Gallery President Defrauded Art Dealers into Sending Him Money and Artwork Worth Millions of Dollars
Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the Federal Bureau of Investigation, New York Division (“FBI”), announced today the unsealing of a complaint charging EZRA CHOWAIKI with fraud and transportation of stolen property for using his art gallery located on Park Avenue in Manhattan to defraud art dealers and collectors of millions of dollars. EZRA CHOWAIKI surrendered this morning to FBI agents and will be presented before Magistrate Judge Katharine H. Parker this afternoon.
Acting U.S. Attorney Joon H. Kim said: “While Ezra Chowaiki appeared to buy and sell high-end artwork in his upscale Manhattan gallery, as alleged, he sold clients nothing more than an illusion. Chowaiki allegedly tricked his clients into investing hundreds of thousands of dollars in artwork that he never actually bought and secretly sold artwork that they had entrusted to him. As a result of Chowaiki’s alleged fraud, valuable works of art have been stolen from their rightful owners and unlawfully distributed all over the world.”
FBI Assistant Director William F. Sweeney Jr. said: “Investors believed the subject in this case had their best interests at heart, taking their money in an investment, but never followed through on his promises. When they dared to demand their money back, he allegedly refused. We believe there may be others out there who could be a victim of this scheme, and we ask that they contact us at NYArtcrime@fbi.gov
According to the allegations contained in the Complaint[1] unsealed today in Manhattan federal court:
Until November 2017, EZRA CHOWAIKI was the president and the minority owner of a private art gallery located on Park Avenue in New York, New York (the “Gallery”). CHOWAIKI founded the Gallery in or about 2004, and since that time, CHOWAIKI has used the Gallery to facilitate the purchase, sale, and consignment of works of fine art, as well as for the hosting of various art exhibitions featuring works of art and sculptures by well-known artists such as Pablo Picasso, Alexander Calder, Marc Chagall, and others. CHOWAIKI lost control of the Gallery in or about November 2017 when the Gallery filed for bankruptcy and was taken over by a trustee to oversee its liquidation.
Between at least in or about 2015 and 2017, through the Gallery, CHOWAIKI engaged in a scheme to deceive other dealers and collectors of fine artwork into sending him money or valuable artwork under the false pretenses that CHOWAIKI would engage in legitimate transactions such as the purchase, sale, or consignment of those artworks. In truth, however, CHOWAIKI did not, and often could not, conduct the transactions as promised, and instead kept funds and artwork for himself and the Gallery, or sold them to others both in and outside the United States, without authorization.
For example, a number of victims reported being asked by CHOWAIKI to invest money to purchase artwork through the Gallery that would then be sold by the Gallery, thereby generating profit for the investors. After a number of these investors sent hundreds of thousands of dollars to CHOWAIKI, CHOWAIKI did not use the funds to purchase the artwork, nor did he return the money to the investors. Similarly, other victims reported consigning artwork to CHOWAIKI for sale by the Gallery. After these victims attempted to cancel the consignments, CHOWAIKI refused to return the artwork and, in some cases, purported to sell the artwork to other galleries and auctioneers located in the United States and abroad with the authorization of the work’s rightful owner.
At the time the Gallery filed for bankruptcy and CHOWAIKI was removed as president, the Gallery purported to have only approximately $276,681 in assets, whereas the Gallery owed at least approximately $11.8 million in claims to dozens of art dealers and others, including those who had sent money to the Gallery to buy artwork or who had consigned artwork to the Gallery that was never returned.
CHOWAIKI, 49, of Brooklyn, New York, is charged with one count of conspiracy to commit wire fraud and one count of wire fraud, each of which carries a maximum potential sentence of 20 years in prison, and one count of interstate transportation of stolen goods, which carries a maximum potential sentence of 10 years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.
Mr. Kim praised the work of the FBI and the New York City Police Department’s Major Case Squad. Any person who believes he/she is a victim of this crime is encouraged to send an email to NYArtCrime@fbi.gov
[1] As the introductory phrase signifies, the entirety of the Complaint, and the description of the Complaint set forth herein, constitute only allegations, and every fact described should be treated as an allegation.
