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Merrin Gallery Is Charged with Inflating Costs and Commissions

Two owners of a New York City antiquities gallery have been accused of intentionally overcharging art collectors by $2/3 million, according to a four-count mail-fraud indictment that was filed in U.S. District Court, Manhattan, on March 2.

NEW YORK—Two owners of a New York City antiquities gallery have been accused of intentionally overcharging art collectors by $2/3 million, according to a four-count mail-fraud indictment that was filed in U.S. District Court, Manhattan, on March 2.

The indictment, based on a ten-year investigation, claims that Edward Merrin, 76, and his son Samuel, 41, owners of The Merrin Gallery, allegedly agreed to buy ancient Mexican, South American, European and Middle Eastern artworks for two collectors—not named in the statement but described as a married couple living in New York City, with homes in Colorado, Connecticut and Florida—and inflated charges of their costs in acquiring the pieces, in addition to the gallery’s dealer commission, which ranged from 10/20 percent.

The Merrins “have committed no crime,” their attorney Benjamin Brafman told ARTnewsletter. “This case involves a business dispute with a prominent, powerful former client who is used to getting his own way and is now using the government to change the terms of an agreement after the fact. The Merrins intend to fight this case and fully expect that they will be exonerated.”

The indictment claims that the gallery owners lied about their actual costs, charging the collectors in some instances more than three times the amounts they actually had paid, plus commissions on the inflated amounts. The “cost-plus agreement” between the Merrins and the collectors, the suit says, was never documented in writing but “confirmed orally and by handshakes.”

Eleven examples of overcharging, on both small scale and large, are cited in the indictment. For instance, a Peruvian necklace of gold beads the Merrins sold to the couple in 1996 for $29,900 (citing $26,000 to acquire the necklace, plus a $3,900 commission) actually cost the gallerists only $8,000.

On a large scale, a 3,000-year-old Mexican jade mask, which in 1999 the Merrins claimed had cost $1,120,000 to acquire, in fact had cost them but $390,000. In another instance, the Merrins reportedly inflated the price of a Mexican urn from $375,000 to $910,000 in 1994. For all 11 examples noted in the charges, the prices had been inflated by a total of $2.12 million over the actual dealer costs—not counting the commissions total of more than $424,000.

The indictment further states that the owners of The Merrin Gallery charged the collectors more than $63 million for hundreds of pieces of art and antiquities during the period from 1989-2000, half of which was part of the “cost-plus plan.” If convicted, the Merrins face fines and imprisonment up to 20 years.

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