(Bloomberg) -- One of Wall Street’s biggest investors in distressed debt claims a prominent New York gallery and artist Jeff Koons are cheating customers by failing to deliver works worth millions of dollars.
The collector, GoldenTree Asset Management LP Chief Investment Officer Steven Tananbaum, sued the Gagosian Gallery and the artist Thursday over the non-delivery of three Koons sculptures, claiming they take deposits and payments from collectors and then delay delivery of works.
It’s a "a garden-variety, interest-free fraudulent financial routine,” according to the complaint.
Larry Gagosian’s global network of galleries stretches from Hong Kong to Los Angeles. His business has generated more than $1 billion in annual sales, according to the Wall Street Journal. His clients include billionaires Steve Cohen and David Geffen. Koons became the most expensive American artists at auction in 2013 when his 10-foot-tall stainless steel sculpture, “Balloon Dog,” fetched $58 million at Christie’s. That record was smashed last year by Jean-Michel Basquiat’s $110.5 million painting at Sotheby’s.
Representatives of Koons and the gallery didn’t immediately respond to requests for comment.
Tananbaum says the gallery and the artist persuade collectors to remit an initial deposit of $1 million to $2 million, along with additional payments of the same amount. They promise delivery of sculptures on a given date, only to delay completion by six months to a year, he claims.
Once collectors sign contracts with Koons, they are no longer able to find out how they will get the sculptures or whether they are in production, "while being besieged by a blizzard of installment payments," according to the complaint. The defendants resort to "faux science" to explain delays, including difficulties with Computer-Aided Design processes used to make the sculptures, Tananbaum claims.
The suit was filed over three Koons sculptures that Tananbaum claims were not delivered: Ballon Venus Hohlen Fels (Magenta), also known as "Balloon Venus," Eros and Diana. Tananbaum says the defendants prioritized other works over the three sculptures, including another sculpture, Gazing Ball (Centaur and Lapith Maiden), that was delivered to him in 2016 after he sued another gallery.
Gagosian has faced legal claims over Koons’ work before. He was sued in 2012 by billionaire Ron Perelman, who accused Gagosian of tricking him into buying a $4 million Koons sculpture named “Popeye." The suit was dismissed in 2014. More recently, the gallery was involved in a legal battle over a Pablo Picasso sculpture “Bust of a Woman" with the royal family of Qatar, which was settled in 2016.
The case is Tananbaum v. Gagosian Gallery, 651889/2018, New York State Supreme Court, New York County (Manhattan).
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