December 10, 2021 • 58 mins
Who can put a price on art? Every year, anonymous buyers and sellers across the planet move works of fine art for millions of dollars, with no questions asked. It's a playground of the well-off -- and, it turns out, one of the best places in the world to launder dirty money. In today's episode, Ben and Matt dive into the conspiracy surrounding fine art and money laundering
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Episode Transcript
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Speaker 1 (00:00):
From UFOs to psychic powers and government conspiracies. History is
riddled with unexplained events. You can turn back now or
learn the stuff they don't want you to know. A
production of I Heart Radio. Hello, welcome back to the show.
(00:25):
My name is Matt. Our colleague Nol is on an adventure,
but he will return soon. They call me Ben. We're
joined as always with our super producer Paul Mission Control decond.
Most importantly, you are you, You are here, and that
makes this the stuff they don't want you to know.
We go to some pretty dark places in the show, Matt,
(00:46):
especially recently. Uh this is uh, this is one where
we can kick our feet up in the beginning and
talk about the finer things in life, you know, because
because uh, despite at least my background here, as I
move around this room, uh we I would say, you
(01:08):
and I have some refined taste, right and most people do.
What are what are some examples of stuff that you
what are some examples of stuff that you're like willing
to spend a little extra money on for the quality?
The most Delicious of the caffe Also, I brought a
(01:29):
few things here, Ben, I love it. Peteret, the most Delicious,
Hazel nut wafers. They're so good and fine art. Oh,
a fellow intellectual, I see, now, those are all Those
are all fantastic examples. Dude, I wish I had. I mean,
(01:52):
I've got a bunch of creepy old books, of course,
but that's a little niche. And you know you nailed it.
Those are excellent examples. And almost everybody, I would say,
not just the people listening today, We all have refined
taste for like at least one or two things or another.
(02:13):
You know, you might be really into classic cars. You
don't care what. You don't care a whit about coffee,
but you need to have a good classic car. You
might be a sneaker head. You might only have limited
release you know Jordan's. You might spend a lot of
time and income chasing down limited release music or rare books,
(02:33):
or expensive clothing or symbols. Get it, Oh yeah, Ziligion symbols.
One of the world's oldest, continually functioning companies. I think
actually might be the world's oldest. And they are mass
produced for the most part, but there are some, there
are some rare children. That's awesome, and you know it
(02:55):
might be like, um, we have a pal a friend
of the show, the one and only Mr Ramsey Gunt
who as a producer here with us uh in he
has a particular, particularly refined taste for Japanese whiskey. And
I know it's a whole thing. It's old genre, but
with all of the examples that you and I are naming,
(03:19):
each of those has become the foundation of a massive
global industry, and today us you beautifully set us up
for exploring one of the most high end, most mysterious
of these industries, the weird world of fine art. It's
a place picture it, fellow conspiracy realists, where the rich,
(03:39):
the creative, and the criminal mingle and the oddest of
then diagrams, a business that orbits the lives of some
of the world's most powerful people. It's a world that
is alien to the vast majority of human beings alive today,
and honestly, many of the art world's insiders hope and
pray that it's stays that way forever. Why well, uh,
(04:03):
here are the facts. Yes, uh so, this art world
that is rather you know, foreign too many of our experiences,
is actually vast, very very large, much larger than you
imagine in your head. And probably that you assume, uh,
and it's always been I don't know. There's there's a
(04:25):
fascination to it. If you think back to films that
you've seen, anything from Oceans eleven to I don't know, Ben,
you'd have to name like a few other of these
Bond films. There's this aristocracy to to this stuff. Um,
you know, and you you just imagine the money in
(04:46):
this space because you you may, even if you don't
know much about the art scene, you may have seen
galleries or auctions where just millions and millions of dollars
are being thrown around at art and you think, why right,
and you you nailed like, you nailed it. I love
the I love the image. It's a trope now of
(05:10):
people aggressively bidding for something. I was just playing finally
Uncharted four if you be Uncharted series. Yeah, and there's
a there's there's an auction scene. This is not a spoiler,
but there's an auction scene where people are trying to
bid on an artifact. We'll touch on the world of
(05:32):
antiquities a bit today too. I suspect and there's a
lot there, Yeah, exactly, and it's beat for beat. The
scene you see in films where there's like one guy
who's holding up his little you know, his little sign thing,
you know, like two million, Do I have dow million
two million, two million, three million? Or do I have
(05:54):
three point five? Three point five? And then you know,
some other guy makes a stink face and he's like, yeah,
three point five, and then it just keeps going, and
then you know, inevitably there's it's usually I think the
bad guy who just gets tired of the cat and
mouse game and throws up their little thing and their
little paddle and just names of stupidly high number and
(06:17):
they're like five hundred billion dollars and everyone's like, oh wow,
dang uh, Now we have to do a heist. And
there is a reason for pushing up the price of
art in that way that I'm sure we'll be talking
about later this Oh boy, yeah, I mean, it's it's
(06:39):
a contradictory world, isn't it. It's also when there has
long been a subject of special fascination for the disciples
of the dismal science economist. At the most basic level,
the art market is it's just a bunch of people
buying stuff. It's a bunch of people selling stuff, and
they're just happened to be trading in works of art,
(07:01):
or we could loosely call them art related services. There
are two parts, two big categories. The primary market that's
where new art hits the scene, and then the secondary
market that's for art that has been sold at least
once before. And the art market it's not the same
as buying a used car. The used market or the
(07:25):
secondary market is where you see a lot of the
big money changing hands because the price the secondary market
is usually going to be dictated by the price at
which a given piece sold the first time around. Um,
but not quite. There's a reason the economists like this
well without getting two in the weeds, eggheads dig it
(07:47):
because it involves so much more than just supply and demand. Yeah,
if you imagine with the Zildian symbols, You've got certain
components that make this thing up, you know, different metals
that are melted down to then create this thing, and
it's it's uh, I'm man, I might be I might
be stretching here a little bit, but I'm just imagining that.
(08:09):
With with art, it is something that is created out
of those components, but it's a brand new thing and
you have to value has to be placed upon that
part of it, and that value is very subjective. Yeah,
beautifully put. And I love I love that you're bringing
up the aspect of the components there, Matt, because let's
(08:32):
take that Zilgian example, which is awesome. You can all
you can predict the cost of the components, right, and
then you can you can predict the amount of labor
right required to make one symbol, and then with that information,
you can predict the price you can sell it at,
and then you can predict the profit. But in the
world of art, like, it's such a good question how
(08:55):
much did the canvas and the paint cost for the
Mona Lisa, right, because you're not buying the cost of
the paint at this point. Uh. It's It's a fantastic
point and it's something that economists spend a lot of
time on because of that subjective value. How do we
how do we quantify it? How do we put a
(09:15):
number on a non quantitative thing. That's why the art
world has elements of what they would call a prediction market.
The art in question has kind of a fluid, fluctuating
financial value, and that cultural value is a huge piece
of this. You know, like, um, the right real world
(09:36):
circumstances can massively increase the value of a given artist work. Sadly,
when they die, that that has that becomes a big deal.
We can talk about that. And um, maybe when the
movers and shakers of the art world, like an influential
critic says, this is the new boss Scyatt, right, or
(09:57):
this is this is the next you know, Free to
Carlo or something, then boom, people want to be someone
who already had their finger on the pulse. Uh. This
this also can happen with things like beanie babies by
the way, yes, oh yeah, and magic cards. But it
is it's weird to think that value can be generated
(10:18):
out of nothing from a piece a single piece of art,
because of it's like singular cultural value. But then similarly,
it can be placed on the creator of that art, right,
all of a sudden, anything this artist touches is going
to be elevated up to that level, which is a
I don't know. It's so strange to me that both
can can occur and the only way that that's generated
(10:40):
is by other people deciding that that artist or piece
of art is worth x amount of millions. Yeah, and
you know, you and I are lucky enough to know
a lot of phenomenal artists both as just friends of
ours out side of of the orbit of this show,
(11:01):
and then also, and I'm grateful for this, we have
come to know a lot of amazingly talented artists through
this show, specifically through stuff they don't want you to know.
And it always I don't know about you, man, but
it always makes my day when someone says, hey, you know,
I listened to your show while I'm sculpting or doing
iron working or painting, and here's a little thing that
(11:24):
I thought you guys would like. And when I see it,
I have to be honest, I hope this doesn't come
back to bite us. But usually when I see those things,
my first thought is, damn, that is so much better
than the actual show, because the level of accomplishment there
is is stunning. Well, you know, shout out to Turbo
Benson first of all, but also this piece of art
(11:45):
that I held up, this is an original nagel, like
a Georgia nagle from It's a local artist here in Georgia.
I have to in my collection and it is seriously
amazing stuff, So look out for it. It'll be going
on auction sometime in that's amazing. Well you say that now,
(12:06):
but we never know, and we the reason we never
know is because there's another there's another weird thing that
comes into play in the economics of the art world.
It's called the greater fool principle. It means, yeah, somebody
will pay a certain price for something, even if it
might seem crazy high, because there's an assumption, let's be honest,
(12:27):
a bet made that later they'll be able to sell
it to somebody else for a higher price, and that
person will later often attempt to do the same. So
it's kind of like a snarky name for what happens.
But what what it's implying is that it might be
foolish for me to buy this thing at this price,
but there will be someone more foolish than me in
(12:50):
the future, and somewhere down the road somewhere. Surely I
am not the world's dumbest person. Or are we saying art?
Art is of really long game hot potato um for
some people? Actually, yeah, you know, for some people it is,
and of course for others this is just something that
(13:12):
is of great personal, historical, or cultural value. You know,
like sometimes you'll see well healed philanthropists buy up, buy
up pieces from an artist who they feel is underappreciated,
who comes from their hometown or their home region, or
(13:33):
their you know, their home community, and they'll do it
because they want to inspire the people living in that
in that place. You know. Um, I'm just making up
an example, and I have a specific one. But let's
say there is a multimillionaire maybe in Botswana or maybe
in Panama or whatever, and they want to have a
(13:56):
museum with local art to enrich the culture of the
bull living in Botswana or Panama. Then they might spend
a lot of money buying this stuff and making a
museum for it. And to them it's just a good deed,
you know, there's nothing crooked about it. But when we
look at stuff like a Stewart Plotner's work for American anthologists,
(14:19):
we see that this is a distinct, strange financial ecosystem. First,
it's notoriously opaque. There is absolutely no way to get
a full, comprehensive high level look at private sale data.
Absolutely no way, zero, zip, zilch way uh. And added
(14:39):
to that, about half of the global transactions in the
art world are thought to be composed entirely of private sales.
That's the last part. Let's put emphasis on global there.
Oh it's huge, it's huge. Let's talk stats and just yeah,
just to get into that what we're talking about here,
we mentioned all the auctions and everything that's often in
(15:02):
public that's often like promoted like, hey, on our auction.
This is happening. Look at all of the transactions that
are occurring here. When we're talking about private sales, it's
just hey, Ben, I've got this nagle, Ben goes Okay,
I'll take it for this amount of money done. That's
a private sale. That's it's over. Uh, and who knows
how much Ben paid for it? But still like this
(15:22):
is crazy. I certainly don't tell Paul when I'm selling
it to him. I haven't had it for a year yet. Uh.
Just some weird rules in there too. But let's know
many of these stats, like you said, Ben, throughout last year,
the global art market was valued at fifty billion dollars.
(15:42):
Fifty billion dollars for art, Okay, and uh, when we're
talking about that lack of transparency like that we're discussing
right here, fifty billion is probably not quite it could
be a little more, a little less, who knows, right,
But we're gonna we'll we'll use it as our running
number at least for this conversation. But here's the deal. Uh,
(16:04):
that number, fifty billion is actually significantly less than what
was spent in the previous year before COVID in twenty nineteen,
it was around sixty four billion dollars, So fourteen billion
got knocked off the top when galleries and other places
were closed and auctions weren't able to be you know,
produced the same way that they were in the previous year.
(16:27):
And people are still guessing, right again that you pointed
out how muddy that number is because there is zero
accountability in the private, the private aspects of this market.
This number, this fifty billion dollars, go ahead and doctor
evil your pinky up there with us, folks, is uh.
It represents somewhere around thirty one point four million known transactions,
(16:52):
meaning thirty one point for million different individual sales of
art that are known to have occurred over the course
of the US has the most skin in the game
or pain in the canvas. They have the highest total
share of the global market. China has the highest share
of fine art auction revenue. That's the stuff. That's the
(17:13):
stuff you're talking about, right, Matt, The money that churns
when outfits like Christie's or Southby's hold auctions for picassos
and mountainets and what have you. So we've explained a
little bit about the sheer financial depth of the market,
but this also sets us up to talk about the
ways in which that market might be smaller than outsiders. Assume.
(17:34):
Here's the simple truth. We'll just uh, let the quiet
badger be the loud one in this part of the conversation. Yeah,
most people can't actually afford to pay millions of dollars
or even hundreds of thousands of dollars for a single
piece of art unless they have like a clear plan
to flip it for profit. The luxury of buying a
(17:55):
piece of art for with historical cultural personal value and
then just like hanging it up in your mansion or
somewhat cottage that that's or on your yacht, that's a
privilege that's restricted to very very few people in modern
society because of the way inequality works, and like every
(18:16):
other industry, the community gets smaller and smaller and smaller
at the top, which means that the movers and the shakers,
they're increasingly likely to personally know each other, or if
they don't personally know each other, they're increasingly likely to
know another individual's position in the hierarchy, including their big
(18:36):
sales and purchases. That's why sometimes you'll hear somebody described
as like a minor correct contemporary every y'all, you know
what I mean, Like that they bought, they bought a
couple of war hauls, but they're not a big fish
to the big fish. How much money just to set
this up are we talking about? In the auction house,
(18:57):
Christie's sold Da Vinci Salvatore Monday for four hundred and
fifty point three million dollars. That's one painting, that's one sale.
That's a lot of money. That's more money than most
people will ever see in the entirety of their lives.
And it was sold to someone in the upper echelons
of the Saudi government or within the family that a
(19:20):
close associate of the Crown Prince. I mean, that's how
you can say Saudi Government and Olive Garden have the
same same tagline. When you're here, your family, but we're
just talking about this hierarchy. There's a story you can
read about from several years ago where Daniel Ratcliffe, you know,
Harry Potter, you say, this guy's probably got some money.
(19:44):
This guy is really well known. Uh. He was attempting
to buy some fine art, but he was refused by
I believe the person running the gallery, as in, like,
I'm we're looking for, you know, someone a little more
suited to purchase this are like someone within the art world, right,
the insider he got new moneyed, he got new moneyed.
(20:06):
Uh again like I don't know the full story. I
was reading it in one of the articles I was
going through today. But he eventually got to purchase the
painting because the artist themselves found out that it was
Daniel Radcliffe and was like, oh, yeah, you can buy
my painting. But the the gallery or the people selling
it wanted to keep it insular within that high art world. Yeah.
(20:28):
Oh wow. And and that sounds like if the artists
hadn't have known, they would have had no control over that. Interesting.
Interesting that kind of avoids the free market idea that's
so often touted. These two examples show us some pretty
fascinating stuff. In the case of that Da Vinci this
sale was unprecedented. It blew it blew all the previous
(20:52):
records out of the water, and it emphasized something that
happens in the secondary market. Artists can become incredibly profitable
once they've died, because you know, they're not making any
new sculptures or collages or paintings. The supply is inherently limited,
and if demand increases for any reason, prices can skyrocket.
(21:12):
And yes, to be fair, when we're talking about the
Da Vincis of the art world, we're kind of talking
about the equivalent of blue chip stocks. Their priced way
above what most other art in the world would be priced.
And as you can imagine, I've gotta talk about controversies.
We're not even the crazy part yet. With this much money,
with this much opacity and play, there's more than enough
(21:34):
room in the shadows of the auction house for crimes
and conspiracies. It would be actually would be pretty astonishing
if this wasn't the case. Art theft is a big deal.
We already talked about epic art heist. Those are just
a small slice of the pie because we don't know
much about the successful heist where something got lost or
(21:54):
got replaced by a forgery, which does happen more than
you think. Uh, there's a thriving black market in stolen
goods and in antiquities. This stuff affects everything from like
an archaeological dig in the hinterlands of Old Samaria to
the world's most prestigious museums who may not know that
they are uh participating with the best of intentions in
(22:19):
criminal acts. So and we've heard from curators who listened
to the show who have told us, like people work
in the world of museums have told us, figuring out
the provenance of an artifact can be can be really challenging.
But people are making their best faith efforts to, you know,
help make sure they're not like aiding in the betting
(22:40):
war crimes, which is probably something a lot of folks
don't anticipate when they're getting into that career. But the
truth of the matter is it's a huge problem, especially
with museums and antiquities. Oh, for sure, I would direct
everybody over to the Atlantic dot com to read the
tomb Raiders of the Upper East Side. There's a story,
(23:01):
and well, there are many stories within that story, but
one of them is about the Metropolitan Museum of Art
in New York and how they purchased something from Egypt
that was you know, a a mummy less coffin, right,
and they allegedly didn't really under fully understand the providence
of this thing. But it was found after investigators proved
(23:22):
that this this thing was just taken, this coffin was
just stolen and it was made out of almost all gold,
and the mummy that was inside of it was just
dumped into the river and it was there were false
documents set up to then sell it to the Metropolitan
Museum of Art. But they like, they didn't really check anything.
(23:45):
They just went, oh, here's an antiquity from Egypt, and
they just bought it because they knew the value that
it had and they didn't even check out, you know,
how it got to them or who who raided a
tomb essentially to get it to them. Um. And it's
all about for me, it's about looking away when you're
(24:07):
the person making a purchase, because you know the inherent value.
You know, you can flip something. You look away from
the actual providence of the thing. Yeah, if it is
the actual thing. Because one of the other big big
problems is is forgery. You've probably heard that old chestnut.
Great artists steal, while you know middling or mediocre artists copy.
(24:29):
There's truth to that, and artists themselves have spoken about
their influences, and different people in the art world go
go pretty far and acknowledging when a certain piece of
art seems derivative of some earlier work. And this happens
in any creative endeavor, from music to writing to dance.
Imitation of that sort is both expected and openly acknowledged
(24:52):
by most people involved. But it crosses the line when
a talented but unknown artist turns to the dark side
and make fake callows or fake GEORGEO o'keefson sells them
as the genuine article. This is forgery. It's a continual,
ongoing crime, and there are countless examples of very successful
forgery operations. You could almost make a yearly list, uh, Like,
(25:17):
I was looking through this and I found year by year.
I didn't found one for twenty twenty one, but I
found from twenty on back year by year list of
like the most successful forgery. So it definitely happens. But
today's episode is not about forgery, even though it's inherently
a conspiratorial crime. It's just the tip of the paintbrush.
(25:38):
For decades and decades, if not centuries, the world of
fine art has been home to another larger conspiracy. Conspiracy
that is arguably and art all its own money laundry.
I know, when are we talking about? Yeah, we'll tell
you after a word from our sponsor. Here's where it
(26:04):
gets crazy, okay, Well, the fixes in the world's most
high ticket art is part of a global business with
tons of secrecy and a laughably small amount of toothless regulation.
Makes it a great place to hide money if you're
trying to avoid the tax ban, or if you've got
a lot of dirty cash and need of a good scrub.
(26:25):
This is where a pretty cool guy named Noriel Rubini,
economist and why you professor comes into play. What I
love about this guy, Matt. He's got a street name,
which not all professional economists do. His street name is
doctor Doom because he he made a lot of very dire,
(26:46):
incredibly accurate predictions about the housing crisis and financial crash
of the early two thousand's. So people column Dr do.
I wonder what he's saying about the housing market right now?
Um Doom and gloom? Maybe who knows I don't want
to look okay, but what he shows us is how
one person, an individual can purchase a really expensive piece
(27:09):
of art worth let's say a million dollars, and they
can pay cash, just slide it on over, and there's
no need for them to register the transaction because there's
because well in some cases you could get around it basically,
and there's virtually no tie to the financial system when
a transaction like that occurs. Yeah, we don't need a
(27:33):
lot of paperwork involved. Did this you know what I mean? Uh.
The opaque nature the art industry also makes it a
haven for tax evasion and lucrative pieces of art are
exchanged all the time, but not in the way you
might think. Because the artwork might never physically change hands,
it can be stored at these things called free ports
(27:55):
for an unlimited amount of time. And quick explanation, I
think for some of us in the crowd who might
not know what freeports are. But yes, I was gonna say,
Tenant is where I think a lot of a lot
of folks get hip to it. Uh, don't feel bad
if you if you haven't seen Tenant and you don't
know what freeports are. Because the truth of the matter
(28:15):
is that there are a ton of people who would
prefer that you never actually think about these things. So essentially, like,
you know, depending on where you live, folks, you probably
have some kind of public storage business in your neck
of the global woods. And you know, you know what
it is. It's a bunch of like tiny garage looking things.
(28:37):
And when people have stuff that they don't want to
throw away but they don't have room for in their
house or apartment, they rent one of those things, like
by the month or by the year to store their junk.
Very wealthy people do that too, but they do it
in a much more sophisticated, expensive manner. Freeports are super
(28:57):
secure warehouses for collections of millionaires and billionaires. This isn't
just art, it's not just Picasso. It could be straight
up bricks of gold. It could be golden gets, it
could be vintage ferraris, it could be crazy expensive wine. Uh.
These things are found in countries where you would expect
a lot of very wealthy people to store very expensive things. Switzerland, Luxembourg, Singapore. Uh.
(29:24):
And it's very advantageous to you if you want to
avoid paying the government anything because those goods. When they're
stored in a freeport, they're technically still in transit, so
it's kind of it's kind of like they told FedEx
to say, just tell me it's always on the way. Yeah,
(29:45):
it hasn't quite arrived in the UK yet, so you
don't have to pay those taxes when it was being
shipped from the US. Well, it's just whatever it's in transit. Yeah.
A while back, The Economist reported that of the freeport
near the Geneva Airport, just on its own is suspected
(30:06):
to hold the equivalent of a hundred billion US dollars
in art. So not counting the ferraris, nor the wine,
nor the in gets of gold and platinum. This stuff
can be stored years, decades. There's really not a time limit.
There's one other interesting mechanism freeports. We have to throw
in once something is inside the freeport. Like let's say
(30:29):
a piece of art is inside the freeport, a bend
bowl in original I make a lot of art, but
I don't sell it. Let's somehow it ends up in
a freeport. That art can be sold privately and anonymously
to other buyers, and it never has to leave the warehouse.
They're just trading money using that thing, as you know,
(30:49):
sort of the mad live in what they're buying. WHOA,
so you yeah, that feels like a good way. You
can't really clean money that way, but that's a weird thing.
Well you you can in some ways. Rubini compares this
(31:10):
dr Doom, compares this to the role that Swiss banks
used to play. He told CNN. You know, they're an alternative,
he said. Maybe an alternative is just to buy an
expensive piece of art and hide it in a freeport
in Europe. Nobody knows what it is that becomes the
equivalent of a safe deposit in a bank previously in Switzerland.
The other thing is, no one is sure about the
(31:32):
extent of this problem. Even the people making money off
of it think about it. No one knows the origin
of the dirty money. It could be drug money, it
could be financial crimes, robberies, trafficking, profits, you name it.
Also know when sure how often it happens, and no
one is sure how deep it goes. It's definitely weapons sales,
by the way. Uh So The n y T New
(31:54):
York Times ran a story earlier this year about a
very surprising case. You can read right now, if you've
got enough free New York Times articles, Yeah, you can't
get a subscription if you want to. Uh, but I
was able to read this. There's an accused drug dealer.
His name was Ronald Bellichiano, and he was in Philadelphia
(32:19):
and the Feds raided his house. They found, you know,
the things that you would find of a suspected drug
dealer if they are in fact a drug dealer, Lots
and lots of marijuana. They found about two point five
million dollars hidden in a compartment beneath a fish tank,
which you can see a picture of. It just looks
like a box, and I had cash stuffed in it
(32:41):
with an aquarium on top of it. But here's the
other thing. They found art, real art, like expensive fine art,
a whole cash of it. Yeah, they did. At a
storage feunit, not a freeport, just like a regular public
storage unit, just a few miles away from his house.
(33:02):
They found thirty three paintings stacked up. They also have
found fourteen paintings in his home. This wasn't from like
his kids high school painting class. This is stuff like
Brenois Picasso, Salvador Dolli, and belt Seato had used the
art to launder some of his drug cash. He purchased
(33:22):
the works from this gallery near Philadelphia's Museum Row. It's
a solid operation basically until it isn't, and the NYT
sums it up by saying buyers typically have no idea
where the work they're purchasing is coming from. Sellers are
in the dark about where work is going. None of
the purchasing requires the filing and paperwork that would allow
(33:44):
regulators to track art sales or profits. It's distinctly different
from the way the government can review the transfer of
other assets like stocks or real estate. Now we need
to talk about the other thing, and I think it's
something people in the audience were anticipating. Power is not
always limited to money. Money is just a medium of
exchange for power. It's a coupon system. It's symbolic. The
(34:07):
fine art market has also been seen as a way
to pedal political influence, and the most notable accusation in
the West in recent years for this kind of thing
centers on the administration of current US President Joe Biden,
well kind of on him, mainly on his son, Yes
Hunter Hunter Biden, that you've likely heard a lot about
(34:30):
over the past few years, He's attained something that many
artists have not, uh, a level of fame, a level
of success that that many can only dream of. He's
represented by the ultra powerful George bars or b r
G S Gallery in that's in New York. Been Yes, yeah,
(34:52):
that's in New York, and uh, he has his works.
His art is expected to cost anywhere from seventy five
dollars to five hundred thousand dollars. Again, Hunter Biden, son
of the current president, right right, and experts, not just
political opponents, have raised ethical concerns here. They're arguing that
(35:14):
people might not be paid this much just because they
like the art. They may be doing this because supporting
Hunter Biden might establish a line of communication and influence
with his father, who is currently one of the most
powerful people on the planet. And in fact, you know,
I found one prominent critic, Walter Shab, because I wanted
(35:38):
to make sure that the ethical concerns weren't just like,
you know, politically motivated stuff. So Walter Shab was an
interesting critic of this to me because back in the
day he was actually the director of the Office of
Government Ethics under the Obama administration. So you can you know,
make uh some assumptions about his own politically means, and
(36:00):
he said, I find it deeply troubling. We've got a
family member clearly trading on his father's name. The man
has never sold a piece of art before, has never
even juried in a community center art show, but suddenly
he's selling art at fantastical prices. There's simply no way
anybody paid seventy five grand for anything other than his name.
That sounds kind of cold and uh. In his defense,
(36:22):
Hunter Biden did appear on a couple of outlets. He
was on an art podcast a while back where he said,
you know, he was surprised, but he was happy. He said,
I would you know, be happy if it's sold for
ten dollars, said painting was away for him to personally
find soulas, which is something a lot of painters in
the crowd today can agree with. Uh. Yeah, but in
(36:44):
the state, you can't argue with the fact that the
reason it's that expensive is because of who he is.
I mean, it's that it's that it's that value that's
placed upon the art by the outside right, and when
he's represented by a powerful dollary, it doesn't hurt. I mean,
it definitely has to play at least some role in
(37:06):
the success here, partially because when people are buying a name,
they're they're also buying a story, right when you buy,
when you buy art, you're also buying the story of
the person who made it, the story of how it
traveled from someone's mind through all these various adventures to you. So, yeah,
(37:30):
it's not a crime. It's just ethically unsound to a
lot of critics. And really it's not a crime because
the legal system doesn't have the vocabulary to articulate this
as a criminal offense. But that doesn't make it not shady.
And to be fair, Hunter Biden is currently embroiled in
other controversies. The U. S. Attorney's Office is digging into
(37:51):
his taxes. He stated that publicly there were corruption charges
raised by the former Trump administration during the la selection.
Biden administration dismissed him as a smear campaign. Hunter Biden
is probably like the thing about Hunter Biden is he
doesn't need the money, you know what I mean, He's
(38:13):
not sweating the seventy five grands. Probably. He did join
the board of a place called Barisma from to twenty nineteen,
where he was making an estimated fifty grand a month.
So if he chose art over that, he's he's following
his passion rather than financial motivation. But there's a whole
(38:34):
thing with Ukraine there with Undiden, and there's a lot
of stuff. There's a lot, there's a lot, there's a
lot with Kraid. Almost I almost texted you and know
about this. But given the way that Russia has amassing
troops on the border, I wonder what's going to happen
around the end of the year. Honestly, dude, there's so
(38:57):
much posturing going on both sides. I don't know. NATO
hasn't no first strike thing, and they definitely I don't know.
And and also earlier this July, Vladimir Putin published an
essay about how they're Ukraine has always been part of Russia. Yeah,
like they're they're of the same stuff, basically, they're spiritually. Yeah,
(39:22):
So we'll see what goes on there and maybe that's
an episode for the future. But regardless of what goes
down with NATO, Russia, Ukraine and crimea, uh and what
revelations come out about corruption on the western end of
that that, we do know one thing, No matter what
(39:42):
wars occur in the future, the problem of money laundering
is only set to continue to grow to expand. At
least that's what multiple governments assume. We're gonna pause for
another word from our sponsors, and then we'll return to
explore a little bit about how these institutions are at
least saying they're going to fight back. So, as you know,
(40:08):
Matt and I aren't just podcasters. Matt is a tremendously
accomplished musician. I write constantly. We're in the world of
creative things. We're also based on this podcast, excited to
announce that we're getting into the world of visual creations,
not with YouTube, but with fart. That's right, Ben and
I are proud to be sponsored by financial alternatives to
(40:29):
real transactions or fart. It addresses a problem that I'm
sure many of us have encountered in our various side hustles.
Where do I put all this drug money or let's say,
even bezzled millions from a charity and need to take
it out of the oven of crime to cool it
off for a while, and all the usual tax havens
are closed down. Yeah, Plus those stick in the mud
tax men are prying into all the empty condos we've
(40:51):
been by, and casinos. She's casinos mean that some mob
gets it cut and you get stuck with tons of paperwork.
That's why we recommend fart up. Until recently, the best
way for us to move dirty money from things like
regime change trafficking, badger smuggling, or stamp fraud was to
buy regular art. We'd send one of our agents to
a South abys tell them to put a few million
(41:13):
into something whatever really and boom call it a day.
But those non criminal, non fat cats in the world
of law enforcement hate to see a good hustle folks.
They're cracking down on good old fashioned drifting and it's
time for all of us to get ahead of the game.
That is where fart comes in. Instead of physically buying arts,
all you have to do is pull up the handy
(41:34):
fart app. Then just enter the amount of money you
need to move, make up a fun nickname, and make
sure you never use that nickname again never. You'll get
an anonymized list of private collections and freeports all across
the world, tailored to your criminal needs. Click what fits
your needs best, and fart takes care of the rest.
You don't have to go pick up the painting. You
don't even have to see it. You can even disable
(41:56):
the thumbnails if you don't want to be bothered with
looking past the price tag. No pesky regulation, no nagging,
and no cries for accountability. Let's say later you need
that cash and maybe you want to make a hefty profit. Now,
all you need to do is set up price for
your art wherever it's being stored. When in just a
few days or hours you'll get an offer. Here's the
fun part, folks, That buyer could be anyone. It could
(42:18):
even be you under a different name, offering a higher price.
With FART, you can take the art from the museum
and turn it into a laundromat, just like the old
masters Shirley intended. And there's a special limited time offer
here just for listening to stuff. They don't want you
to know. The good folks at FART are offering fifteen
percent off the blood price for your first transaction. All
(42:38):
you have to do is type in the promo code
I am a bad person at checkout again for fifteen
percent off blood price. Enter the promo code I am
a bad person at checkout. The fart app is not
available on p p P poor people phones. The makers
of fart are not responsible for any prosecution, bad karma,
dark knights of the soul, well deserved revenge, governmental coups,
regime changes lead pois need physical seizures. Financial seizures come
(43:02):
up in Shenanigan re or lack of honor among thieves
as far as a subsidiary of illumination Global Unlimited and
we returned. Yes, governments are paying more attention to this
in recent years for a couple of pretty compelling reasons. First,
business is booming. You know, earlier, Matt, you and I
(43:25):
were talking about how the pandemic made a drop in
the overall market. But the big ticket items are selling
for increasingly higher prices, and this means that in a
single transaction more money is moving now. It's like an
illegal portive entry to the land of legitimate cash. No
need for paperwork, no need for disclosure, and no way
for the law to look into things too closely right
(43:47):
now at least. And Second, many of the traditional money
laundring avenues have been compromised or shut down. Think about it.
The Panama papers a little while back, the Pandora papers,
people the world, The public is waking up to a
lot of these traditional ways of just moving that money around,
real estate, tax havens, all of these things. The places
(44:08):
where both the incredibly rich and the high level criminals
where they used to stash all that cash, they've just
they've fallen out because people know about them, and also
because there's increased regulation on those things or rules, especially
if you're doing a transaction from one country to another
country where that you know, money would have been stored
(44:28):
or moved or cleansed. It's just not happening right now,
at least not to the extent that it was. Yeah,
and so this also means that a certain demographic of
the world's most successful scoundrels are suddenly discovered a deep
appreciation for art. Actually the expensive stuff that's cool. You
(44:49):
gotta feature soul. So what is to be done in
a world where it's generally acknowledged the taxes are already
for the little people quote unquote, and corruption is i
would say, a widely accepted open secret. How can government
institutions hope to fight the almost entirely invisible kaiju of
(45:09):
global financial crime in the art world? Uh, good news, Matt,
You and I looked into this. We know that the
US is taking a stab at it with some new
proposed bills um essentially stuff like the Bank Secretary Act
b s A and a m L and something called
the Combating the Financing of Terrorism Laws. The Anti Money
(45:32):
Laundering by the way, yes anti money, yes, thank you,
anti money laundering. The b s A already requires people
who deal with precious metals, stones and jewels to report
activities that seems us to the authorities. Like think of like,
you know, you buy diamonds and you're pretty sure someone's
trying to sell you blood diamonds, you would report that,
(45:55):
or they're stolen, you would report that. The idea here
is to expand those report and requirements to art dealers
in the US. Some you know, some shady entity is like, hey,
I want to sell this to two hundred million dollars
And you're like, is that wasn't that painting stolen? Well,
(46:15):
I don't know where I came from, you know what
I mean, it's in my gallery right now. So the
idea is, and you know again, gallery owners and art
buyers and collectors are not not everybody is in on this.
Everybody not everybody. But now we have to look across
the pond. We know that the European Union Commission had
(46:39):
issued an anti money laundering directive in eighteen in June,
which also expanded the coverage of regulation. So they started
they started counting people trading in the world of art
as obliged entities, meaning people who had to report suspicious activities. Uh.
And they also had to reported if they were storing
(47:01):
art in free ports. If the value of a transaction
or a group of linked transactions equaled ten thousand euro
or more, that's that's what they want to happen. Well,
and they're they're actually taking some of this stuff into effect.
You can read about it right now. Some of the
lazes news coming out of the UK has to do
(47:21):
exactly with this, and that number in particular ten thousand
euros or more is so low compared to what the
other regulators and other countries are trying to establish. Most
of the others, like with the United States and uh
few other European countries are setting it setting that minimum
(47:42):
as like you know, it has if it reaches this
amount of money or more, then it has to be
reported around a hundred thousand dollars US. So this is
like you know, most of the other countries are looking
at transactions that are ten times the amount that the
European Union wants to look at. Yeah, and like you said,
this is something that's still influx in some parts of
(48:05):
the world where in the early days of this kind
of regulation. In other parts of the world, it's still
kind of in the idea phase. Can read a pretty
great summation of US laws in various law review outfits,
and we have to point out, of course, not everybody's
on board. In the view of some art dealers, the
legal changes in the US and Europe would strip vendors
(48:29):
of one of their big selling points, the ability to
offer anonymity to clients, either on the buying or selling side.
And this anonymity, the desire for anonymity, despite what surveillance
states would have you assume, does not necessarily make somebody
a criminal. You might just want to sell one thing,
(48:50):
and you might be doing it because you actually need
the money and you don't want people to know, or
you might be doing it because it's just one piece
of a larger collection and you don't want to get
bombarded by other people who want to buy other stuff
in your collection. You know what I mean, Like, privacy
is a currency all its own, so those parts aren't
necessarily criminals. Uh. And in the years back, right back
(49:15):
in the day, the fine arts market was often seen
as a playground for the the wealthy, the indolence well
to do, the sociolites and so on. There was no
real drive on the part of the authorities to police it,
to apply laws to it as strenuously as they would
to something like banking, which they could also use some
(49:36):
help regulating banking. But whatever, Only time will tell what
happens to this practice, because for now it's a wild West.
It's a gold mine baby. Right now, with the appropriate connections,
you can easily longer money through fine arts. Your odds
are getting away with it again for right now are
actually pretty good if you get caught, at least a
lot of cases I've seen, if you get caught, you're
(49:59):
probably getting due to something else you did, the actual
gun running, the actual embezzlement, the trafficking or whatever, and
then the art as a laundering mechanism only gets discovered
later in the investigation, Like where they where they busted
the drug dealer and they were like, Wow, this guy's
great taste, man. Yeah, that's surprised when you open the
(50:23):
storage unit and you're like, oh my god, there's thirty
three paintings in here that are all worth you know,
hundreds of thousands, if not millions of dollars. Why can't
this happen with like grim wise books of the occult,
obscure reference works or comic books that would be cleaning
up my storage unit and you can just find all
(50:43):
my son's clothes, all of them. It would be kind
of creepy if I didn't know. You what do you
do with them? There? There's sentimental value, you know, right,
and kids grow so fast. What's the hey, what's the
shortest amount of time that a pair of shoes fit
the kid? The one of the latest ones. We've got
(51:05):
a minecraft shoes for the beginning of the school year,
so August, this past August, and he's completely outgrown them. Now, yeah,
that's pretty fast, all right. Well, as you know, I'm
a big fan of your kid. Uh. I think he
almost beat me at ski ball. We'll see, let's see.
(51:26):
I just got to enjoy my brief time in the
sun anyway. Uh, children's shoes aside things you find in
public storage spaces can always be weird, and that's why
sometimes they get robbed. But what we're talking about now,
this money laundering problem is all just the traditional old
school hustle. We have to admit that the rise of
(51:48):
new art things like non fungible tokens in f t
s can also produce opportunities for money laundering. In theory,
and only time will tell what happens with all those
nifty new technological toys. Assume you bring in the crypto
the crypto techniques, right, and you're talking about money laundrying
like it's a whole new world there. Yeah, yeah, until
(52:08):
people figure out who Nakamoto is, well, like we don't,
we don't know. Uh So for the more cynical folks
in the crowd, I would say myself included candidly. There's
also the issue of corruption in the halls of power.
A lot of people participating in these conspiracies also have
influence in the world of business and politics. We are
(52:30):
talking big fish capital b capital f It can be
plausibly difficult or even at times dangerous for you know,
regular authorities to make a fuss. It might even hurt
re election chances for some politicians, especially those that depend
heavily on private campaign donations, which can come from those
(52:51):
Capital B, Capital F, big fish. Yeah, if you've got
the money to, you know, hide away in art the
extent that some of these players do, and you can
imagine that a campaign donation isn't out of the question,
especially if it's gonna benefit you personally in some way. Yeah,
and art as an avenue for money laundering, really money
(53:12):
laundering itself, as as a kind of art form. These
aren't things that immediately impact the average person, so there's
not a ton of on the ground momentum to change
this dirty status quo. In fact, the majority of the
stories about this in the media kind of take this
wealthy folks are bad angle, which is honestly misleading. There
(53:34):
are scads get it Georgia natives of affluent folks who
legitimately just dig art or certain artists. It's either for
their own personal enjoyment, maybe it's a social flex to
talk about at the next fundraiser. And of course there
are people who rightly see this as a genuine, if
at times wobbly investment. At Matt, as we're at the
(53:57):
close of this show, I have to ask you with
this regular Asian. I know that we've both read up
on this. Do you think it will have teeth? Do
you think it will make a difference? Well, I think
back to that, to that example we gave of the
four and fifty something million dollars that was spent on
one painting, and that was done in an auction as
somewhat above board auction, right, that kind of transaction, I
(54:21):
think it will be easy to enact regulations on when
it comes down to the private buying that we outlined
up at the top. I think it's going to be
extremely hard for any regulator in any country to get
a firm grasp on those transactions, right because so many
are pre existing, you know what I mean? And how
do you list those as assets? Right? Like? Where where
(54:46):
do they enter the legal system? Right? There's a there's
an app out there, or at least one that's being
developed right now that's supposed to what is it art pass?
I think something that art pass I d it's supposed
to allow buyers and sellers of fine art to like
have their identity information to like hand it over when
(55:09):
you're making a transaction basically, but who knows if it's
gonna work well, or not. It's a group of Dutch
tech entrepreneurs who are creating it. You can read about
that in the art newspaper um. But there's that kind
of thing where like tech is trying to come in
to offer a solution of like, yeah, if dirty money
is a problem in the art scene, maybe there's a
way for us to exchange identity information without having to
(55:33):
get into regulation. And it's more of like, I don't know,
you can do it on the level of the transaction.
I see kind of like we're that we're going to
regulate ourselves to avoid overreach from institutions. Yeah, yeah, you know,
all the best to them. But you can easily see folks,
why so many people would be cynical about this changing
(55:55):
just because of the conflicts of interest involved, because of
the amount of money involved, and because of the um
potential for nepotism involved. Well because of the layers, right,
there are layers of shell companies that often make these
actual transactions and representatives of representatives of a group that
is actually working for the benefactor who's going to own
(56:16):
that art. Agreed, and so now, fellow conspiracy realists, we
passed the uh little auction gabbl to you, thunk, What
do you think? Do you have any personal experience with
the world of fine art? Are you an artist who
has uh seen some shady stuff go down at galleries?
(56:37):
Are you yourself curator who has been trying to keep
people honest? Uh? Do you find yourself whether you're in
this or outside of this? Do you find yourself also
assuming a cynical perspective here and if so why? We
would as always love to hear your thoughts and we
try to be easy to find online. Yes, you can
(56:59):
locate us on Twitter, Facebook, and YouTube where we are
Conspiracy Stuff. On Instagram we are Conspiracy Stuff Show. Please
if you like this episode, head on over to Apple
Podcasts or wherever you listen to the show and give
us a review. We'd appreciate it if it was I
don't know, five stars or more, but you know, we
get it. We'd love to just get your feedback. That'd
(57:20):
be wonderful. Thank you. Please do that. If you don't
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(57:41):
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(58:02):
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(58:25):
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(58:47):
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From UFOs to psychic powers and government conspiracies. History is
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learn the stuff they don't want you to know. A
production of I Heart Radio. Hello, welcome back to the show.
(00:25):
My name is Matt. Our colleague Nol is on an adventure,
but he will return soon. They call me Ben. We're
joined as always with our super producer Paul Mission Control decond.
Most importantly, you are you, You are here, and that
makes this the stuff they don't want you to know.
We go to some pretty dark places in the show, Matt,
(00:46):
especially recently. Uh this is uh, this is one where
we can kick our feet up in the beginning and
talk about the finer things in life, you know, because
because uh, despite at least my background here, as I
move around this room, uh we I would say, you
(01:08):
and I have some refined taste, right and most people do.
What are what are some examples of stuff that you
what are some examples of stuff that you're like willing
to spend a little extra money on for the quality?
The most Delicious of the caffe Also, I brought a
(01:29):
few things here, Ben, I love it. Peteret, the most Delicious,
Hazel nut wafers. They're so good and fine art. Oh,
a fellow intellectual, I see, now, those are all Those
are all fantastic examples. Dude, I wish I had. I mean,
(01:52):
I've got a bunch of creepy old books, of course,
but that's a little niche. And you know you nailed it.
Those are excellent examples. And almost everybody, I would say,
not just the people listening today, We all have refined
taste for like at least one or two things or another.
(02:13):
You know, you might be really into classic cars. You
don't care what. You don't care a whit about coffee,
but you need to have a good classic car. You
might be a sneaker head. You might only have limited
release you know Jordan's. You might spend a lot of
time and income chasing down limited release music or rare books,
(02:33):
or expensive clothing or symbols. Get it, Oh yeah, Ziligion symbols.
One of the world's oldest, continually functioning companies. I think
actually might be the world's oldest. And they are mass
produced for the most part, but there are some, there
are some rare children. That's awesome, and you know it
(02:55):
might be like, um, we have a pal a friend
of the show, the one and only Mr Ramsey Gunt
who as a producer here with us uh in he
has a particular, particularly refined taste for Japanese whiskey. And
I know it's a whole thing. It's old genre, but
with all of the examples that you and I are naming,
(03:19):
each of those has become the foundation of a massive
global industry, and today us you beautifully set us up
for exploring one of the most high end, most mysterious
of these industries, the weird world of fine art. It's
a place picture it, fellow conspiracy realists, where the rich,
(03:39):
the creative, and the criminal mingle and the oddest of
then diagrams, a business that orbits the lives of some
of the world's most powerful people. It's a world that
is alien to the vast majority of human beings alive today,
and honestly, many of the art world's insiders hope and
pray that it's stays that way forever. Why well, uh,
(04:03):
here are the facts. Yes, uh so, this art world
that is rather you know, foreign too many of our experiences,
is actually vast, very very large, much larger than you
imagine in your head. And probably that you assume, uh,
and it's always been I don't know. There's there's a
(04:25):
fascination to it. If you think back to films that
you've seen, anything from Oceans eleven to I don't know, Ben,
you'd have to name like a few other of these
Bond films. There's this aristocracy to to this stuff. Um,
you know, and you you just imagine the money in
(04:46):
this space because you you may, even if you don't
know much about the art scene, you may have seen
galleries or auctions where just millions and millions of dollars
are being thrown around at art and you think, why right,
and you you nailed like, you nailed it. I love
the I love the image. It's a trope now of
(05:10):
people aggressively bidding for something. I was just playing finally
Uncharted four if you be Uncharted series. Yeah, and there's
a there's there's an auction scene. This is not a spoiler,
but there's an auction scene where people are trying to
bid on an artifact. We'll touch on the world of
(05:32):
antiquities a bit today too. I suspect and there's a
lot there, Yeah, exactly, and it's beat for beat. The
scene you see in films where there's like one guy
who's holding up his little you know, his little sign thing,
you know, like two million, Do I have dow million
two million, two million, three million? Or do I have
(05:54):
three point five? Three point five? And then you know,
some other guy makes a stink face and he's like, yeah,
three point five, and then it just keeps going, and
then you know, inevitably there's it's usually I think the
bad guy who just gets tired of the cat and
mouse game and throws up their little thing and their
little paddle and just names of stupidly high number and
(06:17):
they're like five hundred billion dollars and everyone's like, oh wow,
dang uh, Now we have to do a heist. And
there is a reason for pushing up the price of
art in that way that I'm sure we'll be talking
about later this Oh boy, yeah, I mean, it's it's
(06:39):
a contradictory world, isn't it. It's also when there has
long been a subject of special fascination for the disciples
of the dismal science economist. At the most basic level,
the art market is it's just a bunch of people
buying stuff. It's a bunch of people selling stuff, and
they're just happened to be trading in works of art,
(07:01):
or we could loosely call them art related services. There
are two parts, two big categories. The primary market that's
where new art hits the scene, and then the secondary
market that's for art that has been sold at least
once before. And the art market it's not the same
as buying a used car. The used market or the
(07:25):
secondary market is where you see a lot of the
big money changing hands because the price the secondary market
is usually going to be dictated by the price at
which a given piece sold the first time around. Um,
but not quite. There's a reason the economists like this
well without getting two in the weeds, eggheads dig it
(07:47):
because it involves so much more than just supply and demand. Yeah,
if you imagine with the Zildian symbols, You've got certain
components that make this thing up, you know, different metals
that are melted down to then create this thing, and
it's it's uh, I'm man, I might be I might
be stretching here a little bit, but I'm just imagining that.
(08:09):
With with art, it is something that is created out
of those components, but it's a brand new thing and
you have to value has to be placed upon that
part of it, and that value is very subjective. Yeah,
beautifully put. And I love I love that you're bringing
up the aspect of the components there, Matt, because let's
(08:32):
take that Zilgian example, which is awesome. You can all
you can predict the cost of the components, right, and
then you can you can predict the amount of labor
right required to make one symbol, and then with that information,
you can predict the price you can sell it at,
and then you can predict the profit. But in the
world of art, like, it's such a good question how
(08:55):
much did the canvas and the paint cost for the
Mona Lisa, right, because you're not buying the cost of
the paint at this point. Uh. It's It's a fantastic
point and it's something that economists spend a lot of
time on because of that subjective value. How do we
how do we quantify it? How do we put a
(09:15):
number on a non quantitative thing. That's why the art
world has elements of what they would call a prediction market.
The art in question has kind of a fluid, fluctuating
financial value, and that cultural value is a huge piece
of this. You know, like, um, the right real world
(09:36):
circumstances can massively increase the value of a given artist work. Sadly,
when they die, that that has that becomes a big deal.
We can talk about that. And um, maybe when the
movers and shakers of the art world, like an influential
critic says, this is the new boss Scyatt, right, or
(09:57):
this is this is the next you know, Free to
Carlo or something, then boom, people want to be someone
who already had their finger on the pulse. Uh. This
this also can happen with things like beanie babies by
the way, yes, oh yeah, and magic cards. But it
is it's weird to think that value can be generated
(10:18):
out of nothing from a piece a single piece of art,
because of it's like singular cultural value. But then similarly,
it can be placed on the creator of that art, right,
all of a sudden, anything this artist touches is going
to be elevated up to that level, which is a
I don't know. It's so strange to me that both
can can occur and the only way that that's generated
(10:40):
is by other people deciding that that artist or piece
of art is worth x amount of millions. Yeah, and
you know, you and I are lucky enough to know
a lot of phenomenal artists both as just friends of
ours out side of of the orbit of this show,
(11:01):
and then also, and I'm grateful for this, we have
come to know a lot of amazingly talented artists through
this show, specifically through stuff they don't want you to know.
And it always I don't know about you, man, but
it always makes my day when someone says, hey, you know,
I listened to your show while I'm sculpting or doing
iron working or painting, and here's a little thing that
(11:24):
I thought you guys would like. And when I see it,
I have to be honest, I hope this doesn't come
back to bite us. But usually when I see those things,
my first thought is, damn, that is so much better
than the actual show, because the level of accomplishment there
is is stunning. Well, you know, shout out to Turbo
Benson first of all, but also this piece of art
(11:45):
that I held up, this is an original nagel, like
a Georgia nagle from It's a local artist here in Georgia.
I have to in my collection and it is seriously
amazing stuff, So look out for it. It'll be going
on auction sometime in that's amazing. Well you say that now,
(12:06):
but we never know, and we the reason we never
know is because there's another there's another weird thing that
comes into play in the economics of the art world.
It's called the greater fool principle. It means, yeah, somebody
will pay a certain price for something, even if it
might seem crazy high, because there's an assumption, let's be honest,
(12:27):
a bet made that later they'll be able to sell
it to somebody else for a higher price, and that
person will later often attempt to do the same. So
it's kind of like a snarky name for what happens.
But what what it's implying is that it might be
foolish for me to buy this thing at this price,
but there will be someone more foolish than me in
(12:50):
the future, and somewhere down the road somewhere. Surely I
am not the world's dumbest person. Or are we saying art?
Art is of really long game hot potato um for
some people? Actually, yeah, you know, for some people it is,
and of course for others this is just something that
(13:12):
is of great personal, historical, or cultural value. You know,
like sometimes you'll see well healed philanthropists buy up, buy
up pieces from an artist who they feel is underappreciated,
who comes from their hometown or their home region, or
(13:33):
their you know, their home community, and they'll do it
because they want to inspire the people living in that
in that place. You know. Um, I'm just making up
an example, and I have a specific one. But let's
say there is a multimillionaire maybe in Botswana or maybe
in Panama or whatever, and they want to have a
(13:56):
museum with local art to enrich the culture of the
bull living in Botswana or Panama. Then they might spend
a lot of money buying this stuff and making a
museum for it. And to them it's just a good deed,
you know, there's nothing crooked about it. But when we
look at stuff like a Stewart Plotner's work for American anthologists,
(14:19):
we see that this is a distinct, strange financial ecosystem. First,
it's notoriously opaque. There is absolutely no way to get
a full, comprehensive high level look at private sale data.
Absolutely no way, zero, zip, zilch way uh. And added
(14:39):
to that, about half of the global transactions in the
art world are thought to be composed entirely of private sales.
That's the last part. Let's put emphasis on global there.
Oh it's huge, it's huge. Let's talk stats and just yeah,
just to get into that what we're talking about here,
we mentioned all the auctions and everything that's often in
(15:02):
public that's often like promoted like, hey, on our auction.
This is happening. Look at all of the transactions that
are occurring here. When we're talking about private sales, it's
just hey, Ben, I've got this nagle, Ben goes Okay,
I'll take it for this amount of money done. That's
a private sale. That's it's over. Uh, and who knows
how much Ben paid for it? But still like this
(15:22):
is crazy. I certainly don't tell Paul when I'm selling
it to him. I haven't had it for a year yet. Uh.
Just some weird rules in there too. But let's know
many of these stats, like you said, Ben, throughout last year,
the global art market was valued at fifty billion dollars.
(15:42):
Fifty billion dollars for art, Okay, and uh, when we're
talking about that lack of transparency like that we're discussing
right here, fifty billion is probably not quite it could
be a little more, a little less, who knows, right,
But we're gonna we'll we'll use it as our running
number at least for this conversation. But here's the deal. Uh,
(16:04):
that number, fifty billion is actually significantly less than what
was spent in the previous year before COVID in twenty nineteen,
it was around sixty four billion dollars, So fourteen billion
got knocked off the top when galleries and other places
were closed and auctions weren't able to be you know,
produced the same way that they were in the previous year.
(16:27):
And people are still guessing, right again that you pointed
out how muddy that number is because there is zero
accountability in the private, the private aspects of this market.
This number, this fifty billion dollars, go ahead and doctor
evil your pinky up there with us, folks, is uh.
It represents somewhere around thirty one point four million known transactions,
(16:52):
meaning thirty one point for million different individual sales of
art that are known to have occurred over the course
of the US has the most skin in the game
or pain in the canvas. They have the highest total
share of the global market. China has the highest share
of fine art auction revenue. That's the stuff. That's the
(17:13):
stuff you're talking about, right, Matt, The money that churns
when outfits like Christie's or Southby's hold auctions for picassos
and mountainets and what have you. So we've explained a
little bit about the sheer financial depth of the market,
but this also sets us up to talk about the
ways in which that market might be smaller than outsiders. Assume.
(17:34):
Here's the simple truth. We'll just uh, let the quiet
badger be the loud one in this part of the conversation. Yeah,
most people can't actually afford to pay millions of dollars
or even hundreds of thousands of dollars for a single
piece of art unless they have like a clear plan
to flip it for profit. The luxury of buying a
(17:55):
piece of art for with historical cultural personal value and
then just like hanging it up in your mansion or
somewhat cottage that that's or on your yacht, that's a
privilege that's restricted to very very few people in modern
society because of the way inequality works, and like every
(18:16):
other industry, the community gets smaller and smaller and smaller
at the top, which means that the movers and the shakers,
they're increasingly likely to personally know each other, or if
they don't personally know each other, they're increasingly likely to
know another individual's position in the hierarchy, including their big
(18:36):
sales and purchases. That's why sometimes you'll hear somebody described
as like a minor correct contemporary every y'all, you know
what I mean, Like that they bought, they bought a
couple of war hauls, but they're not a big fish
to the big fish. How much money just to set
this up are we talking about? In the auction house,
(18:57):
Christie's sold Da Vinci Salvatore Monday for four hundred and
fifty point three million dollars. That's one painting, that's one sale.
That's a lot of money. That's more money than most
people will ever see in the entirety of their lives.
And it was sold to someone in the upper echelons
of the Saudi government or within the family that a
(19:20):
close associate of the Crown Prince. I mean, that's how
you can say Saudi Government and Olive Garden have the
same same tagline. When you're here, your family, but we're
just talking about this hierarchy. There's a story you can
read about from several years ago where Daniel Ratcliffe, you know,
Harry Potter, you say, this guy's probably got some money.
(19:44):
This guy is really well known. Uh. He was attempting
to buy some fine art, but he was refused by
I believe the person running the gallery, as in, like,
I'm we're looking for, you know, someone a little more
suited to purchase this are like someone within the art world, right,
the insider he got new moneyed, he got new moneyed.
(20:06):
Uh again like I don't know the full story. I
was reading it in one of the articles I was
going through today. But he eventually got to purchase the
painting because the artist themselves found out that it was
Daniel Radcliffe and was like, oh, yeah, you can buy
my painting. But the the gallery or the people selling
it wanted to keep it insular within that high art world. Yeah.
(20:28):
Oh wow. And and that sounds like if the artists
hadn't have known, they would have had no control over that. Interesting.
Interesting that kind of avoids the free market idea that's
so often touted. These two examples show us some pretty
fascinating stuff. In the case of that Da Vinci this
sale was unprecedented. It blew it blew all the previous
(20:52):
records out of the water, and it emphasized something that
happens in the secondary market. Artists can become incredibly profitable
once they've died, because you know, they're not making any
new sculptures or collages or paintings. The supply is inherently limited,
and if demand increases for any reason, prices can skyrocket.
(21:12):
And yes, to be fair, when we're talking about the
Da Vincis of the art world, we're kind of talking
about the equivalent of blue chip stocks. Their priced way
above what most other art in the world would be priced.
And as you can imagine, I've gotta talk about controversies.
We're not even the crazy part yet. With this much money,
with this much opacity and play, there's more than enough
(21:34):
room in the shadows of the auction house for crimes
and conspiracies. It would be actually would be pretty astonishing
if this wasn't the case. Art theft is a big deal.
We already talked about epic art heist. Those are just
a small slice of the pie because we don't know
much about the successful heist where something got lost or
(21:54):
got replaced by a forgery, which does happen more than
you think. Uh, there's a thriving black market in stolen
goods and in antiquities. This stuff affects everything from like
an archaeological dig in the hinterlands of Old Samaria to
the world's most prestigious museums who may not know that
they are uh participating with the best of intentions in
(22:19):
criminal acts. So and we've heard from curators who listened
to the show who have told us, like people work
in the world of museums have told us, figuring out
the provenance of an artifact can be can be really challenging.
But people are making their best faith efforts to, you know,
help make sure they're not like aiding in the betting
(22:40):
war crimes, which is probably something a lot of folks
don't anticipate when they're getting into that career. But the
truth of the matter is it's a huge problem, especially
with museums and antiquities. Oh, for sure, I would direct
everybody over to the Atlantic dot com to read the
tomb Raiders of the Upper East Side. There's a story,
(23:01):
and well, there are many stories within that story, but
one of them is about the Metropolitan Museum of Art
in New York and how they purchased something from Egypt
that was you know, a a mummy less coffin, right,
and they allegedly didn't really under fully understand the providence
of this thing. But it was found after investigators proved
(23:22):
that this this thing was just taken, this coffin was
just stolen and it was made out of almost all gold,
and the mummy that was inside of it was just
dumped into the river and it was there were false
documents set up to then sell it to the Metropolitan
Museum of Art. But they like, they didn't really check anything.
(23:45):
They just went, oh, here's an antiquity from Egypt, and
they just bought it because they knew the value that
it had and they didn't even check out, you know,
how it got to them or who who raided a
tomb essentially to get it to them. Um. And it's
all about for me, it's about looking away when you're
(24:07):
the person making a purchase, because you know the inherent value.
You know, you can flip something. You look away from
the actual providence of the thing. Yeah, if it is
the actual thing. Because one of the other big big
problems is is forgery. You've probably heard that old chestnut.
Great artists steal, while you know middling or mediocre artists copy.
(24:29):
There's truth to that, and artists themselves have spoken about
their influences, and different people in the art world go
go pretty far and acknowledging when a certain piece of
art seems derivative of some earlier work. And this happens
in any creative endeavor, from music to writing to dance.
Imitation of that sort is both expected and openly acknowledged
(24:52):
by most people involved. But it crosses the line when
a talented but unknown artist turns to the dark side
and make fake callows or fake GEORGEO o'keefson sells them
as the genuine article. This is forgery. It's a continual,
ongoing crime, and there are countless examples of very successful
forgery operations. You could almost make a yearly list, uh, Like,
(25:17):
I was looking through this and I found year by year.
I didn't found one for twenty twenty one, but I
found from twenty on back year by year list of
like the most successful forgery. So it definitely happens. But
today's episode is not about forgery, even though it's inherently
a conspiratorial crime. It's just the tip of the paintbrush.
(25:38):
For decades and decades, if not centuries, the world of
fine art has been home to another larger conspiracy. Conspiracy
that is arguably and art all its own money laundry.
I know, when are we talking about? Yeah, we'll tell
you after a word from our sponsor. Here's where it
(26:04):
gets crazy, okay, Well, the fixes in the world's most
high ticket art is part of a global business with
tons of secrecy and a laughably small amount of toothless regulation.
Makes it a great place to hide money if you're
trying to avoid the tax ban, or if you've got
a lot of dirty cash and need of a good scrub.
(26:25):
This is where a pretty cool guy named Noriel Rubini,
economist and why you professor comes into play. What I
love about this guy, Matt. He's got a street name,
which not all professional economists do. His street name is
doctor Doom because he he made a lot of very dire,
(26:46):
incredibly accurate predictions about the housing crisis and financial crash
of the early two thousand's. So people column Dr do.
I wonder what he's saying about the housing market right now?
Um Doom and gloom? Maybe who knows I don't want
to look okay, but what he shows us is how
one person, an individual can purchase a really expensive piece
(27:09):
of art worth let's say a million dollars, and they
can pay cash, just slide it on over, and there's
no need for them to register the transaction because there's
because well in some cases you could get around it basically,
and there's virtually no tie to the financial system when
a transaction like that occurs. Yeah, we don't need a
(27:33):
lot of paperwork involved. Did this you know what I mean? Uh.
The opaque nature the art industry also makes it a
haven for tax evasion and lucrative pieces of art are
exchanged all the time, but not in the way you
might think. Because the artwork might never physically change hands,
it can be stored at these things called free ports
(27:55):
for an unlimited amount of time. And quick explanation, I
think for some of us in the crowd who might
not know what freeports are. But yes, I was gonna say,
Tenant is where I think a lot of a lot
of folks get hip to it. Uh, don't feel bad
if you if you haven't seen Tenant and you don't
know what freeports are. Because the truth of the matter
(28:15):
is that there are a ton of people who would
prefer that you never actually think about these things. So essentially, like,
you know, depending on where you live, folks, you probably
have some kind of public storage business in your neck
of the global woods. And you know, you know what
it is. It's a bunch of like tiny garage looking things.
(28:37):
And when people have stuff that they don't want to
throw away but they don't have room for in their
house or apartment, they rent one of those things, like
by the month or by the year to store their junk.
Very wealthy people do that too, but they do it
in a much more sophisticated, expensive manner. Freeports are super
(28:57):
secure warehouses for collections of millionaires and billionaires. This isn't
just art, it's not just Picasso. It could be straight
up bricks of gold. It could be golden gets, it
could be vintage ferraris, it could be crazy expensive wine. Uh.
These things are found in countries where you would expect
a lot of very wealthy people to store very expensive things. Switzerland, Luxembourg, Singapore. Uh.
(29:24):
And it's very advantageous to you if you want to
avoid paying the government anything because those goods. When they're
stored in a freeport, they're technically still in transit, so
it's kind of it's kind of like they told FedEx
to say, just tell me it's always on the way. Yeah,
(29:45):
it hasn't quite arrived in the UK yet, so you
don't have to pay those taxes when it was being
shipped from the US. Well, it's just whatever it's in transit. Yeah.
A while back, The Economist reported that of the freeport
near the Geneva Airport, just on its own is suspected
(30:06):
to hold the equivalent of a hundred billion US dollars
in art. So not counting the ferraris, nor the wine,
nor the in gets of gold and platinum. This stuff
can be stored years, decades. There's really not a time limit.
There's one other interesting mechanism freeports. We have to throw
in once something is inside the freeport. Like let's say
(30:29):
a piece of art is inside the freeport, a bend
bowl in original I make a lot of art, but
I don't sell it. Let's somehow it ends up in
a freeport. That art can be sold privately and anonymously
to other buyers, and it never has to leave the warehouse.
They're just trading money using that thing, as you know,
(30:49):
sort of the mad live in what they're buying. WHOA,
so you yeah, that feels like a good way. You
can't really clean money that way, but that's a weird thing.
Well you you can in some ways. Rubini compares this
(31:10):
dr Doom, compares this to the role that Swiss banks
used to play. He told CNN. You know, they're an alternative,
he said. Maybe an alternative is just to buy an
expensive piece of art and hide it in a freeport
in Europe. Nobody knows what it is that becomes the
equivalent of a safe deposit in a bank previously in Switzerland.
The other thing is, no one is sure about the
(31:32):
extent of this problem. Even the people making money off
of it think about it. No one knows the origin
of the dirty money. It could be drug money, it
could be financial crimes, robberies, trafficking, profits, you name it.
Also know when sure how often it happens, and no
one is sure how deep it goes. It's definitely weapons sales,
by the way. Uh So The n y T New
(31:54):
York Times ran a story earlier this year about a
very surprising case. You can read right now, if you've
got enough free New York Times articles, Yeah, you can't
get a subscription if you want to. Uh, but I
was able to read this. There's an accused drug dealer.
His name was Ronald Bellichiano, and he was in Philadelphia
(32:19):
and the Feds raided his house. They found, you know,
the things that you would find of a suspected drug
dealer if they are in fact a drug dealer, Lots
and lots of marijuana. They found about two point five
million dollars hidden in a compartment beneath a fish tank,
which you can see a picture of. It just looks
like a box, and I had cash stuffed in it
(32:41):
with an aquarium on top of it. But here's the
other thing. They found art, real art, like expensive fine art,
a whole cash of it. Yeah, they did. At a
storage feunit, not a freeport, just like a regular public
storage unit, just a few miles away from his house.
(33:02):
They found thirty three paintings stacked up. They also have
found fourteen paintings in his home. This wasn't from like
his kids high school painting class. This is stuff like
Brenois Picasso, Salvador Dolli, and belt Seato had used the
art to launder some of his drug cash. He purchased
(33:22):
the works from this gallery near Philadelphia's Museum Row. It's
a solid operation basically until it isn't, and the NYT
sums it up by saying buyers typically have no idea
where the work they're purchasing is coming from. Sellers are
in the dark about where work is going. None of
the purchasing requires the filing and paperwork that would allow
(33:44):
regulators to track art sales or profits. It's distinctly different
from the way the government can review the transfer of
other assets like stocks or real estate. Now we need
to talk about the other thing, and I think it's
something people in the audience were anticipating. Power is not
always limited to money. Money is just a medium of
exchange for power. It's a coupon system. It's symbolic. The
(34:07):
fine art market has also been seen as a way
to pedal political influence, and the most notable accusation in
the West in recent years for this kind of thing
centers on the administration of current US President Joe Biden,
well kind of on him, mainly on his son, Yes
Hunter Hunter Biden, that you've likely heard a lot about
(34:30):
over the past few years, He's attained something that many
artists have not, uh, a level of fame, a level
of success that that many can only dream of. He's
represented by the ultra powerful George bars or b r
G S Gallery in that's in New York. Been Yes, yeah,
(34:52):
that's in New York, and uh, he has his works.
His art is expected to cost anywhere from seventy five
dollars to five hundred thousand dollars. Again, Hunter Biden, son
of the current president, right right, and experts, not just
political opponents, have raised ethical concerns here. They're arguing that
(35:14):
people might not be paid this much just because they
like the art. They may be doing this because supporting
Hunter Biden might establish a line of communication and influence
with his father, who is currently one of the most
powerful people on the planet. And in fact, you know,
I found one prominent critic, Walter Shab, because I wanted
(35:38):
to make sure that the ethical concerns weren't just like,
you know, politically motivated stuff. So Walter Shab was an
interesting critic of this to me because back in the
day he was actually the director of the Office of
Government Ethics under the Obama administration. So you can you know,
make uh some assumptions about his own politically means, and
(36:00):
he said, I find it deeply troubling. We've got a
family member clearly trading on his father's name. The man
has never sold a piece of art before, has never
even juried in a community center art show, but suddenly
he's selling art at fantastical prices. There's simply no way
anybody paid seventy five grand for anything other than his name.
That sounds kind of cold and uh. In his defense,
(36:22):
Hunter Biden did appear on a couple of outlets. He
was on an art podcast a while back where he said,
you know, he was surprised, but he was happy. He said,
I would you know, be happy if it's sold for
ten dollars, said painting was away for him to personally
find soulas, which is something a lot of painters in
the crowd today can agree with. Uh. Yeah, but in
(36:44):
the state, you can't argue with the fact that the
reason it's that expensive is because of who he is.
I mean, it's that it's that it's that value that's
placed upon the art by the outside right, and when
he's represented by a powerful dollary, it doesn't hurt. I mean,
it definitely has to play at least some role in
(37:06):
the success here, partially because when people are buying a name,
they're they're also buying a story, right when you buy,
when you buy art, you're also buying the story of
the person who made it, the story of how it
traveled from someone's mind through all these various adventures to you. So, yeah,
(37:30):
it's not a crime. It's just ethically unsound to a
lot of critics. And really it's not a crime because
the legal system doesn't have the vocabulary to articulate this
as a criminal offense. But that doesn't make it not shady.
And to be fair, Hunter Biden is currently embroiled in
other controversies. The U. S. Attorney's Office is digging into
(37:51):
his taxes. He stated that publicly there were corruption charges
raised by the former Trump administration during the la selection.
Biden administration dismissed him as a smear campaign. Hunter Biden
is probably like the thing about Hunter Biden is he
doesn't need the money, you know what I mean, He's
(38:13):
not sweating the seventy five grands. Probably. He did join
the board of a place called Barisma from to twenty nineteen,
where he was making an estimated fifty grand a month.
So if he chose art over that, he's he's following
his passion rather than financial motivation. But there's a whole
(38:34):
thing with Ukraine there with Undiden, and there's a lot
of stuff. There's a lot, there's a lot, there's a
lot with Kraid. Almost I almost texted you and know
about this. But given the way that Russia has amassing
troops on the border, I wonder what's going to happen
around the end of the year. Honestly, dude, there's so
(38:57):
much posturing going on both sides. I don't know. NATO
hasn't no first strike thing, and they definitely I don't know.
And and also earlier this July, Vladimir Putin published an
essay about how they're Ukraine has always been part of Russia. Yeah,
like they're they're of the same stuff, basically, they're spiritually. Yeah,
(39:22):
So we'll see what goes on there and maybe that's
an episode for the future. But regardless of what goes
down with NATO, Russia, Ukraine and crimea, uh and what
revelations come out about corruption on the western end of
that that, we do know one thing, No matter what
(39:42):
wars occur in the future, the problem of money laundering
is only set to continue to grow to expand. At
least that's what multiple governments assume. We're gonna pause for
another word from our sponsors, and then we'll return to
explore a little bit about how these institutions are at
least saying they're going to fight back. So, as you know,
(40:08):
Matt and I aren't just podcasters. Matt is a tremendously
accomplished musician. I write constantly. We're in the world of
creative things. We're also based on this podcast, excited to
announce that we're getting into the world of visual creations,
not with YouTube, but with fart. That's right, Ben and
I are proud to be sponsored by financial alternatives to
(40:29):
real transactions or fart. It addresses a problem that I'm
sure many of us have encountered in our various side hustles.
Where do I put all this drug money or let's say,
even bezzled millions from a charity and need to take
it out of the oven of crime to cool it
off for a while, and all the usual tax havens
are closed down. Yeah, Plus those stick in the mud
tax men are prying into all the empty condos we've
(40:51):
been by, and casinos. She's casinos mean that some mob
gets it cut and you get stuck with tons of paperwork.
That's why we recommend fart up. Until recently, the best
way for us to move dirty money from things like
regime change trafficking, badger smuggling, or stamp fraud was to
buy regular art. We'd send one of our agents to
a South abys tell them to put a few million
(41:13):
into something whatever really and boom call it a day.
But those non criminal, non fat cats in the world
of law enforcement hate to see a good hustle folks.
They're cracking down on good old fashioned drifting and it's
time for all of us to get ahead of the game.
That is where fart comes in. Instead of physically buying arts,
all you have to do is pull up the handy
(41:34):
fart app. Then just enter the amount of money you
need to move, make up a fun nickname, and make
sure you never use that nickname again never. You'll get
an anonymized list of private collections and freeports all across
the world, tailored to your criminal needs. Click what fits
your needs best, and fart takes care of the rest.
You don't have to go pick up the painting. You
don't even have to see it. You can even disable
(41:56):
the thumbnails if you don't want to be bothered with
looking past the price tag. No pesky regulation, no nagging,
and no cries for accountability. Let's say later you need
that cash and maybe you want to make a hefty profit. Now,
all you need to do is set up price for
your art wherever it's being stored. When in just a
few days or hours you'll get an offer. Here's the
fun part, folks, That buyer could be anyone. It could
(42:18):
even be you under a different name, offering a higher price.
With FART, you can take the art from the museum
and turn it into a laundromat, just like the old
masters Shirley intended. And there's a special limited time offer
here just for listening to stuff. They don't want you
to know. The good folks at FART are offering fifteen
percent off the blood price for your first transaction. All
(42:38):
you have to do is type in the promo code
I am a bad person at checkout again for fifteen
percent off blood price. Enter the promo code I am
a bad person at checkout. The fart app is not
available on p p P poor people phones. The makers
of fart are not responsible for any prosecution, bad karma,
dark knights of the soul, well deserved revenge, governmental coups,
regime changes lead pois need physical seizures. Financial seizures come
(43:02):
up in Shenanigan re or lack of honor among thieves
as far as a subsidiary of illumination Global Unlimited and
we returned. Yes, governments are paying more attention to this
in recent years for a couple of pretty compelling reasons. First,
business is booming. You know, earlier, Matt, you and I
(43:25):
were talking about how the pandemic made a drop in
the overall market. But the big ticket items are selling
for increasingly higher prices, and this means that in a
single transaction more money is moving now. It's like an
illegal portive entry to the land of legitimate cash. No
need for paperwork, no need for disclosure, and no way
for the law to look into things too closely right
(43:47):
now at least. And Second, many of the traditional money
laundring avenues have been compromised or shut down. Think about it.
The Panama papers a little while back, the Pandora papers,
people the world, The public is waking up to a
lot of these traditional ways of just moving that money around,
real estate, tax havens, all of these things. The places
(44:08):
where both the incredibly rich and the high level criminals
where they used to stash all that cash, they've just
they've fallen out because people know about them, and also
because there's increased regulation on those things or rules, especially
if you're doing a transaction from one country to another
country where that you know, money would have been stored
(44:28):
or moved or cleansed. It's just not happening right now,
at least not to the extent that it was. Yeah,
and so this also means that a certain demographic of
the world's most successful scoundrels are suddenly discovered a deep
appreciation for art. Actually the expensive stuff that's cool. You
(44:49):
gotta feature soul. So what is to be done in
a world where it's generally acknowledged the taxes are already
for the little people quote unquote, and corruption is i
would say, a widely accepted open secret. How can government
institutions hope to fight the almost entirely invisible kaiju of
(45:09):
global financial crime in the art world? Uh, good news, Matt,
You and I looked into this. We know that the
US is taking a stab at it with some new
proposed bills um essentially stuff like the Bank Secretary Act
b s A and a m L and something called
the Combating the Financing of Terrorism Laws. The Anti Money
(45:32):
Laundering by the way, yes anti money, yes, thank you,
anti money laundering. The b s A already requires people
who deal with precious metals, stones and jewels to report
activities that seems us to the authorities. Like think of like,
you know, you buy diamonds and you're pretty sure someone's
trying to sell you blood diamonds, you would report that,
(45:55):
or they're stolen, you would report that. The idea here
is to expand those report and requirements to art dealers
in the US. Some you know, some shady entity is like, hey,
I want to sell this to two hundred million dollars
And you're like, is that wasn't that painting stolen? Well,
(46:15):
I don't know where I came from, you know what
I mean, it's in my gallery right now. So the
idea is, and you know again, gallery owners and art
buyers and collectors are not not everybody is in on this.
Everybody not everybody. But now we have to look across
the pond. We know that the European Union Commission had
(46:39):
issued an anti money laundering directive in eighteen in June,
which also expanded the coverage of regulation. So they started
they started counting people trading in the world of art
as obliged entities, meaning people who had to report suspicious activities. Uh.
And they also had to reported if they were storing
(47:01):
art in free ports. If the value of a transaction
or a group of linked transactions equaled ten thousand euro
or more, that's that's what they want to happen. Well,
and they're they're actually taking some of this stuff into effect.
You can read about it right now. Some of the
lazes news coming out of the UK has to do
(47:21):
exactly with this, and that number in particular ten thousand
euros or more is so low compared to what the
other regulators and other countries are trying to establish. Most
of the others, like with the United States and uh
few other European countries are setting it setting that minimum
(47:42):
as like you know, it has if it reaches this
amount of money or more, then it has to be
reported around a hundred thousand dollars US. So this is
like you know, most of the other countries are looking
at transactions that are ten times the amount that the
European Union wants to look at. Yeah, and like you said,
this is something that's still influx in some parts of
(48:05):
the world where in the early days of this kind
of regulation. In other parts of the world, it's still
kind of in the idea phase. Can read a pretty
great summation of US laws in various law review outfits,
and we have to point out, of course, not everybody's
on board. In the view of some art dealers, the
legal changes in the US and Europe would strip vendors
(48:29):
of one of their big selling points, the ability to
offer anonymity to clients, either on the buying or selling side.
And this anonymity, the desire for anonymity, despite what surveillance
states would have you assume, does not necessarily make somebody
a criminal. You might just want to sell one thing,
(48:50):
and you might be doing it because you actually need
the money and you don't want people to know, or
you might be doing it because it's just one piece
of a larger collection and you don't want to get
bombarded by other people who want to buy other stuff
in your collection. You know what I mean, Like, privacy
is a currency all its own, so those parts aren't
necessarily criminals. Uh. And in the years back, right back
(49:15):
in the day, the fine arts market was often seen
as a playground for the the wealthy, the indolence well
to do, the sociolites and so on. There was no
real drive on the part of the authorities to police it,
to apply laws to it as strenuously as they would
to something like banking, which they could also use some
(49:36):
help regulating banking. But whatever, Only time will tell what
happens to this practice, because for now it's a wild West.
It's a gold mine baby. Right now, with the appropriate connections,
you can easily longer money through fine arts. Your odds
are getting away with it again for right now are
actually pretty good if you get caught, at least a
lot of cases I've seen, if you get caught, you're
(49:59):
probably getting due to something else you did, the actual
gun running, the actual embezzlement, the trafficking or whatever, and
then the art as a laundering mechanism only gets discovered
later in the investigation, Like where they where they busted
the drug dealer and they were like, Wow, this guy's
great taste, man. Yeah, that's surprised when you open the
(50:23):
storage unit and you're like, oh my god, there's thirty
three paintings in here that are all worth you know,
hundreds of thousands, if not millions of dollars. Why can't
this happen with like grim wise books of the occult,
obscure reference works or comic books that would be cleaning
up my storage unit and you can just find all
(50:43):
my son's clothes, all of them. It would be kind
of creepy if I didn't know. You what do you
do with them? There? There's sentimental value, you know, right,
and kids grow so fast. What's the hey, what's the
shortest amount of time that a pair of shoes fit
the kid? The one of the latest ones. We've got
(51:05):
a minecraft shoes for the beginning of the school year,
so August, this past August, and he's completely outgrown them. Now, yeah,
that's pretty fast, all right. Well, as you know, I'm
a big fan of your kid. Uh. I think he
almost beat me at ski ball. We'll see, let's see.
(51:26):
I just got to enjoy my brief time in the
sun anyway. Uh, children's shoes aside things you find in
public storage spaces can always be weird, and that's why
sometimes they get robbed. But what we're talking about now,
this money laundering problem is all just the traditional old
school hustle. We have to admit that the rise of
(51:48):
new art things like non fungible tokens in f t
s can also produce opportunities for money laundering. In theory,
and only time will tell what happens with all those
nifty new technological toys. Assume you bring in the crypto
the crypto techniques, right, and you're talking about money laundrying
like it's a whole new world there. Yeah, yeah, until
(52:08):
people figure out who Nakamoto is, well, like we don't,
we don't know. Uh So for the more cynical folks
in the crowd, I would say myself included candidly. There's
also the issue of corruption in the halls of power.
A lot of people participating in these conspiracies also have
influence in the world of business and politics. We are
(52:30):
talking big fish capital b capital f It can be
plausibly difficult or even at times dangerous for you know,
regular authorities to make a fuss. It might even hurt
re election chances for some politicians, especially those that depend
heavily on private campaign donations, which can come from those
(52:51):
Capital B, Capital F, big fish. Yeah, if you've got
the money to, you know, hide away in art the
extent that some of these players do, and you can
imagine that a campaign donation isn't out of the question,
especially if it's gonna benefit you personally in some way. Yeah,
and art as an avenue for money laundering, really money
(53:12):
laundering itself, as as a kind of art form. These
aren't things that immediately impact the average person, so there's
not a ton of on the ground momentum to change
this dirty status quo. In fact, the majority of the
stories about this in the media kind of take this
wealthy folks are bad angle, which is honestly misleading. There
(53:34):
are scads get it Georgia natives of affluent folks who
legitimately just dig art or certain artists. It's either for
their own personal enjoyment, maybe it's a social flex to
talk about at the next fundraiser. And of course there
are people who rightly see this as a genuine, if
at times wobbly investment. At Matt, as we're at the
(53:57):
close of this show, I have to ask you with
this regular Asian. I know that we've both read up
on this. Do you think it will have teeth? Do
you think it will make a difference? Well, I think
back to that, to that example we gave of the
four and fifty something million dollars that was spent on
one painting, and that was done in an auction as
somewhat above board auction, right, that kind of transaction, I
(54:21):
think it will be easy to enact regulations on when
it comes down to the private buying that we outlined
up at the top. I think it's going to be
extremely hard for any regulator in any country to get
a firm grasp on those transactions, right because so many
are pre existing, you know what I mean? And how
do you list those as assets? Right? Like? Where where
(54:46):
do they enter the legal system? Right? There's a there's
an app out there, or at least one that's being
developed right now that's supposed to what is it art pass?
I think something that art pass I d it's supposed
to allow buyers and sellers of fine art to like
have their identity information to like hand it over when
(55:09):
you're making a transaction basically, but who knows if it's
gonna work well, or not. It's a group of Dutch
tech entrepreneurs who are creating it. You can read about
that in the art newspaper um. But there's that kind
of thing where like tech is trying to come in
to offer a solution of like, yeah, if dirty money
is a problem in the art scene, maybe there's a
way for us to exchange identity information without having to
(55:33):
get into regulation. And it's more of like, I don't know,
you can do it on the level of the transaction.
I see kind of like we're that we're going to
regulate ourselves to avoid overreach from institutions. Yeah, yeah, you know,
all the best to them. But you can easily see folks,
why so many people would be cynical about this changing
(55:55):
just because of the conflicts of interest involved, because of
the amount of money involved, and because of the um
potential for nepotism involved. Well because of the layers, right,
there are layers of shell companies that often make these
actual transactions and representatives of representatives of a group that
is actually working for the benefactor who's going to own
(56:16):
that art. Agreed, and so now, fellow conspiracy realists, we
passed the uh little auction gabbl to you, thunk, What
do you think? Do you have any personal experience with
the world of fine art? Are you an artist who
has uh seen some shady stuff go down at galleries?
(56:37):
Are you yourself curator who has been trying to keep
people honest? Uh? Do you find yourself whether you're in
this or outside of this? Do you find yourself also
assuming a cynical perspective here and if so why? We
would as always love to hear your thoughts and we
try to be easy to find online. Yes, you can
(56:59):
locate us on Twitter, Facebook, and YouTube where we are
Conspiracy Stuff. On Instagram we are Conspiracy Stuff Show. Please
if you like this episode, head on over to Apple
Podcasts or wherever you listen to the show and give
us a review. We'd appreciate it if it was I
don't know, five stars or more, but you know, we
get it. We'd love to just get your feedback. That'd
(57:20):
be wonderful. Thank you. Please do that. If you don't
like social media, there are other ways to contact us. Yeah,
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(58:25):
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(58:47):
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