NEW YORK—Several artists, collectors and investors who initially filed lawsuits against Manhattan art dealer Lawrence Salander and the defunct Salander-O’Reilly Galleries are now taking legal action directly against one another to recover millions of dollars worth of art and funds they claim they are owed.
Salander was arrested on March 26 and indicted on 100 counts of grand larceny, scheming to defraud, securities fraud, perjury and falsifying business records. Salander is accused of stealing $88million from investors, art owners and a bank, according to Manhattan district attorney Robert Morgenthau’s office. The dealer pled not guilty to the charges, and is free on $1million bail.
Meanwhile, Steven O. Harvey, a former director of the gallery who left his position in 2007, was arrested on March 12, two weeks before Salander’s arrest. Harvey pled guilty to one count of falsifying business records in the first degree related to an incident that occurred in July 2004, and was released on his own recognizance. The charge, a Class E felony, is punishable by as much as one and one-third to four years in prison.
According to the plea agreement, if Harvey satisfies the conditions of his agreement with the district attorney’s office, he will be allowed to instead plead guilty to the lesser charge of falsifying records in the second degree, a Class A misdemeanor punishable by up to one year in prison. He must also pay restitution of $507,800 over a three-year period, according to the plea agreement. Harvey’s attorney did not respond to a request for comment.
Asked whether any other former employees of Salander-O’Reilly have been arrested or made plea agreements with the district attorney, Alicia Maxey Greene, a spokesperson for the district attorney’s office, declined to comment.
Salander Clients Face Claims Over Purchases
In early February, Earl Davis, son of American painter Stuart Davis (1894–1964), sued New York art dealer Joseph P. Carroll, seeking the return of eight paintings by his father that he alleges were “unlawfully converted.” Davis’s suit alleges that Salander-O’Reilly Galleries (SOG) and Carroll made “a series of improper transactions” without Davis’s knowledge or consent, culminating in three agreements, dated May 22, 2006, in which Salander-O’Reilly transferred 16 Stuart Davis paintings, including the eight claimed in the suit, to Carroll “at far below their fair market value.” The complaint alleges that Salander “actively concealed” these transactions from Earl Davis, and that Carroll knew at the time the Davis works were not owned by Salander-O’Reilly, but were in fact owned by the artist’s son.
In a counterclaim filed on April 1, Carroll asserts that the works were acquired in good faith, and that prior to the transaction with Salander, he had performed due diligence on the works, including searches of Uniform Commercial Code (UCC) filings. According to the counterclaim, “Mr. Carroll’s diligent search revealed no such interest claim by Davis.” Davis’s attorney, David B. Goldstein of Rabinowitz, Boudin, Standard, Krinsky & Lieberman, New York, declined to comment.
Carroll’s counterclaim asserts that he was “not aware of any financial difficulties or suspicion-raising need for cash on the part of Salander or SOG.” Citing a 2005 article in The Wall Street Journal about the dealer, the claim goes on to say that “Salander was known to Mr. Carroll as a reputable, honest and well-respected art merchant.” The counterclaim is seeking a declaratory judgment from the court that Carroll holds “full, right and proper title” to five of the works and that it owes Davis none of the proceeds from the sale of the other three. Carroll’s attorney did not respond to a request from the ARTnewsletter for comment.
Earlier this month, Carroll sued Massachusetts-based Craig Baker, described in the complaint as an art dealer and “experienced art investor,” seeking to establish that Carroll has title to a painting by John Graham. The claim “arises out of erroneous, wrongful and damaging assertions made by Craig Baker, who claims ownership of the painting.” The untitled Graham work was one of a group of 23 paintings Carroll acquired from Salander in early 2007 for $444,000. Baker claimed he had consigned the painting to Salander at a verbally agreed minimum price of $250,000, according to Carroll’s suit. Carroll paid $105,000 for the Graham painting, reflecting a 40 percent discount from Salander’s original asking price of $175,000, which Carroll thought “unrealistically high,” according to the complaint.
The suit states that in February, as part of the ongoing bankruptcy cases against Salander and Salander-O’Reilly, “Baker moved … to take the deposition of Mr. Carroll … the first time that Mr. Carroll was aware that any other party claimed ownership rights in the painting.” According to Carroll’s suit, Baker did not file a claim with the bankruptcy court before the deadline of August 31 of last year, and therefore could not pursue a claim against Salander-O’Reilly. His suit argues that he bought the work from Salander in good faith, and therefore has legitimate title to the work. It further says Baker’s ownership claim is “lacking” because the work Baker claims is not the same work he bought from Salander, which he says has slightly different dimensions; a date of 1943, not the date of 1947 Baker claims; and is unsigned, unlike the work Baker claims.
Plaintiffs Pursue Works Sent Outside U.S.
A similar claim was brought against Gallerie Benucci, Rome, last December by a group of plaintiffs including artists Paul Resika, Michael Steiner and Michael Mulhern, along with the George McNeil Charitable Trust and Helen McNeil (owners of work by artist George McNeil) and the Giorgio Cavallon Family Limited Partnership and Dolores Hiding (owners of works by artist Giorgio Cavallon).
The suit seeks the return of 30 works, valued at $3.3million, that it says Salander transferred to the Benucci gallery under a “settlement agreement,” dated June 2007, to satisfy an outstanding debt.
The complaint claims that “as of June 2007 Salander had already acted in a dishonest manner by… providing postdated checks which were dishonored by Salander’s bank. Given the pressure that [Benucci] was applying to Salander and given at least [Benucci’s] general awareness of Salander’s financial condition, [Benucci] could plainly see that Salander was willing to sign or say anything just to make the most immediate problem disappear.”
In a response to the suit, Benucci sought dismissal of the claim “because venue of the action is improper as the proper venue is Rome, Italy,” among other reasons. Neither attorneys for the plaintiffs nor for the defendants responded to requests for comment.
As ARTnewsletter went to press, Salander was scheduled to appear in New York Supreme Court on April 17. The appearance had been scheduled for April 8, but was postponed after Salander’s attorney asked for an extension in order “to determine if the defendant will retain his counsel,” according to Greene.