Dunnington Partner Raymond J. Dowd will present the luncheon keynote lecture at the annual meeting of the Trusts and Estates Law Section of the New York Bar Association on January 28, 2015. The Trusts and Estates Law Section is one of the largest sections of the New York State Bar Association, and its annual meeting attracts over six hundred attendees. Mr. Dowd will address the topic Nazi Art Looting, Stolen Art and Our Museums: Why The Ghosts of The Past Still Haunt Us. Tickets to the luncheon are available through http://www.nysba.org/Trusts/.
The Controversy Over Stolen Art In U.S. Museums
Why do American museums contain stolen European artworks acquired during and after World War II? The National Stolen Property Act and comparable state laws have criminalized transporting, receiving and concealing stolen property for decades, yet the problem persists. The keynote address will explore the reasons for this and the implications for trusts and estates practitioners.
The Payne-Aldrich Tariff Act of 1909 cleared the way for America’s wealthiest citizens to import a vast collection of European art into the United States tax-free. In the 1930s, a dispute between Andrew W. Mellon and the Internal Revenue Service resulted in the allowance of a tax deduction for the fair market value of art donated to U.S. museums.
Following World War II, affluent American collectors clamored for bargain-priced art to donate to U.S. museums in exchange for substantial reductions on their personal income taxes. Nazi spoliations and the murders of millions of Jews and others meant that the international markets were flooded with cheap, albeit stolen, artworks. From 1945 through the early 1960s, the U.S. State Department issued warnings to U.S. museums, collectors, and dealers, advising them not to acquire artworks without solid provenance and requesting that they assist the U.S. in recovering artworks belonging to European citizens. These State Department warnings were ignored by museums hungry to build world-class collections of European art. Their donors, buoyed by a strong dollar, bought stolen art on the cheap and took massive tax deductions based on sale prices of comparable pieces from the latest auctions.
The loophole in the tax code incentivizing donations of stolen art persists today, raising profound questions of tax fairness and abuse of not-for-profit corporations nationwide. As a result of this breach of the public trust, the American public continues to subsidize museums with tax breaks yet will inherit collections tainted by stolen or undocumented artworks. As U.S. museums have repeatedly acknowledged, the problem of artworks lacking appropriate provenance documentation in U.S. museums is a tremendous one, raising serious questions about the stewardship of our nation’s museums.
Over the last decade, Mr. Dowd has represented a number of heirs of Holocaust victims and owners in trying to reclaim artworks stolen during World War II faced with laches defenses. In 2006, Mr. Dowd was retained by the heirs of artist George Grosz to recover three artworks at the Museum of Modern Art stolen from Grosz’s Jewish art dealer Alfred Flechtheim shortly after Grosz fled in January 1933 to New York, where he taught at the Art Students League on 57th Street. Grosz was declared “cultural enemy number one” by the Nazis, who were enraged by Grosz’s caricatures of Hitler and other prominent party members. Flechtheim’s inventory of Grosz artwork was stolen (“Aryanized”) in 1933. Mr. Dowd sued on April 9, 2009, within three years of the MoMA’s trustees refusing to return the artworks. Under New York’s traditional “demand and refusal” rule, the suit was timely. However, the Southern District of New York found an “implied refusal” because the MoMA had spent a lengthy amount of time in settlement discussions. Grosz v. MoMA, 772 F.Supp.2d 473 (S.D.N.Y. 2010). Mr. Dowd went all the way to the U.S. Supreme Court in challenging this ruling. 403 Fed.Appx. 575 (2d Cir. 2010); 132 S.Ct. (2011)(denying cert.). MoMA continues to resist sharing evidence necessary for the heirs to demonstrate that the artworks were stolen from Alfred Flechtheim and laundered through Curt Valentin, an agent for the Nazis operating in New York.
In 2008, Mr. Dowd was lead trial counsel in the Southern District of New York the first Holocaust-era art case in U.S. federal court history ever to go to trial: Bakalar v. Vavra, 2008 WL 4067335 (S.D.N.Y. 2008). The trial judge applied Swiss law to give a 1964 purchaser good title to the artwork. Mr. Dowd successfully appealed to the Second Circuit, obtaining a reversal and remand for the trial judge to consider evidence of Nazi looting in the record and to apply New York law. 619 F.3d 136 (2d. Cir. 2010). The trial judge, in decisions affirmed by the Second Circuit Court of Appeals, excluded an expert report by Dr. Jonathan Petropoulos concluding that the artworks were looted from Fritz Grunbaum by the Nazis and instead decided that although the purchaser could not show good chain of title, Grunbaum heirs’ claims were barred by the doctrine of laches, despite there being no evidence that the family knew that any artworks had survived World War II. 819 F. Supp.2d 298 (S.D.N.Y. 2011) aff’d 500 Fed. Appx. 6 (2d Cir. 2012), cert. denied 133 S.Ct. 2038 (2013). Grunbaum’s heirs continue to advocate for the consideration by the authorities of the expert evidence of Nazi looting of Grunbaum’s collection and for restitution to be made.
On November 4, 2014, Mr. Dowd succeeded in recovering for the heirs of Fritz Grunbaum Town on the Blue River (1910), a watercolor drawing by the Austrian artist Egon Schiele which was auctioned at Christie’s following its recovery. Grunbaum was a renowned Viennese cabaret performer who had eighty-one Schiele artworks in his apartment when the Gestapo arrested him on March 22, 1938 and deported him to the Dachau Concentration Camp, where he died penniless on January 14, 1941. Town on the Blue River sold at auction for 2.5 million dollars—more than double Christie’s high estimate—and was the subject of an October 24, 2014 New York Times article, Dispute Over Nazi Victim’s Art: Christie’s and Sotheby’s Differ on Handling of 2 Schieles. European and American museums and private collectors today hold many artworks stolen from Fritz Grunbaum, and Mr. Dowd continues recovery efforts on behalf of the Grunbaum family.
In Matter of Flamenbaum, 22 N.Y.3d 962, 1 N.E.3d 782 (2013), Mr. Dowd succeeded on behalf of the world-famous Pergamon Museum in Berlin in persuading the New York Court of Appeals to order the return of an ancient Assyrian tablet dating to the reign of King Tukulti-Ninurta II (1200 B.C.). The tablet went missing when Stalin’s troops invaded and occupied East Berlin in 1945. It turned up in 2006 during a contested accounting proceeding in Nassau County Surrogate’s Court in a safe deposit box that belonged to a deceased Auschwitz survivor. Ultimately, the New York Court of Appeals rejected the executor’s argument that the “spoils of war” doctrine permitted the decedent to retain the amulet. The Court further rejected the argument that the doctrine of laches barred the Museum’s restitution claim. In the wake of Flamenbaum, it is clear that under New York law, where there is a thief in the chain of title, no subsequent possessor can take good title and that the burden of proving the affirmative defense of laches is a heavy one.
In 2013, Mr. Dowd wrote “Nazi Looted Art and Cocaine: When Museum Directors Take It, Call The Cops” 14 Rutgers Journal of Law & Religion (May 2013). In the article, Mr. Dowd argues that statutes of limitations and laches cannot be used to launder title to stolen property, that Nazi looted art ought to be treated like contraband or drugs, and that due to the unique facts of World War II and U.S. foreign policy repudiating Nazi acts of property spoliation, U.S. museums should not be able to shield Nazi-era stolen art in their collections from scrutiny and restitution. In 2013, as a result of advocacy efforts in which Mr. Dowd participated, the Federal Bar Association now advocates that Congress should create a Commission on Nazi-Confiscated Art Claims to assist heirs in recovering Holocaust-era looted assets.
About Ray Dowd
Mr. Dowd’s first case in New York County Surrogate’s Court was Matter of Doris Duke, a dispute over the estate of the American Tobacco heiress. In 1994, Mr. Dowd successfully petitioned for the removal of Doris Duke’s butler, Bernard Lafferty, and U.S Trust Company as co-executors of the Duke estate. These efforts aided in the recovery of millions in misspent funds. Mr. Dowd’s efforts were chronicled in Vanity Fair magazine and on the front pages of New York’s tabloids. The case garnered worldwide headlines and was immortalized by Hollywood. As part of the subsequent proceedings, Mr. Dowd succeeded in upholding the first testamentary honorary pet trust in New York State history by using the life of the trustee as the measuring life to create a $100,000 trust fund for Ms. Duke’s dogs. Mr. Dowd has since litigated numerous contested probate matters, guardianship proceedings, and accountings, including a rare contested adoption proceeding in Surrogate’s Court on behalf of a 9/11 victim.
Mr. Dowd is a partner in the law firm of Dunnington, Bartholow & Miller LLP in New York City. He currently serves on the Board of Directors of the Federal Bar Association, having served as General Counsel (2011-2012), Vice President for the Second Circuit (2008-2013), President of the Southern District of New York Chapter (2006-2008), on the Editorial Board of The Federal Lawyer (2009-2011), and on the FBA Government Relations Committee (2010-2013). From 2013-2014, Mr. Dowd served as President of Network of Bar Leaders, a coalition of over fifty bar associations in the Metropolitan New York area. In 2013, he was appointed to serve on the Planning Committee for the 2014 Second Circuit Judicial Conference titled Cybersecurity in an Age of Cyberterrorism. Mr. Dowd is the author of Copyright Litigation Handbook (West 8th Ed. 2014-2015) (updated annually).
Mr. Dowd’s practice consists of federal and state trial and appellate litigation, arbitration and mediation. He served as lead trial counsel in notable cases involving art law, copyrights, trademarks, cybersquatting, privacy, trusts and decedents estates, licensing, corporate and real estate transactions. He has litigated questions of Austrian, Canadian, French, German, Italian, Russian and Swiss law.
Mr. Dowd lectures frequently on copyright litigation, including the prestigious Copyright Society of the U.S.A. At the 2009 Prague Conference on Holocaust-Era Assets, he was selected for an expert legal panel, and he has lectured worldwide on the matter of looted art, including at the Jewish Museum in Berlin, Yad Vashem in Jerusalem, the Pennsylvania Academy of the Fine Arts, the San Francisco War Memorial, the U.S. District Court for the District of Columbia, and many chapters of the Federal Bar Association. In 2007, he co-founded the annual Art Litigation and Dispute Resolution Institute at New York County Lawyers’ Association. In 2014, Mr. Dowd was selected by the Brandeis Society to deliver a lecture commemorating the 76th anniversary of Kristallnacht. He currently serves on the Board of Governors and is Chair of the Education Committee at the National Arts Club in New York City.
Mr. Dowd is a graduate of Manhattan College (B.A. International Studies cum laude, 1986) and Fordham Law School (1991), where he served on the Fordham International Law Journal. He speaks French and Italian. He is admitted to practice in the State of New York, to the Southern and Eastern Districts of New York, and to the First, Second, Fifth, Seventh, Ninth, and Tenth Circuit Courts of Appeals.
Dunnington, Bartholow & Miller LLP was selected as a 2014 Top Ranked Law Firm for Intellectual Property by Corporate Counsel/ALM/The American Lawyer. Dunnington is a full-service law firm providing corporate, litigation, intellectual property, real estate, taxation and estate planning services for an international clientele. Find out more at www.dunnington.com.
Attorney advertising. Past results do not guarantee future outcomes.
Copyright law, fine art and navigating the courts. All practice, no theory.Copyright Litigation Handbook (Thomson Reuters Westlaw 2012-2013) by Raymond J. Dowd