The choice between civil and criminal remedies in stolen art litigation.

• Author: Kreder, Jennifer Anglim

TABLE OF CONTENTS I. INTRODUCTION II. STOLEN ART CRIMINAL PROSECUTIONS III. CIVIL FORFEITURE CASES--A HYBRID A. Austrian Post-War Efforts and Portrait of Wally B. CAFRA--Increasing Due Process Safeguards C. Femme En Blanc D. Comparison of Portrait of Wally and Femme en Blanc IV. CONCLUSION I. INTRODUCTION

The subject of stolen art has recently received substantial attention from the media (1) and has been the subject of a number of closely-followed cases, (2) many involving Nazi-looted art. Such cases were filed in U.S. courts as recently as 2004 and 2005, (3) and in 2004, the U.S. Supreme Court heard one such case, Republic of Austria v. Altmann, on a narrow issue. (4) Some heirs of deceased Holocaust survivors are learning, as they look through family documents, for example, that they have claims to art. (5)

Because approximately 20% of all European art was looted by the Nazis, (6) there is a tremendous amount of artwork with a tainted past that has traded hands many times. (7) Current possessors of such art may be completely unaware that it ever was stolen. (8) Even if they are generally aware of the Nazi-looted art problem, many are leery of initiating a provenance search: possessors may be apprehensive, not only because the search itself is expensive, but also because they may fear that initiating a search will ultimately result in dispossession without compensation. (9) As potential buyers research the provenance of the artwork, information about the artwork's whereabouts and its current possessors will reach claimants, who will seek to negotiate a settlement, file a lawsuit, or both. (10)

The fight to return Nazi-looted art was invigorated by the publication of Lynn Nicholas' The Rape of Europa (1994) and Hector Feliciano's The Lost Museum (1997). (11) News of lawsuits filed in the late 1990s seeking compensation for World War II-era slave labor, (12) unpaid insurance policies, (13) bank accounts, (14) and stolen gold (15) led to generally increased awareness about the remaining legal issues pertaining to the Holocaust. Since these events and the adoption of the Washington Principles in 1998, (16) many major museums around the world have dedicated significant resources to researching the provenance of artworks with gaps seemingly related to World War II. (17) These museums are publishing their findings on the web, which is searchable by claimants. Organizations dedicated to locating looted art, such as the Art Loss Register, are taking similar steps. (18) Some museums have reached creative settlements with claimants. (19) Others, however, notably the Austrian Gallery and the Belvedere in Vienna, have fought claims in U.S. courts. (20)

In the United States, litigation of art theft issues has taken various forms and is governed by varying standards of proof and statutes of limitation. Of course, traditional civil litigation is one option. On the whole, traditional civil litigation of art theft cases has been quite positive for plaintiffs: most of those cases reach out-of-court settlements. (21) Notably, some have an unfavorable view of U.S. courts' openness to such claims. For example, some critics maintain that the New York courts--arguably the most liberal in the United States because they employ the "demand and refusal" rule for triggering the statute of limitations--have become a magnet for ancient, unjustified claims. (22)

The most contested issues in such cases tend to be the factual accuracy of the claim of looting, statutes of limitation, and choice of law. (23) As witnesses die and documents are lost, a plaintiff has greater difficulty establishing ownership, while a defendant has an increased ability to show prejudice from the delay under U.S. laches doctrine. (24) As time passes and art trades hands, it likely will become more difficult for plaintiffs to win such cases. (25) Additionally, the applicable statutes of limitation and repose available under the civil law of European nations continue to run. (26) Choice of law is often contested because U.S. law is more favorable to plaintiffs than European laws on statute of limitations issues. (27)

Plaintiffs continue to file traditional civil actions seeking the return of Nazi-looted artwork. In October 2004, a case was filed against Elizabeth Taylor. That case was dismissed fairly quickly, primarily because there was no evidence that the art was looted or subjected to a forced sale. (28) Additionally, Ed Fagan--famous for his role in the Holocaust slave labor class actions in New York--reportedly filed an $18 billion suit against Germany and a $1.8 billion suit against Sotheby's, publicly stating that he planned to file similar suits against the United States, Austria, and France. (29) Regardless of the viability of those particular suits, traditional civil litigation is a viable option in many Nazi-looted art cases. Indeed, the Altmann case, prior to entering arbitration, was litigated all the way to the Supreme Court in 2004, albeit on narrow grounds. (30)

Criminal prosecution is another possible option. At the federal level, art theft is prosecuted criminally under the National Stolen Property Act (NSPA). (31) The NSPA was initially passed to address the problem of stolen cars that were moved in interstate commerce: prior to its enactment, prosecutors in the state where cars were stolen were powerless to prosecute the thieves after they drove the stolen cars across state lines. (32) Of course, criminal prosecutions are governed by the "beyond a reasonable doubt" standard, whereas most traditional civil litigation is governed by the "preponderance of the evidence" standard.

In addition to civil actions and criminal prosecutions, civil forfeiture is another mechanism that may be used to recover stolen art. (33) The civil forfeiture mechanism operates as a hybrid of criminal and civil proceedings. (34) In the types of civil forfeiture proceedings most applicable to stolen art, the government seizes the art and must then show, by a preponderance of the evidence, (35) that the art is subject to forfeiture because it was imported, transported, or received in violation of some law (probably the NSPA or a customs regulation). (36) Those who claim ownership of the art--regardless of whether they possessed the art immediately prior to the seizure--may then assert that the art should not be forfeited to the government, but rather should be awarded to them. (37)

"[T]he complexities of ownership issues sometimes result in more than one party having colorable and good faith claims to title." (38) Additionally, because a violation of the NSPA occurs only when the defendant acted "knowingly," (39) there is a scienter component, which means that the government must prove that the violation was intentional. (40) Further, as with most U.S. penal statutes, conspiracy to violate the NSPA is also a crime. (41)

This Article analyzes the patchwork of legal remedies available to persons claiming ownership of Nazi-looted art. This Article demonstrates that the use of the NSPA via criminal prosecutions or civil forfeiture proceedings provides a claimant with great advantages over the present-day possessors of the art. Part II analyzes the criminal remedies used to punish thieves and restore the art to its original owners or their heirs. Part III analyzes the use of the civil forfeiture mechanism--a hybrid of criminal and civil remedies--in pursuit of restoring art to claimants.

Part IV concludes that criminal prosecutions or civil forfeiture proceedings premised on violations of the NSPA should be brought--most often, but not exclusively--in the limited circumstance of a clear, usually recent, theft. The NSPA is a criminal statute and should only be applied--even indirectly through civil forfeiture proceedings--to truly criminal conduct. For many claims to purportedly stolen art, traditional civil litigation is a viable option that is preferable to government-backed forfeiture proceedings, which preempt statute of limitations principles upon which the viability of the art market greatly depends. Although since the adoption in 2000 of the Civil Asset Forfeiture Reform Act (CAFRA) the advantages to the government in a civil forfeiture proceeding are no longer quite as extreme as they once were, (42) they still are weighty. Moreover, the risk of erroneous deprivation is extremely high when ownership turns on complex legal and factual issues that span many years. The government should initiate criminal or civil forfeiture proceedings only when there is probable cause to believe that notice of criminal conduct at the time of acquisition is attributable to the current possessor of the art, and when the current claimant is unable to locate the art shortly after the theft. Otherwise, the government should limit its involvement to assisting in negotiating a settlement, or it should leave the claimants to pursue traditional civil remedies.

2. STOLEN ART CRIMINAL PROSECUTIONS

   Only a few criminal cases have been filed on the grounds of art theft. The NSPA--passed in 1934 (43) as an extension of the National Motor Vehicle Act of 1919 (44)--has been the basis for almost all reported criminal prosecutions of art theft in the United States. The NSPA is subdivided into two sections: 2314 and 2315. Section 2314 provides in relevant part:

   Whoever transports, transmits or transfers in interstate or foreign commerce any goods, wares, merchandise, securities or money, of the value of $5,000 or more, knowing the same to have been stolen or taken by fraud.... [s]hall be fined under this title or imprisoned not more than ten years or both. (45) Section 2315 provides in relevant part:

   Whoever receives, possesses, conceals, stores, barters, sells, or disposes of any goods ... of the value of $5,000 or more ... which have crossed a State or United States boundary after being stolen, unlawfully converted, or taken, knowing the same to have been stolen, unlawfully converted, or taken...