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Monday, January 27, 2003 - Page updated at 12:00 AM

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The Art of Deception: Eminent economist tied to fake antiques

Seattle Times staff reporter

HONG KONG — Hollywood Road is one of the world's busiest shopping streets, a stop on the world's longest escalator, perched above the world's busiest harbor.

A bustling half-mile, it is lined with more than 200 stores selling Chinese antiques and curios, or curios purported to be antiques.

This money-driven city of 7.3 million has established itself as the gateway for ancient artifacts from what is now the People's Republic of China. Hong Kong is a duty-free zone through which antiquities that would be illegal to export from China directly can be legally sold and shipped overseas. Hollywood Road is where much of that commerce occurs.

On Hollywood Road, as in much of Hong Kong, Steven Ng Sheong Cheung is well-known. But he is known as an economics professor and a columnist, not as an art dealer.

Cheung is one of the people behind Thesaurus Fine Arts, a Seattle gallery that deals in phony Chinese antiques, passing them off as much older and more valuable than they are. He also is involved in a shop off Hollywood Road, called Dandelion Fine Arts, and in a lab that certifies artifacts.

In his native city, Cheung, 67, is revered as "the Renaissance man of Hong Kong." He has taught finance at Hong Kong University and is a personal friend of American Nobel Prize economist Milton Friedman. He has written 20 books. He writes a column on finance for Apple Daily, Hong Kong's second-largest newspaper, and another for the weekly magazine Next. He is a calligrapher and a published photographer.

Sporting a white, Einsteinlike coiffure, Cheung is a bona fide celebrity.

He was recently chosen the "hottest economist of the year" by a prominent Chinese Web site, and a television host said Cheung is "so hot that he's like an academic star." The People's Daily newspaper in Beijing predicted last year that he will win the Nobel in economics. Cheung himself speaks about "Steven Cheung mania."

He is unabashed about his own brilliance. He says he hasn't read a book in years, insisting there's nothing he can learn from them. He boasts that he's China's most popular lecturer and its best photographer.

"I hate famous," Cheung said in an interview. "I shun publicity. But people wouldn't let me off the hook. You know I'm famous, right?"

A naturalized U.S. citizen, he has a $1.6 million home in Hong Kong, a $1.1 million gated home overlooking Lake Washington north of Seattle, and a third home in Shanghai, China.

At Hong Kong University and at the University of Washington, he has specialized in research, writing and lectures on how free enterprise works. His scholarship includes what he calls a "natural equilibrium theory" of corruption.

Cheung believes government regulation can actually encourage misdeeds, saying controls are created "just to facilitate corruption" by officials looking to make money.

Speaking at a 1996 conference on "The Economics of Corruption," Cheung said, "It is no use to put a beautiful woman in my bedroom, naked, and ask me not to be aroused. The only effective way of getting rid of corruption is to get rid of the controls and regulations that give rise to corruption opportunities."

In an interview last week, Cheung confirmed what The Times had been told by U.S. law-enforcement sources: that he is under investigation for alleged income-tax evasion in the United States. But not even federal investigators knew about Cheung's trade in fake antiques.

The economist and his theories

Cheung Ng Sheong was 5 years old when Japan conquered Hong Kong in 1941, and 13 when Mao's troops seized China. At 21, he immigrated to Canada, then to the United States. Like many Hong Kong Chinese, he took an English first name.

Steven Cheung earned a Ph.D. in economics at the University of California at Los Angeles, then studied at the University of Chicago under Friedman.

He joined the University of Washington Department of Economics in 1969 and was promoted to full professor in 1973. He married, had two children, founded Steven NS Cheung Inc. in 1977 and started buying and developing real estate on both sides of the Pacific.

In 1982, he filed for divorce and returned to Hong Kong. At that time, the Cheungs owned property in Seattle; Wenatchee; Belfair, Mason County; Arlington, Snohomish County; Bellingham; Anacortes; Skykomish; and Hong Kong, according to the divorce file.

Cheung moved back to Hong Kong and founded the School of Economics at Hong Kong University. Increasingly popular, he churned out books and articles. He hosted Friedman on tours of China in 1988, 1993 and 1997. They met with top officials, including future Chinese President Jiang Zemin.

The Hong Kong University Web site lists Cheung among eight "Great Economists." The list starts with Adam Smith. It includes Friedman. It ends with Cheung.

Along the way, Cheung's research in economics expanded to include a keen interest in art.

He started trading jade products — "a rare special market" — in 1975, then antiques in 1982.

Writing in an economics text about variances in the prices paid for art, Cheung wrote that "asymmetric information," when one party knows more than the other, causes deceptive and unfair conduct. Buyers lacking information judge the quality by price, he wrote, and a "phony high price" was "often encountered in the arts market."

For example, Cheung described someone who becomes a famous calligrapher by having friends bid up the price on his work. The higher price itself builds reputation and leads to future sales.

He added: "Do you want to try it out and have fun?"

The professor's Hong Kong shop

Half a block off Hollywood Road is a stretch of lower-rent stores and vending carts packed along Upper Lascar Row, more commonly called "Cat Street." The name comes from days when the area specialized in stolen goods; locals called the thieves rats, and the dealers who purchased goods from the rats, cats.

No. 3, a small store with a dirty yellow awning, is Dandelion Fine Arts.

When the owner of the shop next door was asked about Steven Cheung, he pointed at Dandelion and said with a smile, "The professor."

Dandelion appears to have no corporate papers filed in Hong Kong. But Dandelion Fine Arts was a trade name of Cheung's West Coast Land Investments, a company he started in Washington state in 1981. The Dandelion trade name was canceled one month before Thesaurus Fine Arts incorporated in 1998.

Cheung says the Hong Kong store is owned by other people — he won't say who — and that he is just an adviser. A Dandelion clerk said the store has its headquarters in Seattle, but the manager, Candy Tsang, said that is not the case.

Dandelion features pottery, bronze and jade objects billed as coming from ancient China. Several of Dandelion's items are featured in a catalog published by Thesaurus Fine Arts.

As is the case in Thesaurus Fine Arts' Seattle store, several items in Dandelion Fine Arts come with age-test certificates from the City University of Hong Kong, signed by Dr. Po Lau Leung.

Leung is a Beijing University graduate who worked as an astronomer for 20 years before getting a doctorate in physics from Hong Kong University at age 50. He is a member of the Chinese Academy of Science. He also advises the Shanghai Museum.

He says City University of Hong Kong started doing commercial thermoluminescence, or TL, testing on pottery in about 1997. TL is the only scientific method for measuring the approximate age of pottery.

Leung says one of his first customers was professor Cheung. Leung said Cheung did business first as Dandelion Fine Arts, then as Thesaurus Fine Arts, and the lab's records reflect that. Cheung would bring the items for testing himself or send an assistant, Leung said.

Paging through his notebook, Leung said he tested dozens of items for Cheung from 1997 to 2000. At first, most of them failed: They were modern, or much more modern than the eras Cheung claimed, and Leung marked them as "inconsistent" with the claimed age.

Then Leung started giving Cheung second chances. If an object Cheung claimed was 2,000 years old instead tested at 400 years old, Leung said, he would offer to provide certification for the latter, rather than to record the test as a failure.

"After result, I said this is fail for you, so sometimes he change his mind, yeah," Leung said.

Leung could not explain how his 1999 test of a ceramic vessel bought by The Seattle Times from Thesaurus Fine Arts found it to be 1,200 years old, while the world's leading TL lab, Oxford Authentication, found it to be less than 100 years old. The leading U.S. lab, Daybreak Archaeometric Laboratory, found it to be less than 45 years old.

The last time Leung tested objects for Cheung was early in 2000. Cheung submitted 10 items.

Leung leafed through his reports: "Fail. Fail. Fail. True. True. True. This one maybe they changed to Ming. ... The last time, many fail."

In the end, only four of the 10 pieces passed the City University TL test, including one or two on which Leung permitted Cheung to change the designated dynasty.

About that time, Leung recalled, Cheung told him he planned to set up his own TL testing laboratory.

Initially, Leung said he didn't know whether Cheung actually had set up the lab. "I completely don't know," he said, adding with a laugh, "In Hong Kong, it's very free. If they have money, they can do that."

Later, Leung disclosed he had suggested to Cheung that he buy a particular piece of equipment, and further, that he had personally provided radiation-wipe tests to certify the annual licensing of what he called "professor Cheung's equipment."

A university Web site listing some of Leung's contracts shows he certified Adsigno Thermoluminescence Laboratory in March 2001. Adsigno is the lab that provided the initial certification for a second piece purchased by The Times, a pottery tile purported to be 400-600 years old and from the Ming Dynasty. That certificate is dated March 29, 2001.

The Oxford and Daybreak labs found the piece to be a fake.

The missing laboratory

Adsigno lists its address as a suite on the top floor of the West Coast International Building, in the heart of Hong Kong's most notorious district for counterfeit items, where fake Prada handbags and fake Windows software are as readily available as cabbage and chicken.

But the lab doesn't have offices where it says it does, and doesn't return phone calls.

The room listed for Adsigno is the corporate office for West Coast International. That company and the building were owned by Cheung and his family until they sold it in 1997 to a company called Celinel Ltd., based in the Marshall Islands.

A receptionist said Adsigno was Cheung's business and said it was in Room 508. But the sign on that door said Colour Art Centre, and the office was closed.

In an interview, Cheung insisted he doesn't own Adsigno and that he just helped set it up in order to get TL testing for less money. He would not say who does own the lab.

Lars Bøtter-Jensen of Risø National Laboratory in Denmark, the world's leading supplier of TL-testing equipment, said he sold a $60,000 machine to Cheung for use by Adsigno. Cheung says the money used to purchase the equipment was not his money.

Patrick Wang, who owns a well-regarded Hong Kong antiques shop named Orientique, said Cheung told him about setting up a new lab.

"He pops into the shop. We chat," Wang recalled. "He says, 'Oh, I bought a machine. I can do tests for you.' "

In telephone interviews, Cheung talked at length about his interest in antiques. He said he's studied them since the 1970s, initially from an academic interest in the power of information on pricing in volatile markets.

"When you do research in economics, you try to find extreme cases to go into to learn about it," he said. "So I am talking about the power of information, and it is very difficult to find anything that is more variable than antiques."

As he learned more about prices and authenticity tests, Cheung says, he developed some expertise and met a lot of collectors. When the Asian financial crisis hit, "Asian collectors wanted to sell out, and I'm the one that served as the middleman."

In the antique market, he said, "You are only selling the probability" that an item is real. Cheung says nearly every antique dealer occasionally sells a fake by mistake. "Would they willfully put out something that they know to be fake? No. Absolutely not. That would be suicidal to do that."

Meanwhile, legitimate dealers in Hong Kong say fakes sold by less scrupulous competitors are a growing problem.

Victor Choi, the best-known antiquities dealer on Hollywood Road, says the con men hurt everyone.

"That is no good if some dealer does this to try to cheat tourists," Choi said. "It cheats the whole industry."

Duff Wilson: 206-464-2288 or dwilson@seattletimes.com

Seattle Times art critic Sheila Farr contributed to this article as did free-lance reporters Tim Healy and Connie C. Ling, both in Hong Kong.

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