Imagine your school selling one of its class art projects for $50,000!
Not in one case. It landed in court.
In a recent blog post, I shared the Vanity Fair story of Harvey Weinstein and his auction donations at a 2015 gala in France. He’s currently being investigated for the questionable financial dealings tied to that AmFAR fundraiser.
With today’s post, the drama turns from glamorous international galas to a more typical school auction.
The controversy took place during a New York school auction whereby the standard class art projects were offered for sale.
Selling homemade crafty projects made by youngsters isn’t unusual. Many schools with younger grades (Pre-K through 5th grade) sell art made by the students. Usually the piece is created by a class; sometimes a grade.
Mostly these works of art are offered in the silent auction, but occasionally — as in the case of the Cathedral School of St. John the Divine on the Upper West Side of Manhattan — they are sold in the live auction.
In 2013 in the weeks preceding the school’s spring auction, Mom Michelle Heinemann helped her kindergarten son and classmates create an art project.
She and her husband couldn’t attend the auction, so they instructed a proxy to bid on the piece.
They’d been told that art projects often sold for between $500 and $1200, and instructed the school proxy to bid until they (the Heinemanns) won the item. They wanted to pay no more than $3000.
The winning bid placed by the Heinemanns’ proxy was a bit more than anticipated. Specifically, the art sold for $50,000.
The couple felt scammed. They sued for $415,000 plus damages.
According to the suit, the school’s Director of Advancement had a first-grade teacher intentionally bid against the Heinemann’s proxy to inflate the price to $50,000.
“TaxGirl” Forbes writer Kelly Phillips Erb covered the case from the angle of its tax implications in her article, “Parents Sue School for Art Auction Gone Bad.” It’s worth the read.
You can also see photos and read more in this New York Post article.
Here are a few of the financial claims included in the suit:
- The son’s chauffeur ($60,000)
- Family housekeeper ($1200 per week)
- Lost tuition fees for the younger daughter, who will now not attend the school ($5000)
Here’s my take.
Though I think the claim made is extravagant, I am curious about the rules listed on the absentee bid sheet.
Did the sheet have a cap for a maximum bid, ensuring the proxy wouldn’t bid above that amount? How was it worded?
I am unclear from the articles if the proxy sheet actually indicated a maximum set price, or if the parents merely thought it wouldn’t sell for above $3000.
Sometimes we forget about the importance of auction rules (so mundane!), yet they provide clarity.
Last month in a post-auction review meeting I asked about some outdated live auction rules I’d read in the nonprofit’s program. The rules didn’t seem to reflect the event I worked; they mentioned elements that weren’t included in the gala. Turns out that the rules had just been copied from the prior year’s catalog and had not been reviewed.
The outdated rules at that event didn’t present a problem. All guests paid, and no one threatened a lawsuit.
But the New York case is a good reminder to all of us that reviewing our stated rules is a good idea.
If you see anything unclear in the auction rules for your online auction, live event, absentee bid document, or other forms, tidy them up in preparation for your next event. For the New York school mentioned above, it might have made a difference.