The Big Fake: Behind the Scenes of Knoedler Gallery’s Downfall

Domenico and Eleanore De Sole live most of the year in Hilton Head, South Carolina. Domenico is originally from Calabria, and he grew up in a military family, moving all around Italy. He got a law degree from Harvard in 1972, but he’s no longer a member of the bar. He made his fortune in the fashion industry, first as the CEO of the Gucci Group, and then as a cofounder of Tom Ford International with the label’s namesake. Eleanore describes herself as “Domenico’s unpaid secretary.” They are collectors and major patrons of the arts. Domenico currently serves as the chairman of the board of directors at Sotheby’s, but when it comes to their art purchases, Eleanore makes all the decisions. Still, they would not describe themselves as art experts per se. Domenico is more comfortable talking about handbags.

On a trip to New York in November 2004, the De Soles visited the Knoedler & Co. gallery on the Upper East Side of Manhattan for the first and last time. They went there to inquire about buying a work by artist Sean Scully, who had been represented by Knoedler off and on for years, and met with Ann Freedman, the gallery’s president. She told them she did not have any work by Scully available, but she did have a painting—right there in her office—that she said was by Mark Rothko.

Freedman explained that a private Swiss collector had owned the work, and that his family wanted to remain anonymous. After short deliberations, the De Soles wanted to buy the painting. They paid Knoedler $8.3 million, the most the couple had ever spent on a work of art by a wide margin. The invoice for the Rothko lists the buyer as Laura De Sole, the couple’s oldest daughter, so that it would be clear that the painting would go to her after the De Soles died, and not her younger sister, Rickie. “They fight,” Domenico said of his daughters. (Eleanore was slightly more morbid. After the couple was dead and buried, she said, “I didn’t want to roll over in my grave.”) The family planned on owning the work for a long time.

More than a decade after that meeting at the gallery, and two years after their Rothko was revealed to be a fake, the De Soles would tell a jury that Freedman and Knoedler had knowingly conned them out of seven figures. But, Domenico would testify, back in 2004 he and his wife had “no reason to believe someone was lying” to them. After all, they were dealing with Knoedler—“the most trusted, oldest, most important gallery,” he said.

Knoedler & Co. opened in New York City in 1846 and ran more or less continuously until closing abruptly at the end of 2011. Knoedler went into business almost a quarter of a century before the Metropolitan Museum of Art was founded. When the gallery started, California was not yet a U.S. state. Knoedler would become a leading supplier of Old Master paintings to the robber barons of the Gilded Age, counting among its clients Cornelius Vanderbilt, J. P. Morgan, and Henry Clay Frick. For years the business was described as a framer and “picture manufacturer”—its existence predated the very idea of a storefront business that sold art. The gallery weathered 165 years of American history and changing tastes.

But in the second half of the 20th century, as the market for contemporary art expanded dramatically, Knoedler suffered. In 1970, after spending a large sum on a town house at 19 East 70th Street, the gallery was nearly bankrupt. In 1971 Armand Hammer, the oil magnate who eventually founded his own private museum in Los Angeles, purchased the business for $2.5 million. Knoedler survived, mostly on the strength of one of its greatest directors, Lawrence Rubin, who shifted the business’s focus to more contemporary fare, bringing on artists like Richard Diebenkorn, Frank Stella, and Scully. Rubin also hired Freedman, then a 29-year-old receptionist from a rival gallery, who quickly rose to the position of president, and, in 1994, became Knoedler’s director.

By all appearances, the gallery prospered under Freedman—she was a natural salesperson, and her Rolodex included David Geffen and the Taubman family, as well as every imaginable museum director—but the year she took over was also the beginning of Knoedler’s ultimate downfall; it was the same year a woman from Long Island no one in the art world had ever heard of, named Glafira Rosales, came to the gallery and met with Freedman for the first time. Between 1994 and 2008, the year before Freedman quietly resigned, Rosales, with the alleged help of her boyfriend, Jose Carlos Bergantiños Diaz, his brother Jesus, and Pei-Shen Qian, a Chinese immigrant living in Queens, conducted an $80 million forgery ring through Knoedler, selling or consigning 40 expertly crafted counterfeits—the De Soles’ painting among them—that Rosales claimed were by Abstract Expressionists, including giants like Robert Motherwell, Jackson Pollock, and Rothko.

Knoedler received a grand jury subpoena in 2009, but details of Rosales’s conspiracy only became known to the public after they seeped into the press, a few days after Knoedler closed in November 2011. Freedman and the gallery have been in litigation ever since. In 2013 Rosales admitted that the works she brought to Knoedler were all fakes, painted by Qian in his studio in Woodhaven, and pled guilty to various charges, including tax evasion and wire fraud. She is awaiting sentencing. The Diaz brothers were arrested the following year in Spain, having fled the United States, and have yet to be extradited as of this writing. Qian was indicted, but has since returned to China, where he maintains he didn’t know his paintings were being passed off as the work of famous artists. Up until Rosales’s guilty plea, Freedman insisted that the works were real, and that she would be vindicated. After the plea, Freedman described herself in an interview with New York magazine as Rosales’s “central victim.”

The art market is notoriously opaque—the cliché is that it is the largest unregulated industry in the world, besides guns and drugs. There are certain rules, but chief among them is an almost pathological level of discretion. There is little oversight, and players can get away with a lot of ethically dubious behavior. Many of the collectors who purchased fake works from Knoedler did not veer from this privacy, choosing instead to settle with the gallery out of court. But last winter the De Soles, unable to reach an agreement with Knoedler, made it to trial. It took four years to get there. The De Soles and their legal team argued that for its final 15 years Knoedler was a racketeering operation, and they were suing for triple damages—$25 million—under federal RICO laws. The gallery, Freedman, and the gallery’s holding company, 8-31 Holdings—owned by Armand Hammer’s grandson, Michael—were all defendants.

The trial unearthed one of the greatest scandals the art world has ever seen and laid bare the chain of suspicious decisions that brought down what had once been a storied gallery. The details of Knoedler’s collapse offer a kind of clarity that is typically nonexistent in this business, raising all sorts of questions about whether the lack of transparency at the high end of the art market will be viable in the future.

The trial began in Southern District Court in Manhattan on a Monday in January 2016, and lasted three weeks. Behind a screen in the courtroom was the fake Rothko, which would occasionally be brought out during testimony for the jury to see. The painting had hung in the De Soles’ house for about six years, behind expensive glass casing and rigged to an alarm system; in the courtroom, it was handled roughly, like a piece of cardboard.

From day one, the De Soles did little to mask their contempt for Freedman. When Knoedler’s lawyers did cross-examinations, Domenico would shake his head and laugh in exasperation. He had a tendency to pull reporters aside, usually during breaks, but sometimes not, and whisper not-to-be-quoted tirades about how Knoedler perpetrated a fraud.

Like many collectors, Domenico first suspected that the work he bought from Knoedler was a fake when, in late 2011, the New York Times published an article about a lawsuit that had been filed by another duped collector, Pierre Lagrange. Domenico seemed to have spent a lot of time over the last five years thinking about Knoedler, and to be relieved to have a room of interested listeners to whom he could vent. I had a clear sense that he was not wearing his best suits to the courthouse.

Eleanore was less outspoken than her husband. Her face would simply stretch into a sarcastic smile when Knoedler’s lawyers tried to discredit the plaintiffs’ witnesses. Occasionally, she would quietly cry into a tissue. The contrast between the De Soles and Freedman was pointed. Freedman was stone-faced throughout the trial, and she seemed to avoid eye contact with everyone, especially the members of the jury. She dressed as if attending a funeral, in black, beige, or gray.

The De Soles had three main presenting attorneys—Gregory Clarick, Aaron Crowell, and Emily Reisbaum. Clarick, a compact bald man, was chipper in the courtroom, usually managing an awkward smile no matter the circumstance. Crowell had the unique ability to ask a witness a question as if he hadn’t asked it over and over again during four years worth of depositions, as if he really was just curious and wanted to know the unexpected answer.

Reisbaum was the most relaxed and casual of all the lawyers. She gave the plaintiffs’ opening statement, which focused on the six “red flags” that formed the backbone of the De Soles’ case against Knoedler: Freedman knew nothing of Rosales before she came into Knoedler and had no reason to trust her; no one had ever seen or heard of the works Rosales was bringing in, and there was no documentation—receipts, sales records, photographs—to corroborate their existence; Rosales offered the works at “bargain-basement prices,” and Knoedler made massive profits in selling them, profits Reisbaum described as “not normal”; Knoedler paid Rosales for the works partly by wire transfer, partly by check, and partly with a cash payment usually just under $10,000, the federal bank reporting requirement; Knoedler and Freedman not only didn’t know Rosales’s source for the works, they “actually made up the story about where the works came from” themselves, Reisbaum said; beginning in 1994, when the gallery sold the first Rosales work, various experts voiced suspicions about the collection. The case hinged on whether or not Freedman and others at Knoedler were in on Rosales’s scheme. (Freedman herself has not been indicted on criminal charges.)

After showing some images of Rothko’s work to the jury, Reisbaum said, “Now, not everybody likes this kind of art, but many people do.” Of Freedman, she added, “She was lying. We will give you the evidence that will show you she was lying to the De Soles about everything she said.”

Luke Nikas, Freedman’s attorney, claimed his client had vetted the Rosales paintings, including the De Soles’, with leading experts—conservators, historians, connoisseurs—all of whom supported the works. The painting was even briefly exhibited at the Beyeler Foundation, a private museum in Switzerland. “When the whole art world says it’s impossible that these works are forgeries,” Nikas said, could the plaintiffs prove that Freedman knew they were?

Nikas spoke in a dramatic, brooding tone that contradicted his boyish face. During cross-examination, he would often spend half an hour or more simply establishing what a person does in her job, only to use that information later to shatter her credibility. Freedman traded genuine works from her own collection for some of the Rosales works, he said, and purchased others. A purported Jackson Pollock—with the signature misspelled (“Pollok”)—hung in her apartment for 15 years. Nikas went on to argue in his opening that Freedman’s enthusiasm for the Rosales works “crumbles the foundation of the plaintiffs’ argument” that Freedman was knowingly misrepresenting the paintings as authentic to her clients. As he said this, he played an animated video on the courtroom screen that showed a house crumbling because of its weak foundation.

Nikas’s whole presentation took 90 minutes and included footage from the 2000 film Pollock, directed by Ed Harris. This was an attempt to prove that Pollock’s penchant for alcohol (the scene presented in court had the artist, played by Harris, drinking a beer on a bicycle) meant that he and his contemporaries kept poor records of their work. It was natural, Nikas argued, for Freedman to believe a work was by Pollock, even if, as was the case with all of the works Rosales brought to Knoedler, it had never been shown publicly and was not published in the painter’s catalogue raisonné (the list of all known works by an artist; Pollock’s was first published, as a four-volume set, in 1978).

Buffering Nikas was Charles Schmerler, who represented Knoedler and 8-31 Holdings at trial. Schmerler is originally from Plano, Texas, and looks like Edward G. Robinson. During the trial, he occasionally came across as a plainspoken everyman that a juror might want to have a beer with. (His laconicism took on a more foreboding tone later in the trial.) “I want you to put aside the fancy art words like ‘connoisseurship’ and ‘catalogue raisonné’ that the supposed experts use,” he said in his opening. On the courtroom screen, he projected a scoreboard, which listed what he claimed to be the facts of the case. The scoreboard had buzzer sound effects that went off every time he produced a new fact. The judge, Paul G. Gardephe, who said on several occasions that his preference was to meet on federal holidays and who never let court out before 5 p.m., was having none of this. Gardephe frowned throughout almost the entire trial—his face drooped in either heavy concentration or mere annoyance. He would sometimes uphold an objection by saying, “Sustained, sustained, sustained,” in the tone of a disappointed parent, with a heavy exhale and a slow shake of his head, as if the lawyer should have known better than to do something that would be objected to. “Please cut out the sound effects,” he told Schmerler.

Clarick, Crowell, and Reisbaum had to prove that Freedman acted with fraudulent intent and not just negligence—a tall order, according to Nikas and Schmerler. (Nikas, in fact, presented a short animation in his own opening that addressed this difficulty: it showed a stick figure climbing up a tall mountain, and atop the mountain was the word “fraud.”)

“They want you to believe that Ann Freedman fooled the entire world,” Schmerler said, in disbelief.

Domenico testified that Freedman told him and his wife that eleven experts had authenticated the Rothko. He was careful to use the word “authenticate.” The defense’s argument was that no one person authenticates a work, and that even the combined opinions of many experts is not binding. The De Soles’ lawyers argued that Freedman presented the work as authentic without disclosing any of the questions surrounding where it came from.

All of the Rosales works supposedly came from a collector who had made his riches in the sugar business and had homes in Switzerland and Mexico. Freedman told collectors he was very secretive and wished to remain anonymous—but few people besides Freedman’s assistant and other gallery employees she had tasked with doing research on the Rosales works were aware that even Freedman didn’t know who the collector was. He had obtained the works directly from the studios of Abstract Expressionist artists, she said. When he died, his son wanted Rosales’s help to sell some of the works. This was the story, anyway, that Rosales had presented to Freedman. Rosales’s name, both De Soles said, did not come up in their conversation with Freedman.

Around Knoedler, the anonymous collector came to be known as “Mr. X.” Freedman also referred to him as “Secret Santa,” former Knoedler employees testified. Over time, as Knoedler sold the Rosales works, the identity of Mr. X remained a mystery, but the gallery’s story of the paintings’ provenance—the history of who had previously owned the works and when—shifted. First, the claim was that Alfonso Ossorio, a friend of Jackson Pollock and his contemporaries, had brokered Mr. X’s purchases. But no evidence could be found that Ossorio, a familiar figure to historians of Abstract Expressionism who was known for keeping detailed records, had any connection to a Swiss collector.

By the time the De Soles arrived at Knoedler, Freedman was using the late David Herbert to explain the Rosales works. Herbert, who died in 1995, was a former low-level employee at the two leading New York galleries that showed the Abstract Expressionists in their prime, in the 1950s—Sidney Janis and Betty Parsons. The story became richer when Herbert’s name was floated in connection to the paintings: Mr. X and Herbert had engaged in a love affair. This was why the collector, who was married and had a family, wanted his name to be kept secret.

At the trial, several former Knoedler employees—including Melissa De Medeiros, who was Freedman’s assistant, and Edye Weissler, the gallery’s librarian—said they had done provenance research into the Rosales works to find documentation that proved the paintings were purchased decades ago by a Swiss collector with the help of either Ossorio or Herbert. Of course, no such documentation ever existed. Mr. X was the creation of Rosales. Still, the names of either Ossorio or Herbert appear on many Knoedler invoices describing the provenance of the Rosales works. With her vague story in place, Rosales brought a few paintings a year to Knoedler, often rolled up in the backseat of her Mercedes.

Before the sale of the Rothko went ahead, the De Soles requested the details of their conversation with Freedman be put in writing. The subsequent letter that Freedman sent to the De Soles, in December 2004, was central to the arguments of both the plaintiffs and the defendants. It says that the Rothko had “been viewed by the following individuals with special expertise on the work of Mark Rothko,” going on to list the eleven experts Freedman supposedly named in their meeting. The De Soles’ lawyers claimed that this document strongly implied that Freedman had these experts authenticate the work; Nikas and Schmerler claimed that the letter only meant that Freedman had shown the work to those people. The list includes Laili Nasr, who was making a supplement to the Rothko catalogue raisonné; Christopher Rothko, the artist’s son; art historians Irving Sandler, Stephen Polcari, and David Anfam, the author of the catalogue raisonné for Rothko’s works on canvas; and E. A. Carmean Jr., a former curator at the National Gallery of Art who had been put on retainer by Knoedler for upward of $50,000 a year, primarily to research the provenance of Rosales’s works. Polcari and Carmean had put their opinions about the validity of the Rosales works into writing. (“I too am convinced of their quality and authenticity,” Polcari wrote in reference to the entire Rosales collection in an essay, composed at Freedman’s request, about what turned out to be a fake Robert Motherwell.)

But Anfam testified that he was never asked to give his opinion on the Rothko, and worse, he never saw it in person, only in pictures that Freedman had sent to him after the De Soles purchased it. He said Freedman including him on a document of experts who had viewed a work would “constitute a proxy authentication,” and that doing so was “outrageous.” “You don’t put people’s names on lists of anything without asking their consent,” Anfam said.

Others whose names appeared on the list echoed this sentiment. Sandler testified that he had no knowledge his name was being used on a document presented to prospective buyers, and that he’d looked at a supposed Rothko in Freedman’s office for “5 to 20 seconds,” but he couldn’t recall if it was the painting the De Soles ended up buying. He said he does not authenticate works of art. “I never have and I never will.” Rothko gave similar testimony, saying he stays clear of offering opinions on the authenticity of his father’s work so that he doesn’t end up in court. He said, however, that he saw the De Soles’ Rothko and recalled telling Freedman it was “pristine.”

Carmean and Polcari were big supporters of the Rosales works, praising them in internal Knoedler documents and ignoring many warning signs. In 2002 a collector named Jack Levy submitted a Rosales Pollock he purchased from Knoedler to the International Foundation for Art Research, the main source for authenticating works by Pollock and other Abstract Expressionists. IFAR could not conclusively attribute the work to Pollock. Polcari called the report an “attack,” describing it as “amateurish…and irrelevant.” And Carmean refuted testing done by forensic analyst James Martin, who has examined many of the Rosales works and found numerous anomalies—including pigment that wasn’t invented until long after the supposed dates on the paintings. Carmean dismissed one of Martin’s reports on two fake Motherwells as “too broad” and “negative.”

Various members of the art world followed all of this testimony intently, including a documentary filmmaker who always took the same seat in the front row; a reporter from the Art Newspaper who usually had her highly entertained boyfriend with her; a lawyer working on a screenplay about the Knoedler saga; numerous dealers and appraisers who all came and took notes, treating the trial like a cautionary tale; and one very pregnant art adviser who told me that she canceled a sonogram so she wouldn’t miss anything. Figures like these within the art world have been calling to reform and regulate how galleries do business for many years, and the Knoedler case gave fuel to that argument. But if the trial has a lasting impact, it will more likely relate to the commentary art experts like Polcari and Carmean are willing to provide. Adam Sheffer, the president of the Art Dealers Association of America, told me in an email that the bond between art historians and galleries might strengthen.

“One positive result may be the reinforcement of the fundamental roles that research and connoisseurship play in the work of an art dealer,” he said. “An art dealer’s depth of experience working with particular artists, schools, and periods is critical for the long-lasting, trusted relationships that successful gallerists build with both artists and collectors over time.”

But Sheffer, who has worked as a dealer for 25 years, also said he had “never seen anything like this situation.” In front of the jury, Nikas and Schmerler suggested that the De Soles had placed blind trust in Knoedler and hadn’t even bothered to read Freedman’s letter, much less reach out to the experts listed on it. This led awkwardly into one of the plaintiffs’ major arguments. Domenico said that if he bought a sweater from the Ralph Lauren store, he wouldn’t ask a sales clerk if the sweater was a real Ralph Lauren. (Buying a handbag from a Gucci store was floated by his lawyers as a similar example.)

Certainly, the Knoedler saga has raised trust issues. Jason P. Hernandez, an assistant U.S. district attorney who prosecuted Rosales at her criminal trial, told me, “For a long time, buyers were too reliant on the reputation of the gallery that was selling the piece, and really not much more.” Hernandez, who is now a litigator in Miami, said that after Knoedler, collectors might start to consider “the legal risk you take by not conducting your own investigation.” The De Soles’ lawyers, Clarick, Crowell, and Reisbaum, told me that the case might compel galleries to be more upfront, but would clearly make collectors more cautious in the long run. “People may be doing more due diligence than they used to,” Crowell said, “because now they know, no matter how fancy the gallery, you can’t just trust them.”

Nikas explained to me that there was legislation pending, proposed by the New York City bar’s Art Law Committee, to amend the New York Arts and Cultural Affairs Law, which would encourage scholars to give opinions about the authenticity of a work by protecting them from lawsuits in the event that their opinion was proven wrong. But for now, he said, “Good luck getting anyone to write you a letter about a Jackson Pollock saying it’s an authentic work of Jackson Pollock.”

When Freedman took over Knoedler in the mid-’90s, the gallery was part of an older generation that had been overshadowed by more fashionable businesses downtown, galleries like Gagosian and Mary Boone, which had prospered throughout the ’80s in SoHo by selling contemporary works to new Wall Street money. The art market crashed in 1990, but signs of recovery emerged beginning in 1994, and as the ’90s continued, the market for contemporary art at auction was beginning to overtake the prices commanded by Impressionist and modern art.

The exit of Knoedler’s longtime director Lawrence Rubin triggered an exodus of many of the contemporary artists Rubin had helped bring to the gallery. The initial plan was for Freedman to run the gallery alongside Donald Saff, who had been at Knoedler since 1992 as vice president, but Saff was edged out of his role, demoted to a consultant, supposedly at the request of Michael Hammer. At the time, Saff told the New York Times that Freedman had “interfered” with Hammer, and that he was shocked he was being shoved aside. “Between Ann’s skills with sales and the contacts I have with artists, this gallery could have been a powerhouse,” he said.

What happened instead was laid out in the plaintiffs’ case. The first of their witnesses was the art historian John Elderfield, a former curator at the Museum of Modern Art in New York, who testified to seeing, back in 1994, the first two Rosales works Knoedler had sold, paintings supposedly by Diebenkorn. He recalled telling Freedman they were “dubious.” “They were bland and flat,” he said, adding that Diebenkorn’s widow (the artist died in 1993), who accompanied Elderfield on his visit to Knoedler, told Freedman, “It would take a lot to persuade me that these were done by my husband.” (Nikas said that the two paintings in question were never at Knoedler at the same time, and that there was no way Elderfield could have seen them together.)

Elderfield spoke so softly that his testimony was nearly nonexistent, but the De Soles were stronger personalities on the stand. Eleanore began crying within about two minutes of starting her testimony. (The tears came at the mention of her deceased parents.) They both testified in front of their fake Rothko. Domenico occasionally looked at it in disgust, and at one point referred to it as a “fraud.” Judge Gardephe told Domenico to keep his commentary to himself.

The painting’s presence in the courtroom was uncomfortable for everyone. When I looked at it, all I could see was a black splotch of color on top of a red one. “Of course it’s a fake,” I thought every time I saw it, trying to avoid the possibility that if I viewed it in a museum I might have have scratched my chin thoughtfully while looking at its majestic colors. Clarick asked Domenico if knowing the painting is a fake has changed its value. Domenico laughed.

“I think so! It’s worthless!” At this, he scowled.

As more and more witnesses appeared, it was as if every corner of the usually secretive art world was being called to task. There were at least two art historians who wanted it on the record that they were the pre-eminent scholars in their given field. Roger Seifert, an accountant hired by the plaintiffs, offered a detailed look into Knoedler’s books and claimed that the business, in the years it was selling Rosales’s works, would not have been profitable—would have, in fact, been millions of dollars in the red—if not for the sale of the forgeries. The defense dismissed these findings as the financial records of a hypothetical business. Martha Parrish, a gallery owner who helped draft ethical guidelines for the Art Dealers Association of America, revealed certain trade secrets. The word “interesting,” for instance, “is a code word for ‘fake,’” she said. When asked what a gallery should do if faced with a situation like the one Knoedler faced with Rosales—a virtually unknown figure selling previously unheard of works by beloved artists from an anonymous collector at discount prices—Parrish said a reputable dealer should “run like hell.” (Nikas claimed Parrish’s testimony was biased, and he filed a motion to have her dismissed, which Gardephe denied.)

Frank Del Deo, a Knoedler employee who had been promoted as Freedman’s successor, revealed details of Knoedler’s final days. Freedman left the gallery in 2009 for reasons then unknown to the public. In an email from Freedman to Polcari that was presented to the jury, she described being forced out, and how it “hurt[s] like hell.” She did not mention the grand jury subpoena, after which the remaining Rosales works in Knoedler’s inventory were marked NFS (“Not for Sale”) while the FBI investigated them. On the afternoon of November 30, 2011, Del Deo met with Hammer. In February Hammer had sold the gallery’s East 70th Street town house for $31 million, about half its asking price. There had been talk, Del Deo testified, of relocating Knoedler to Chelsea. Many employees arrived to work on the morning of November 30 thinking it was just another day, including Del Deo. He resigned after his meeting with Hammer, and by early evening the gallery had shuttered for good. An email went out to Knoedler’s mailing list that read:

It is with profound regret that the owners of Knoedler Gallery announce its closing, effective [November 30, 2011]. This was a business decision made after careful consideration over the course of an extended period of time. Gallery staff are assisting with an orderly winding down of Knoedler Gallery.

The gallery’s final exhibition, of work by sculptor Charles Simonds, was scheduled to run for several more weeks. It seemed as if someone had simply turned off the lights at Knoedler and walked away.

Ruth Blankschen, a former accountant for Knoedler currently serving as the CFO of 8-31 Holdings, revealed—with palpable hesitation—details about cash flow, offering a rare peek into the finances at the higher end of the art market. This included the salaries and profit shares of the people running Knoedler. Freedman, according to financial records, made about $10.4 million off of the sale of the Rosales works over those 15 years, in addition to her $300,000-a-year base salary.

Blankschen said Hammer, 8-31’s owner, collected a salary of $400,000 a year, plus a 20 percent share of the combined profits of 8-31’s subsidiaries, LLCs that included Knoedler and Hammer’s own gallery. In addition, Hammer had access to an American Express credit card, Blankschen said, which 8-31 paid for. Between 2001 and 2012, Hammer charged $1.2 million to the card, a figure that included a $10,000 trip to Paris with his then wife. 8-31 also purchased several cars for Hammer, including a $482,000 Rolls Royce, which was sold in 2008 for $452,000, money that Hammer kept for himself, listing it on his W-2 as part of his salary. That same year, 8-31 purchased a $523,000 Mercedes for Hammer’s exclusive use. The point of exposing all this was to prove that Hammer was reaping benefits directly from Knoedler’s profits on the Rosales works and using that money to support a lavish lifestyle. “Are you aware of any board meetings that took place in Paris?” Crowell asked, regarding Hammer’s trip there. “None that I’m aware of,” Blankschen said.

There was a lunch break after Blankschen’s testimony, and Hammer was supposed to testify next, followed by Freedman. The courtroom was packed in anticipation after the break. People were cramming onto the benches.

After a long wait, Gardephe’s deputy walked over to the lawyers, and they all retreated to the judge’s chambers. A few minutes passed and they returned. Gardephe said to the jury that, “due to some unexpected developments,” he was going to do something he never does: send them home a little early. It was as if the air had been let out of the room.

The next morning, the crowd was much smaller. The lawyers once again went into the judge’s chambers and then returned to the courtroom. “The case is over,” Reisbaum said, with a slight shrug. “The jury’s not here.” She wondered aloud if it was too early
to get a drink.

Freedman wouldn’t be testifying under oath. The lawyers stuck around to say that all parties had settled. They wouldn’t disclose the terms, but everyone—including the defendants—was, in Clarick’s words, “extremely satisfied.” The trial ended as Knoedler had: abruptly, with a whimper.

The office of Clarick, Crowell, and Reisbaum is in an old building in Manhattan’s Flatiron District, and I visited them there a few weeks after the settlement. A slow and rickety elevator deposited me into a space with lots of windows letting in light from outside. The three attorneys were giddy as we sat at a conference table. They would sometimes talk over each other excitedly, or finish each other’s sentences.

“Ann Freedman tried to take advantage of the fact that in the art world there often are buyers and sellers who are anonymous,” Clarick said, sitting at the head of the table. “I think she tried to take advantage of that, to let that kind of obscurity bleed into the whole process, as if that means that everything can be obscure, you know? And as if that gave her a license to believe everything that Glafira Rosales supposedly said.”

I asked them what led to the decision to settle, right before Freedman’s testimony.

“I think after the couple of weeks of trial,” Reisbaum said, “the defendants saw what was happening, finally, I guess. And we really settled when they were ready to settle.”

“What I particularly like about the timing is not that they did or didn’t testify, but they settled at a point where we really told the whole story,” Clarick said.

“We could have rested,” Crowell said.

The next day I went to see Nikas. He works out of a towering office building on Lexington Avenue in midtown. Nikas laid out his whole case for me and explained how Freedman would have testified. (Freedman, after repeated attempts through her lawyer, never responded to a request for comment.) He refuted, one by one, the plaintiffs’ so-called red flags, and claimed that the experts had previously supported the Rosales works but were trying to backtrack in order to save their reputations. He argued many of them had produced false memories.

“They clearly want to remember not believing in the Rosales works,” Nikas said. “‘They’ meaning everyone who saw them.”

When I asked him about the contradictory testimonies of several experts who were listed in Freedman’s letter to the De Soles as having “viewed” the Rothko, who claimed at trial not to recall having seen the work, he told me that even if the list hadn’t existed, the De Soles would have bought the painting, such was their trust in Knoedler. He admitted that Freedman could have asked permission from people to use their names in such a document, but argued that giving a fabricated list to collectors would have been to willfully invite trouble later on. “The list was completely unnecessary to sell paintings, period,” Nikas said. “The list with misstatements on it would have been beyond foolish, given who she was dealing with. I think the list itself was used as a sword. And what we would have done in our case and in the closing is show that the existence of the list, if you use your common sense, actually shows that either Knoedler and Ann acted in good faith, or they were the worst criminals in the entire history of criminality.”

I asked him why they settled, then, before doing that. He said there were other settlements with collectors on the table. If the defense had gone forward, whether the jury ruled in their favor or not, it would have made settling the other cases impossible—they would have spent the next five years in court. He thought this settlement made another trial for Knoedler and Freedman unlikely. “This trial made it possible to have real conversations with people,” Nikas said.

I was surprised to see several of the Rosales fakes hanging in Nikas’s office, including the very first work that Rosales showed to Freedman—a Rothko—and the Pollock with the misspelled signature. Beneath the Pollock was a framed New York Times article with the headline, “Note to Forgers: Don’t Forget the Spell Check.”

“I’m just interested in the picture itself,” Nikas said.

M. H. Miller is deputy editor at ARTnews.

A version of this story originally appeared in the Summer 2016 issue of ARTnews on page 84 under the title “The Big Fake.”