A lawsuit filed last month pits a Warhol Factory denizen against a New York art dealer. The case involves a bounced check and a complex transaction for artworks by Dan Colen, Mike Kelley and Richard Prince. The story was originally reported by Courthouse News Service.
Art collector and former Warhol superstar “Baby” Jane Holzer sued New York’s Stephan Stoyanov Gallery in New York Supreme Court on May 19, claiming Stoyanov mishandled at least $585,000, which he’d agreed to hold in escrow for Holzer as part of a “like kind” exchange of artwork, also known as a section 1031 exchange. The transaction requires a third party (Stoyanov, in this instance) to hold the funds until the transaction is complete but allows the seller to postpone paying income tax or capital gains tax.
According to Holzer’s complaint, she and Stoyanov, who maintains a gallery on Orchard Street, signed an “Agreement for Exchange of Property” on Mar. 25. That agreement stated that Holzer would sell two pieces from her own collection to Stoyanov: Mike Kelley’s acrylic-on-canvas Rainbow Coalition (1985), which he bought in April for $240,000, and Dan Colen’s candy-on-canvas Cardboard Cutout (2010), which he bought for $500,000 that same month. The $740,000 total was to be held by Stoyanov in an escrow account for the exclusive purpose of buying “exchange works” selected by Holzer.
Holzer opted to purchase from Gagosian Gallery two Richard Prince Untitled (Cowboy) paintings from 2012, for $405,000 and $585,000 respectively. Holzer paid Stoyanov an additional $253,000 (plus fees) to cover the difference between the sum received for the Kelley and Colen and the price of the Princes.
The complaint states that Stoyanov wrote two checks to pay for the Prince paintings; however, only the $405,000 check, covering the smaller Prince painting, cleared. The other, for $585,000, bounced. The complaint points out that the money should have come from an escrow account set aside for these funds, not the gallery’s account.
Holzer says Stoyanov claimed this was all a “mix up” and that Holzer’s money ended up in the “wrong account.” She asserts that in fact Stoyanov used her money “for his own benefit on his current travel to Europe.”
Stoyanov said he had traveled to Bulgaria after the death of his brother, according to the complaint, and was unable to resolve the matter from there.
“There is nothing more to say,” Stoyanov told A.i.A. by e-mail from Venice. “I am planning to resolve the situation upon my return to the U.S. next week.”
Stoyanov has 20 or 30 days to formally respond to Holzer’s allegations, depending on how he was served with papers.