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More on the Raiders of the Los (Angeles) Art

Jason Felch of the LA Times today has published an updated report of his shocking revelations yesterday about the long-term federal sting operation and the sudden four-museum early morning raid by federal agents. They were seeking evidence in connection with their five-year investigation of transactions and possible tax fraud involving allegedly looted objects.
Before I get to the meat of Felch’s detailed article, I’d like to add two comments:
First, the dramatic raid, photographed by the LA Times, was out of proportion to what it was attempting to achieve, unless its goal was sensational publicity for the federal enforcement team and against the targeted museums. I doubt that any of the institutions under investigation would have denied requests by the government agents for records, nor would they likely have destroyed documents had they not been taken by surprise. This dragnet seems to have been staged for maximum shock value.
Second, my comment in my previous post—that it’s too soon to say whether this will turn out to be another MUSEUM scandal—has been miscontrued by at least two commentators. Here’s what I said: “This may well turn out to be an ART-MARKET scandal, but the degree of intentional complicity by MUSEUMS in this mess is not yet known” (emphasis added).
Here’s what Felch himself has to say:
No arrests were made, but legal experts say the surprise search warrants suggest prosecutors are collecting the final elements to seek criminal indictments against [dealer Jonathan] Markell and [alleged smuggler Robert] Olson….
The warrants served Thursday show prosectors have carefully laid a foundation for the possible indictment of museum staffers allegedly complicit in the looting schemes—which would be a first under American law, experts say….
In the case of the Bowers [Museum, Santa Ana] and the Pacific Asia Museum [Pasadena], the warrants clearly suggest that officials were aware that the objects were looted and overvalued but accepted them anyway….LACMA [Los Angeles County Museum of Art], the Mingei [International Museum, San Diego] and the UC Berkeley Art Museum all received similar donations from Markell or Olson over several years, the warrants say, but the documents are unclear about the extent to which museum officials knew of alleged theft or tax evasion.

Today’s NY Times report informs us that LACMA “had about 60 objects related to the investigation that had been donated…over the last decade.” It also provided these details, from the search warrant affidavits, about the allegedly inflated appraisals for donations to the museums now under investigation:
The Markells would acquire an object from Mr. Olson and then offer it for sale to the undercover agent for about $1,500. They would provide an appraisal valuing the object at close to $4,990, an amount calculated to get around tax regulations requiring more documentation for bigger donations.
This strategem would have allowed donors to avoid the requirement that objects valued at over $5,000 be accompanied by IRS Form 8283, containing a “qualified appraisal” by a “qualified [independent] appraiser,” as defined by the tax code. The donor is required to give the donee a copy of the appraisal and the receiving organization (such as a museum), as well as the appraiser, must sign Form 8283. The museum’s signature acknowledges receipt of the property but does not constitute any opinion on the amount of the appraisal.
These requirements do not apply for under-$5,000 donations, but tax deductions still must not exceed the objects’ properly appraised fair market value.

an ArtsJournal blog