Trial over gallery's fake paintings ends with settlement

AP News
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Posted: Feb 10, 2016 7:47 PM

NEW YORK (AP) — A civil trial exposing the ugly underbelly of New York's art world ended with a settlement just as the once highly respected president of a gallery was to testify Wednesday about selling forged fakes of modern masters for millions of dollars.

The settlement — terms of which were not disclosed — was reached late Tuesday in time for jurors to be notified there was no need to return to Manhattan federal court.

Witnesses over two weeks said the final years of a gallery more than 150 years old invited a scandal that shook the dignity of one of its wealthy clientele's favorite playgrounds.

Knoedler & Company gallery closed in 2011 and ever since has defended itself against claims resulting from $69.8 million in sales from a collection of bogus paintings that capitalized on the names of famous artists including Jackson Pollock and Mark Rothko. The sales earned the gallery $43.2 million in profit and provided Ann Freedman, the gallery's president, with $10.4 million in profit sharing, testimony showed.

The trial focused on the claims of Domenico De Sole, chairman of the board at Sotheby's auction house and a former Gucci CEO, who said the gallery had refused to return $8.3 million he spent on a fake painting. His lawsuit sought $25 million.

His wife Eleanore had testified that learning that the Rothko titled "Untitled, 1956" wasn't real sent her into a "shaking frenzy."

Their attorney, Gregory Clarick, said Wednesday the couple was "extremely pleased and not surprised" that the case settled.

"For 15 years, Freedman and Knoedler ignored the most eminent experts, buried unhelpful research, made up stories about where works came from, earned profit margins that virtually announced the fraud, hid the truth, and lied to collectors, like the De Soles, to sell fakes and make millions. The outcome — including that the true facts are finally on the table — is exactly as we hoped and expected," he said.

Freedman's lawyer Luke Nikas said Freedman has been working for years to revolve these cases and "is pleased to have reached this compromise with the De Soles."

The fake paintings, created by a Chinese immigrant, were sold between 1994 and 2011.

One former gallery employee testified that Knoedler workers referred to the person supplying Long Island dealer Glafira Rosales with the lucrative paintings as "Mr. X" or "secret Santa."

Rosales, who pleaded guilty to criminal charges and admitted selling or consigning 40 fakes to the gallery, found the forger painting portraits on a Manhattan street.

Accountant Roger Siefert, hired by the plaintiffs, testified that the gallery would have lost $3.2 million since 1994 without the fakes.

Art historian Jack Flam, who was close friends with painter Robert Motherwell and is president of the foundation the late artist formed to oversee art in his possession, testified he congratulated Freedman when she showed him a supposedly newly discovered Motherwell painting in 2006.

He said he knew her well and the gallery had a sterling reputation.

A year later, she was told at a meeting at his foundation that they were probably fakes.

"She resisted it," he recalled.

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Associated Press Writer Tom Hays contributed to this report.