WG’s Greenwood, Guilty of Fraud, Sells $1.9 Million Teddy Bears

A Steiff "Harlequin" teddy bear that is part of a collection of over 1,300 toys made by the German company. Dating from about 1925, the bear was the most highly estimated lot in the sale at 50,000 pounds to 80,000 pounds. It sold for 46,850 pounds. Source: Christie's Images via Bloomberg

A collection of teddy bears valued at as much as 1.2 million pounds ($1.9 million) will be sold at a London auction by a hedge-fund manager who has pleaded guilty to fraud charges, art dealers said.

Paul Greenwood, the former general partner in WG Trading Co., is the seller of 1,300 vintage Steiff teddy bears and soft toys at Christie’s International on Oct. 13, the dealers said.

“Greenwood is the seller,” Jasper Pearson, partner in the U.K.-based antique teddy-bear dealers Sue Pearson, said in an interview. “Greenwood’s collection is of extraordinary quality. He only bought museum-grade pieces in mint condition.”

Fred Hafetz, Greenwood’s lawyer, did not immediately reply to an e-mail asking for comment. Christie’s does not publicly comment on the identities of sellers. “The vendor is anonymous,” spokesman Matthew Paton said.

Greenwood and Steve Walsh, his fellow manager of WG Trading and WG Investors, were indicted in July 2009 on charges that they conspired to defraud investors of $554 million. The U.S. said the scheme stretched from 1996 until their arrest in February 2009.

Greenwood told U.S. District Judge Miriam Cedarbaum in Manhattan on July 28 this year that he had surrendered his assets to the government, saying they would be auctioned off. Cedarbaum said Greenwood, who remains free on bond and is co-operating with the U.S. against co-defendant Walsh, may face as long as 85 years in prison and hundreds of millions of dollars in fines. She set a Dec. 1 sentencing date.

Metal Stud

The hedge-fund manager bought from auctions and dealers that were able to offer rare and unique pieces by Steiff, the world’s oldest and most avidly collected manufacturer of soft toys, said Pearson. The German maker, founded in 1880 near Ulm, created the “teddy” bear in 1902, following its adoption as a political mascot by President Theodore “Teddy” Roosevelt. Then, as now, Steiff toys are distinguished by the presence of a trademark metal stud in the ear.

Greenwood said on July 28, 2010, that he had taken in excess of $75 million from clients.

Christie’s sale includes a Steiff “Harlequin” bear, dating from about 1925, featuring alternating halves of red and blue plush. Acquired in June 1999 at the German company’s annual auction of toys, it is “possibly unique” and is estimated to fetch between 50,000 pounds and 80,000 pounds, said Christie’s.

The U.S. Securities and Exchange Commission, in a release on July 29, said the money taken was used “to purchase multimillion dollar homes, a horse farm and horses, luxury cars, and rare collectibles such as Steiff teddy bears.”

Greenwood also settled civil claims brought by the SEC, agreed to refrain from violating securities laws and to pay yet-to-be determined disgorgement and penalties, the SEC said in the July statement.

Water Bottle

A lace-up teddy bear with a hot-water bottle carries a high estimate of 30,000 pounds at the auction. Just 90 examples of the Hot-Water Bottle Bear were made by Steiff between 1907 and 1914, said Christie’s.

“I’d be surprised if there were more than 10 of these left in the world,” Daniel Agnew, Christie’s specialist consultant for the sale, said in an interview. “The collector specialized in the more unusual things, oddities that were never factory- produced. The majority of the lots date from before World War II, which is the stronger collecting market.”

Auctions for vintage teddy bears reached their zenith in December 1994 when a Japanese museum paid a record 110,000 pounds for a Steiff toy dating from about 1906 at Christie’s. Since then, auction prices have fallen, Agnew said.

“High prices were paid for bears that have now turned out to be not so rare,” he said. “Some postwar examples are selling for a quarter of what they were at the height of the market.”

Bonzo, Mickey

More than 80 percent of the sale’s 641 lots are Steiff animals. One of a small number of samples of a never-manufactured Bonzo the Dog toy is estimated to fetch up to 20,000 pounds, while a perfectly preserved couple, Mickey and Minnie Mouse, has an upper valuation of 15,000 pounds.

Christie’s has put a low estimate of 800,000 pounds on the collection that has been amassed over the last 15 years.

According to his plea agreement, Greenwood will have to forfeit at least $331 million to the government, representing the money he and Walsh obtained from their securities and wire fraud. Greenwood also agreed to pay the U.S. an $83.5 million judgment, the proceeds he “personally obtained” as a result of the fraud.

The case is SEC v. WG Trading Investors, 09-1750, U.S. District Court, Southern District of New York (Manhattan).

(Scott Reyburn writes about the art market for Muse, the arts and culture section of Bloomberg News. Opinions expressed are his own.)

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