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Liars, Beggars, Thieves, And How To Invest In Art

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Rochelle Ohrstrom

With Rochelle Ohrstrom, Artist, Author – Ponzi & Picasso

Most of us will never own an original Picasso and—with luck—will also never be caught in a Ponzi scheme, but many of us do appreciate and would love to own a fine piece of artwork.

As an artist, patron, and collector, Rochelle Ohrstrom knows very well the fascinating, romantic, and sometimes seedy side of the art world, which makes up the landscape of her book, Ponzi & Picasso.

Rochelle explains that her plot and characters were literally lifted from real life, from the elements that characterize the somewhat opaque art world. So for the collector or would-be collector, it’s important to understand what really goes on in auction houses and among those who authenticate and  price works of art and as well as create the market for paintings, sculptures, and the like.

First of all, if you come upon a piece of artwork that you love and want to purchase, how do you tell if the price is right? Rochelle says that because there is little regulation in this area, it’s nearly impossible to determine.

Today’s art world is fueled by auction houses and the global elite fraternity of newly minted billionaires, many of whom are in China. In addition, much of the art market is either run by Russian oligarchs trying to get their money out of Russia, hedge fund owners buying for vanity’s sake, or gulf Emirate states wanting to enhance their museums. An even seedier aspect is the drug cartels who use art as a venue to launder money.

When you consider the painters, the sculptors, the creators who are driven by the love of their art having to collide with the gross lack of integrity moving the art world today, it’s particularly disheartening.

For a deeper look into the subject of how to invest in art, read Rochelle Ohrstrom’s fast-moving book, Ponzi & Picasso.


Disclosure: The opinions expressed are those of the interviewee and not necessarily United Capital.  Interviewee is not a representative of United Capital. Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions.  Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances.  The information contained herein was obtained from sources believed to be reliable, however their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by United Capital.

Read The Entire Transcript Here

Steve Pomeranz: Recently, I attended an art and antiques show in Palm Beach and came very close to buying original art that I fell in love with.  Thus, I entered the world of art.  I’ll tell you later if I bought this piece of art or not, but this experience sent me off to Google and the books of experts familiar with this world and the person I’m going to introduce to you right now is one such person.  Her name is Rochelle Ohrstrom, and she is a familiar figure in the New York art world, in roles as diverse as artist, patron, and collector.  Throughout her career, she has also known many of its most fascinating figures.  Her fascinating new book, which peers into the art world’s seedier side, is Ponzi and Picasso, and I welcome her to my show.  Hi, Rochelle.  Thanks for being with us.

Rochelle Ohrstrom: Hello.  Thank you for having me.

Steve Pomeranz: Give us a little idea about your life in the world of art.

Rochelle Ohrstrom: Well, I’ve seen the art world from all sides, from the museum boardrooms, the acquisition committees at several of the major museums in Manhattan, and I’ve been a struggling young artist.  I’ve had a couple of one-woman art shows, and I’m in two museums.

Steve Pomeranz: Very nice.

Rochelle Ohrstrom: The paintings in Ponzi and Picasso are mine.

Steve Pomeranz: I saw them, and you have them also listed on your website.  We’ll get into those in a minute.  This book is a book of fiction, but I guess it’s based upon some real experiences or parables.  Tell us a little bit about the book.

Rochelle Ohrstrom: Well, the book is about the rise and fall of the famed gallerist Henry Classico, when he’s forced to take desperate measures in 2008 when the sub-prime mortgage crisis hits and impacts the art world.  To protect his art fund from becoming a Ponzi scheme, he travels to the underbelly of the Beijing contemporary art world, to the copy factories and the industrial art colonies.  He learns all about the cultural revolution, how it impacted contemporary Chinese art.  Be forewarned because many people have stayed up late at night second-guessing this familiar character.  Then, Alouisha Jones (she’s the Yale Master of Fine Arts scholarship student who lands a job with Henry Classico) she tries to fight being seduced by this art world, the bling of the art world, and tries to reconcile the integrity of her art process with this art market that’s all rife with dishonesty, forgeries, and fakes.  She also represents the all too prevalent plight of every woman artist that is asked to barter sexual favors for a show.

Steve Pomeranz: Does that really go on?

Rochelle Ohrstrom: Oh, yes.

Steve Pomeranz: Interesting.

Rochelle Ohrstrom: Very much so.

Steve Pomeranz: If I’m entering this art world, I really want to kind of share my personal experience and learn from this, and through this, hopefully, my listeners will learn as well.  If I’m entering the world of art, I see an artist that I just truly love, and I’m convinced that it’s authentic because we’re not talking about art that’s worth tens of millions of dollars and the like. What are some of the first steps that I should be taking in order to know, first of all, whether I’m paying the right price?  How do you even know what the right price is?

Rochelle Ohrstrom: There is no right price.  First of all, suppose someone misses the painting at auction—this happens all the time—they miss a painting by a certain artist at auction, and they know they have buyers remorse.  Then, they go to an art fair, and often they’ll pay double for that same artist because they know that they’ll never get another opportunity to buy these paintings.  They could disappear if they go into people’s homes.  It’s a very opaque art world.  There’s no transparency.  It’s one of the most unregulated markets at all.

Steve Pomeranz: I experienced that a little bit because when I—I guess I’ll tell the audience now—I passed on that art.  I didn’t buy it, but the next day I was thinking, “You know, this is not like a copy where I can just buy a copy.  This was the original and I’ll never see that again.” I was feeling kind of bad about that.

Rochelle Ohrstrom: Yes.  Was the artist living or dead?

Steve Pomeranz: Yeah, he’s still living, but he’s quite old.

Rochelle Ohrstrom: Well, see, a living artist, there are not so many forgeries of living artists.  It’s mostly the dead artists that are forged because they can’t come say, “That’s my work,” or not.

Steve Pomeranz: Well, yeah.  I see your point.  The dealer was saying that he had basically stopped painting.  Of course, that creates-

Rochelle Ohrstrom: Oh, what’s his name?

Steve Pomeranz: Zhang Sheng King.  Do you know that name?

Rochelle Ohrstrom: Not off hand.  Chinese artist?

Steve Pomeranz: Chinese artist, yeah.

Rochelle Ohrstrom: Ultimately, if you want to love it, that’s good.  If you want something for investment, that’s a whole other story.

Steve Pomeranz: Well, at those prices, I would hope at least that it would keep its value over time.  I didn’t want to consider it a consumption item that somehow I would lose all this money over time.  I, at least, want it to hold its value, and, if I was lucky, maybe make some money on it as the years went by.

Rochelle Ohrstrom: Well, there’s some work you can do to check it out.  You can look at the auction houses. When was the last time he sold at auction?  What was the price compared to the previous time he sold at auction?  The only way an artist gets branded and marketed now is at the auction houses.

Steve Pomeranz: I see.  There are sites online, I think, where if you pay three or four-hundred dollars a year, you can-

Rochelle Ohrstrom: Art Net.

Steve Pomeranz: Art Net, yeah, you can get that.  What was interesting about this particular transaction is, though, the price that he quoted me when I was there was seventy-five thousand dollars.  He said he would hold it for me as I made a decision for the next day.  He called me the next day, and he said he had an offer for sixty-five thousand.  As I was sitting there and he was telling me it was seventy-five thousand, I was thinking, “So how do I negotiate?” Because it’s like I didn’t want to go-

Rochelle Ohrstrom: Did you ever buy a Persian carpet?

Steve Pomeranz: No.

Rochelle Ohrstrom: It’s the same.

Steve Pomeranz: Same thing?

Rochelle Ohrstrom: It’s the same thing.

Steve Pomeranz: Can’t you just make a ridiculous offer on a Persian carpet, though?  I didn’t really feel like I could.

Rochelle Ohrstrom: You could barter with anyone.  The art world of the twenty-first century is unlike any of its predecessors.  It’s fueled by auction houses and the global elite fraternity of these newly minted billionaires.

Steve Pomeranz: Well, the story behind this was that these newly minted billionaires in China wanted to repatriate as much Chinese art as they could.

Rochelle Ohrstrom: Yes.

Steve Pomeranz: Is that a true story?  Is that a real story?

Rochelle Ohrstrom: That’s mostly with antiquities, not necessarily paintings, but yes, paintings too.  Always true.

Steve Pomeranz: All right.

Rochelle Ohrstrom: You know, anything’s true if you want to believe it.  It’s all about the back story and the context that art is put into.  If you just see a painting, a black on black painting, and you don’t know who it’s done by, it means nothing.  If someone will tell you that it’s about nuances of tiny little details, and it’s been owned, the provenance has been owned by the king and the queen, and all the sudden, the value of it increases.

Steve Pomeranz: How much of the art—especially we’re talking about this high priced art—is about ego, is about having a trophy or just knowing that you own a piece of something that someone or some very important organization validated at some point?

Rochelle Ohrstrom: Well, you know, that’s the intrinsic value of art.  Picasso said that art washes away the dust of everyday life.  It also washes away your tax liabilities.  This is an art market that’s run by Russian oligarchs trying to get their money out of Russia before Putin takes it from them; it’s fueled by hedge fund owners trying to get trophy pieces for their trophy wives.  It’s run by the gulf states, as you all know, the gulf Emirate states, they’re building three museums, they have unlimited amounts of dollars, and they’ve bought everything possible to fill up their museums because they know one day their oil will run out and they want to remain a tourist destination.

Steve Pomeranz: I see.  Well, that’s interesting.  Boy, there are so many factors here, none of them have to do with the things that I’m familiar with, which is investing in things that actually produce some cash value, where you can actually measure what something is worth.

Rochelle Ohrstrom: Oh, yes.  There’s no quantitative measure.  There’s emotional measure or quantitative measure— two different things.  It’s also the drug cartels, by the way.  This is a great venue for the drug cartels to launder their money.  You must keep in mind that this inflated art that we’re seeing, in the November auctions, November 2013, in twenty-four hours, Christie’s and Sotheby’s sold one-hundred thirty pieces of art that were valued over a billion dollars.  Now, these prices, that’s only top ten percent of the market that’s inflated.  The other ninety percent is still at 2007 prices.

Steve Pomeranz: Oh, okay.  Yeah, so, it’s kind of a bubble in those markets because those individuals and institutions are awash with cash.  They’ve got to do something with it.  Let’s get into the scandal of forgery because there was a huge scandal, I read in the paper, that a lot of this Chinese art was really actually forged.  Tell us about that.

Rochelle Ohrstrom: Well, if you read my book you’ll see Henry Classico goes to the underbelly of the Beijing art scene.  He goes to the copy factories.  There are a billion people in China and their mandate from their government is not to innovate, it’s to copy.  For them, pirating didn’t exist.  Until a few years ago (now that they’ve come on the global markets) they’re trying to use some western values, but it’s a very different type of system over there.  It’s not that they’re bad; it’s just that they were different.  You manage a billion people much differently than you manage three-hundred million.  When I was there, there was one dog that got the rabies, and they made fifty-thousand dogs be killed because of it.

Steve Pomeranz: Yeah.  Their culture is completely different, basically than ours.

Rochelle Ohrstrom: Exactly.  The art world right now is a disgrace.  It really is because it used to be a high bastion of moral integrity.  It was a place where people looked up to the world and had their higher ideals validated.  Now, it’s just a disgrace because every day you read about a scandal in the newspaper.  Wolfgang Beltracchi, he’s that famous copyist.  Oh, my gosh.  He spent six years in jail and was laughing all the way.  He was selling his paintings …  His paintings have been on the covers of Christie’s catalogs; they’ve been in every museum.

Steve Pomeranz: They were not known to be forgeries at the time?

Rochelle Ohrstrom: No.  No, the authentication process is very dicey, and Classico is very involved in my book.  There’s a digital art analysis, which is fool proof.  And why Knoedler didn’t use it is just a disgrace.  Knoedler sold all those paintings that were forged for millions of dollars from Mrs.  Gonzales.  The digital art analysis takes algorithms of paintings, it’s absolutely foolproof, and it can tell us if something’s authentic and not.  There’s one museum, who’s name I won’t mention, was offered to have their paintings tested by this, and they were afraid to open up a Pandora’s box, so they said, “I’m very sorry.  This is not a proven modality.”
Now, there are all these authenticators running around, that people say they’re an expert, and their connosseiurship and their eye.  Frankly, through the scrim of fine vintage wine, that doesn’t work.  How about a nice yacht trip?  People will eventually sign on the dotted line and say it’s authentic.  The reason that there’s so many forgeries out there is if someone knows that something is fake, they cannot say it, because if they do, they will be sued for libel.  They would be dragged through the courts for five years.  Now, if someone that’s invested fifty, a hundred million dollars in a painting, they don’t have a problem spending a million or two to protect their investment and go through the courts.  People don’t dare say anything.

Steve Pomeranz: I hear you.  The emperor basically has no clothes.  Nobody can speak up.  Nobody is willing to speak up.  This type of thing will happen in the darkness of night.

Rochelle Ohrstrom: The darkness of night, yes.

Steve Pomeranz: The darkness of night.  I’m not trying to be a writer like you are.

Rochelle Ohrstrom: No, it’s true.  It’s absolutely true.

Steve Pomeranz: The book is Ponzi and Picasso, and it peers into the art world, and it’s a story about really the seedier side of art.  One final question, Rochelle.

Rochelle Ohrstrom: It’s also about the artist’s process, and how the artists have to deal with this art world that’s all about marketing, branding because the artist has a very serious investigation into their process.  How do they deal with a world that’s so rife with dishonesty and criminal behavior?  I really wanted to bring that out in the book.  This is a very fast-paced read.  My agent said he felt like he was on crack. He couldn’t put it down.

Steve Pomeranz: I saw that.  Well, congratulations.

Rochelle Ohrstrom: It’s selling, by the way, at the Whitney Museum, The National Gallery of Art, LACMA, Dallas, and on Amazon.

Steve Pomeranz: Okay, the book is Ponzi and Picasso. My guest, Rochelle Ohrstrom.  Thank you so much for joining us, Rochelle.  Quite interesting.

Rochelle Ohrstrom: Thank you so much.  Pleasure.