US: Art Auctions on Cruise Ships Lead to Anger, Accusations and Lawsuits

When most people think of art auctions,
they think of Christie's or Sotheby's in New York or London, not a
cruise ship. But over the last two decades, auctioning "fine art" on
cruises, often to first-time bidders who have never met a reserve or
inspected a provenance, has become big business.

The biggest player by far,
with more than $300 million in annual revenue and nearly 300,000
artworks sold each year, is Park West Gallery, based in Southfield,
Mich. It handles such a high volume of art sales at sea that it bills
itself as "the world's largest art dealer."

Park West sells art
on the Royal Caribbean, Celebrity, Norwegian, Carnival, Disney, Holland
America, Regent and Oceania lines. (Princess runs its own auctions

For the cruise-ship companies, Park West's auctions
have become a revenue source like any other concession. For the
passengers the auctions are a popular form of onboard entertainment,
like gambling or shopping or catching the shows.

Yet some Park West customers say they did not get what they bargained for.

is Luis Maldonado, a businessman from the La Jolla section of San Diego
with interests in finance and construction and a penchant for Latin
American art. He was touring the Mediterranean with his wife, Karina,
on the Regent Seven Seas Voyager in November 2006 when they decided to
stop by the Park West art auction promoted onboard.

He was surprised to find artworks by Picasso
and Rembrandt in the auction area, a lounge near the casino, where they
were greeted with Champagne. He gravitated toward the Picassos.

he said, the auctioneer talked up two "museum-quality" Picasso prints
appraised at more than $35,000 each and a trilogy of Salvador Dalí
prints valued at $35,000 as a set. Mr. Maldonado said the auctioneer
described the works as "good investments," explaining that they were
being offered at 40 percent off their "appraised value," with no sales

When he asked about the nature of Park West, he said he was told it was on par with Christie's and Sotheby's.

was easy to make the leap. After all, he thought, it was a prestigious
cruise, and he had gotten discounts on good wines onboard before. He
started bidding, with little competition from the room, and stopped at
several thousand dollars below Park West's appraised value on each. He
received an invoice marked "All sales are final."

It was only
after Mr. Maldonado landed back in California that he did some research
on his purchases. Including the buyer's premium, he had paid $24,265
for a 1964 "Clown" print by Picasso. He found that Sotheby's had sold
the exact same print (also numbered 132 of 200) in London for about
$6,150 in 2004.

In addition, he had paid $31,110 for a 1968 print, "Le Clown" by Picasso;, an online art database, showed it going for about $5,000.

most disturbing, he learned from The Official Catalog of the Graphic
Works of Salvador Dalí, by the Dalí archivist Albert Field, that the
pencil signatures on Mr. Maldonado's prints from Dalí's "Divine Comedy"
series (prints without a signature in the woodblock itself) put them in
Mr. Field's column of "unacceptable" prints.

"Since Dalí did not sign any of these prints in black pencil, a pencil signature on one must be a forgery," Mr. Field wrote.

was very upsetting," Mr. Maldonado said. "I'm not mad about spending
$73,000. I'm mad about spending $73,000 for works that I was told are
worth more than $100,000 and are probably worth $10,000, if they're
even real."

He said he contacted Park West "dozens" of times
requesting a refund, beginning in early 2007 with multiple e-mail
messages to the auctioneer, who responded that all sales were final.
More recently, he has pressed Park West's customer service department
for a full refund, without success.

Reached by phone in
Michigan, Albert Scaglione, the founder of Park West, said he stood by
the company's certificates of authenticity and its appraisals. "I am
absolutely confident that if we had the opportunity to give Mr.
Maldonado the history of our pricing, he would have a different view,"
Mr. Scaglione said on Monday.

But about two hours after The
New York Times asked Mr. Scaglione about Mr. Maldonado's case, Park
West phoned Mr. Maldonado to offer him a full refund.

It may
take more effort to satisfy other customers. In April a Florida
resident and a California resident filed class action lawsuits against
Park West that could potentially cover tens of thousands of residents
of those states.

They have accused the company of
misrepresenting the value of its artwork and are seeking unspecified
damages for unfair trade practices, breach of contract and unjust

Appraisals in Question

overcharging for a product is not in itself illegal, misrepresenting
the goods sold can be. The plaintiffs' central argument hinges on Park
West's description of its appraisals.

On the back of Park West
invoices, issued on the ship, the appraised value is described as "the
price a client would have to pay to replace the work through a
reputable retail art gallery." Yet on the Park West appraisals
themselves, shipped to buyers along with their artwork, the appraised
value refers to the "current Park West Gallery retail replacement

A lawyer for the plaintiffs in both states, Shawn
Khorrami in Los Angeles, said there was a big difference between the
two. "It's the difference between saying, 'My house is worth $50
million because that's what the market would pay for it,' and, 'My
house is worth $50 million because I say so," he said.

But a
lawyer for Park West, Robert Burlington of Miami, emphasized that the
courts have not yet certified the proposed classes in the suits and
might not ever do so. He mentioned a 2001 complaint filed in New Jersey
against Park West, accusing it of chandelier bidding (the art market
term for plucking a bid from thin air), that was kicked around the
courts for years before the class was denied certification, partly
because the purchases at issue took place at sea.

As for sales
pitches by auctioneers, Mr. Burlington pointed to language in the
invoice saying that "no verbal agreements or representations shall be
of any force of effect unless set forth in writing in this invoice."

Scaglione called the class action suits groundless. "We've got over a
million clients and we make an effort to satisfy every one of them," he
said. "Sometimes you have disingenuous people who buy things for not
good reasons, and we get set up."

"With our size, it's unfortunate we've now become a target," he added.

other Park West customers who are not involved in the class action
suits have made similar allegations of misrepresentation of value.

Dr. Venkatraman Srinivasan, a Pittsburgh cardiologist, has published an
account of his experience with Park West at the Web site He said he paid around $30,000 for "Better World," by Peter Max, while on a Celebrity cruise from Vancouver, British Columbia, to Anchorage last August.

to his account, he was told that it was an "original" painting worth
about $50,000 and was dismayed to discover, when back on terra firma,
that variations from the same series were priced as low as $3,000 or
$4,000. (Dr. Srinivasan declined to be interviewed for this article
because of a confidentiality agreement he signed to obtain a refund
from Park West.)

Debra and Timothy Vruble, a couple from Elgin,
Ill., who both work in manufacturing engineering, took a Royal
Caribbean cruise to the Bahamas in October 2006. Onboard they bought a
set of three "Divine Comedy" prints by Dalí from Park West for $19,468.

An Auctioneer's Advice

auctioneer told us we could walk off the boat and sell them for 20
percent more, and they would go up 20 percent a year," Mrs. Vruble
said. Back home, an outside appraisal for the resale value of one of
the three prints came in at $850 to $1,000.

Mrs. Vruble said
she had gone to great lengths to obtain a refund over the last 18
months, making "dozens of calls" and writing "several letters" to Park
West customer service representatives and managers.

Asked on
Monday about her complaint, Mr. Scaglione said that any auctioneer who
said such things "would be an auctioneer with us no longer." Later that
afternoon Mrs. Vruble said she received a call "out of the blue" from
Mr. Shapiro, Park West's gallery director, offering a refund. (She got
the call about a refund five minutes after Mr. Maldonado did; Mr.
Shapiro confirmed later by e-mail that a "refund is in process and will
be issued upon receipt of release.")

Both the Vrubles and Dr.
Srinivasan pointed to atypical elements of the auction process, like
placing stickers on artwork of interest to them before the auction or
negotiating a sales price with the auctioneer before bidding.

with nearly 100 other disgruntled Park West customers, Dr. Srinivasan
and the Vrubles both turned for help to the Fine Art Registry Web site,
based in Phoenix.

For a $10 annual membership fee, Fine Art
Registry offers subscribers a system for tagging and registering
artworks so they can be tracked over the years. It has also made it a
mission to publish "buyer beware" articles on collecting - many of
which focus on Park West.

The site's founder, Theresa Franks,
first commissioned an article for her site about art auctions at sea in
April 2007 after an investigative newspaper article on Park West in The
Arizona Republic. She has since fielded 45 complaints from passengers
about Park West's sales of Dalí artwork and 50 more about other
purchases from Park West.

A common complaint, she said, is that
the rarity or value of an artwork has been misrepresented. "If you're
paying for a Mercedes, you should get a Mercedes, not a '65
Volkswagen," she said.

A former paralegal, Ms. Franks tracks
the customers' complaints and provides basic advice to members on
getting refunds. (Mainly, she said, we tell them "not to give up.")

described the Park West buyers as "newbies," inexperienced in the art
market, let alone the prints market, with its profusion of technology
and terminology. Few of the buyers were aware, for instance, that
forged Dalí prints flooded the market in the 1970s, she said.

Attracted by Famous Names

they hear the names Picasso, Rembrandt, Dalí, they recognize them," she
said. "It's easy to fall into that trap." And, she added, it is not
easy for these vacationers to do due diligence on the cruise, where
phone calls can be very expensive and Internet access very slow.

West's response to Fine Art Registry is a matter of public record. In
April the company sued Ms. Franks; Fine Art Registry's lead writer,
David Phillips; and a Dalí specialist that the site quoted, Bruce
Hochman, for defamation.

By phone, Mr. Scalglione also accused
the Web site of "poisoning" his customers against him as retaliation
for Park West's not delivering business to Fine Art Registry by
registering art works with them. Ms. Franks called this an "absolute,
bald-faced lie," adding, "I wouldn't want their artwork tagged and
registered with Fine Art Registry."

For his part, Mr. Maldonado
said he discovered Fine Art Registry "after doing lots of research on
my own." And Mrs. Vruble said she had not visited the Web site until
this year: "We were already way hysterical before we heard of Fine Art
Registry," she said.

As for the Park West appraisals under
scrutiny, Mr. Scaglione said the company determines values through a
network of independent appraisers who "cross reference - they cross

"We have literally spent hundreds of thousands of dollars doing this," he said.

he denied that the company promotes art to passengers as an investment.
"We make no claim that somehow they're going to go out and make money
or they're going to become instant millionaires," he said.

Scaglione left a position teaching mechanical engineering at Wayne
State University to open Park West as a gallery in Michigan in 1969.
"My big early hit was Escher," he said. "I caught him as he was very
old, buying prints for $50, selling them easily for hundreds. I wound
up handling the estate." In 1993 he began selling art on cruise ships.

Park West is privately held, it does not issue revenue or earnings
reports. But Mr. Scaglione said the company posted between $300 million
and $400 million in annual revenue last year, with cruise-ship sales by
85 auctioneers accounting for roughly half that volume. The rest comes
from gallery sales in Michigan and special events like hotel auctions,
he said.

Asked about his financial arrangements with the cruise
lines, he confirmed that they receive an undisclosed percentage of Park
West revenue onboard. They are also guaranteed "a certain minimum
against a percentage of the gross" that he compared to rent.

the question of refunds, Mr. Scaglione said Park West considers refunds
case by case. He would not disclose, he said, "the number or nature" of
them except to say "there is never an admission of wrongdoing."

refunds do, however, typically come with confidentiality agreements,
which Ms. Franks calls another Park West tactic intended to silence its
critics and to make sure "nobody's going to be able to walk into a
lawyer's office." She denounced the defamation lawsuit against her and
her colleagues in similar terms. "Park West has enough money to blot
out the sun," she said.

Consulting With Experts

West's suit against Fine Art Registry revolves in part around the Web
site's allegations that the company's Dalí prints are inauthentic. The
suit quotes, for example, a Fine Art Registry interview in which Mr.
Hochman said of the signatures on these pieces: "They're all the same.
And we feel they're done with an auto pencil device."

Scaglione called those assertions "bogus." He cited the credentials of
his Dalí appraiser, Bernard Ewell, and described his Dalí material as
"perfectly" authenticated - "our documentation is sometimes five or six
inches thick."

When asked about the Dalí expert Mr. Field's
exclusion of certain "Divine Comedy" prints with pencil signatures, Mr.
Scaglione said, "That man was so senile at the end of his life, it's
insane." (Mr. Field died in 1998, two years after the catalog was

Mr. Scaglione also dismissed Mr. Field's "official"
catalog as "the most unofficial thing you can imagine," adding that
there are "150 well-known fakes in that book" that are presented as

Frank Hunter, Mr. Field's successor at the Salvador
Dalí Archives in New York, countered indignantly in a telephone
interview, "That is absurd," adding with emphasis, "I'd like him to
show me one."

Despite the libel
lawsuit, Ms. Franks has continued to investigate the authenticity of
Park West's Dalís. In May she traveled with her writer Mr. Phillips to
Stuttgart, Germany, to meet Ernst Schöller, a senior art fraud
detective with the Baden-Württemberg state police, who has been working
to remove fake Dalís from the market there. They took for his
inspection two of Dalí's "Biblia Sacra" prints that they said were sold
by Park West as hand-signed lithographs.

Mr. Schöller's
verdict, captured on video and in an article by Mr. Phillips, was that
both works were photomechanical reproductions, not lithographs, and
were not hand-signed by Dalí. He called them "poster art."

Darraby, a Los Angeles lawyer who recently helped two clients secure
refunds for art purchases at sea from a company she would not identify,
said the cruise lines should take more responsibility for the onboard
art sales.

"People are not watching their wallets like they
would on Times Square," she said. 'They are lulled into this belief
they are in a very safe place."

A spokesman for Regent declined
to comment on customers' complaints against Park West. A spokesman for
Royal Caribbean and Celebrity said that in the case of a dispute, they
would work with Park West "to resolve the matter in a manner that is
mutually agreeable to all parties involved."

Neither company
would disclose its financial arrangement with Park West; nor would
Carnival, Norwegian, Oceania, Disney or Holland America.

cruise-ship setting also poses a challenge for law enforcement.
"There's a steady stream of people who have complaints about how these
art auctions are being handled on cruise ships," said Don Hrycyk, a
detective with the Los Angeles Police Department. But he said he could
not investigate because international waters are well outside his

"I usually refer these people to the F.B.I.," he said.

May an F.B.I. agent took part in a panel discussion in Los Angeles with
Ms. Darraby, among others, about art fraud and forgery. Most of the
session focused on purchases aboard cruise ships. Asked afterward by
this reporter if the F.B.I. had opened an investigation into the
cruise-ship sales, the agent, Christopher Calarco, said, "I can't talk
about current cases."

Contacted by telephone and asked if the
agency was investigating, an F.B.I. spokeswoman in Los Angeles said,
"We don't confirm or deny investigations."

As for Mr.
Maldonado, he hopes an investigation is under way. "Buying art from
Park West," he said, "was the only part of my cruise experience that
was a bad experience."

AMP Section Name:Tourism & Real Estate
  • 185 Corruption

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