Insurers balk at $19.7M claim on fake Basquiat paintings seized by FBI

ORLANDO, Fla. (AP) — Two insurance companies have asked a court to block a $19.7 million claim by owners of more than two dozen forged Jean-Michel Basquiat paintings that were seized during an FBI raid at the Orlando Museum of Art in 2022. The insurers say that the owners should have known that the works were counterfeits and they have no value.

Liberty Mutual Insurance Company and Great American Insurance Company sought a declaratory judgment in Orlando, Florida, that the policy doesn't cover counterfeits.

“Defendants do not have any valid claim to proceeds from this ‘loss’ since there is no loss to begin with,” the insurance companies said in court papers filed late last year. “The paintings have not been damaged or destroyed.”

The owners of the works denied the insurance company's allegations in court papers. They said they acted in good faith and that the paintings’ authenticity shouldn’t play a role in whether a claim is paid out since the insurers chose not to investigate their authenticity when they were added to the policy,

The owners had loaned the paintings to the Orlando Museum of Art, which displayed them in 2022 until they were confiscated by the FBI during the raid. As part of the agreement to display the works, the museum added the owners as an additional insured party to its fine arts insurance policy. The owners filed a claim last year with the insurance companies, who argued the policy doesn’t cover the paintings because they aren’t authentic.

Former Los Angeles auctioneer Michael Barzman agreed to plead guilty in 2023 to federal charges of making false statements to the FBI, admitting that he and an accomplice had created the fake artwork and falsely attributed the paintings to Basquiat.

Basquiat, who lived and worked in New York City, found success in the 1980s as part of the neo-Expressionism movement. The Orlando Museum of Art was the first institution to display the more than two dozen artworks said to have been found in an old storage locker decades after Basquiat’s 1988 death from a drug overdose at age 27.

Questions about the artworks’ authenticity arose almost immediately after their reported discovery in 2012. The artwork was purportedly made in 1982, but experts have pointed out that the cardboard used in at least one of the pieces included FedEx typeface that wasn’t used until 1994, about six years after Basquiat died, according to the federal warrant from the museum raid.

Also, television writer Thad Mumford, the owner of the storage locker where the art was supposedly found, told investigators that he had never owned any Basquiat art and that the pieces were not in the unit the last time he had visited. Mumford died in 2018.

The insurance companies first filed their lawsuit in state court in Orlando. But the owners have filed to have it moved to federal court in Orlando because the parties reside in different states.

Separately, the museum has sued its former executive director for fraud and breach of contract, saying the institution's reputation was left in tatters. The executive director, Aaron De Groft, countersued, claiming wrongful termination and defamation.

The insurers argued in court papers that their case should be returned to state court since the litigation between the museum and its former executive director is taking place there. The case between the museum and De Groft will help settle any questions about whether the works are fakes and what damages should arise if they are determined to be counterfeits, the insurers said.

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