US Government Sells Art From 1MDB Scandal Including Basquiat, Picasso, and Arbus

Artworks Linked to 1MDB Scandal Now Up for Auction

Four notable artworks by Pablo Picasso, Jean-Michel Basquiat, and Diane Arbus are currently being auctioned online by the US Marshals Service. These pieces were surrendered to the US Department of Justice as part of the ongoing investigation into the 1MDB scandal, a complex financial fraud case involving billions of dollars.

The auction is being managed by Gaston and Sheehan, an auction house based in Pflugerville, Texas. The works up for sale include Jean-Michel Basquiat’s Self Portrait (1982), his collage Red Man One (1982), Pablo Picasso’s Tête de taureau et broc (1939), and Diane Arbus’s Child with a Toy Hand Grenade. The online-only auction began on July 16 and will conclude on September 4. Notably, there is no buyer's premium attached to any of the items, which could potentially attract more bidders.

Art advisors and experts have commented that these pieces are of high quality and have "crazy" starting bids relative to their previous sales. However, the auction website’s simplicity and its association with an international fugitive may deter potential buyers, especially in a market that has been sluggish in recent years.

Dane Jensen, an art advisor, told DISCOVER TREND that while the auction might present an opportunity for savvy buyers, the lack of condition reports and information about the artworks' storage history could be a barrier. He noted that serious bidders would likely need to inspect the pieces in person before placing a bid.

Arushi Kapoor, another art advisor, expressed skepticism about the auction site, saying it might even raise red flags among her clients. She mentioned that if someone sent her the website without context, she would suspect a scam.

Background on the Artworks and Their Origins

The artworks were part of a larger scheme tied to the 1MDB scandal. Christopher Joey McFarland, who co-founded Red Granite Pictures with Riza Shahriz Bin Abdul Aziz, the stepson of former Malaysian Prime Minister Najib Razak, surrendered Basquiat’s Self Portrait to the US government. McFarland and Aziz also produced the 2013 film The Wolf of Wall Street.

The other three artworks were purchased by Low Taek Jho, also known as Jho Low, between 2012 and 2014. Low, who is currently wanted in several countries, including by Interpol, gifted them to Leonardo DiCaprio, who also starred in The Wolf of Wall Street. According to documents filed by the Justice Department, DiCaprio surrendered the three artworks after they were located in Switzerland in 2017.

The US Justice Department estimates that over $4.5 billion was stolen from Malaysia's sovereign investment fund between 2009 and 2015 through a criminal scheme involving money laundering and embezzlement.

Pricing and Previous Sales

Basquiat’s Red Man One sold for $3.5 million at Sotheby’s Contemporary evening sale in New York in May 2009. It was later purchased for $9.4 million from the Helly Nahmad Gallery in November 2012 using funds from a diverted bond sale for 1MDB. The starting bid for Red Man One on the US Marshals Art Auction website is $2.975 million.

Picasso’s Tête de taureau et broc (1939) was acquired for $3.28 million in January 2014 using funds from a diverted bond sale. The painting was gifted to DiCaprio with a handwritten note and signed “TKL,” which stands for Low Taek Jho. The starting bid for this piece is $850,000.

Diane Arbus’s Child with a Toy Hand Grenade was purchased for $750,000 from Cinema Archives. The starting bid for this artwork on the auction site is $4,400.

Proceeds and Future Implications

Proceeds from federal seizures typically go to the Treasury Department, but in this case, the funds from the sale of these assets will benefit people harmed by the corruption in Malaysia. A Justice Department spokesperson confirmed this in 2019.

Gaston and Sheehan previously sold two other artworks connected to the 1MDB scandal in February 2021: Heinz Schulz-Neudamm’s "Metropolis" film poster and Andy Warhol’s Round Jackie (1964). The Warhol painting sold for $1.04 million, slightly below the price Low paid for it in 2013.

Another artwork linked to Low, Mark Rothko’s Untitled (Yellow and Blue), saw a significant drop in value when it was sold in Hong Kong last November. The 1954 painting sold for $252.5 million HKD ($32.5 million), far below its estimated $275 million HKD ($35 million).

Expert Opinions on Bidding Activity

While some art advisors believe the association with Low might lead to discounts for the artworks, industry experts caution against making assumptions. Jane Levine, a partner at The ArtRisk Group, noted that it is difficult to determine whether a lower sale price is due to market conditions or issues with the auction process itself.

She added that auctions can be unpredictable, and prices could defy expectations. This uncertainty adds to the intrigue of the auction, making it an interesting event for collectors and investors alike.