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In her first foray into the world of art investing, Lucette d’Angelique got an offer that seemed too good to turn down.

Buy a work of contemporary Chinese art, which was appreciating at as much as 20 percent a year, then lease it to a corporation for a guaranteed 6 percent annual return.

The company making the pitch, Art Futures Group, said a client had already been signed up to lease the painting, but she would need to act quickly as several other potential buyers were also looking at the work.

So d’Angelique plunked down HK$198,000 ($25,223) for an oil painting by Hou Qing featuring a young Chinese woman in a red dress, clutching a bottle of Hennessy cognac. "I was thinking, wow, what a great investment."

A few months later, while attending an open house at the AFG gallery, she was surprised to see her painting was on display to promote the artist and not hanging in someone’s office. Still, the monthly dividend checks kept arriving, so she brushed aside her concerns, eventually spending another HK$1.1 million on four more paintings.

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After two years, the leasing contract on her painting “Red Hennessy” expired. AFG told her it wouldn’t be renewed. The story was the same for her other purchases once the initial two-year rental period expired. She was told the leasing market had gone quiet and it was too soon to try and sell her paintings.

Frustrated by AFG’s failure to respond to her further queries, she tried to place her works with several Hong Kong auction houses.

"Not one of them wanted anything to do with these paintings," she said. The best she could get was an offer from Sotheby’s to sell a Shen Jingdong painting online with a reserve price of HK$10,000 ($1,274), about 3.5 percent of the HK$288,000 she had paid for it. Sotheby’s declined to comment on Shen Jindong’s artworks.

Buyers’ Forum

d’Angelique isn’t the only one suffering buyer’s remorse. More than 50 people have signed up to a private chat group on Facebook for AFG clients that she created. Interviews with more than a dozen other AFG clients tell a similar story. The average price they paid per painting was about $25,000.

AFG’s website says it has served more than 1,000 clients. In an e-mail exchange, AFG initially said the company’s founder, Jeremy Kasler, would give an interview, but then said he would respond to written questions instead. On receiving the questions, the company said he was too busy to respond. In response to two subsequent emails, the company said there was no one else available to address the questions.

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AFG isn’t the only company in Hong Kong offering to sell and then lease art. Elliot James & Tyndal also sells Chinese contemporary art with promises of an 8 percent return for two years, said Divine Fung, who bought one of their paintings after getting cold called by a sales representative. The company did not respond to emailed questions.

Another firm, Collins & Kent International Fine Art, sold editions of works by Damien Hirst and Salvador Dali, offering 7.5 percent rental income, until its Hong Kong office went bust in 2017.

Mrs. Wong, a compliance lawyer who asked to use her husband’s surname only, bought a Hirst print from Collins & Kent a few months before the company closed. Now she says she’s stuck with a painting she never liked and can’t sell.

"I was the perfect target, someone with enough money, very little time and no knowledge of art,” she said. “I am totally embarrassed by my own stupidity and lack of due diligence.

A Melbourne-based company using the same name said it helps some clients lease their purchases of "blue chip" European works for a one-year period with yields between 3.5 percent and 7 percent as part of a broader business offering art storage and logistics. It allowed the Hong Kong entity use of its name and access to its artworks, the company said in an email.

The art-purchase-and-lease offer is particularly appealing for people looking for a high-return alternative investment, but find the world of galleries, art fairs and auction houses intimidating.

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"That’s where the model works, it preys on people by speaking to them in a vocabulary they understand and offering to be a trusted guide through this very opaque market, so buyers probably let their guard down," says Edie Hu, art advisory specialist at Citi Private Bank in Hong Kong. "There is a mystique to the art market and all of a sudden you have someone who brings it down to your level. Nobody from galleries or auction houses talks about return on investment."

Macey & Sons, which sells mostly European works of art and antiques, was founded by former AFG employee Jonathan Macey, who declined to discuss his former employer. He said his firm does lease some pieces back from buyers it uses for publicity to attract new clients, paying the owner up to 5 percent.

"We have a leasing program, not on all pieces, on certain pieces we can show off around the world,” Macey said. "You have to reinvent the way you gain markets."

Free Whisky

His firm rents space at art fairs and held a free whisky tasting in November for delegates of the Hong Kong AVCJ Venture Capital Summit. In February Macey displayed a client’s HK$1 million 12 carat tiara at the Longines Masters equestrian event in Hong Kong. His clients can even earn frequent flyer points when they purchase his art.

AFG has set up a booth each year at the Asia Contemporary Art Show in Hong Kong alongside other galleries, and has held lucky draws to win a painting, according to d’Angelique, who said she was contacted by phone “in minutes” after filling out an online survey in 2012 to enter the contest.

Iris, who works in finance and asked that only her first name be used, started getting calls from a salesman soon after filling out an AFG questionnaire in exchange for a free face-painting for her daughter in the upscale Hong Kong enclave of Discovery Bay.

"He was very pushy and good at talking, like a car salesman," she said after buying a surrealistic painting of a multicolored zebra by mainland artist Liu Liguo for HK$348,000 in 2016. "If he had sold me a mutual fund or some other investment I would have been a lot more careful. Without the rental offer I probably would not have bought it."

She said she doesn’t believe her painting was ever rented out and AFG simply overcharged her and paid the lease premium from the sale proceeds. The leasing contract was drawn up between her and AFG, not a corporate renter. She said AFG wouldn’t tell her who would be leasing her painting.

While the claims of third-party leases may have been unsubstantiated, the company hasn’t done anything legally improper, said Wong, the lawyer.

One reason the strategy flourishes is the reluctance of many former clients to speak out. Seven people who were interviewed about their purchases work in banking and finance and requested anonymity to protect their professional reputations. Some of those who bought the artworks didn’t want to talk about the experience.

That behavior is typical of people who fear they fell for a scam because they feel ashamed, said a former Blackrock employee who spent HK$625,000 on art from AFG. Their shame is a natural reaction and companies rely on it to prevent information coming out about their operations, the person said.

But some who feel victimized don’t stay silent. H.L. Tan decided to speak out after an AFG broker tried to sell him a second painting five years after his first. "I was really angry," said Tay, a former stock broker who wrote off his HK$248,000 purchase years ago. "This is why I am coming forward, as a warning sign to everyone not to get involved."

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