A cinema nonprofit co-founded by the late filmmaker Jonas Mekas is suing online auctioneer Paddle8, along with several of its executives, in New York State Supreme Court for allegedly misappropriating funds from a charity auction that Paddle8 held for the non-profit, the New American Cinema Group, in November. (The group is independent from the Anthology Film Archives, another organization founded by Mekas.)
The sale included works donated by artists John Ahearn, Kiki Smith, Tom Otterness, Jonas Mekas, Jim Jarmusch, and Walter Robinson, among others. According to the complaint, the cinema organization still had not received the funds from Paddle8 months after the sale. Meanwhile, collectors had started calling to inquire about the whereabouts of works they purchased at the auction. (The New American Cinema Group is believed to be in possession of the artworks, but lacks the funds to release them.)
“Paddle8’s pattern of conduct in withholding, and apparently misappropriating, funds that belong to a non-profit is very troubling,” Paul Cossu, a pro bono attorney for the cinema organization, told Artnet News in an email. “As an auction house, Paddle8 “has a fiduciary obligation to hold and safeguard such funds in trust for its consignors.”
Cossu said his firm is asking the court to appoint a receiver to take control of Paddle8’s assets and “ensure that any funds belonging to these charities are protected from further misconduct by Paddle8.”
Included as defendants are former Paddle8 CEO Valentine Uhovski, financial controller Rameshkumar Ganeshan, and director of operations Michael McClellan.
A source familiar with the situation told Artnet News on the condition of anonymity that Uhovski, who was appointed CEO in November, resigned in mid-February. Uhovski’s predecessor, Izabela Depczyk, also resigned as CEO after two years in December.
“Valentine’s tenure as CEO at Paddle8 was extremely short lived,” a spokesperson for Paddle8 told Artnet News. “This recent change in leadership has caused some disruption and the company is addressing these problems individually. Some have apparently risen to the level of dispute, but the company expects to resolve all of these situations quickly and amicably.”
Word appears to be spreading that Paddle8 has not kept up on other debts as well. Artist Elliot Arkin told Artnet News that although he was promptly paid for a consignment of his work after an auction in November, a fellow artist told him that he was not paid for his own sale, and that a second lawsuit was expected to soon be filed.
This was the fourth time the New American Cinema Group had enlisted Paddle8 for a charity auction, having held three prior sales where it received the proceeds within one month of the auction. However, this time around, after four months passed, the organization inquired as to when it could expect the proceeds and was assured “payment would be made shortly,” according to the complaint.
The amount owed to the New American Cinema Group is not specified in the complaint but is said to be under $30,000 and in the five figures, according to a source familiar with the case.
In late February, representatives of the non-profit went to Paddle8’s offices in Manhattan to demand payment. Paddle8’s Michael McClellan allegedly suggested that the company would take out a loan to make the payment. (Artnet News has learned that McClellan has also since left the company.)
“Our goal for this auction was to finance our climate-controlled cooling system that’s installed in our film archive, and which is vital for maintaining our 5,000-plus films, which date from 1917 to the present day,” said New American Cinema Group director MM Serra in a statement. “These funds are necessary for the continued survival, and distribution of, this vast archive of avant-garde film titles.”
Serra added: “I am deeply concerned that these vital funds for our non-profit have been misappropriated.