Art Institute showed 'willful blindness' in buying Nazi-looted art, New York prosecutors say

CHICAGO - The Art Institute of Chicago has been accused of exhibiting "willful blindness" to evidence suggesting it was purchasing artwork stolen during the Holocaust when it acquired a drawing that authorities say was looted by the Nazis.

The damning allegations were made in court documents filed in New York last week that argue the Art Institute benefited from a decadeslong "conspiracy of silence" over the drawing "Russian War Prisoner" by Egon Schiele.

The 160-page filing by the Manhattan district attorney’s office lays out its case contending the work of art was stolen by the Nazis from cabaret star Fritz Grunbaum and later laundered through art dealers before arriving in New York.

It accuses the Art Institute of failing to engage in "reasonable inquiry" as to the origins of the piece when it purchased it in 1966 and again decades later when questions arose about its provenance.

The Art Institute denies the allegations, contending museum officials are "confident" they legally own the piece.

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Grunbaum’s heirs have for years sought the return of "Russian War Prisoner" and other pieces of his art collection, which the performer and songwriter was forced to turn over to Nazi authorities in 1938 when he was sent to the Dachau concentration camp. Grünbaum died there in 1941.

Manhattan District Attorney Alvin Bragg’s office seized 10 of Schiele’s drawings that were once in Grünbaum’s possession and identified as stolen property by the office’s Antiquities Trafficking Unit.

Nine of those works — including pieces that were at the Museum of Modern Art in New York and the Santa Barbara Museum of Art in California — have been returned to Grünbaum’s heirs, leaving the Art Institute as the lone holdout. An 11th piece was surrendered to heirs directly by an individual, according to court documents.

Prosecutors say they have jurisdiction in all of the cases because the artworks were bought and sold by Manhattan art dealers at some point.

The Art Institute said in a statement that it had done "extensive research" on the provenance of the work, and officials were "confident" in their lawful ownership of the piece and would continue to defend the museum’s position in court.

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The museum contends Grünbaum’s sister-in-law, Mathilde Lukacs, inherited "Russian War Prisoner" and subsequently sold it along with other of his works in 1956 to Swiss art dealer Eberhard Kornfeld.

"Fritz Grünbaum’s sister-in-law Mathilde Lukacs sold it in 1956," the Art Institute said. "If we had this work unlawfully, we would return it, but that is not the case here."

The museum pointed to a court ruling in 2011 involving another piece of Schiele’s work in which a judge found the Lukacs-Kornfeld sale story credible and ruled against the heirs.

"Federal court has explicitly ruled that the Grünbaum’s Schiele art collection was ‘not looted’ and ‘remained in the Grünbaum family’s possession,'" the museum said.

But in their filing last week, New York prosectuors addressed that argument at length, outlining a "conspiracy of silence" in which Kornfeld and dealers laundered artwork stolen by Nazis.

Investigators also say Kornfeld only produced corroborating documents decades after the alleged sale. Those documents contained forged signatures and other irregularities in an attempt to prove he received the pieces from Lukacs in the 1950s, according to the filing.

Matthew Bogdanos, chief of the Antiquities Trafficking Unit, states in the filing that one person in the case "doctored" documents "and he always did so in pencil. Eberhard Kornfeld."

Investigators say it is likely Kornfeld received "clandestine delivery" of the Schieles in Switzerland by dealers with connections to Nazis, though it’s not possible to pinpoint exactly how Kornfeld came into possession of Grünbaum’s art.

Grünbaum’s collection of Schieles — including "Russian War Prisoner" — was stored in a Nazi-controlled warehouse in Vienna after he was sent to Dachau in 1938, the filing states. Lukacs had already fled the country by that point, and therefore she could not have sold the works to Kornfeld at that time.

"Russian War Prisoner" didn’t resurface until Kornfeld put it up for sale among other Schieles in 1956, investigators say. Kornfeld’s auction house sold an "unprecedented" total of 63 Schiele paintings and drawings in 1955 and 1956. Of those sales, Kornfeld only provided prior ownership history for one piece.

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In 1998, after being interviewed by a Swiss journalist who exposed Switzerland’s role in laundering Nazi-looted art, Kornfeld suddenly produced typewritten documents that he said were receipts proving he had bought the Schieles from Lukacs in 1955 and 1956.

"The telltale signs of reverse engineering in these four typed inventory lists are legion," the court documents state. "All four bear the unmistakable signs of having been created at some later date to attempt to cover up what was becoming increasingly difficult to cover up, and to deny what today can no longer be denied."

After World War II, museums and other institutions around the world were warned about the provenance of artwork from Nazi-controlled territories. Despite this, the Art Institute did not exercise proper due diligence when it bought "Russian War Prisoner" in 1966, the filing states.

According to the court filing, only in 2002 did the Art Institute ask Kornfeld about the ownership history of "Russian War Prisoner." Kornfeld told the museum he had bought the piece from Lukacs. "AIC did not question Kornfeld’s self-serving cover story," even though it came four years after the 1998 publication of the story by the Swiss journalist, the filing states.

Oral arguments in the dispute are expected to begin in the spring, and if recent rulings involving Schiele’s works are any indication, the court could land on either side of the issue.

In a 2018 case, a New York State Supreme Court found that Grünbaum did not voluntarily relinquish his collection before he was killed and ordered works returned to his heirs.

But in November, the Art Institute was awarded ownership of "Prisoner of War" after a judge ruled that Grünbaum’s heirs filed claims to the drawing after the statute of limitations had expired.