NEW YORK (NYT NEWS SERVICE).- It began as a worthy experiment: a fund to create some rare financial security for artists by having them pool their paintings and sculptures and sell the work years later when it had appreciated in value. Everyone would share in the proceeds.
A for-profit company, the Artist Pension Trust, hatched the idea in 2004 and promised to store, insure and market the works in exchange for a cut of the revenue. The venture got off to a promising start, fueled by the involvement of art world luminaries like the former Whitney Museum director David Ross and well-regarded curators who recruited emerging artists from around the world.
Over time, the company gathered more than 13,000 artworks from 2,000 artists in 75 countries, with an insured value of at least $70 million as of 2013, according to company records.
But dozens of the artists now say they have deep concerns about the company. It sold very little of their art, they say, made only two rounds of small payouts several years ago and sought to change the contract to make them responsible for storage costs. Artists say that after they objected, the company all but disappeared and they lost track of where their art was being held, something they had expected to be kept abreast of, even though such notifications were not required under the contract.
“I found out that my work was moved to some secret upstate location,” said Diana Shpungin. “I still don’t know where it is.”
It turned out that much of the art, once stored in multiple locations around the world, had been moved to two major warehouses, one in Germany and one in upstate New York.
Some artists complain that many emails to the company have gone unreturned. The managers who ran various pools left the company and have not been replaced, leaving artists with few points of contact. The company no longer issues annual status reports on the pools to artists, as the contract stipulates.
“I really trusted it — it’s very alarming to me what’s happening,” said Marc Swanson, a Brooklyn artist. “I just want my stuff back.”
The founder of the company, Moti Shniberg, initially said in an email response to questions that he was unaware of any artists’ concerns, but later acknowledged some were disappointed. He said the fund remains “active,” but that he is looking for “a more cost-effective solution” or possibly for someone else to take over the collection.
“Currently, we are exploring options to pass APT on to a credible institution that understands the importance of this mission and the value of the sharing/risk diversification model,” he said.
Still, more than 140 artists have joined a chat room to share their accounts of disillusionment. Several have hired lawyers. One artist has sued, citing breach of contract. Another group of 30 artists in 2018 filed a complaint with a British regulatory agency, which declined to comment.
Former staff members say that the art sales could not keep pace with the cost of insuring and storing the artwork. Problems with storage conditions cropped up, they say. Staff turnover became endemic.
Auspicious Beginnings
The idea of creating a new financial vehicle to help artists began with Shniberg, an Israeli entrepreneur, who teamed up with Ross — who provided art-world bona fides — and Dan Galai, an investment banker and finance professor in Jerusalem.
“Our vision was to create a diversified financial structure through which artists could reduce the inherent risk to their future security,” Shniberg said in his written responses. He was well aware, he added, that it was “a risky undertaking.”
Given an unpredictable art market, in which artists rarely break out, do not benefit from auction sales and cannot count on long-term success, the pension trust offered an enticing model: When one artist got hot and sold work, all artists would share in the benefits.
The fund invited artists to contribute 20 pieces of their work over 20 years on the theory that some of the art would significantly appreciate before being sold. The contract did not specify when sales would happen, or project payouts. After 20 years, it said, artists would be able to reclaim their unsold works.
“It got people talking about this kind of collective action on the part of a large number of artists located around the world,” said Ross, who no longer works for the company. “I still think that’s a beautiful idea.”
The contracts gave artists the right to block lending their work for exhibition, though it did not give them the right to initiate lending, or commit to keeping them in the loop on where their artworks were. But over the trust’s first 10 years or so, artists said in interviews, arranging such loans was usually not an issue and they were typically told where their work was stored by regional directors who ran the various pools.
Those directors chose which artists to recruit by consulting with curators. Some of the artists quickly won recognition, including 14 who were featured in the 2008 Whitney Biennial, such as Edgar Arceneaux, Drew Heitzler and Leslie Hewitt. Richard Wright, another trust artist, won the 2009 Turner Prize.
“There was a bit of pomp around it at the time, talking about it being exclusive,” said Los Angeles sculptor Amanda Ross-Ho.
An early advisory board featured art world figures who gave artists comfort, such as dealer Jeffrey Deitch and artists Kiki Smith and John Baldessari — none of whom are still involved.
The first pool was established in New York and led by Pamela Auchincloss, a former gallery owner and head of an arts management company.
“Pamela gave a sense of security,” said Monika Bravo, a New York artist.
Auchincloss, who served as CEO for several years, declined to be interviewed, but said in an email, “I remain an advocate for a solution when I have the opportunity to speak with the founder,” adding, “I cannot speak for APT.”
Over the next three years, pools were set up in Los Angeles, London, Berlin, Mexico City, Beijing, Mumbai and Dubai. They were designed to top out at 250 artists, recruited from across the broader region. Each pool was set up as a separate business in a complex arrangement of companies, with some registered in Delaware and others in the British Virgin Islands.
When a work sold, the fee split — as outlined in the contract — was 40% to the artist; 32% to other artists in that pool; and 28% to cover costs and repay investors.
The trust is one of several businesses that Shniberg has operated over the past several years, including Face.com, a facial recognition software company that was sold to Facebook in 2012.
Artists said their contacts in the company were the regional directors, or Auchincloss, and over time the staff kept changing.
“The office went from 10 to 8 to 5,” said Peter Emerick, the operations manager who worked in New York as the trust’s director of logistics from 2007 to 2012, when he was let go.
Jane Fine, a painter, said the “rotating cast of characters” became a concern to her.
“We went from someone who clearly knew me and my work to someone who seemed like they just kind of wandered in,” she said.
But in 2016, the first distribution of $169,000 in proceeds from sales mitigated some of those misgivings. The payouts were small — mostly in the hundreds of dollars, and just to artists in the New York and Los Angeles pools. The payouts the following year were larger and the most vested artists from those pools received as much as $6,000 each.
A Business Model With Holes
The trust’s first foray into the auction market, at Sotheby’s in New York in 2017, did not go as planned.
Nearly all the 15 works it offered sold, but the prices were low enough that galleries and artists feared that their brands could be damaged; after they protested, a second auction planned in London was canceled.
Shniberg said in an email that he had been happy with the auction results.
“The purpose of the sale, in addition to private sales we conducted, was to start paying back artists, which we did,” he said. “We did not anticipate the backlash from galleries and artists.”
To enhance sales, Mutual Art, another Shniberg venture that now operates as the trust’s corporate parent, announced it was creating a business devoted to marketing the art to collectors.
But the cost of caring for the art was a drain.
“There wasn’t enough money to support the organization,” said Sarah Murkett, who was the fund’s director of sales from 2013 to 2017. “I sold some of the best things they had when I first came on — things that cost at most $100,000 each. That’s not going to float this company.”
During recent visits by reporters, the two warehouses where Shniberg said most of the art is now held — one in Leipzig, the other in Liverpool, New York, near Syracuse — appeared to be climate controlled and well-tended. Shniberg denied that any artworks had ever been improperly cared for.
But Murkett, who says she was let go after insisting the Sotheby’s auction was ill-advised, said the storage in Los Angeles when she first joined the company fell far short of requirements and threatened the long-term integrity of some of the works.
In the summer of 2017, the fund asked the artists to approve a contract change requiring them to now cover the costs of storing their works, either by paying the company a fee of $6.50 a month per work or arranging for storage themselves. Shniberg in his written responses said this was necessary “to mitigate some costs.”
Artists cried foul, organizing against the proposed new contract in a Facebook group and hiring a lawyer to fight the policy on behalf of artists in the United States.
The company backed down.
Many Questions, Few Answers
Communications between the trust company and the artists it had collected then seemed to wither. Shniberg said it became too expensive to continue distributing the annual reports to artists.
But the problems extended beyond that. Contact people for the company disappeared or did not respond, artists said.
“There used to be an artist liaison,” Shpungin said. “Then, radio silence.”
Shpungin said she worried about the fate of several of her works.
“They only have four pieces,” she said, “but they are important pieces dealing with the death of my father.”
York Chang, an artist in the Los Angeles pool, was unable to borrow work for a show at the Orange County Museum of Art. He said a curator for the show who tried to reach the company “never received a single response.”
“Then I heard all the work had been shipped to the East Coast,” Chang added.
Shniberg said that the company tries “to be as transparent as possible with our artists when their work is moved” and that it had found it too expensive to accommodate lending works for individual exhibitions, as had been practiced in earlier years.
Park Myers, who served as regional director of the New York pool for a year and a half starting in 2016, said the company’s operations grew opaque even for its own regional directors. “The information provided to us was not adequate to answer the artists’ needs or enable us to do our jobs,” he said.
Of late, several members said, their only point of contact has been an employee based in Brooklyn, Ashley Dillman, who also works as a real estate agent. Valerie Hegarty, an artist who joined the fund in 2007, said she has been asking Dillman since March for help retrieving her work in response to interest from collectors.
In May, she asked Dillman in an email why her superiors had not responded to the request in months. Dillman responded, “They haven’t cited anything specific; I have followed up with them again but please do keep in mind they are in Israel. I don’t really expect to hear back from them this week.”
In an interview, Hegarty said she didn’t hear anything further. “There is no transparency about what’s actually happening,” she said.
Dillman said in email to The New York Times that she had done her best “to see how APT could accommodate her request.”
“However,” she said, “the company isn’t currently lending to selling exhibitions — only to public institutions.”
Pushing Back
Last spring, artists upset with the trust began to organize again. Several in Los Angeles have consulted with lawyers. One, Shaun Leonardo, has sued in New York, demanding the return of artwork and alleging breach of contract.
“APT has ceased communicating with Leonardo,” the lawsuit states, “and failed to respond to a May 2021 letter asking APT to cure its breaches and fully perform its contractual obligations.”
Shniberg said he was not aware of the suit and has said that if artists were allowed to take back their work, the business model would become “untenable.” In email responses, he said he has “much less” than 51% ownership and is not involved in the company’s day to day activities, but he declined to specify who was running things or to address a question asking whether the collection is insured.
He added that he is retaining a leadership role because he feels responsible for the fund’s long term success and remains “a big believer in the vision of the company.”
Many artists have given up on that vision. They instead have questions like, where is the art that is not being held in Germany or in upstate New York? How will the trust settle accounts with the heirs of artists who have died?
Another worry: what will happen in 2024 when the first works turned over will have been in the trust for 20 years? Under the contract, artists at that point can reclaim works that remain unsold. But how do you do that if you can’t reliably reach the company or confirm the location of your art? And in the event artists fail to reclaim their work at that time, ownership reverts to the company, according to the contract.
In his effort to defend the company, Shniberg cited recent sales of work by artists Hank Willis Thomas and Mequitta Ahuja as evidence the trust is functioning. He acknowledged that the sales had been initiated by the artists or their galleries but said the trust had handled the administrative matters and, in one case, negotiated the price.
“We know the artists and buyers were very happy with the work we had done,” he said.
But the Jack Shainman Gallery, which represents Thomas, characterized the trust’s role as passive, as largely a matter of paperwork.
Ahuja said she was glad the sale went through because it meant the work was no longer held by the trust and that she regretted having joined the pool in New York.
“At the beginning, there were good-faith people involved, but where are they now?” she said. “Now it’s just the artists and the trust, with the artists’ works trapped in the middle.”
This article originally appeared in
The New York Times.
