Service of Settling with a Cheat
February 15th, 2016
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.”
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?
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?