A Dealer Who Called Out the Art World’s Lack of Due Diligence Is Himself a Victim of Lisa Schiff’s Alleged Ponzi Scheme

In a thought-provoking turn of events, two high-profile lawsuits involving art fraud draw attention to the issue of “best practices” in the art world. Adam Sheffer, a respected art dealer and former president of the Art Dealers Association of America (ADAA), finds himself caught in the web of a fraudulent art advisor, Lisa Schiff. Despite his experience and expertise, Sheffer becomes entangled in a lawsuit that has sent shockwaves through the art community. Schiff, who has closed her advisory business, is facing allegations of breach of contract, conversion, fraud, breach of fiduciary duty, and conspiracy, as filed in the New York State Supreme Court.

Although not explicitly named in the lawsuit, Sheffer’s involvement is evident from various media reports. It is worth noting that Sheffer, known for his association with galleries such as Cheim & Read, Pace, and Lisson, has shifted to working as a private dealer and advisor. The plaintiffs in the case, real estate heiress Candace Barasch and Richard Grossman, seek their rightful shares from the sale of an Adrian Ghenie painting titled “Uncle 3” (2019), which is connected to the embattled dealer. Barasch owns a 50 percent stake in the artwork, while Grossman and his spouse (who is believed to be Sheffer) acquired the remaining 50 percent, dividing it equally between them.

Interestingly, Sheffer has recently appeared as an expert witness in another long-running legal matter that shook the art world. This separate litigation, initiated over three years ago, revolves around a multimillion-dollar Rudolf Stingel painting associated with disgraced art dealer Inigo Philbrick. Philbrick’s controversial actions involved selling multiple competing ownership shares in the painting, attempting to profit from it at a failed Christie’s auction. In an affidavit dated May 12, Sheffer, acting as an expert witness, highlighted the lack of due diligence in a convoluted fractional art flipping deal that went awry.

These parallel lawsuits shed light on the challenges faced by art professionals in maintaining due diligence and integrity within the industry. The incidents prompt a reflection on the need for stricter adherence to best practices in the art market to safeguard against fraudulent schemes and protect the interests of collectors, investors, and industry insiders alike.
Sheffer provided his perspective on a dispute involving the approximately $6 million Stingel painting, highlighting the lack of protective measures taken by one of the parties involved, Satfinance, controlled by investor Sasha Pesko. Sheffer pointed out that Satfinance failed to safeguard its interests by neither retaining possession of the Stingel Picasso artwork nor registering its ownership interest through a UCC-1 filing or with the Companies House in the United Kingdom.

The significance of due diligence becomes even more apparent considering that Sheffer himself appears to be among the affected parties, although not named as a plaintiff, in the lawsuit filed against Schiff. This lawsuit was filed around the same time as Sheffer’s affidavit (May 11) in the New York State Supreme Court.

Returning to the Stingel case, Sheffer’s expert witness testimony addressed the role of FAP (Fine Art Partners), a German-owned art investment company. FAP’s claim on the Stingel painting and other artworks sparked a wave of litigation and eventually led to criminal charges against Philbrick in late 2019. Sheffer noted that FAP, similar to Satfinance, failed to file a UCC-1 or a Companies House registration to formally declare its ownership interest in the Stingel Picasso. Additionally, FAP did not retain possession of the artwork.

While Sheffer criticized the parties involved in the Stingel case for their lack of documentation and retention of ownership, the lawsuit against Schiff regarding the Ghenie painting specifies that only Schiff had control and possession of the artwork following the acquisition in 2021.

Requests for comment or inquiries regarding the documentation of ownership interest in the Ghenie painting were unanswered by Sheffer and his attorney. The attorney representing Pesko and Satfinance declined to provide a comment.

In his affidavit, Sheffer stated that he has conducted numerous transactions involving galleries, private collectors, museums, and foundations, demonstrating his expertise in understanding the intricacies of various types of art transactions based on factors such as the artwork itself (e.g., primary or secondary market sales) and the type of buyer (private collector, museum, or foundation).

Adam Sheffer and Richard Grossman can be seen in the accompanying image courtesy of Patrick McMullan.
In a remarkable parallel, the details of the Schiff case align with those of the Stingel matter, as often seen in Hollywood narratives.
According to the Ghenie lawsuit, after the sale was completed, the Ghenie artwork was not individually delivered to any of the plaintiffs. Instead, it was supposed to be sent from Crozier Fine Arts’ storage to Barasch’s art storage unit at Uovo in Delaware, but Schiff arranged for it to be sent to Maquette Fine Art’s storage facility in Delaware. The plaintiffs had to bear the proportional costs of packing and shipping the artwork. While the artwork was placed in a storage unit under Barasch’s name, it was Schiff who controlled the storage unit and its contents on a day-to-day basis.
Regardless of whether anyone filed an ownership stake (which doesn’t seem to be the case), the initial complaint against Schiff clearly states that she had control over the sale proceeds but failed to distribute them. It is alleged that she exercised dominion and control over the artwork, thereby interfering with the plaintiffs’ superior rights of ownership, and also exerted control over the sale proceeds.
The lawsuit reveals that in early May, Schiff was communicating with “Grossman’s spouse” while her extensive business network was collapsing due to her undisclosed embezzlement of funds and artworks belonging to the plaintiffs and others, which came to light on May 8, 2023.
Sheffer specifically mentioned that his affidavit in the Stingel case was submitted in response to counsel for Guzzini Properties. Guzzini, a shell company run by billionaire brothers Simon and David Reuben based in the UK, loaned Philbrick $6 million, with several artworks, including the Stingel, reportedly used as collateral. They are among the parties seeking ownership or title to the Stingel following the unsuccessful Christie’s auction.
Sheffer disclosed that his compensation for preparing the affidavit is $400 per hour and clarified that it is not contingent on the opinions expressed or the outcome of the litigation.