On the invisible boundary between building reputation, manipulating the market, and committing fraud

From time to time, a scandal involving forgery or fraud ripples through the art press and revives a convenient suspicion: that the entire market is a fabrication, that prices are illusory, and that behind every figure lies a hand pulling the strings. The suspicion is understandable and, phrased in this way, false. There is no evidence of a coordinated and permanent manipulation of the art market. Proven frauds exist, yet they are closed cases and, in the aggregate, exceptional.

What interests me is more uncomfortable than conspiracy theory, and more difficult to dismantle. It is not that the market is a fraud. It is that its structure makes it, by design, nearly impossible from the outside to distinguish between three very different things: the legitimate construction of reputation, licit but questionable manipulation, and criminally proven fraud. The problem is not that there is deception. It is that we cannot know, in any specific instance, whether there is.

1. How a price that does not entirely lie is manufactured

It is prudent to begin with what is demonstrated, as it is less spectacular and more revealing than any denunciation. The price of a work is not a reading of a property the work possesses. It is the result of a social process. The economic sociology of art has documented this with authority: under radical uncertainty regarding quality—no one can objectively demonstrate that a painting is 'worth' ten million—it is the authorised actors who confer reputation and produce the signals that allow a number to be assigned. Gallerists, critics, curators, journalists, and benchmark collectors. Value is produced intersubjectively, among individuals with the authority to recognise it; it is not discovered within the object.

There are studies that quantify this. Exhibition in prestigious museums correlates with subsequent performance at auction. Social signals—who supports an artist, in which network they circulate—predict contemporary art prices better than the visual traits of the work, especially in emerging markets. And the price itself, in the gallery, functions as a message: it communicates quality, status, the identity of the initial buyers, and the legitimacy of the artist. The number conveys meaning before it is a figure.

None of this is illegitimate. It is, quite simply, how a market for unique goods functions when no one can independently verify their value. Yet it carries a consequence that should be confronted directly: if value is manufactured through relationships and signals, then manipulating those relationships and signals is, from the outside, indistinguishable from producing them legitimately.

2. The legal theatre of price

Consider the auction, which is the most visible and supposedly most transparent part of the market. Until recently, in New York, the auctioneer could engage in chandelier bidding: accepting non-existent bids, cast into the air, to create the appearance of activity up to the reserve price. It was legal under certain conditions. In 2022, the city eliminated a significant portion of the specific rules that regulated auctions—including disclosure obligations regarding guarantees and that very practice—leaving the field to general regulations and self-regulation.

Consider guarantees. Before a work goes to auction, the house or a third party may assure the seller of a minimum price. If no one bids higher, the guarantor retains the work; if it is exceeded, they receive compensation or a portion of the difference. The effect is a price floor established before the actual bidding commences. A guaranteed work appears pre-validated by sophisticated capital. This is not necessarily deception—it may be disclosed—but the boundary between 'information the bidder deserves' and 'information withheld from them' depends upon an opacity that the system tolerates.

Consider the primary gallery market, which is not a transparent exchange but the contrary: managed scarcity, waiting lists, and the selection of who is permitted to purchase. All of this produces an aura of qualified demand. And all of this is perfectly legal. Controlling supply to sustain a price is market management; it could also be, in a specific case, manipulation. From the outside, the difference is not visible.

None of these practices is, in itself, fraud. That is precisely the point. The standard repertoire of the market—chandelier bidding, opaque guarantees, strategic withdrawal, defensive buybacks, institutional placement—produces the same visible effects that deliberate manipulation would produce. The legality of the tool does not guarantee the integrity of its use, and the use is not observable.

3. When fraud does occur: what the cases teach us

There are proven instances of fraud, and it is prudent not to dilute them within general suspicion, as their exceptional nature is central to the argument. Glafira Rosales pleaded guilty to introducing several dozen forged Abstract Expressionist works—attributed to Rothko, Pollock, and Motherwell—through the Knoedler gallery, which were in fact painted by a single artist. Wolfgang Beltracchi was convicted by a Cologne court for forging works with fabricated provenances, including collections that never existed. Inigo Philbrick was sentenced for selling more than one hundred per cent ownership of the same work to multiple buyers simultaneously, using it as collateral without informing the co-owners.

Three observations are immediately apparent in these cases. First, what enabled the fraud was not the technical skill of the forger or the audacity of the dealer, but the very opacity that sustains the legitimate market. Provenances that no one could verify, ownerships that no one cross-checked, and reputational trust that replaced due diligence. Philbrick was able to sell the same work multiple times because no public registry existed to prevent it.

Second, the system failed to detect any of these frauds through internal mechanisms. They were uncovered only by collapse—when Philbrick’s buyers all sought the same work at once—, by whistleblowing, or by judicial investigation. From within, the market could not distinguish the fraudulent operation from the legitimate one, as both utilised the same opaque channels.

Third, and most delicate, is the boundary. The Bouvier-Rybolovlev case did not result in a conviction: the buyer accused the intermediary of overcharging him by hundreds of millions over the years on a collection of thirty-eight works; the intermediary maintained he was acting as a dealer free to set his own margin. There was an out-of-court settlement, a dismissal in Geneva, and a New York jury acquitted the auction house involved. It is not proven fraud. It is, precisely, the grey area: alleged overpricing, a conflict of role between agent and vendor, and opacity regarding who knew what. What was a scam to one was commerce to the other. And the law, with the available evidence, could not resolve it.

4. The role of the media, without exaggeration

What of the press, the rankings, the “artists to watch” lists, and the fair coverage? One must be precise here, as it is easy to overstate the case. What is demonstrated is that the media are part of the apparatus that confers reputation: they fit into the mechanism by which authorised actors produce the signals that reduce buyer uncertainty. Media attention can be converted into liquidity—more enquiries, more visits, more potential buyers, and more justification for increasing the primary price.

What is not demonstrated is that every price increase following coverage constitutes manipulation. It may be a legitimate reputational effect, genuine scarcity, authentic demand, or institutional validation. To assert that there is a coordinated and stable manipulation between media, auction houses, galleries, and collectors to manufacture prices across the entire market is conjecture, not data: it would require documentary evidence—emails, contracts, covert financing, synchronised operations—which, due to the very opacity of the system, almost never surface.

And therein lies the central problem, now applied to the media. We cannot affirm generalised manipulation. Neither can we rule it out. The structure does not allow us to know.

5. The loophole as a discovery

What this journey leaves us with is not an accusation, but an impossibility. It is proven that reputation, social signals, institutions, and the media influence value. It is proven that there are criminally proven frauds. It is proven that the market has structural vulnerabilities—anonymity, intermediaries, shell companies, freeports, and private, non-public pricing—recognised by the United States Senate, the US Treasury, the FATF, and by European anti-money laundering regulations themselves, which have only in recent years begun to include the art trade among those obligated.

What is absent, and cannot easily be present, is the line. Opacity prevents a clear distinction between the legal formation of reputation, ethical yet lawful manipulation, and proven fraud. This lack of distinction is not an accidental failure that a robust audit would rectify. It is the operational condition of a market that trades in goods whose value no one can independently verify, and which has established discretion as a norm.

This connects to a premise I maintain in this Notebook. If the value of art is not an inherent property of the object but something activated within a system of relations—recognition, exhibition, endorsement, circulation—then the manipulation of that system is, by design, difficult to distinguish from its normal operation. This is not because everyone is lying, but because the truth and the falsehood regarding price circulate through the same opaque channel. The consequence is not cynicism—the notion that everything is a lie—which is as false as naivety. It is something more sober: when confronted with a figure from the art market, intellectual honesty compels one to admit that we do not know, and that the system is designed to ensure we remain in ignorance.

And there is, even here, a loophole that is not insignificant. That very impossibility of verifying the price is proof that the price is not the work itself. What a painting does when someone stands before it—whether it reorganises something, whether it opens a horizon—does not pass through the auction house nor is it decided in the private market. That we can know, each of us, at first hand, without intermediaries and without opacity. The market jealously guards the secret of its figures. The experience of the work, by contrast, seeks no one’s permission.

On open conversation

This text continues the reflection on how the value of art is produced and validated, a theme that runs throughout this Notebook. Should anyone wish to contribute from the perspectives of the economic sociology of art, market law, specialised journalism, or professional practice within the sector, the notebook remains open.

Sources

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U.S. Department of the Treasury (2022). Study of the Facilitation of Money Laundering and Terror Finance Through the Trade in Works of Art. https://home.treasury.gov/system/files/136/Treasury_Study_WoA.pdf

Financial Action Task Force (FATF/GAFI) (2023). Money Laundering and Terrorist Financing in the Art and Antiquities Market. https://www.fatf-gafi.org/en/publications/Methodsandtrends/Money-Laundering-Terrorist-Financing-Art-Antiquities-Market.html

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