COLUMN ONE : Art Boom: A Market for Fraud : New technology allowed the mass production of major works. When collecting became a fad, that technology set the stage for bilking novices.

When lithographs exploded on the art market a decade ago, the Upstairs Gallery was well prepared to answer the call for Dali, Chagall, Picasso, Miro and and other popular artists.

The ubiquitous chain of galleries in Los Angeles and Orange counties made art accessible to the masses, including those buying on credit. There was always more than enough artwork to go around, gallery employees said, even if a print happened to be part of a limited edition.

Authorities may have discovered why when they recently seized 1,685 allegedly fraudulent works from the Upstairs chain. No longer are tales of art fraud merely fodder for “Lifestyles of the Rich and Famous.”

The same forces that created the boom in affordable art--heavy demand and the advanced technology that made it possible to mass-produce major works--have spawned a whole new market for fraud. The primary victims, authorities say, are buyers making their first forays into galleries.

“When you talk graphics you’re talking about the middle class,” said Los Angeles Police Detective William Martin, an art fraud expert. “The whole idea of the graphics market was to make art available to the masses. And now the middle class have become the art fraud victims.”

Now that counterfeit art is so common, many galleries are afraid to even deal in lithographs and serigraphs attributed to the most commonly forged artists, such as Dali and Chagall.

Investigators say the floodgates for phony graphics flew open when art collecting became a fad that attracted more novices and investors than connoisseurs, people who went from hanging cheap oils, posters and even black velvets on their walls to dabbling in legitimate artworks.

Strides in photomechanical printing made re-creating fine and decorative artworks easy, and rising prices for art made it profitable.

Dealers say the demand for art is so great these days that most people never take time to demand proof of authenticity.

“A lot of people are more concerned with whether a piece will match their carpeting than whether it’s authentic,” said one respected local art dealer.

As a result, print buyers, many of whom are intimidated by the atmosphere of an art gallery to begin with, are viewed as easy prey by unscrupulous sellers. In a damage claim filed in Los Angeles this month, one Japanese executive with more disposable income than art acumen claimed that he was defrauded by the same gallery on nine separate occasions.

Another woman told police of getting a special deal for buying Miros in bulk. She now believes that she invested her savings in worthless paper.

Others, such as Lawndale high school teacher Steve Davidson, were burned on their first and only purchase. Davidson bought a $2,800 Dali lithograph called “The Last Supper” as an investment six years ago. It was only recently, when reports of phony Dalis surfaced in the news, that Davidson removed the print from his living room wall and took a closer look at it.

“When I examined it under a light I noticed that the top of the ‘l’ in the signature was obscured by the print,” Davidson said. “If it was an artist’s proof, that would have been impossible.”

Davidson’s suspicions were confirmed in August by Bernard Ewell, the chief art appraiser for the Federal Trade Commission and an expert on Dali. In a three-page letter to the high school teacher, Ewell concluded that the print’s “fair market value is negligible.”

Davidson has hired an attorney to represent him in a lawsuit against the gallery that sold him the Dali. Ewell said newer galleries that deal in bulk sales of prints, the ones that are supposed to cater to novice buyers, are actually the ones most often charged with fraud.

“We’re seeing a whole new generation of galleries cropping up in (places such as) shopping malls,” said Ewell, an expert witness in fraud cases. “There is practically no expertise within the gallery operation and practically nowhere a buyer can turn for expertise.”

Galleries that seem like art supermarkets--replete with weekly specials--can even be found in Las Vegas hotels, not far from slot machines and blackjack tables.

Federal officials say that Southern California is a hub for fraudulent art because of its affluent populace and its booming tourist industry. Reports of phony art are so widespread that people are even starting to distrust legitimate dealers, officials say. On Rodeo Drive, where many galleries must sell $150,000 worth of art a month just to meet expenses, panic is setting in. “Everyone is working damn hard just to make it,” said one well known dealer.

Detective John Ambro of the Beverly Hills Police Department said art fraud is like an “octopus whose tentacles reach out in countless directions.” Especially vulnerable are middle-class tourists who buy art as a travel memento. “This is everywhere,” said the detective.

The Upstairs Gallery case presents a good example of the dangers inherent in the graphics world, according to authorities. Police told of finding dozens of allegedly fake Chagalls on the walls of its stores in an affidavit filed in Los Angeles Superior Court.

The eight-gallery chain, which is widely credited with pioneering the concept of selling affordable artworks to novice collectors, denies any wrongdoing. But investigators have charged the former manager of its Beverly Hills branch with five counts of grand theft in the ongoing case.

Ben Horowitz of the Art Dealers Assn. of California, an organization that promotes integrity among dealers, said he has long questioned the reputation of the Upstairs Gallery chain.

“We don’t know exactly how up-and-up they are,” he said. “But we do know that they are far from meeting our standard of ethics. Their procedures and their approach is all hype.”

Touting Investments

One example of questionable business practices is Upstairs’ custom--also said to be common at other galleries catering to middle-class buyers--of guaranteeing that certain pieces of art will rise in value, Horowitz said. The chain is also known for touting the investment potential of works by artists near death. But what really shocked Horowitz was when Upstairs Vice President Patricia White admitted that she couldn’t authenticate her merchandise.

Horowitz said White tried to hire him to appraise her inventory several weeks ago, confessing in a telephone call that “she didn’t know what was authentic and what wasn’t.”

White and Upstairs President William McKelvey did not dispute Horowitz’s account, and say that when he turned them down they hired another appraiser to examine the inventory.

Horowitz’s story supports the suspicions of more established art dealers who have always dismissed Upstairs as a crass company that exploits ignorant buyers. Especially galling to them are promotions in which the company offers free lithographs as purchase incentives.

Critics have also enjoyed poking fun at the chain’s “pedestrian” collection of works that weighs heavily toward such mass-market artists as the surrealist Dali and the ever-popular Leroy Neiman, who is best known for his color-splashed paintings of major sporting events.

Spokesmen for Upstairs dismiss such criticism as snobbery. They say that the chain has introduced art to people who might otherwise have never heard of Dali or Neiman, much less owned their works.

“Many of our customers are just starting to collect,” said McKelvey. “We use payment plans to make art affordable. And it’s a pretty terrific service. We don’t pretend to be a New York Soho art gallery. The appeal is much more mainstream.”

Maurie Symonds, a former Long Beach furniture merchant who founded Upstairs Gallery 24 years ago, said the operation was always geared to novice art buyers. Symonds opened the chain’s first branch in the upstairs section of a Lakewood office building--hence the name.

By the early 1970s, the chain had spread to four locations. Business really took off when Symonds started promoting open-ended payment plans, an idea that harkened back to his furniture-selling days. “People were intrigued,” Symonds recalled in an interview. “We were doing so much business that I was in Europe (buying more art) practically every week.”

Symonds sold a controlling interest in the expanding chain to Forest Lawn, better known for its cemeteries, in 1973. Forest Lawn took over the remaining share years later, when the 75-year-old Symonds moved to Palm Springs and opened two art galleries under his own name. McKelvey, a former department store executive himself, was hired to run the galleries in 1982.

McKelvey is widely credited with perfecting Symonds’ strategy for making art accessible.

But today the company clearly faces an uncertain future. Business has practically ground to a halt at the Rodeo Drive branch, the ritzy location that was christened with a champagne celebration featuring singer and artist Tony Bennett when it opened four years ago. Business is also said to be down at the remaining seven stores across the Southland.

Upstairs Gallery, however, is not the only affordable art gallery touched by scandal.

In Beverly Hills alone, four galleries have recently been implicated in phony art schemes. Bad art can even be found on Rodeo Drive, where galleries stand wall-to-wall in cramped quarters renting for as much as $40,000 a month.

Sadly, investigators say the most common victims include people who have invested their life savings in art.

“These are people who have used money they could ill afford to lose,” said the FTC’s Ewell. “They have used funds set aside for their own retirement, or their kids’ education or funds left to them by a deceased relative, and they thought they were doing the right thing.”

The most recent case broke two months ago. The Japanese artist Hiro Yamagata spotted a phony copy of his own work at the Carol Lawrence Galleries. Police subsequently arrested Anthony Gene Tetro, 39, on forgery charges. A district attorney’s office spokesman called Tetro “one of the largest art forgers on the West Coast, if not the United States.”

Federal Trade Commission investigators have also zeroed in on the dealings of a Beverly Hills-based art publisher. FTC officials allege that Pierre Marcand, the owner of Magui Publishers, has produced and sold at least 22,000 fake prints by artists such as Dali.

Nationally, authorities discovered more than $1 billion worth of fake Dalis alone between 1980 and 1987. Galleries from Arizona to New York have been caught in the fraud net.

Authorities say they ultimately hope to cut off the supply of bad art at the source--the publishers who print it and the distributors who deliver it to countless print galleries.

Dealers say the art field is now flooded with people looking to unload vast supplies of suspicious works. “I was approached just a month ago by a guy talking big,” said Ben Vaughn of the Aspen Fine Art Gallery in Colorado. “He gave the impression that anything I wanted was at his disposal. He just came in off the streets with an endless supply of Picassos and Miros.”

The FTC’s Ewell said unscrupulous operators will continue to prosper until buyers are more cautious and dealers start taking a much closer look at their merchandise.

“The entire market needs to do some serious re-evaluation,” he said.