Collectables Crime: Cavet Collector

Leila Boulton ('Caveat Collector', Private Wealth magazine,  September 2, 2014) has written quite a detailed article about collectables crime with some interesting information which, though the general thrust of the text is concerned with high-end fine art and fine wines (and their functions as media for capital growth), should be of interest to antiquities collectors:

Pricey collectibles such as art, wine and classic cars are high on the shopping lists of the ultra-affluent—and fraudsters are only too happy to provide them. Collectibles crime is a global industry that generates billions annually. The recent run-up in prices at international auction sales and the ease with which collectibles are transported across borders have fueled a burgeoning market for forgeries. Forty percent or more of the collectibles sold worldwide are likely counterfeit, experts estimate.[...]  the number of forgeries [...] is increasing because of the growth in global wealth and disposable income. “There’s more money being spent in the collectibles market than ever before in history. 

The rich collect primarily for the emotional gratification of owning one-of-a-kind pieces, though increasingly they are also considering their treasures as a store of wealth and as long-term investments. This type of investment however carries a number of risks and one of the most significant investment risks is the

increasing likelihood of buying a forgery. The market for collectibles, including fine art, is the largest unregulated market in the world.[...]  As prices have skyrocketed in response to demand, so have the number of counterfeits. 

It is not just the high-end items which are a risk. Matt Erskine, of the Worcester, Mass.-based Erskine Company explains that:

there’s a middle-market sweet spot where fraudsters can earn enough money to make the risk worth it, without attracting too much scrutiny. It takes counterfeiters a fair amount of time and effort to make decent forgeries. “They tend to copy collectibles that will bring enough value to compensate them for making the items, but are not so valuable that they attract a lot of attention. The easiest things to forge are those that were made in the thousands, if not hundreds of thousands—coins, stamps, books—because you can take one and modify it slightly to make it look rarer.”[...] Not surprisingly, many fakes that start out as harmless replicas are later hawked as authentic works by unscrupulous collectors, dealers and auction houses. The fraud occurs when sellers portray the items as real, when they know they’re not. Industry insiders say a code of silence exists when it comes to forgeries. Some wealthy collectors are simply too embarrassed to admit they’ve been duped. Others who suspect that their pieces are forged want to avoid casting doubt on the authenticity of the works, thereby reducing their value. Rather than come clean, some attempt to unload their forgeries on others. 

Buyers cannot usually invest a lot of time in becoming top connoisseurs themselves (and of course in many fields - such as antiquities and ancient coins there are no end of collectors who believe that though they have no formal training in the processing of ancient artefacts and have not handled many fresh from the ground, they know enough not to be caught out). Some may hire authentication services (who authenticates them?).  Boulton of course concludes that one of the best risk-reducers is due diligence  concerning an item's purported origins and its collecting history:

In the “buyer beware” world of collectibles, the greater a client’s desire to believe that a unique piece is a once-in-a-lifetime buying opportunity, the more caution an advisor should likely urge. As Erskine puts it, “There are probably new scams being thought up every day. And the number detected is nowhere near the number actually being perpetrated. Even the most experienced collector can get scammed, so if the deal sounds too good to be true—it probably is.”