Sad news about Illustration House 0

[artdealer]

Walt Reed, his Father.

 

 

[Roger Reed-migration]

First, Jeri Jackson should have been paid the other half of her revenue by Friday of the previous week, no excuses. And in focusing almost exclusively on the income side of the business, instead of communicating with Ms. Jackson about her payment prospects, I made a poor judgment call. As of May 28, she has been paid in full.

 

We do have an unusual situation in that two of our major clients add up to a six-figure accounts receivable. This is too big a gap to quickly close, but we will close it, even if those two clients fail to pay us, by selling art Illustration House owns, which we still have solid holdings in.

 

We have not had any auction consignments taken back, because our consignors know, or should know, that they will be paid in full. We’ve been a consignment house for over 30 years, and paid out tens of millions of dollars to consignors; I expect we will continue to do so.

 

Have any questions or concerns or comments? I’m here: 212/966-9444.

 

An additional note:

Zaddick Longenbach is a collector of art, and a valued employee at Illustration House. He often buys and sells of his own accord that has nothing to do with his job here. He has had great ideas for cutting expenses and weathering the downturn, but he is not responsible for paying consignors. He does not appear on the television segment, and I’ve never seen him wear a baseball cap.

 

Roger T. Reed

Illustration House

[Cimm]

HA! I like a guy that stands up and admits his fault in public... Well said, Mr. Reed, well said!

[spider9698]

Roger

Thanks for coming on the boards and providing some clarification. As I said in my original post, I hope things turn around for you and IH.

Best

Stephen

 

[heartened]

I too hope they can turn this around. I have had nothing but professional dealings with them in the past.

 

Best of luck, Roger.

 

Hari

 

[comicartcom]

I applaud Roger for coming up to the plate and acknowledging the difficulties that Illustration House is having. Clearly the economic downturn is affecting Illustration House in the same way it is affecting hundreds of thousands (or millions) of businesses all over America and for those of us who in business and not just collectors these are very challenging times.

 

Roger and Walt are "100 percenters" in my book and always have been.

Their contribution to the field of collecting art is monumental and I am certain will continue to be so for years to come.

 

To those who compare IH to Bernard Madoff's ponzi scheme are way off the mark. Madoff was a thief, plain and simple. His operation was 100% based on stealing from people from the git-go. Illustration House has as much to do with a Madoff comparison as bicycle riding has with increased global warming.

 

Also, to be sure, Illustration is a business and all business have a serious challenge to make money & pay bills on a daily basis.

 

Those who say things like "The should never have spent money that didn't belong to them. That is stealing." don't understand the workings of business. They do not maintain individual bank accounts for each consignor segregating funds from individual pieces of art and in teh course of business, money that comes in this week is used to write checks to consignors whose artwork was sold weeks earlier. In other words, all funds are co-mingled at every turn, much the same as any bank. You don't think that Chase Bank segregates individual deposits when they invest the money in real estate ventures or bonds, do you??

 

Businesses, like auto parts dealers for instance, borrow money from banks or the auto makers to run their business. Frequently these businesses go bankrupt because at different times, cash flow is poor and/or expenses can be greater than incomes. It is very challenging to be inbusiness and make daily profits to pay bills and consignors are no different than your landlord, the utility company or any other service provider that you use to operate.

 

The difference is whether your plan is to intentionally withhold honest business from any of the entities you depend on to run your business, or if you are genuinely just having difficulties preventing you from being on schedule with your financial obligations.

 

Clearly Illustration House did not intend to get into the situation they are in, they are not crooks and I am confident they will work through this problem to make whole every last one of their consignors who are still waiting for funds.

 

Roger.. I apologize that I was unable to post this perspective previously.. I was prepping to be out of town for the Cinevent poster convention in Columbus and was lacking time until I got home last night.. you can be sure that I am 100% behind you and will be happy to help in any way that I can in the future to see that Illustration House continues to be a solid force in the hobby of art collecting

 

Best

Rich

[Claudio]

Rich H,

 

I would strongly disagree. Since it happened before, they should have taken extra precaution in not spending consigners' money to pay their bills. If they went bk, the consigners could end up as creditors and they never should be. After the first incident, the Reeds should have set up differwnt accounts to make sure this never happened again. Using other people's money to pay the bills is just wrong. When they spent that old lady's money, they apparently did so to "keep the light on." They were lucky enough to keep the business running but if they weren't able to, that lady's money would have been gone. That is why it is unacceptable to me. They made the mistake once before but I am a little less forgiving since this was the second REPORTED case.

 

I am not trying to crucify them on the boards, I am just explaining my thoughts.

[comicartcom]

Claudio.. if they can't keep teh lights on.. they do go bankrupt just like any other commercial entity and Jeri stands in line to be paid a % of her total claim - if anything - in a liquidation sale

 

have you ever in your entire life found your paycheck not helpong you pay the bills and deciding which ones get paid late so you can keep YOUR lights on??

 

It isn't the same as having your best pal sell a piece of your art and instead of him giving you the cash, he goes to the horse track and lays it all on Spanking Collector to win by a nose.

 

You want a bank account to be held separately and to be administered??

Well then expect higher consignment fees to pay for the employees, paperwork, corporate setup etc,

 

But really, forgetting all of that what you need to remember is that Illustration House is no different a business than a McDonald's francise owns.

 

The material is no more than a commodity to any dealer, even if it may be a loved item by the consignor to whom it may have an emotional attachement and to any accountant both McDonalds and Illustration House are exactly alike because of that.

 

I am sure that Illustration House, Roger and Walt Reed are working on resolving their issues for themselves and unlike some other people, I am happy to give them the benefit of the doubt. You can choose what you wish to do for yourself as should other people. Myself, if I have any artwork that I'm looking to consign, I'd be just as happy to consign it to Roger Reed as I would to Heritage. But I recognize that I've known both Roger and Walt for decades personally.. I know where they're at and I trust them 100% which is more than I can say for most people I've met in my life.

Edited May 26, 2009 by comicartcom

[Claudio]

Claudio.. if they can't keep teh lights on.. they do go bankrupt just like any other commercial entity and Jeri stands in line to be paid a % of her total claim - if anything - in a liquidation sale

 

And that's what I have a problem with. She didn't sign up to be a creditor. A car supplier accepts credit risk since they are selling on credit. She didn't sell IH anything. She let them sell her stuff for a fee. Her money should be set aside.

 

have you ever in your entire life found your paycheck not helpong you pay the bills and deciding which ones get paid late so you can keep YOUR lights on??

 

No. And I realize that it could happen and I could make mistakes. I would just hope that I wouldn't repeat them as it appears IH has.

 

It isn't the same as having your best pal sell a piece of your art and instead of him giving you the cash, he goes to the horse track and lays it all on Spanking Collector to win by a nose.

 

Correct, it is not that egregious. However, when it happens more than once, it gets a lot closer to being theft.

 

You want a bank account to be held separately and to be administered??

Well then expect higher consignment fees to pay for the employees, paperwork, corporate setup etc

 

They should charge whatever is appropriate and enables them to do their job correctly. If by charging too little they can't conduct their business properly, then they are at fault.

 

I am sure they are nice guys. Like I said, I had a great experience with them earlier this year. Coming on this board and "manning up" may make me reconsider using them in the future. I am just saying that this was a huge mistake and it bothers me that it was made on more than one occasion.

[Bronty]

 

They should charge whatever is appropriate and enables them to do their job correctly. If by charging too little they can't conduct their business properly, then they are at fault.

 

.

 

There's no need for separate bank accounts for each consignor, that really is overkill. But its not asking too much for consignors to be paid within a reasonable amount of time (I'd imagine this is contractually stipulated) or at least where the payment terms can't be met, a simple communication to effect a mutually agreeable timetable.

 

Its no different than a collector not being able to make good on $1000 they owe you. If they make the effort to let you know and you both agree on a revised payment timetable you're going to have a much better feeling than if you're having to hound them for payment.

 

Like everybody has said I'm sure they are nice guys and they sound trustworthy, but its just good business sense IMO for them to take good care of the consignors first... otherwise stuff ends up in the news or on chat forums! Or, just as bad, people get turned off and stop consigning with them, and consignors are revenue...

[pinupcartoonguy]

Claudio.. if they can't keep teh lights on.. they do go bankrupt just like any other commercial entity and Jeri stands in line to be paid a % of her total claim - if anything - in a liquidation sale

 

Rich,

 

I'm sure Roger and Walt are great guys, but this is backward reasoning. Jeri never should have been put in a position to stand in line. If they hadn't paid bill from the consignors account, there would have been money to pay the consignors.

[comicartcom]

Bronty, I agree with what you said. Pinupcartoonguy, I agree with "Jeri never should have been put in a position to stand in line".

 

However, I doubt any business losing money intends to put anyone in any line exc ept the payment line.. It happens all on it's own and sometimes, it is just an unavoidable circumstance.

 

I doubt anyone who holds bonds on GM's debt ever expected to see the company go belly up. Illustration House is a business like any other. Their intentions may be pure, but sometimes - circumstances are not. Anyone who is in business understands these principals. You get further and further behind without intending too until finally, it's too much and everyone in the que feels the pain.

 

sadly, money does not flow in just because you have bills to pay. sadly also, when you're getting behind and the economy sometimes conspires against your intentions and intent is the key aspect here.

 

Madoff had evil intent

Illustration House did not

 

Madoff should be in hell

Illustration House should not, as long as they intend to repay those who are owed in whatever timely manner they can

 

I defy anyone on this list to say they never had problems and never made mistakes. Anyone who does is a liar.

 

[CollectingFool]

Wow, I stepped away for a minute and all hell breaks loose. I'm glad to see Roger came on here and showed he was not trying to hide anything and put it all on the table. It's a lot more than I would do. After all, we're just a bunch of gossiping hens and his business issues are his to deal with not ours to speculate about. The one good thing about him having posted here is now anyone that has anything else to say about it or has any further questions can just pick up the phone. Unless of course people like being negative for no reason but that can't possibly be the case. Human nature doesn't work like that at all, right?

 

Ruben

http://www.collectingfool.com

[comicartcom]

After all, we're just a bunch of gossiping hens and his business issues are his to deal with not ours to speculate about. The one good thing about him having posted here is now anyone that has anything else to say about it or has any further questions can just pick up the phone. Unless of course people like being negative for no reason but that can't possibly be the case. Human nature doesn't work like that at all, right?

 

amen to that Ruben

[vodou]

On the subject of true fraud- http://www.nypost.com/seven/03262009/news/regionalnews/famed_art_gallery_owner_indicted_161438.htm

[artcollector9]

Ruben and Richie,

 

I agree we are a bunch of gossiping hens; BUT:

 

When a well known auction house fails to pay a consignor and fails to proactively deal with the problem, very simply it IS the business of everyone who would potentially consign...or for that matter even bid in that auction houses' future auctions.

 

I think Roger's comments are welcomed, but late...but better late than never.

 

Those who discussed this aren't at fault, let's please remember that.

 

 

[CollectingFool]

Ruben and Richie,

>When a well known auction house fails to pay a consignor and fails to proactively deal with the problem, very simply it IS the business of everyone who would potentially consign...or for that matter even bid in that auction houses' future auctions.

 

I think Roger's comments are welcomed, but late...but better late than never.

 

Those who discussed this aren't at fault, let's please remember that.

 

I'm sorry, I'm not used to this forum... who are you? If you are going to address me directly by name I'd like to do the same.

 

My point was, is and will still be that EVERYONE has issues with their business, the only reason we are discussing IH is because theirs was televised. When everyone starts commenting as if this were some big outrage and it doesn't happen with just about EVERYONE in this hobby, hell even some people IN THIS FORUM, it seems to me to be hypocritical. At least do your homework about the people you praise and do business with before casting stones at others. For instance I'm sure everyone knows about the 8 million shortfall a major auction house had because their main buyer ran into difficulty (still 2 mil in arrears from what last I heard), or dealers taking each other to court over trades gone sour or collectors who do deals in bad faith and when called on it respond with "sue me". Never mind all those who knowingly deal in stolen goods (real stolen not Marvel returns stolen) or knowingly hide or falsify information about pieces that are now valuable but were once considered garbage.

 

All I'm saying is there was a lot of misplaced outrage directed at IH as if this were a squeaky clean hobby and something shocking was revealed. Please! This was nothing and to even imply Roger should have to address this issue publicly is ridiculous. As a matter of fact I would consider it as ridiculous as Congress going after baseball players for steriod use while there are two major wars going on and the economy is going in the toilet. Maybe not that level but pretty close.

 

Ruben

http://www.collectingfool.com

 

 

[artcollector9]

If he had dealt with this privately, of course it should have and WOULD have stayed private.

 

Once the media got involved, he NEEDED to make a public statement, which he eventually (and wisely) did.

 

It isn't RIDICULOUS to discuss this, and it wasn't 'NOTHING' that a consignor wasn't paid.

 

I consign A LOT of material to various auction houses. It is an issue that concerns ME.

 

Regarding the 8 MIL shortfall a major auction house had with one buyer, it didn't effect their ability to pay consignors...

 

I think you make a lot of valid points...and yes, a lot worse has happened and goes on even today...but this isn't a case of 'much ado about nothing'. This lady got jerked around until she went to the press.

 

Rob

[steve9999]

I have been both a buyer AND a seller with IH and have never had any problems and certainly want to give the Reeds the benefit of the doubt, but Rob's points are all valid...if she had not exhausted every method of communication and received a satifactory response (or even an ATTEMPT at compensation ie. "Here's ALL of the money you are owed," or "here are continued payments") she never would have had to go to the press.

 

Now that the press has been involved and you're hung out to dry in front of millions of people, MAN UP and at least appear on camera to explain....that is, IF you have an explanation. Admitting you have a problem is the first step.

[Images-migration]

Well I guess everyone that is pileing on Walt and Roger, have never, as a business, gotten in over there head, and rationalized that things were going

to get better and floated some money. I am sure all the comenters are totally

honest and aboveboard. I started dealing with Walt Reed in 1983, never a problem with anything. So it took 30 years for their dishonesty to show up.

HOGWASH!!!