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Gallery gold plans upended by fraud probe
by Paul Waldie

When New York's famed Gagosian Gallery was planning an upcoming exhibition at its Beverly Hills, Calif., gallery, One Ton, One Kilo, it needed an unusual art supply - 100 gold bars weighing one kilogram each.

The gold was apparently required by California artist Chris Burden, who planned to remount his 1985 piece Tower of Power. That work featured 100 gold bars arranged in a cone, surrounded by a dozen matchstick figures bowing, praying or saluting.

To get the bars, Gagosian director Melissa Lazarov contacted Joe Frisard, president of Stanford Coins & Bullion Inc. in Houston, who had dealt with the gallery before. On Feb. 2, Lazarov placed the order and wired Stanford $2.9-million (U.S.). She insisted the gold arrive at the Beverly Hills gallery by March 4, three days before the start of the exhibit which features other works by Burden involving "figurative aspects of weights and measures."

At first, everything worked like clockwork. Frisard called up Dillon Gage, a Dallas company that specializes in precious metals, and it procured the bars and got them ready for delivery.

The gold was just about to be shipped when federal agents raided the Houston office of Stanford Financial Group, which owns Stanford Coins. The raid was part of a lengthy investigation by the U.S. Securities and Exchange Commission into allegations that company owner Allen Stanford had orchestrated an $8-billion fraud. Within hours, the SEC filed civil charges in Texas and appointed a receiver to take control of all Stanford Group entities. The receiver immediately issued an order freezing all accounts and assets.

Gagosian was stuck. Its gold was ready to go, but Dillon Gage refused to ship the bars, citing the asset freeze.

Last Friday, Gagosian's lawyers pleaded with U.S. District Judge David Godbey, who is overseeing the Stanford Financial case, and asked him to lift the freeze just enough to free the bars. If the gold didn't arrive in time for the exhibition Gagosian would suffer "irreparable harm, including but not limited to, substantial monetary losses and damage to its reputation in the art community," the lawyers argued in a court filing.

They noted that the gold deal had nothing to do with the SEC investigation. "The gold held by Dillon is not the property of Stanford Coins nor Dillon Gage as it has been paid for in full by Gagosian," the lawyers argued.

On Monday, Judge Godbey turned them down along with dozens of other investors in Stanford Financial who asked for similar relief. The judge extended the freeze for at least another 10 days, noting the complexity of the case (Stanford Financial had operations in 130 countries including Canada, and more than 30,000 clients). The receiver, Dallas lawyer Ralph Janvey, told the court he understands the concerns raised about the freeze and he pledged to do his best to unlock some assets.

But that's not much help for Gagosian. The exhibit is supposed to run from March 7 to April 4 and it is not clear when or if the gold will be released. In a brief interview, Frisard said Stanford Coins has shut down and the matter is in the hands of the courts. Officials at Dillon Gage were unavailable for comment.

Michelle Pobar, a spokeswoman for Gagosian, said the gallery still plans to go ahead with the exhibit, although it may be delayed. "We're certainly hopeful that it opens this Saturday," she said yesterday. "But we don't have an answer on anything quite yet."


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