5 received no funds.
Victim-6, a Canadian art collector, consigned to Chowaiki in February 2017 four works of art, including a painting worth $225,000. In June 2017 the Canadian collector canceled the consignment but was informed by a lawyer that the painting had been “transferred” to another New York City gallery.
At the time the gallery filed for bankruptcy and Chowaiki was removed as president, the gallery purported to have only approximately $276,681 in assets, whereas the gallery owed at least approximately $11.8 million in claims to dozens of art dealers and others, including those who had sent money to the gallery to buy artwork or who had consigned artwork to the gallery that was never returned.
Chowaiki, 49, of Brooklyn, is charged with one count of conspiracy to commit wire fraud and one count of wire fraud, each of which carries a maximum potential sentence of 20 years in prison, and one count of interstate transportation of stolen goods, which carries a maximum potential sentence of ten years in prison.
Acting U.S. Attorney Joon H. Kim said in a statement, “While Ezra Chowaiki appeared to buy and sell high-end artwork in his upscale Manhattan gallery, as alleged, he sold clients nothing more than an illusion. Chowaiki allegedly tricked his clients into investing hundreds of thousands of dollars in artwork that he never actually bought and secretly sold artwork that they had entrusted to him. As a result of Chowaiki’s alleged fraud, valuable works of art have been stolen from their rightful owners and unlawfully distributed all over the world.”
FBI Assistant Director William F. Sweeney Jr. said, “Investors believed the subject in this case had their best interests at heart,” but he took their money and never followed through on his promises. “When they dared to demand their money back, he allegedly refused. We believe there may be others out there who could be a victim of this scheme, and we ask that they contact us at <[email protected]>.”
Originally published in the February 2018 issue of Maine Antique Digest. © 2018 Maine Antique Digest