Daniel Best has a disturbing exploration of the lawsuit over original art between Steve Geppi, purchaser and Diamond Distribution owner, and the family of Bob Montana, Archie creator and strip illustrator. In short, Geppi agreed to pay a million dollars for a huge amount of Montana’s original art, but only paid half of it, all the while selling off pieces of the collection.
However, the market was coming into a depression, partially due to the GFC, added to the Sub-Prime Mortgage crisis and high unemployment in the USA. Added to the limited appeal of high end Archie art (it really is a niche market), prices realised by Diamond Galleries were well below the original valuations by Jerry Weist. And there was another, more important factor coming into play — at the point of purchase Steve Geppi and Diamond were hemorrhaging money to the point of legal action, not that he told anyone. Geppi was rapidly finding that more money was leaving Diamond than what was coming in from its various sources with the result that his net worth had plummeted to a fraction of its original value. While this didn’t leave him destitute, it did have the effect of leaving Diamond hovering on the brink of bankruptcy. Geppi elected to simply cry poor and not pay the remaining $500,000 owing to the Montana family.
More disturbing for the comic industry, in a deposition, Geppi claimed to have lost 95% of his net worth in three years: “Geppi stated that he did indeed have a net worth in excess of $20,000,000 when he signed the contract in 2007, but as of 2010 his net worth was around the $1,000,000 mark.” Best goes on to speculate that the sealed settlement came about for fear of further potential losses:
The Montana family, by this stage, were ready to settle, after all the deposition had revealed several factors, neither Geppi nor Diamond International Galleries had enough money to meet their contractual obligations and with other lawsuits and judgments pending, there was every chance that, eventually, Geppi and Diamond could be placed into receivership and the remaining art sized.
Best’s focus is primarily on the art market and what this means for Montana collectors, but if what he states is plausible, this case could foreshadow tough times ahead for the comic industry. The established direct retail market couldn’t function if Diamond suddenly went under, and the loss of even a small percentage of those stores would likely also take out several publishers.
Update Heidi’s piece on the case includes mention of some additional debt problems faced by Geppi, including where he stiffed Disney specialist Bruce Hamilton’s widow in similar circumstances. Heidi also reassures somewhat:
“Every Diamond employee we’ve ever spoken to has assured us that there is a financial firewall between Geppi’s personal business, like the Museum and the galleries, and Diamond Comics Distributors.”