Tags: US | Art | Gallery | Indictment

Atty: Ex-NY Art Dealer to Admit Nearly $100M Fraud

Thursday, 18 Mar 2010 02:02 PM

A once-high-flying art dealer plans to admit swindling nearly $100 million from a star-studded clientele that included tennis great John McEnroe and the estate of actor Robert De Niro's father, the dealer's lawyer said Thursday.

Former gallery owner Lawrence B. Salander was expected to plead guilty Thursday to grand larceny and scheme to defraud, attorney Charles Ross said. He said Salander would admit to a sweeping scheme that prosecutors say involved a dream of dominating the Renaissance art market and victimized heirs to a roster of prominent artists.

"This is a sad day for Mr. Salander. It is, however, a good result for him and for those whom he is deeply remorseful about hurting," Ross said. He said Salander, 60, expected to be promised a prison sentence of a maximum range of six to 18 years — compared with the 25 years he could have faced if convicted — and would try to raise money to repay his victims.

The now-closed Salander-O'Reilly Galleries LLC, established in 1976, advertised works by artists ranging from 19th-century master Gustave Courbet to Armenian-born American abstract expressionist Arshile Gorky.

Salander is accused of financing a deluxe lifestyle by selling art he didn't own and luring clients into bogus art investment opportunities.

He sold investors shares in artworks that added up to more than 100 percent and lied about what the backers stood to get in return, the Manhattan district attorney's office said. When owners consigned art to him to sell, he struck deals below the prices the owners had authorized, used the works to satisfy his own debts and balked at demands to return the pieces, prosecutors said.

Prosecutors say McEnroe lost more than $2 million, and the estate of abstract expressionist Robert De Niro Sr. lost more than $1 million. Earl Davis, son of artist Stuart Davis, lost more than $6.7 million after consigning 96 of his father's paintings to Salander for sale, according to prosecutors.

The art broker used the stolen money for such personal luxuries as private jet travel and a 66-acre country estate, and to finance a self-created campaign to corner the market in Renaissance art, prosecutors said.

The criminal investigation began in October 2007 after allegations arose that the gallery was stealing its wealthy clients' art and money. Soon afterward, a judge halted sales and ordered the gallery's contents seized.

The process of dismantling the business continues in bankruptcy court. Some consigned artworks have been returned to their owners, while creditors recently hashed out a plan to sell off thousands of other pieces the gallery held, said Robert J. Feinstein, creditor for the lawyers.

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