Former gallery director to pay restitution for fraud

Reuters News
|
Posted: Jul 19, 2011 12:53 PM
Former gallery director to pay restitution for fraud

By Joseph Ax

NEW YORK (Reuters) - Former art gallery director Leigh Morse escaped a lengthy prison term at her sentencing in a Manhattan criminal court on Tuesday but will owe $1.65 million in restitution for defrauding her clients.

Morse will serve an intermittent sentence, spending weekends in confinement for four months, and be on probation for five years.

The punishment capped a trial that saw actor Robert DeNiro testify against her.

Morse, 55, was found guilty in April of selling more than 80 works of art from four estates for approximately $5 million without informing the owners.

But she was cleared of a larceny charge that stemmed from allegations that she had sold several paintings by DeNiro's father, the late Robert DeNiro Sr., without paying the actor.

Morse worked for art dealer Lawrence Salander, who pleaded guilty last year to orchestrating an art investment scam that netted more than $100 million from DeNiro, tennis legend John McEnroe, Bank of America and well known figures in the art world.

Salander, whose gallery closed in 2007, was sentenced to six to 18 years in prison and ordered to pay $120 million in restitution.

Judge Michael Obus said Morse's conduct went beyond simply failing to report Salander's conduct into active participation.

"This was a betrayal of trust," he said.

But in her favor, he noted her clean criminal record, her lack of professional censure prior to the scheme and her responsibilities to her husband, who is ill.

Assistant District Attorney Micki Hendricks, backed by representatives from the victimized estates who spoke at the hearing, sought one to three years in prison and $9 million in penalties.

"In a nutshell, she categorically refuses to accept any responsibility or accountability or express remorse," Hendricks said in court.

Morse, in a brief statement, said she was "deeply sorry" for the pain her clients had endured but maintained that she was unaware of Salander's conduct.

"I never suspected that Larry would be unable to pay his debts and that he was running a Ponzi scheme," she said, adding that her husband is ill and needs her to care for him.

(Editing by Noeleen Walder and Ellen Wulfhorst)