MANHATTAN (CN) - A nonprofit claims in court that the owner of the Forum Gallery, on Fifth Avenue, scammed it for $3.5 million by inflating the prices of art he procured for the foundation for young artists.
Richard McKenzie Jr. and Seven Bridges Foundation sued Robert and Cheryl Fishko and their Forum Gallery, in Federal Court.
McKenzie, an equities investor, claims he founded his foundation in 1992 to support "American figurative realism artists (Norman Rockwell being an example of figurative realism) by purchasing their art work and displaying it at its museum and on its grounds, which it built in Greenwich, Connecticut." (Parentheses in complaint.)
McKenzie says his collection "includes one work by many well known artists, such as a Rockwell painting or a Rodin sculpture, so that the visiting artists can have access to and view these inspirational works in a very personal and intimate setting."
McKenzie claims the Fishkos took advantage of his lack of knowledge of the fine art world, "where prices can be manipulated by unscrupulous, duplicitous and deceitful dealers, such as Fishko and the defendants".
In his complaint, McKenzie describes Robert Fishko as "an owner (if not the sole owner) of defendant Forum Gallery, Inc.," and Cheryl Fishko, his wife, as "an officer, employee and/or owner" of the gallery. (Parentheses in complaint.)
McKenzie says his relationship with the Fishkos began in 1998 when he bought a painting for $5,000 painting at Forum Gallery. He became a regular buyer, and Fishko "became aware of Seven Bridges and both its mission statement and the fact that it had in excess of $100,000,000 in liquid assets dedicated to purchasing art and supporting artists. This made McKenzie the ideal individual for someone like Fishko to exploit," according to the complaint.
Fishko then offered to "become the near exclusive intermediary for McKenzie and Seven Bridges' art purchases," and claimed he would give them a 20 percent discount on works by artists that Forum Gallery or Fishko represented, and that he "could get the best price" from other dealers and galleries, for which he would take just a 5 percent commission, according to the complaint.
"In furtherance of this scheme," McKenzie claims, the Fishkos "would often go out to dinner with him or set up trips to Europe 'to look for art,' always at McKenzie's expense."
As the years went by, McKenzie claims, he bought more expensive works, so that "Over the entire period of their dealings, McKenzie/Seven Bridges purchased 110 works of art from Fishko at an average price in excess of $100,000."
But McKenzie claims Fishko was not "negotiating" deals for him at all, but "marking up the prices he bought at from other dealers or galleries, sometimes near to 100 percent, pocketing the mark-up and then tacking on the 5 percent 'agreed to' commission to the inflated price."
The complaint continues: "Further, as to pieces being sold directly by Fishko, there was continual fraud, deception and unfair trade practices, as Fishko and Cheryl Fishko would quote McKenzie and Seven Bridges two different 'prices' on the same piece, when they did not know that McKenzie had asked each of them for a quote separately. In other words, a person walking into Forum Galleries with no past history, could be offered a lower 'list price' than McKenzie, who supposedly was a highly valued client."
And, McKenzie claims, the Fishkos sold him "art that had been consigned to Fishko by people who had passed away and their Estates had no knowledge of the consignment or had lost track or forgotten that they pieces had been consigned. This was 100 percent profit to Fishko."
McKenzie claims he and his foundation paid the Fishkos $11.8 million-more than 75 percent of the art collected by Seven Bridges. He claims that he and Seven Bridges "have been overcharged, deceived and/or defrauded in the amount of 30 percent or $3,540,000."
McKenzie says he asked Fishko for "copies of checks, bank statements and invoices" of the art he procured for him, but that "Fishko, obviously hiding his fraud and deception, has refused to do so."
McKenzie demands an accounting, $3,540,000 in damages, and treble damages, for fraud, breach of contract, breach of fiduciary duty and deceptive trade.
He is represented by Eric Grayson, of Greenwich, Conn.