But such arguments failed to persuade the arbitration panel, which on Feb. 23 ruled in favor of the former Virginia gallery owners, Karen Hazlewood and Jeffrey Spinello.
The panel found that the company and one of its executives, Richard F. Barnett, defrauded the couple by failing to disclose pertinent information that would have dissuaded them from investing $122,000 to open the first of their two galleries in 1999.
The interim award of $860,000, based on a decision that Kinkade's lawyer said he would seek to void, could quadruple when interest, legal fees and other costs are added, said the former dealers' Michigan lawyer, Norman Yatooma, whose firm is also handling the five pending arbitration claims.
Kinkade himself has been dismissed from the Hazlewood-Spinello claim, so obligation for payment of the award would fall to his solely owned company, and to Barnett, said Yatooma's associate, Joseph Ejbeh.
Though the panel did not single out the artist in its fraud finding, it wrote that he and other Media Arts Group executives had created "a certain religious environment designed to instill a special relationship of trust" with the couple, who have since divorced. The company, communicating through Kinkade and the others, often used terms such as "partner," "trust," "Christian" and "God" to convey a sense of "higher calling," the panel wrote.
Although Kinkade has said he does not market specifically to Christians, his limited-edition canvas prints bear the familiar Christian fish symbol and are inscribed with a biblical reference, "John 3:16." He also is fond of quoting Matthew 5:16 -- "Let your light shine before men" -- at times sounding more evangelist than artist.
"I love to talk about my faith," he said in a deposition. "I try to embrace people with love, unconditional love, like Christ did."
Former dealer Jim Cote said he was hard-pressed to feel the love. He has filed an arbitration claim, alleging among other things that he was a victim of Media Arts Group's pressure to saturate the market.
"In the beginning it was fine," said Cote, of Birmingham, Mich., who opened his first Signature gallery in 1996. "Sales were great because Thom at that point was very popular and there were limited outlets to buy his art."
But as time went on, Cote alleges, Media Arts Group pushed him to open more galleries, threatening to set up its own outlets in his territory. Cote eventually had three stores, all of which failed.
