News The Knoedler Affair

Ann Freedman Settles With the De Soles in Knoedler Trial Over $8.3 M. Fake Rothko

The collectors’ suit against the gallery will continue

The fake Rothko at the center of the dispute.

The fake Rothko at the center of the dispute.

Ann Freedman, the former president of New York’s Knoedler gallery, and collectors Domenico and Eleanore De Sole have settled their lawsuit over the sale of a forged Mark Rothko, which the De Soles purchased from Knoedler for $8.3 million in 2004. The terms have not been disclosed.

The De Soles claimed that Knoedler and Freedman knowingly misrepresented the fake Rothko as authentic. The painting was, in fact, part of a cache of counterfeit paintings that Long Island dealer Glafira Rosales brought to Knoedler over the course of 15 years and that Knoedler sold to collectors. Freedman’s lawyers claimed that she, too, was fooled by the paintings, even going so far as to trade a genuine Rothko from her personal collection for one of Rosales’s fake, which then hung on the wall of Freedman’s home for years.

The trial, which begins its third week on Monday, has focused on a number of expert witnesses claiming that Knoedler, and Freedman in particular, ignored many warning signs about Rosales, who pled guilty to federal tax evasion and money laundering charges in 2013.

Rosales claimed to be working with the heirs of an anonymous Swiss collector. She told Freedman that the collector, who came to be known as Mr. X (Freedman also referred to him as “Secret Santa,” according to the testimony of several former Knoedler employees), purchased a number of paintings directly from Abstract Expressionist artists with the help of David Herbert, a past employee of the Sidney Janis and Betty Parsons galleries, which represented artists like Rothko and his contemporaries. Mr. X turned out to be a farce. The paintings had been made by a Chinese immigrant living in Queens. Several experts—including art historian John Elderfield and Rothko’s son Christopher—said that their names were used without their knowledge to substantiate the validity of Rosales’s forgeries.

Last Friday, Roger Siefert, an accountant who examined Knoedler’s financial records, testified on behalf of the plaintiffs. He claimed that between 1994, when Knoedler sold the first Rosales work, and 2011, when the gallery closed, Knoedler wouldn’t have been profitable if not for the sale of forged paintings. In that same time period, Knoedler’s gross profit in sales from the Rosales fakes, according to Siefert’s calculations, was $43.1 million. The gallery had a net income during this time of $29.5 million. Without the sale of the Rosales works, Siefert said, the gallery would have operated at a loss of $3.2 million during this time period.

In addition, Siefert said that Freedman made about $10.4 million from the sale of the Rosales collection as a result of profit sharing, on top of her base salary of about $300,000 per year. (In 1998, Freedman’s base salary increased from $278,000 to $300,000, and her share of profits increased from 10 percent to 15 percent; by April 2008, her cut was equal to 30 percent of Knoedler’s operating income, according to records presented to the jury.)

In 2009, Freedman resigned from the gallery, which was subpoenaed by the FBI that same year. Knoedler closed in 2011.

The New York Times first reported the news of Freedman’s settlement, confirming it with Freedman and the De Soles’ lawyers. The De Soles, who first filed their case in 2012, were seeking $25 million from Freedman, the gallery, and its holding company. The case against Knoedler will continue, according to the Times, and Freedman is still expected to testify.

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