Lessons from the Art World: Anti-fraud tools for HNW individuals


The story of how Inigo Philbrook used art to con investors out of $86 million may sound like it comes straight from a Hollywood movie, but it also serves as a cautionary tale.

What happened?

Philbrook was well known in the art world. He was the former head of secondary market sales at the White Cube gallery in London before opening his own gallery in Mayfair. He eventually opened another branch in Miami in 2017. The fraud involved Philbrook employing a variety of methods to swindle his clients using high-value artwork. For example, he sold stakes in the artwork he acquired which added up to more than 100% to multiple investors. Then, using the artworks as collateral, he took out loans against the pieces without informing the other artwork shareholders or informing lenders that shares in the artwork had been sold. In addition, he falsified documents to artificially inflate the values of the artworks.

The fraud eventually unravelled when one of the lenders formally notified Philbrick that he was in default of a $14 million loan.

As Philbrook operated out of both London and Miami, both the UK and American authorities were likely aware on some level of Philbrook's activities and no doubt an investigation would have involved at least some cooperation between them.

Fraud on the scale seen here is often multijurisdictional in nature and it can sometimes be difficult for the various jurisdictions to determine who takes the lead in investigating and prosecuting the fraudsters. There may have been a discussion in this case between the two countries, and it remains a possibility that the UK authorities could not investigate to the full extent necessary due to a lack of resources.  But it certainly seems that elements of the fraud took place in both UK and America (and perhaps other jurisdictions), meaning criminal proceedings could have been brought in the UK.

The high profile and high-value nature of Philbrook's dodgy dealings forced authorities to take action. But what if they don't?

Fighting Fraud

Fraud accounts for roughly 30% of all crimes reported to authorities in the United Kingdom. Despite this, less than 1% of police personnel are involved in fraud investigations. Fraud costs the UK economy 137 billion pounds per year.  While victims should report these to the relevant authorities such as the police or Action Fraud, these services are often under-resourced and are not always able to respond, investigate and prosecute fraudsters. In 2022, roughly 1 in 1000 frauds reported have resulted in a prosecution.

Private Prosecutions 

Luckily for the victims, and unluckily for Mr. Philbrook, the amount of money involved and the high profile nature of the con meant that the case received too much attention to ignore, leading law enforcement authorities to take action. 

For those cases where law enforcement is unable to bring perpetrators to justice, private prosecutions are often an ideal choice for a number of reasons. 

Firstly, one does not have to wait for the police or Crown Prosecution Service to react as they are often under-resourced and unable to investigate a claim. Those bringing private prosecutions can also pick their own representatives and pursue their own course of justice. 

Ensuring that a prosecution takes place also acts as a deterrent. Entrepreneurs and high net worth individuals can often be seen as mark by would be fraudsters. High net worth individuals and entrepreneurs who do not wish to be targeted should be aware of the options they have at their disposal. 

Even if one decides against pursuing a private prosecution, having the assistance of a lawyer who can speak the same language as the police can help. A lawyer will be able to set out any available evidence and clearly identify if a suspected fraud has taken place which will make it more difficult for the police to not investigate.

So while the authorities may be the first point of contact, instructing lawyers with an expertise in fraud can help victims pursue the justice they deserve. 

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