Former Folk Art Museum Chairman Sentenced to Six Years in Prison for Rampant Fraud
The charges had nothing to do with his dealings with the museum, though he committed most of his crimes while serving as board chairman, and left the post due to his mounting legal and financial troubles. The fourth-generation jeweler was found guilty of double-pledging $40 million in collateral to secure $217 million in loans, which he used to finance his business. Some of that money went toward his 2006 purchase of jeweler-to-the-stars Fred Leighton's company, according to the New York Times.[content:shareblock]
At his sentencing on Friday, July 22, the United States District Court Judge Denise Cote said Esmerian "lived a life of fraud and deceit on a massive scale," according to the Art Newspaper. In addition to prison time, the 71-year-old folk art collector will serve 1,800 days of community service and pay a whopping $20 million fine.[content:advertisement-center]
What separates Esmerian from many other high-end defrauders is the impressive assets he had to facilitate his fraud. Because your everyday Ponzi schemer isn't dealing in millions worth of jewelry, he can't use, like Esmerian, a 124-year-old Duchess of Newcastle diamond brooch, a gilded album commissioned by Marie Antionette, or a 13-carat Burma ruby and diamond ring to fuel his schemes.
The massive fraud appears to be the result of many individual lies and illegal sales, such as Esmerian's 2008 sale of a diamond-encrusted 1894 Endymion Butterfly brooch by Bucheron, which he had previously pledged as collateral to Merrill Lynch. Despite the fact that his company Fred Leighton filed for bankruptcy protection in 2008, he sold the broach to a private collector that year for $2.2 million, and sent $1 million in proceeds to his own bank account.
Calls made by ARTINFO to Esmerian's attorney Patricia Pileggi and the Folk Art Museum were not returned.
Esmerian began his career at the Folk Art Museum in 1973 as treasurer, and went on to become one of its biggest supporters. During his tenure, he gave the museum over 400 works of art from his personal collection. Those works became the inaugural exhibition for its new building, "American Radiance: The Ralph Esmerian Gift to the American Folk Art Museum." According to reports, museum trustees were shocked to find that some of the work he donated to the museum had been used as collateral to acquire fraudulent loans.
Esmerian has owned well-known masterpieces of the folk art genre, including the paintings "The Peaceable Kingdom" by Quaker artist Edward Hicks and "Girl in Red Dress with Cat and Dog" by Ammi Phillips. (He sold the former at Sotheby's in 2008 to pay off debts — it's now at the Brooklyn Museum — while the latter remains in the Folk Art Museum's collection.)
Esmerian has also collected work by German immigrant artist Jacob Maentel, watercolor portraits by Northeast painter Joseph H. Davis, and woodcarved weather vane patterns by Pennsylvania-born artist Henry Leach.