Virginia Kincade dealers prevail in arbitration
A successful case brought by former owners of Thomas Kinkade art galleries in downtown Fredericksburg and Charlottesville might have helped spark the FBI’s interest in the artist and executives of his company. Palmyra resident Jeff Spinello and his former wife, Karen Hazlewood, argued earlier this year that Media Arts Group Inc., Kinkade’s Christian-themed company, committed fraud by convincing them to invest $122,000 to open their galleries, and then ruined them financially. They won $860,000 from Media Arts Group in a 2-1 American Arbitration Association decision and could receive as much as $3.5 million when the final award–which will include interest, arbitration costs and attorneys’ fees–is determined in the next few days. Spinello and Hazlewood are the first dealers to defeat Kinkade’s Morgan Hill, Calif.-based company in arbitration. Media Arts had prevailed in at least three previous arbitration claims. The former dealers’ lawyer, Norman Yatooma of Birmingham, Mich., is filing additional suits for 23 other Kinkade dealers, as well as two class-action suits and a racketeering suit on behalf of Kinkade’s shareholders and collectors. “Most of my clients got involved with Kinkade because it was presented as a religious opportunity,” Yatooma said in a phone interview. “Being defrauded is awful enough, but doing it in the name of God is really despicable.” According to an article in the Los Angeles Times last month, FBI investigators are looking into issues raised in civil litigation by at least six former Thomas Kinkade Signature Gallery owners, and have asked several former dealers to provide documentation of their business relationship with Kinkade’s company. Kinkade, the self-styled “Painter of Light,” is known for his romanticized scenes, many of which feature cottages and churches near tranquil streams. “Sunrise Chapel,” his latest release on canvas, sells for from $795 to $1,160, depending on frame choices and whether it is an artist’s proof or a numbered edition.The dealers said agents asked for copies of dealer agreements, retail sales policies, training materials from “Thomas Kinkade University” and correspondence, including e-mail, according to the Times article. However the Thomas Kinkade Co., as the business is now named, has not been contacted by the FBI or the U.S. attorney general in conjunction with any investigation, CEO Dan Byrne said in a prepared statement on the company’s Web site, thomaskinkade .com. The Thomas Kinkade Co. was formed in 2004 when Media Arts, which had been losing money, went private for $32.7 million. The FBI would neither confirm nor deny that an investigation is in progress, as is its policy, said FBI spokeswoman Patti Hansen. Spinello and Hazlewood got interested in opening a Kinkade gallery in the 1990s because it was presented as an opportunity “to share God’s light with the Painter of Light,” said Yatooma. The former dealers have been advised not to talk to the media until the arbitration award is finalized. Spinello opened his first Kinkade gallery in Charlottesville’s Downtown Mall in 1999 after moving from the San Francisco area with Hazlewood. Media Arts advised the couple to establish multiple galleries, so they opened a second one on Caroline Street in Fredericksburg, Yatooma said. They first realized that their business was in trouble when customers started bringing in paper prints of Kinkade’s collectible works that they’d gotten for a song at discount shops. As dealers, Spinello and Hazlewood were locked into selling the prints sent by the artist’s company. They told customers they couldn’t offer discounts to match what places such as Tuesday Morning, Red Tag and Hobby Lobby were charging. “The customers believed that the dealers were lying to them,” Yatooma said. Spinello and Hazlewood’s joint ventures folded in 2003.
http://fredericksburg.com/News/FLS/2006/092006/09212006/220020
