Gallery owner says PayPal won't help enough after alleged heist

An ABC7 I-Team Investigation
CHICAGO (WLS) -- A local gallerist says he's a victim of a modern day art heist, and police said it was perpetrated by a savvy con artist who's on the run. Now that gallery owner has a warning related to a popular payment technology.

The convicted con artist has a high profile name. Police had already issued a warrant for his arrest before he was accused of new crime at an art gallery. Now the gallery owner wants to know why one of the world's largest internet payment tools won't help him after he says he was scammed.

David Leonardis said his gallery in Wicker Park is celebrating its 25th anniversary by being robbed.

"The art was not purchased for a secondary resale, the art was purchased for his home," Leonardis said.

John Hancock - his real name - has a history of credit card fraud and Chicago police are looking for him. An arrest warrant was issued in 2014 when he skipped court after pleading guilty to stealing IDs and forging credit cards to buy thousands of dollars' worth of belts and shoes from Neiman Marcus and Oak Street's Gallery Aesthete. He even scammed his way into a membership at the East Bank Club.

"I think it's fairly amazing that someone would come in here and defraud me to get art," Leonardis said.

Leonardis photographs all of his happy customers, including 6-foot 300-lbs. John Hancock posing with his loot.

"He got a giant painting of Biggie and Tupac," Leonardis said. "He got five pieces, it was $7,150 on the ticket."

Hancock handed over his credit card that had Hancock's real name on it. Leonardis ran it through the gallery PayPal account.

"He filled out the numbers and a few seconds later I got an email from PayPal that the money has cleared," he said.

Thirty days later the PayPal charge was reversed, claiming the purchase wasn't authorized. Leonardis disputed the "chargeback," sending information on Hancock, including the photo, but PayPal told him there was nothing they could do "based on the evidence provided." They also told him he didn't qualify for "seller protection" because Hancock took the art with him.

Then they billed him a $20 chargeback fee.

PayPal provided a statement to the ABC7 I-Team, saying, "We encourage merchants to work with our customer service team to understand the different products that PayPal offers to meet their needs. PayPal does not offer Seller Protection for merchandise picked up in person or for transactions made through the donation's button. We encourage all merchants to ensure they are using PayPal products in accordance with the PayPal agreement. Our customer service teams are always available to help sellers understand our protection policies."

"I gave up the art, I used the PayPal button, I didn't do anything wrong," Leonardis said.

Leonardis filed a police report. His attorney contacted PayPal and without explanation they reimbursed half. So Leonardis contacted the I-Team.

The I-Team went to Hancock's last listed address, but he's not on the directory. And when they called his phone number was disconnected and only gave a busy signal.

PayPal told Leonardis, "For this particular chargeback, we may only dispute if the transaction has been refunded to the buyers credit card."

But in an email, PayPal told the I-Team, "Since the chargeback is processed with the buyer's credit card company, PayPal couldn't prevent the chargeback or inform Mr. Leonardis prior to our notification of the chargeback."

"That's fine, you don't need to prevent the chargeback, still the merchant has rights to dispute that chargeback and get their money back if they can prove they have a valid sale," said Monica Eaton, expert with Chargebacks911. "The whole purpose for a representment is to help rectify invalid chargebacks because they do happen, so that doesn't make any sense."

"Personally, I don't think it's cool when a multi-million dollar company gets to put the scam on David Leonardis the humble biz owner," Leonardis said.

Leonardis no longer uses PayPal as a payment tool. He hopes to warn other business owners about Hancock and how PayPal handled his case.

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Tips from our expert: 1. Know your rights. 2. The rules are arbitrary. 3. Get educated. 4. What the pros like Chargebacks911 can do for you 5. Fight fraud by enforcing consequences 6. What's the true cost of chargeback fraud.

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