Responding for the first time to one of the explosive lawsuits brought against art advisory Lisa Schiff, her lawyer John Cahill has revealed in court filings that Schiff is cooperating with federal and state authorities investigating her business dealings, and has been working to liquidate her advisory firm to pay creditors. Court documents also reveal Schiff is no longer able to afford the “lavish lifestyle” she was accused of by her former client and friend Candace Barasch, including the $25,000 rent on her Manhattan apartment, and she has exhausted her savings, dipping into retirement funds to pay for her living costs and legal fees.
Cahill’s motion, filed on 6 June, is in response to collector Barasch’s second lawsuit against Schiff. It asks the court to stay the current civil proceedings and deny the plaintiff’s request for a temporary restraining order and expedited discovery, so that Schiff can continue to work with authorities investigating her now defunct advisory business. “To engage and allow other counsel to engage with law enforcement bodies, as well as ancillary services for technology and specialized accounting services, Lisa quickly exhausted her savings and is now relying on tax-consequential drawdowns of retirement savings,” Cahill writes. “Without the ability to use those and other assets, Lisa and the Company will be unable to secure services and, if needed, a defense, by the attorneys of their choices.”
Cahill, who has been representing Schiff pro bono according to the court documents, adds that before any law enforcement started investigating Schiff, she voluntarily self-reported her financial circumstances to the New York County District Attorney’s Office. The lawyer noted, however, that “whether the conduct surrounding Defendants’ financial predicament rises to the level of criminal conduct that will be the subject of potential prosecution remains to be seen.”
The filings also confirm that Schiff has started liquidating her business, after admitting to Barasch and other clients that she was unable to pay what was owed to them. “The Company has assigned all of its assets to an Assignee for the Benefit of Creditors (including Plaintiffs),” Cahill writes, referring to an alternative to bankruptcy proceedings. “The Assignee has been active and diligent in gathering the assets of the Company and has engaged one of the most-respected art advisory firms in the world to advise on the sale of the Company’s artwork assets and related logistics.”
According to the court documents, Schiff is no longer able to pay the rent on her apartment. “After her son finishes the school year, she will seek to move elsewhere,” Cahill writes. “Given the media attention to her and this matter, Lisa is finding it difficult to obtain new employment and health insurance.” And while Schiff personally owns “some works of fine art, furniture, jewelry, and other times of value”, the filings note, “few of her personal items are easily liquidated or have values beyond the tens of thousands of dollars.”
Cahill’s motion also denies the allegation made by Barasch that Schiff was operating a Ponzi scheme. “Although a number of the Company’s clients and vendors are owed money because … expenses and flawed payment practices left the Company with more payment obligations than funds,” Cahill writes, over its 20-year relationship with the collector, Schiff’s advisory “re-sold for Plaintiffs approximately 100 artworks and generated a net profit for Plaintiffs of more than $10,000,000 merely on those re-sold artworks alone.”
Neither Cahill nor Barasch’s lawyers responded to our requests for further comment at the time of publication.
