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Knoedler Curdler: NY Times’ Astonishing Scoop; Plus: Indictment Bombshells in USA v. Rosales

RosalIndict

US Attorney’s Superseding Indictment in USA v Rosales

 

When I read Sarah Maslin Nir‘s, Patricia Cohen‘s and William Rashbaum‘s NY Times report fingering a particular painter who lived in Queens as the artist suspected by federal authorities of having produced “most, if not all” of the purported (but now questioned) Abstract Expressionist works (many allegedly sold by the now defunct Knoedler & Co. gallery) that are the focus of a criminal lawsuit, USA v. Glafira Rosales, I didn’t know which was more astonishing—that a single, very obscure artist had allegedly churned out all these high-priced works for reportedly paltry financial compensation, or that the NY Times had attached a name to that artist, notwithstanding the fact that he was not identified in the court papers.

For your own reference, you can read the entire 34-page indictment here. This “superseding indictment” was filed on Aug. 14 and includes, for the first time, allegations about the unnamed painter, information about his alleged fees, and details about the proceeds allegedly earned by the galleries that marketed the works allegedly produced by the painter, who has not been charged in this case. (More about these financial details, below.)

The Times mysteriously based its identification of the painter (which I will not repeat here) on information from “people with knowledge of the case [who] confirmed that he was the man referred to only elliptically in the [indictment's] charges as the ‘Painter.’”

We can only hope that those “people with knowledge,” who are not otherwise identified by the Times, are more authoritative sources than the artist’s neighbors who were contacted by the paper’s journalists. Those neighbors, according to the Times report, “learned that [the painter] is suspected of having fooled the art world by creating dozens of works that were modeled after America’s Modernist masters and were later sold as their handiwork for more than $80 million.”

The Times article acknowledges that “it is unclear how much [the painter] knew [or didn't know] of the fraud that federal investigators have described.” In other words, he may have had no idea of the ultimate plans for his works (if he did, in fact, produce them).

Also new in the superseding indictment (as compared to the previously filed indictment) are details on the amounts for which the suspect works were allegedly sold by “Gallery 1″ (the 165-year-old, now shuttered Knoedler & Co.) and by “Gallery 2″ (Julian Weissman). Neither the galleries nor their principals have been charged in connection with these transactions. The galleries allegedly acquired the paintings from defendent Glafira Rosales and an unnamed co-conspirator.

The indictment alleges that Gallery 1 received payments of “more than $63.7 million” from “the Victims” who bought the suspect works. Gallery 1’s “realized gross profit for those works” (the amount allegedly received from buyers minus the amount that the gallery allegedly paid for them) was “approximately $43 million.” Gallery 2 allegedly received “more than $17 million,” for a “realized gross profit of approximately $4.5 million.” (These figures are on p. 14 of the superseding indictment, to which I’ve linked in the second paragraph of this post.)

In all, defendent Rosales and the unnamed co-conspirator allegedly sold approximately 40 suspect works to Gallery 1 and approximately 23 suspect works to Gallery 2, during a period “from, in or about the early 1990s through, in or about 2009″ (p. 9 of the indictment).

The alleged painter of these works was “typically paid” a pittance—“several thousand dollars for each” (p. 13 of the indictment). The amounts of eight checks that he received are listed on p. 14, and he is also said to have received “approximately $15,000″ through a wire transfer. There is nothing in the indictment, however, to indicate what other payments he may have received (by check or by other means) for these or other paintings.

At an Aug. 19 court hearing, Rosales pleaded not guilty to the nine-count indictment and was released on $2.5-million bond. She had originally been deemed a flight risk after her arrest in May. According to Rashburn’s NY Times report on the Aug. 19 court hearing, “Judge [Katherine Polk] Failla asked the prosecutor, Jason P. Hernandez, an assistant United States attorney, if he was contemplating additional arrests in the case. ‘Yes,’ he said, without elaborating.”

Rashburn’s report also says that Hernandez’s prediction at Monday’s hearing of “a quick resolution of the case, along with the expectation of additional arrests, suggests that Ms. Rosales may have begun cooperating with the Federal Bureau of Investigation and prosecutors sometime after her arrest.”

The next scheduled court date in this matter is a conference about the status of the case on Oct. 1, Hernandez told me. However, the Times’ and others’ reports of this month’s hearing suggest that major new developments in this sorry saga may occur much sooner.

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