Inigo Philbrick, the disgraced art dealer who committed the largest art fraud in American history, may have been released from prison but his crimes still resonate. On Tuesday, a US magistrate judge said that a Jean-Michel Basquiat painting that was used by Philbrick in his illegal scheme belongs to a collector he misled—and not the high-profile art lender he also duped.

The collector, Alexander “Sasha” Pesko, has been locking horns with the art lender. Athena Art Finance, for over five years in court filings that outline complex and conflicting transactions by Philbrick. He was released from federal prison earlier this year after pleading guilty to wire fraud in 2021.

In 2016, Philbrick purchased the Basquiat, titled Humidity (1982), for $12.5 million from Phillips auction house. He then sold shares in it to Pesko and another collector called Damien Delahunty, telling them that they were buying the shares from a company in Pennsylvania—SKH Management Corp. The firm, however, didn’t exist. Pesko and Delahunty are allies in the litigation, but the judge’s writing only mentions the former.

Pesko purchased a 66 percent stake in Humidity for $12 million through his company Satfinance, while Delahunty bought a 12.5 percent stake, forking out $2.75 million.

When the cash landed in his bank account, Philbrick resold the Basquiat in its entirety to an offshore company called Boxwood that he had set up on the island of Jersey in the English Channel. After this, he included the painting in a series of works that he used as collateral to get his hands on a $10 million loan from Athena. Athena then locked the painting in a New York storage facility in 2017.

Two years later, Athena sent Boxwood and Philbrick a default notice. At the same time, he was also hit with his first serious fraud lawsuit. Not long after, Philbrick fled the US. A judge in New York then ruled that he owed Athena $14.3 million, and the art lender moved to take ownership of the Basquiat.

Pesko and Delahunty protested the decision, and the parties have been battling over Humidity ever since.

Valerie Figueredo, the US magistrate dealing with the case, said Philbrick’s transfer to Boxwood through his company Inigo Philbrick Ltd was “a fraudulent conveyance.” She added that Boxwood “had no rights in the painting and thus could not convey a security interest to Athena.”

Figueredo’s decision is a recommendation to the case’s presiding judge, U.S. District Court Judge George B. Daniels, who will end up making the final call.

For its part, Athena said it will appeal the decision. Jonathan Shapiro, one of the art lender’s attorneys, told Artnet News, “Our client utilizes an industry leading, well-trodden approach to asset-backed lending. Ultimately, we expect that the court will rule—as other courts have in the past—that the secured lender is entitled to enforce its rights against Philbrick and, in this case, his ‘silent partners.’”

Artnet news also spoke to Gregory Clarick, an attorney for Delahunty, who said, “We are pleased that the court correctly and sensibly found that Inigo Philbrick could not transfer the painting to Athena after he sold interests to Satfinance and to our client Delahunty Ltd.”