Disgraced dealer Ezra Chowaiki, whose elaborate wire fraud art investment scheme came to light after his gallery, Chowaiki & Co. Fine Art Ltd., filed for bankruptcy last year, was sentenced to 18 months in prison on Thursday. Chowaiki had faced up to 20 years for selling collectors shares of artworks he didn’t own—including pieces by Marc Chagall, Edgar Degas, Pablo Picasso—often charging them far more than the market value of works. He pleaded guilty to one count of wire fraud in May and agreed to forfeit $16.6 million and 25 artworks; on Wednesday, he was ordered to repay his victims $12.9 million.
“My lying and scheming were antithetical to my conduct; this is why it’s so hard for me to understand why I allowed myself to do something so terrible,” Chowaiki, who had sought a sentence of a year and a day, said. “Why did I do it all? The short answer is I got desperate.”
“One factor that does loom in this case is the seemingly and largely unregulated nature of the art market,” said U.S. District Judge Jed S. Rakoff, who sentenced Chowaiki. “Here, we have something that by its very nature calls for expertise and can easily be the subject of fraud, yet seems to operate without any meaningful constraints. I think that weighs modestly in favor of a higher sentence.”