Knoedler Trial Settled

Forbes is reporting the $25 million in damages suit between the Knoedlser and Collector De Soles has been settled. Terms were not disclosed.

The Forbes article also looks at collecting, doing the right thing, buying from a reputable gallery, and still having risk.

Forbes reports

When new collectors make their first art purchase, they are advised to buy from reputable galleries or auction houses and carefully check the provenance and condition of the piece.

But that is not always enough, and even highly experienced collectors can be duped. Sotheby’s chairman Domenico De Sole and his wife Eleanore insist they checked all those boxes before they spent $8.3 million in 2004 on a supposed Rothko painting at the Knoedler Gallery, the oldest gallery in Manhattan before it shut in 2011. They still ended up with a worthless forgery produced by an unknown Chinese artist named Pei Shen Qian in his garage in Queens.

The civil case brought by the De Soles against Knoedler, its parent company, 8-31 Holdings, and its former director, Ann Freedman, was settled abruptly in the U.S. District Court in Manhattan this morning, after the De Soles finalized a financial settlement with all three parties. The settlement terms were not disclosed, but the De Soles had been seeking $25 million in damages.

The case involved whether Knoedler knowingly sold the De Soles a fake Rothko in 2004. All the defendants have denied any wrongdoing.

The disputed painting was one of 40, supposedly by post-war artists such as Jackson Pollock and Robert Motherwell, which Long Island art dealer Glafira Rosales sold to Knoedler between 1994 and 2008. Freedman and the gallery say they believed that the paintings were authentic, but Rosales admitted that all the paintings were fakes after she pleaded guilty to tax evasion and money laundering in 2013.


In this courtroom sketch of Monday, Jan. 25, 2016, Emily Reisbaum, center, attorney for Domenico De Sole, center right, gives her opening statement with a display of a fake Mark Rothko painting, at a civil trial in New York at Manhattan federal court. At left, flanked by her defense team, is Ann Freedman who was a former director of Knoedler & Co. (Elizabeth Williams via AP)

The trial, one of several still pending against the gallery, didn’t produce a jury verdict, so leaves many unanswered legal questions. However, the testimony given about one of the biggest art frauds in recent history has blown holes in much of conventional advice given to art buyers and highlights some of the major headaches they face today.

Buyer beware

One key question left unanswered by this trial is how far buyers can rely on the information a gallery or auction house presents about an art work and whether they are responsible for doing their own due diligence.

However, the De Soles argued in court that they did their homework. They bought from a highly reputable gallery that had been around for 165 years, longer than New York’s Metropolitan Museum, and obtained written provenance and condition reports. Domenico De Sole testified that he never imagined the ‘Rothko’ was a fake, because he and his wife bought it from the oldest and one of the most respected galleries he knew.


Ann Freedman, former director of Knoedler & Company art gallery, leaves a courthouse in New York, Tuesday, Feb. 9, 2016. (AP Photo/Seth Wenig)

Freedman also gave the De Soles written details of the ‘Rothko’s’ provenance, which she said was acquired from the artist’s studio and inherited by an anonymous collector in Switzerland. In addition, she provided a condition report by a former conservator at the Mark Rothko Foundation.

Establishment approval is not enough

Buyers are usually impressed when third-party experts vouch for a work and are often told that works that have appeared in museum exhibitions have the strongest provenance, having the seal of approval of the museums in question. The Knoedler trial suggests that buyers can’t rely on this information either.

Freedman gave the De Soles a list of 11 art experts who she had asked to look at the painting, but the majority of those experts, including the artist’s son, Christopher Rothko, testified during the trial that they had never authenticated the work. Other experts testified that they told Freedman as early as 1994 that they had doubts about the authenticity of other works she had acquired from Rosales.

Freedman had also shown the ‘Rothko’ to the National Gallery of Art in Washington DC and several other works that Rosales sold to Knoedler were exhibited in museums.

Art authentication is subjective

Art authentication is often an extremely difficult and subjective process. As art historian and Abstract Expressionist expert Stephen Polcari testified during the trial, Rothko’s style made it hard to for even Polcari to tell one Mark Rothko painting from another.

Even objective authentication methods, such as forensic testing, can be presented to suit a particular narrative. James Martin, a forensic conservator from Orion Analytical, who examined 17 of the works originating from Rosales, testified that the Knoedler Gallery had asked him to remove sections of his report on two supposed Robert Motherwell works, including his finding that two red paints used in the paintings, supposedly finished in the 1950s, hadn’t been available until the 1960s. Martin testified that he refused to change his report.

Authenticating art is harder than ever

Art experts and artist foundations have been increasingly unwilling to authenticate work belonging to third parties in recent years because of the vast disparity between the fee that they receive for this work, if any, and the legal and financial ramifications of their decision. It is not unusual for art experts to be sued because they have authenticated works that are suspected fakes or because they have refused to authenticate valuable paintings.

Legislation that has passed the New York State Senate to protect art authenticators from frivolous legal claims in civil suits has not yet come into law. Now that high-profile expert witnesses have had to testify in one of the biggest art fraud cases in recent memory, finding third-parties who are willing to authenticate art and put their reputations on the line will be an even harder sell.

Source: Forbes