Despite what the common layperson might believe, my investigative journalism gig at NUVO is not a job any idiot could do. Indeed, working week after week to expose social injustice, champion civil rights and report government malfeasance thoroughly and eloquently is possible only for a professional comme moi. This is tough detective work boys and girls - finding out the who, what, where, when, why and how of any given story. And sometimes, when those queries lead to the dark underbelly of our metropolis, things can get ugly. Especially when that underbelly is a metaphor for Indiana State Government.
Take a recent Saturday night, for example, when I found myself in bed by 9 p.m., surrounded by junk food, reading a very long, very boring 6 million page self-aggrandizing strokefest called the Indiana State Government Performance Report put out the day before by Gov. Mitch Daniels' office. Not a bedtime story for amateurs, I assure you.
A summary of the report would sound something like this and, for the best effect, should be read aloud with a mouthful of Oreos:
Blah, blah, blah, the State's finances were in shambles under the Democrats. Blah, blah, blah, Thank God the Republicans have arrived to save us all from ruin!
But then at the bottom of page 4,786,251, I came across the following:
The Indiana Development Finance Authority was found to own over 3,000 pieces of artwork that have been stored in Michigan for many years. The art had been pledged as security on a transaction that went bad and therefore the IDFA took possession of the artwork. IDFA is developing a strategy to sell this artwork and will be sending the proceeds to the State General Fund to help balance the budget.
THREE THOUSAND PIECES OF ARTWORK!?!?!?!?!?!?
Suddenly I'm having an Antiques Roadshow moment. I begin to imagine a room full of Van Gogh and Cézanne; a previously unknown Matisse leans against a far wall, while a particularly morose Modigliani looms above the fireplace. And there I am in the middle of it all. The ace reporter who discovered the discovery!
I had better start practicing my Pulitzer acceptance speech now! Circulation will go through the roof! All our competitors will lie untouched in dusty stacks as residents of Indianapolis stampede to pick up NUVO and READ ALL ABOUT IT! The greatest art discovery of our generation!
Maybe I'll even get to be on Oprah!
The Big Kahuna laughs
It's a long time and a lot of Pringles before I can follow up on this lead. Unlike investigative journalists, government and its employees don't work seven days a week - they're off on "weekends."
But first thing Monday morning I'm dialing up Mr. Indiana Finance Authority himself, Ryan Kitchell, to get the 411. His official title is public finance officer, and I have no idea what that means. I just know the governor appointed him, and he's pretty much the Big Kahuna in charge of all the state's money. Kitchell isn't in yet, so I leave a message.
I always get nervous waiting for those who work at the Statehouse to call me back. Maybe that's because I always envision a lot of eye rolling when a government official gets the message a NUVO reporter is on the line. But I'm fairly confident Kitchell will return my call. He's a nice guy; I interviewed him for another story a few months ago, and we seemed to hit it off rather well.
With nothing else to do, I pour myself a bowl of Trix and decide it might be best if I prepare interview questions in addition to "What's the deal with the artwork?" I am, after all, a professional.
Around 9:30, my phone rings. It's Ryan Kitchell.
"What's the deal with the artwork?" my professional self blurts out.
"The 3,000 pieces of discovered artwork in Michigan!" I am trying not to scream or use the word "duh" in that sentence, so it takes a moment for his response to register.
He's laughing. Not chuckling. The Big Kahuna is actually roaring with laughter. Suddenly my world starts deflating like a big fat flat tire. No Antiques Roadshow. No Matisse. No Oprah.
"I'm in a meeting right now," he says as he attempts to regain his composure. "But let me put you in touch with the guy who's handling it."
"Are you laughing?" I somehow manage to say without revealing the fact that I'm just about to burst into tears.
"Well, the term 'artwork' might be over-reaching it a bit. The stuff's worthless." Kitchell has composed himself, but there is still much amusement in his voice.
"You mean it's all crap?" I ask in what can only be described as a whine.
"Yeah. It's a pretty funny story. Call Adam Horst in my office and he'll tell you all about it."
"Thanks," I mutter weakly and reach for the Kleenex.
Like all the eager-beaver staffers arriving as part of the Daniels' team in January, Adam Horst was charged with cleaning house from top to bottom at his job in the Office of Management and Budget. When he initially discovered the "lost" artwork the state owned, his joy was as palpable as mine. When he discovered the "artwork" wasn't worth much, his disappointment was comparable as well.
The facts remain somewhat sketchy; Horst is no investigative journalist after all. But here's what he does know from digging through 15 years worth of poorly organized files, comparing notes with the State Attorney General's Office and talking to a few art experts.
In 1991, the State of Indiana loaned Michigan resident Eugene I. Schuster $1.5 million as part of a new business economic development deal in Northern Indiana. Three years later, Schuster's company went bankrupt.
When the state went to seize the biomedical equipment Schuster used as collateral, they were told that it was "missing." (Seriously, that's how it's described in the files, just "missing." As in, poof, it was here a minute ago but now we can't seem to locate that warehouse full of biomedical equipment.) So, Schuster offered what he claimed was $600,000 worth of artwork in its place, and the State of Indiana accepted.
"Up until a few months ago, they were stored in the basement of a bank in Detroit," Horst says. "We were just starting to look into the artwork when the bank called and asked the state to come and get them. Apparently they'd just been sitting there for years."When Horst began seeking appraisals on the artwork's value, he had an Antiques Roadshow moment of his own - though his was more along the lines of a worst-case scenario moment. Because, as it turns out, what the state actually received in exchange for its investment of $1.5 million taxpayer dollars was 3,000-plus "original serial lithographs" of some 50 odd works by 10 different artists. (Think of it as the inventory of a Deck the Walls liquidation sale.) According to the experts Horst has contacted, the most optimistic appraisal of the "artwork" is $1,470,000 less than the $1,500,000 Schuster received, or a meager $30k.
"Seriously? The State of Indiana gave $1.5 million in taxpayer money to some guy in Michigan. He goes broke. The original collateral goes 'missing,' and the replacement collateral is $30,000 worth of crappy mall art that no one who works for the State of Indiana ever bothered to check out or bring back to this state for more than a decade?"
"Uh, yeah. That's pretty much it. Sounds crazy, but that's what we can piece together," Horst replies.
"And no one from the state had ever even seen these 'limited edition' masterpieces or had them appraised by someone other than Mr. Schuster when they accepted them for collateral on a $1.5 million loan that he'd already defaulted on?"
"Not as far as I can tell," he says, laughing. "Do you want me to send you a copy of the inventory?"
Unwilling, unable, or both, to give up my dreams of winning a Pulitzer or being on Oprah, I am skeptical about Adam Horst's amateur sleuthing abilities. So I decide to launch an investigation of my own.
And let me just say right here: Thank God for the Internet! Oh, I know it might be bad form for me to admit that nearly all my detective work begins with a Google search, but why take a shower, get dressed, put on makeup and leave the house before I have to?
After glancing at the inventory of the state's $1.5 million retail art investment, I select artist Fran Bull randomly from the list. Lo and behold, the first thing that pops up is an eBay listing where one can "Buy Now!" an "original" signed "serial lithograph" printed on "archival paper" of Bull's "Two Storks" for a mere $125. How reassuring. The State of Indiana owns 225 of 250 copies of this "original," which, according to what Schuster claimed when he forked them over, are worth $750 a piece.
Indiana also owns 203 of 250 serial copies of Tom Blackwell's "Charles Jourdan Galleria," courtesy of Schuster's inability to pay his debts. These are worth $1,000 a piece according to Schuster. And yet a certain London Arts Group Online Gallery is selling the same prints from the same series for $200 each. The more Googling I do, the more examples I find. And in almost every case, London Arts Group sells prints from nearly every single series of lithographs owned by the State of Indiana - each one at a fraction of the value the state's inventory lists.
Richard McLean's "Banana Beau" is available for $300; the state was given a value of $1,000. Lamar Briggs' "Spirit Dancer" is available for $200; the state was given a value of $800.
Fran Bull's "Zebras" is available for $200; the state was given a value of $900.
Mosche Castel's "Secret Writing" is available for $300; the state was given a value of $1,800.
OK. Setting aside for a brief moment the fact that the State of Indiana was completely hoodwinked into accepting all this artwork as anything near a value of a million bucks, how is it possible that the London Arts Group sells the exact same inventory of mall art that Schuster turned over?
And here's an interesting little tidbit: Both the eBay seller ("brightcolors") and London Arts share the same mailing address in Detroit, which also happens to be the exact same mailing address as Mr. Eugene Schuster.
Coincidence? Nope. The explanation is right on the Web site: "London Arts Group was founded in 1966 in London, England, by our father, a visiting Fulbright Scholar of art history at the Warburg Institute, who found more exciting challenges by publishing limited edition fine prints rather than lecturing on the nuances of Italian Quattrocento fresco painting."
In this case, "our father" is none other than Eugene Schuster himself.
Eugene Schuster's infamy in the art world began more than 20 years before the State of Indiana found him a good enough credit risk to loan him $1.5 million. In 1970, British police raided the London Arts gallery and arrested Schuster on obscenity charges for showing drawings by John Lennon depicting sex between himself and Yoko. Magistrates eventually threw out the charges on a legal technicality. But Schuster's statement to the police would prove to be a prophetic description of his business philosophy for more than three decades: "They are bad art, but after all, it's the name that sells them."
Not long after this first legal skirmish, Schuster and London Arts were back in court, but this time the accusations stuck. In 1972, a Mrs. Lawson purchased an original Frederick Remington pastel from London Arts. A few years later, she read an article in her local newspaper about art forgery and began to worry about her expensive Remington. Over the next year, Lawson had a series of appraisals done, and the piece was repeatedly declared absolutely and positively a forgery.
But London Arts contested the lawsuit (not the allegations mind you), claiming that the statute of limitations had run out, and therefore Lawson's suit was unenforceable. The court's final ruling in Lawson v. London Arts found that because Lawson was untrained in art, she relied on the gallery's expertise and did not suspect that she had bought a copy for four years. Therefore, the statute of limitations did not begin until she realized she had been sold a fake, and the court ruled in her favor.
Schuster and London Arts Group tried this same legal tactic in 1986 when Ira Snider sued the gallery for selling him "collector art plates" that were not worth nearly what he paid for them (Snider v. London Arts). After an IRS audit, Snider discovered that the appraisals for the plates provided by the gallery were inflated (that's putting it mildly!), and he filed a suit against London Arts for racketeering and fraud.
Again, Schuster's lawyers didn't contest the fraud charges; they argued that the statue of limitations had run out because six years had passed since the purchase. Again, the courts ruled in favor of the hoodwinked art buyer and against Schuster.
There are at least a dozen other civil and contractual lawsuits involving Eugene Schuster as an individual or doing business as London Arts, Dyansen Galleries or Art Renaissance. These lawsuits are all public information and their details are available to anyone who knows how to type "Eugene I. Schuster" into a search engine.
But his sullied reputation isn't limited to federal and state court records. In October of 1989, Barron's magazine published an article by David Schiff, editor of Schiff's Insurance Observer, entitled "Junk Art" that discusses Schuster's Dyansen Gallery and other similar mass-produced art retailers.
According to Schiff, dealers like Schuster "use mass merchandising to sell 'signed limited edition' prints and sculpture, usually produced in lots of 300-500. Each work is described as 'fine art' - a term that many critics would call a misnomer. And these art objects carry very lofty retail margins [as much as 400 percent]."
In describing the "artwork" Eugene Schuster and retail galleries like London Arts sell, John Rewald of the New York Metropolitan Museum of Art says, "It's very sad that people fall for it ... The whole thing is sickening."
Prints and the Print Market: A Handbook for Buyers, Collectors, and Connoisseurs written by Theodore Donson and published in 1977 devotes nearly an entire chapter to the infamous Eugene Schuster and his early days selling copies of paintings out of the trunk of his car on the streets of New York.
The really disturbing part of all this evidence about Eugene Schuster's business practices and art credentials is the fact that everything I've discovered occurred and was public record in legal documents and published articles before the State of Indiana gave Schuster a loan of $1.5 million in 1991. Yet, the State of Indiana somehow managed to either overlook or never bother noticing these facts.And so here's the real mystery: What kind of knucklehead - or knucklehead administration - doesn't do even the slightest bit of research before giving a guy like Schuster $1.5 million of taxpayer money? And even more mysterious: What kind of a knucklehead - or knucklehead administration - accepts Schuster's 3,000 "masterpieces" of mall art as collateral?
It's 3 a.m. and I can't sleep.
A little more than an hour ago I awoke from a horrible nightmare. The details are fuzzy, but I do remember it involved me as a guest on the O'Reilly Factor wearing a green "My Man Mitch" T-shirt. I'm still quite shaken by the whole experience.
So now I'm sitting on the back porch with my good friends Ben and Jerry, listening to the cicadas, and trying to come to grips with the hardest part of my job: the ugly truth about politics, and money, and government.
Despite my earlier sarcasm about Daniels' Indiana Government Performance Report, it deserves to be taken seriously. In just six months, the new administration has identified over $150 million in misspent, mismanaged or misplaced taxpayer money from the previous administration's practices.
And sure, the new guys are always going to be able to pounce on the mistakes of the previous occupants of the Statehouse, Republican and Democrat alike. We've all got skeletons in our closets, and I'm sure the Daniels crew will leave behind a few of their own when it's their time to go.
But $35,000 a year spent by the Bureau of Motor Vehicles for its home office and branches to drink bottled water? A Department of Agriculture cookbook that cost taxpayers $70,000 a year? The Hoosier Lottery spending an extra $36,000 a year because their employees weren't on a single cell phone plan? The Department of Workforce Development paying an outside IT contractor $270,000 to do the same job a state employee could do for $110,000 a year less?
The report contains page after page of examples like this, and when you throw the Eugene Schuster $1.5 million loan in the mix, it's a pretty dismal picture. Forget the blah, blah, blah. It really does seem as if the state's finances were in shambles under the last administration. (Gulp.)
I'd sleep a whole lot better at night if I could rest assured that the people running the world, or at least my little Midwestern corner of it, were smarter than me. I was a French and feminist lit major in college for heaven's sake! I always tip 20 percent because calculating 15 percent of a tab is sometimes too damn hard. And if I can figure out after a couple of hours on the Internet that Eugene Schuster is a bad credit risk and an even shadier art dealer, how is it that someone in charge of billions and billions of taxpayer money concluded otherwise?
Despite a plethora of who, what, where, when and how questions, the one that bothers me the most is why? There has to be a reason Schuster got the money and the state got all that artwork - but the only ones I can come up with are ignorance, incompetence or malfeasance. None of which do a thing to sooth my anxiety.
And I know $1.5 million isn't a lot of money. When Gov. Daniels took office the state was approaching nearly a billion dollar deficit. But when I break the $1.5 million down into things like teachers' salaries and textbook rental, my anxiety turns into anger.
Granted, math is not my strong suit - but if the average teacher makes $30,000 a year, that $1.5 million equals the annual salary of 50 teachers. How many teachers had to be let go from Indianapolis Public Schools and the township school systems this past year when the education budget was cut?
Last year the Indiana General Assembly failed to pass a bill that would have provided free textbooks to all Indiana students, thereby eliminating the average rental fee of $130 per child that parents now pay. There just wasn't the money in the budget, our elected representatives told us.
But the $150 million total in government waste the Daniels Administration identifies in its Performance Report could pay the salaries of 500 teachers or provide textbooks for 115,500 students.
A few days later, I'm sitting in Adam Horst's office admiring the framed Monet water lily print hanging on the wall behind his desk. "How much do you think the state paid for that priceless piece of artwork?" I ask, and we both crack up.
Throughout the nearly two hours we spend comparing notes, Horst and I can't stop laughing or expressing our mutual astonishment that the State of Indiana gave Eugene Schuster a million and half dollar loan and then accepted the mall art as repayment, even though we both know it isn't really funny at all.
It's still unclear how Schuster made the leap from selling snake oil in the form of mass-produced art to getting the State of Indiana to give him a loan for a biomedical technology company, but it's easy to see how his previous experience served him in his new career - venture capital.
In 1986, the same year he lost the Snider v. London Arts racketeering case, Schuster became the chairman, CEO and president of Quest Biotechnology, Inc. According to the company's Web site, Quest was "organized to acquire, develop and commercialize human health care products and processes and to acquire ownership interests in entities which possess such products and processes."
Over the next two decades, Schuster would have ownership in a variety of companies including Polycell, Inc., Hunt Research Corporation, ICAS Corporation, AM Diagnostics, Quest American, QBS Inc. and Venture Funding Inc. Nearly all of which sold millions of shares of stock, and then went bankrupt.
In 1994, Quest defaulted on its $1.5 million loan from the State of Indiana, the same year the company also defaulted on a $500,000 loan in Michigan. In 1995, Quest filed bankruptcy. In 2000, the exact same board of directors, including Eugene Schuster, and the exact same company began reissuing stock. The State of Indiana won a judgment against Eugene Schuster in 2001. He was ordered to pay nearly $600,000 as restitution for the defaulted loan.
To date, the State of Indiana has received none of that money. Not one red cent. But until recently, they weren't working too hard to get it either.
In addition to leaving the "artwork" in Michigan for years, the previous administration also seemingly accepted Schuster's claims of poverty long enough for him to manage to sell his Florida condominium for $2 million to his son. That same son has also recently become the owner of London Arts Gallery and heads up the "brightcolors" eBay collection.
Horst is turning over what he discovers, and what I have discovered, to the State Attorney General's Office. But he admits to being the butt of more than a few jokes around the office. Like my own delusions of grandeur, Horst saw big things in his future as a result of his artwork discovery. In those glorious freshman weeks of his job at the OMB, he thought he'd earn a whole lot of Brownie points for discovering the paintings and then finding a way to sell them for a ton of money and do his part to reduce the state budget deficit.
Things haven't turned out that way. After multiple inquiries, he still can't find a buyer.
But he's almost gotten used to the "Hey, Adam, did you sell that artwork yet?" ribbing in the halls and staff meetings.
"One place actually wrote me back and said, 'Mr. Horst, even if you gave us these prints, we would still have the majority of the inventory left after a year, and would have sold only a few for no more than $10.""Hey, that's Picasso isn't it?"
It's been a few weeks since I stumbled upon Horst's discovery. The Office of Budget and Management has given me permission to go through the five boxes of the state's files on the Schuster case and the bad loan - I just have to come up with what questions I still want answered. So for hours now, I've been sitting in front of my computer writing out those questions.
What was the original $1.5 million loan from the State of Indiana for exactly? Which state agency granted the loan? What kind of background or credit check was done before giving the loan? Who actually signed off on the loan? Who approved the biomedical equipment as collateral? Who approved the artwork as replacement collateral? Why didn't anyone ever drive up to Michigan and get the stuff before now? How is it possible that just last year he sold his condo for a cool $2 million when he's supposed to be bankrupt? Who is responsible for this entire mess?
I pause between bites of cheesecake and contemplate the bigger picture. Knowing the answers to any and all of my questions won't change the basic fact that Eugene Schuster got $1.5 million of taxpayer money and all the State of Indiana got in return were 3,000 lithographs worth (maybe) $30,000.
And I'm reminded of an incident at a party I attended a few years ago. It was an eclectic crowd, to say the least, but I was enjoying myself in the modest Butler Tarkington home of the hosts, and I'd drank enough to finally stop wondering if the jeans I was wearing made me look fat. I'd even managed to start chatting it up with a cute boy.
Alas, when three beautiful women who'd just finished their shifts at Brad's Gold Club arrived and joined the soiree it was clear I'd spend the rest of the evening with the chips and salsa. I listened attentively as one of the girls was admiring the décor (sort of a frat-house chic is how I'd describe it), when she noticed a large poster pinned to the wall with thumbtacks above the sofa with the mismatched cushions.
"Hey, that's Picasso isn't it?" she asked the host. Every head in the room turned to look at the poster. Even the snottiest of us were a bit impressed. The host nodded. And then, I swear to you, she asked, "Is it real?"
So, there's a small part of me that just doesn't want to know who approved the Schuster loan, who accepted the crap as artwork, who was running things and giving away taxpayer money before the Republicans arrived. This really is the dark underbelly of the metropolis. Let some Eye Team Investigative television crew do the rest of the dirty work and find out who is to blame, I don't care anymore.
But Adam Horst hasn't given up his efforts to right a wrong. He's even exploring the possibility of the state having its own online gallery to compete directly with London Arts gallery and sell the artwork over the Internet.If all else fails, rumor has it Ryan Kitchell just might have a plan for getting rid of the artwork. I don't want to give away any top-secret government information, but I have a hunch that I know what most state employees, including the governor himself, could be getting for Christmas.