Fellow appraiser Claudia Hess sent me an interesting and troubling article from the San Francisco Chronicle about art donated to a small private music/choral school initially valued at $2.8 million. When the school tried to sell the painting, they were informed by Bonhams they were copies. The financially struggling school had already borrowed against the paintings and are now in financial distress. The donor has donated some other works to the school with a $500,000 value by first appraiser, but the authenticity has yet to be fully determined. The school is hoping the second group of paintings are correct and valuable.
We are looking at donated works, where it certainly appears the appraiser did not fully or properly authenticate, and with that, incorrect values causing potential problems for the donor with the IRS, as well as a lender and the private school all relying on that appraisal report and value conclusion.
The SF Chronicle reports
Source: San Francisco ChronicleWhen the small Oakland private school received the donation of four Chinese paintings, valued at $2.8 million, administrators were gobsmacked.
After relying on bake sales to stay fiscally afloat for the past two decades, the Pacific Boychoir Academy and its elite after-school music program were sitting on a relative fortune.
The New York donor, an art collector who inherited the pieces, had been a boys choir participant in his youth and had wanted to help such a program. Appraisers valued one of the pieces, an ink and color on paper of a waterfall by 20th century Chinese artist Li Keran, at $2 million alone, and the other three combined at just over $800,000.
The possibilities for the school were “super exciting,” said admissions director Janelle Geistlinger. “We took this asset and were able to lean into some security for the first time as a community.”
The paintings arrived about a year ago, but unable to immediately sell them because of IRS rules, school officials borrowed $400,000 against the imminent windfall to boost staff and build their program. An admissions director was added. So was a web designer, and a Latin teacher.
Then came the shocking news. In February, as school officials readied to sell, they took the art to Bonhams auction house in San Francisco, where Asian art experts evaluated the paintings.
The paintings were fake. Copies. Reproductions of original works by Li Keran, Fu Baoshi, Zhang Daqian and Shi Tao.
And definitely not worth $2.8 million, the experts said. They were basically worthless. Other experts agreed.
It was unreal, said Summer Dittmer, a math teacher who also is performing the tasks of head of school.
The donor, who school officials declined to identify, was devastated — he had no idea the pieces weren’t real, she added.
The school was just getting by when the paintings arrived. The loans have put it in deep financial trouble, making it unable to cover $270,000 in operating costs through the end of the year.
The school’s board has laid off the head of school and the new admissions director among others, and forced teachers to take a 20 percent pay cut.
It’s not enough.
“The school might close,” said Dittmer, who voluntarily took on the head of school duties for now. “What are we going to do if we don’t have money to pay paychecks in April?”
The Pacific Boychoir includes a music-rich private school, which currently serves about 24 boys in grades four through eight, as well as an after-school choir program and a premier concert and touring choir.
It is celebrating its 20th anniversary this year.
The school has small classes and two hours of music a day. Sixth-graders are doing ninth-grade math curriculum, Dittmer said. And, she said, the site is open from 7:30 a.m. to 6 p.m. with no charge for after-school care.
Tuition is $24,000.
“Every person that walks onto campus wants to enroll,” she said.
Now, it’s unclear whether there will be a campus through June.
The school has started an online fundraising campaign and individual supporters have sent a few checks, but the effort is falling short of the goal.
“We’re trying not to freak everybody out,” Dittmer said. “Fiscally, we can’t keep going.”
Due diligence had been done, or so everyone believed.
“There was absolutely nothing but good intention and good faith,” said Geistlinger, the admissions director.
But Chinese paintings can be tricky, experts said. The art of masters is often copied, which is more of an homage than forgery.
“It is extremely difficult to ascertain with real certainty and consensus the attribution of any Chinese painting,” said New York Asian art dealer J.J. Lally. “It certainly is not the first time there’s been a dispute over a Chinese painting. Sometimes you ask five experts, you get six opinions.”
The sad part, school officials said, is that the school was already reaping the benefits of the additional staff, with the enrollment of the school expected to nearly double next year.
Imagine, they added, what they could have done with an endowment — with a stable flow of funds — for the foreseeable future.
“It’s such a bummer,” said Johanna Ortis, development director. “I know that’s an understatement.”
There is one tiny ray of hope outside the fundraising effort, Ortis said. Before realizing the four pieces were fake, the donor had given the school three additional pieces from the same collection. This week, one of the New York appraisers who had appraised the first set, valued them at a combined $500,000.
We’ll see, Ortis said.
“We’re not holding our breath,” she said. “We’re not cashing checks.”
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