Artworks can be part of the battleground in a divorce case but what happens when the art is a fake?

The problem of art forgery can cause damage in a number of ways. And one potential cause for trouble is in divorce cases where artworks are part of any settlement. If the art in question turns out to be a dud then clearly that adds to the pain of what are often already difficult conversations. As part of the wider discussions around good wealth and estate planning, it therefore makes sense to be clear about the integrity of assets, including art.

Charles Hale QC, barrister at 4PB, considers how these issues play out in divorce. The editors of this news service are pleased to share these thoughts and invite readers to respond. Email tom.burroughes@wealthbriefing.com

Removing an extremely valuable artwork and replacing it with a forgery in order to steal the original sounds like a work of literary fiction or the plot from a blockbuster film. However, it’s all true – and the reason for this deception? A divorce. The painting in question was a Picasso work, ‘Le Repos’ which recently sold for $37 million at Sotheby’s. The couple in question is American investor Bill Gross (net worth $2.5 billion) and his now ex-wife Sue.

The couple’s divorce was acrimonious and even spilled over into the charity which they had jointly run, with the Orange County Register reporting Sue froze the bank account for the couple’s foundation. As you might expect for a couple so wealthy, they owned a great number of assets - from properties across the world to rare and sometimes irreplaceable, pieces of art. With the toss of a coin, Sue won the Picasso piece during the divorce, but Bill was shocked to hear she in fact, already had it.

Through email correspondences with the lawyer it transpired that Sue has interpreted an earlier message from Bill to “take all the furniture and art that you’d like” to… “make off” with the painting. But rather than leave an empty spot on the wall, making it clear she’d taken it, she replaced it with a very convincing fake which she herself had painted;  her own masterpiece! The original piece of art has now been sold, with some of the proceeds going to charity through The Sue J Gross Foundation.

There’s no doubt this was a messy divorce, with Bill obtaining a restraining order against his ex-wife in the midst of the divorce storm. What the forged painting saga shines a light on is the sometimes extreme lengths which divorcing couples will go through to hide away assets or shield them from the divorce courts glare.

Some relationships operate with one spouse never having a full overview of the other’s business or financial affairs. When the breakdown happens and the trust is broken, often the less financially in- tune spouse can feel isolated and suspicious, questioning of every motive for financial transactions.

Another example - earlier this year, we saw the wife of a Russian oligarch allege that he was hiding assets from her. Tatiana Akhmedova appeared in court stating that she’d not received any of the £450 million ($603.9 million) which her now ex-husband Farkhad Akhmedo was ordered to pay as part of their divorce settlement. It was alleged the ownership of a luxury yacht had been transferred to a Panama company to ensure Ms Akhmedova couldn’t gain access.

But what could be done? Deciding to use the services of a private investigator is a path some people are deciding to take in order to try and prove instincts right -  that their partner isn’t properly disclosing the full extent of their assets. On a smaller scale, people also sometimes feel compelled to open their ex-husband or wife’s post, use passwords to access bank accounts or delve into computers for potentially incriminating information. But beware, this is a criminal offence and any evidence sourced using these sorts of means is likely not to be permissible in a court and any perpetrators could even find themselves facing sever criminal or civil sanctions.

The only type of ‘investigation’ which could prove helpful is scouring an ex-spouse’s social media accounts for examples of big spending, flashy cars or holidays, which could be used as illustrations of their lavish lifestyle and in turn, standard of living. These examples of legitimate, “self-help” can prove helpful and the court can make orders bases on such evidence if it is felt the spouse isn’t fully disclosing all financial information even if they are flaunting it on Instagram.

If an application for financial remedies is issued by either spouse, both sides will have to provide at least 12 months’ worth of bank statements and information on assets they own to the court. The duty to the English divorce court is a strict one. The disclosure must be full and frank and if the court is led to believe there has been no disclosure it has wide powers to make orders forcing information, documents and property to be disclosed backed ultimately with the threat of prison as the 83 year Mr Hart recently found.  Having ordered the transfer of a company to the wife Mr Hart failed to accept it and refused to provide documents ordered to be disclosed and transferred.  He is currently facing 9 months in prison. An extreme example but a lesson none the less that the divorce court’s judges will flex their judicial muscle and act where non-disclosure is wilful.

However disclosure applications and freezing injunctions come at a real cost. They rack up very expensive fees that ultimately often come from the only available source, the family pot!

Divorces are fraught and painful times, and suspicions and disbelief can run rife. What is important to remember is, however bitter and resentful, confused and hurt, honesty remains by far the less painful and definitely the cheapest policy on divorce. Pouring the disinfectant of transparency on finances early on, often heals the deepest of distrusting wounds.