During summer 2023, a saga began to unfold concerning the art business of a prominent contemporary art market professional, based in New York City. The story raises significant legal and ethical issues for the art ecosystem.
Lisa Schiff is a self-styled art advisor, specialising in contemporary and modern art, who founded Schiff Fine Art LLC in 2002 as a limited liability company registered in New York State. It traded under the brand name of SFA Advisory, from premises in Tribeca and outposts in Los Angeles and London. Clients included individuals, companies, foundations and institutions – notably Leonardo DiCaprio and his LDF Foundation, and Sprinkles Cupcakes founder Candace Nelson. SFA’s last reported annual company revenue was $5 million.
In a 2017 Financial Times profile, Schiff explained her art advisory role: ‘My main job is to make the art world transparent, to help empower collectors. It’s such a complex world and very opaque. If you’re in it every day, it becomes second nature … When people come in, they often leave quickly because they feel threatened, make mistakes, or they’re taken advantage of. So I’m trying to help people understand … and enjoy it.’
In May 2023 serious problems arose for Schiff, when longstanding client collectors Richard Grossman and Candace Barasch filed lawsuits in New York Supreme Court against her and SFA. The first claimed their not having been paid $1.8m of the due proceeds of a $2.5m sale of their jointly-owned Adrian Ghenie oil painting (The Uncle 3, 2019), which they had contracted SFA to sell as their agent. The second claim is far broader, alleging misuse of funds provided to SFA for the purchase of artworks as buying agent. Together, the lawsuits allege breach of contract, conversion, fraud, breach of fiduciary duty, and conspiracy.
The suits allege that ‘Schiff and her businesses have effectively been running a Ponzi scheme, taking funds, accounts and artworks entrusted to them by clients, and using them and their sale proceeds, upon information and belief, to fund Schiff’s own lavish lifestyle.’ It is significant to note that the first lawsuit concerns SFA acting as selling agent, and the second as buying agent – in neither acting solely as art advisor. Within weeks of their filing, doubtless triggered by the lawsuits, SFA closed its website and Tribeca and London premises, and filed a notice of insolvency with the New York Supreme Court.
Amongst numerous art world commentators shocked by these events, New York-based curator and art consultant Jason Patrick Voegele speculated that ‘Schiff’s expenses – even those unrelated to her alleged personal spending habits – may have trapped her in a financial hole’. Voegele expanded: ‘I think this is a systemic problem in the art world where you make a certain name for yourself, and there’s certain expectations of you. And then the bills start rolling in … Art businesses pay off liabilities using money from other clients, even if that money should have been earmarked for a different use … I think that happens far more often than people are aware’.
Art lawyers invited to comment by art world journalists and wider media, responded by explaining that: the art industry is mostly unregulated worldwide and is a natural target for fraudsters; high-end transactions are commonly executed in secret, often conducted through chains of advisers and trading companies; and that, as one lawyer put it pithily, ‘money plus trust plus opacity equals trouble’.
Although financial wrangles between selling/buying collectors and their advisers sometimes occur, most disputes remain private and confidential to safeguard disputants’ respective reputations. Reputation is the greatest asset key actors have in the art ecosystem, therefore litigation through public courts is rare, and is why lawsuits against a high-profile player like Schiff have generated such interest and concern. Whatever the eventual outcome of legal proceedings, perhaps damage has already been done to Schiff’s reputation, and possibly to the art ecosystem. Voegele went on to say, ‘That’s the worst part of the whole thing. Whether she did this or not, the ripples of worry and the trust with art advisories and art consultants … that’s going to be a big problem.’
In June 2023, a first response to the lawsuits was filed at court by Schiff’s lawyer, which includes her denial that she was operating a Ponzi scheme, explaining that ‘a number of the Company’s clients and vendors are owed money because … expenses and flawed payment practices left the Company with more payment obligations than funds.’ The filing confirms that Schiff is cooperating with federal and state criminal law enforcement bodies investigating her art business activities, and has started liquidating business assets to pay creditors. The filing also asserts: ‘Given the media attention to her and this matter, Lisa is finding it difficult to obtain new employment and health insurance.’
An insightful column in the Art Newspaper, inJune 2023, by its editor-at-large, Georgina Adam, prompted by the Schiff events, explored ‘why the art market is vulnerable to wrongdoing’. Adam concluded wistfully: ‘But the greatest danger is that the dealer/adviser/agent wants to emulate their clients, to live like them. But they don’t have those billions behind them, so they fund the champagne lifestyle through their business. Which sometimes works, until it doesn’t work anymore, and they end up in court, or worse, in prison. Should we be sad, or cynical? The jury is out.’
By October 2023 a spate of art world journalists and commentators were exploring the implications and fall-out from the Schiff civil lawsuits, and now investigations of possible criminal offences. Being an art advisor is not regulated in the art world, meaning that academic or professional qualifications, and/or an authorised licence to practice, are not required – as a leading US art advisor commented, ‘the field is amorphic and ill-defined, and anyone can call themselves one.’
Yet in the US a well-respected Association of Professional Art Advisors (APAA), was established in 1980 as a non-profit membership organisation. APAA has over 170 independent members, based in 31 cities worldwide; and is the only standard-setting body for art advisors. APAA’s Code of Ethics, to which all members commit, includes: members may not maintain inventory for sale, accept artwork on consignment or act as private dealers in any transaction; members do not accept financial compensation that creates a conflict of interest between the member and their client; members do not solicit or accept compensation from service providers or vendors.
APAA’s ethics requirements are evidently aimed at potential conflicts of interest between acting as a dealer maintaining an inventory, and/or as a selling/buying agent, on one hand; and, on the other, acting as an objective professional with no vested financial interest in art transactions.
© Henry Lydiate 2023
HL’s Note March 2025: In the federal criminal court for the Southern District of New York on 19 March 2025, Lisa Schiff was sentenced to 30 months in prison for perpetrating a multi-year scheme in which she defrauded the clients of her art advisory business of approximately $6.5 million in connection with the purchase and sale of approximately fifty-five artworks; and was ordered to pay forfeiture of $6,408,538.20 and restitution of $9,147,789.26 to her client-victims.