Service of Settling with a Cheat

February 15th, 2016

Categories: Art, Scams, Settle, Theft

Settle out of court

Knoedler & Company, founded in 1846, had a star-quality international reputation until 2011 when the art dealership was accused of fraud and closed.

In artnet.com Brian Boucher wrote: “Over fifteen years, from 1994 to 2009, the gallery sold fake paintings by Jackson Pollock, Mark Rothko and other artists that had been brought to the gallery by Long Island art dealer Glafira Rosales, who pleaded guilty to fraud in 2013 and is awaiting sentencing. She had commissioned the paintings from a Chinese artist in Queens, who has since fled to China.”

Knoedler & Co. Photo Observer.com

Knoedler & Co. Photo Observer.com

On the witness stand last week, Ruth Blankschen, the gallery’s accountant, “said that she had paid Rosales up to $9,000 in cash in an envelope for each of the paintings she brought to the gallery, which is significant because the IRS requires reporting of cash transactions over $10,000,” wrote Boucher in “Knoedler Gallery Fraud Trial Abruptly Suspended—Settlement Seems Likely.”

This trial involved Eleanore and Domenico De Sole who were suing for $25 million because they paid $8.3 million in 2004 for their fake Rothko. Meanwhile the gallery did well, increasing their $9,000 investment to $8.3 million: A Madoff-worthy return, no?

Mark Rothko photo wikiart.org

Mark Rothko photo wikiart.org

Domenico De Sole, chairman of Sotheby’s, said that he was counting on the reputation of this well-regarded art house and didn’t do any vetting of the art himself. Given his position, imagine how embarrassed he was to be caught in such a net.

Clearly former gallery director and president Ann Freedman and Michael Hammer, the owner of Knoedler and its holding company, 8-31 Holdings, saved plenty of their ill gotten profits as they seem to be settling cases out of court right and left.

  • Freedman settled with the De Sole’s a few days before having to take the stand.
  • According to Henri Neuendorf of artnet.com in an earlier story, of nine suits against the gallery by buyers, five have been settled and four await trial.

Jennifer Smith in “Gallery Settles Art-Fraud Case,” written a few days after Boucher’s piece, reported that the gallery and the DeSoles’s have reached an undisclosed agreement and that “no criminal charges have been filed against Knoedler or Ms. Freedman.” In her Wall Street Journal article she continued “that both have said they were also duped by Ms. Rosales who told them the paintings came from a trove acquired by a collector known as ‘Mr. X.’” Smith said in all there were more than 30 fake artworks.

Do you think that sellers of fake art, if they settle out of court, should be free and not have to suffer punishment other than paying an agreed upon fine? Freedman claimed she knew nothing about the fakes. Wasn’t it a clue that her gallery paid less than $10,000 for something for which it was able to get over $8 million not from an art nubie, but from someone in the trade?

 Mr. X

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4 Responses to “Service of Settling with a Cheat”

  1. hb Said:

    There is nothing new about shenanigans in the world of art peddling. That patron saint of art connoisseurs, Bernard Berenson, for many years secretly colluded with Joseph Duveen, perhaps the most powerful picture peddler of all time who built the collections of men like Henry Frick and J.P. Morgan. Berenson would provide the glowing authentications for canvas after canvas, and Duveen would market them at bloated prices to his following of fat cat suckers. They split the profits.

    Knoedler & Company, once one of the most renowned names in the trade, joins the long list of those who sold off their integrity for a quick buck. And don’t tell me that senior management did not know … Sadly, while there are still many ethical and well informed individuals, from curators to dealers, to authenticators, to restorers, in the business, art buying and selling has been corrupted from top to bottom by too much money.

    But what I take away most from your post is the realization that the art you describe as having been forged, can be so easily be faked. Otherwise, why did it take so long to discover the fraud? The answer must be that while even a knowledgeable amateur can tell the difference between a true John Singer Sargent and a weak one that isn’t quite “right,” who can really say which of two canvasses, with a bunch of paint drops sprinkled on them in more or less the same way, is really a Jackson Pollock? The same goes for Rothko and his blotches of color.

  2. Jeanne Byington Said:

    hb,

    I didn’t think of that angle: The artists selected were far easier to fake than others. I have a Rothko-like picture I bought in California. It’s colors remind me of the landscape I enjoyed on my vacation in the San Francisco area. I find the Rothko concept pleasing though $1 million? I don’t think so, not when there’s so much hunger and illness yet to be conquered.

    The saddest part of the Knoedler affair and others like it is that it ruins it for reputable dealers of anything–pictures, sculpture, antiques and collectibles. The whole reason for buying from a dealer is because of the staff’s expertise in vetting the work you are buying and to save time: Who can follow and/or attend auctions unless they are in the business?

    To discourage this kind of cheating, I think that the cheaters should have to serve time.

  3. Lucrezia Said:

    Why is it that the immediate reaction upon learning of wrongdoing is to think the culprit belongs in jail? Just what problem does it solve, and just what good does it do other than to place an additional burden on the taxpayer? No I don’t think anyone should be locked up, and would much prefer seeing that they make restitution plus damages and court costs. Making the cheat pay a great deal more than his gain is much more likely to discourage such activity than a stint in jail.

    It’s common knowledge that the US, a democracy, has the largest population of yard birds on the planet, and according to presidential candidate, Bernie Sanders, three times more than in Communist China. Is this something to be proud of?

    Jail will not stop crime, and it’s possible nothing will, but at least let’s use common sense and make it financially crippling for scammers to operate. If they don’t get the message, let them live on the street corner, and not at society’s expense.

  4. Jeanne Byington Said:

    Lucrezia,

    These people have so much money that punishing them with a fine isn’t enough. I would imagine that the thought of having to spend time behind bars might deter some who would be horrified by their potential roommates. As they see that this doesn’t happen with their colleagues, they consider being caught and paying a fine as a cost of doing business–no biggie.

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