"Don't Kill the Goose That's Laying the Golden Egg": Knoedler Racketeering Suit Makes Spicy New Accusations

"Don't Kill the Goose That's Laying the Golden Egg": Knoedler Racketeering Suit Makes Spicy New Accusations
Knoedler Gallery, New York City
(Courtesy Mihail Lari via Artlinked)

The Knoedler Gallery scandal continues, and with each turn it becomes more and more like a Hollywood summer thriller. Last Friday, financier and former Bear Stearns senior managing director John D. Howard filed a new civil complaint against the now-defunct space for selling him a dubiously-sourced Willem de Kooning work. Adding extra spice, the one-time bank kingpin is accusing a group associated with the transaction of conspiracy, fraud, and racketeering under RICO, the federal organized crime act put in place in 1970.

In addition to the gallery itself, the defendants in the new case include the gallery's owner, Michael Hammer; its former president, Ann Freedman; Long Island dealer Glafira Rosales and her partner José Carlos Bergantinos Diaz; and gallery employee Jaime Andrade.

The new suit rests on many of the same accusations that are part of two previous cases against the shuttered Knoedler gallery over the sale of supposed blue chip forgeries: the first brought by collector Pierre Lagrange over the authenticity of a $17 million Jackson Pollock, and the second brought by Domenico and Eleanore De Sole, who bought a Mark Rothko in 2004 for $8.3 million and now believe it to be a forgery. It is the Rosales collection's starring role in the three cases that allows Howard (and his attorneys) to level the racketeering charges, instead of a simple fraud charge. (The FBI is also pursuing an investigation into Rosales.)

A version of the new lawsuit glimpsed by ARTINFO lays out a complicated scheme that dates back to at least 2001, when Andrade introduced Freedman to Rosales — a narrative that was already the subject of an  in-depth Vanity Fair feature published in May. But there are also several new issues brought to light as a result of further fact-finding by Howard and his lawyers. ARTINFO breaks down four new things to know about this case:


Hammer is named as a defendant, and indeed seems to play a critical role in Howard's version of events — a player who is conspicuously absent in the Lagrange case, as pointed out by Rachel Corbett of Artnet Magazine earlier this spring. According to the new complaint, the gallery owner knew of issues with the authenticity of at least one of the Rosales consignments all the way back in 2003, but instructed Freedman to continue working with the Long Island art dealer. Allegedly he told Freedman, who didn't necessarily know all of the details of the gallery's finances, "Don't kill the goose that's laying the golden egg."

"MR. X JR."

The "golden egg," it is suggested, is the serious profit that Knoedler was making off the sale of the dubious Rosales collection. The story goes that the numerous postwar works all came from the personal collection of a very private man, "Mr. X." They were sourced from the artists, and then put in storage until Mr. X died (which is the reason there is no documented provenance and they aren't in the artists' catalogue raisonnés). Mr. X's son, Mr. X Jr., inherited them, and sold them through Rosales. Not much is known about the mysterious Mr. X Jr., except that he is Swiss (or, in later accounts, Swiss-Mexican), and that Freedman was never allowed to meet him. Mr. X Jr. entrusted his collection to Rosales, who sold Knoedler the works by celebrated modernists one-by-one for dirt-cheap prices.

In the new lawsuit, Howard says that Knoedler purchased the De Kooning from Rosales for $750,000, and flipped it to Howard for $4 million. The suit insinuates that this enormous profit in itself points to something fishy, saying that the gain was enough for "Hammer … and the other defendants to ignore any pangs of conscious that might have arisen because not one cent of the purchase price was paid to the son of a Swiss collector [that would be Mr. X Jr.]." Instead, the document goes on to say that the majority of the $4 million was instead sent to the "Spain-based brother of [Rosales's] live-in companion, Bergantinos Diaz," with some paid in cash to Rosales.

(Hammer's law firm, Fulbright & Jaworski, did not respond to a request for comment, and Freedman's lawyer, Nicholas Gravante of Boies, Schiller, & Flexner, pointed out to ARTINFO, that their client was not technically the seller of the Rosales works — she was just acting as an agent for her boss. He also stressed that the buyers of the Rosales collection, sophisticated art collectors, had some responsibility to do their own due diligence before purchase.) 


Another major point the lawsuit highlights is the mysterious changes in the story of just who served as the link between the disputed artworks and "Mr. X." In original reports about the Knoedler-Rosales relationship, the mysterious Swiss owner of the collection was said to be connected to the late dealer David Herbert. The lawsuit brings up the fact that as early as 2003, the story was that the intermediary was the Philippine-born, Long Island-based Abstract Expressionist Alfonso Ossario. However, after trying (and failing) to authenticate a Rosales Pollock in 2003 for New York banker Jack Levy, the International Foundation for Art Research (IFAR) concluded that Ossario had not owned the paintings. That's when the story changed. The suit explains, "Following the IFAR Report, Ossario was no longer listed in the provenance of the Enterprise Works [the Rosales Collection] and 'David Herbert' replaced him as the key intermediary behind Mr. X's acquisition."

Freedman justified this changing story to Vanity Fair as a simple mix-up. The article describes her story as such: "Ossorio and Ted Dragon had been part of a gay art-world circle in the 1950s that had included a gallery assistant named David Herbert. Rosales supposedly had gotten it wrong: Herbert was the key character, not Ossorio."


Finally, Howard's lawsuit attempts to flip Knoedler's own expert testimony on itself. Throughout its relationship with Rosales, the gallery relied on experts to authenticate the works (and continues to throughout this series of lawsuits). The expert testimony pointed out in this particular case is that of Stephen Polcari, an art historian and former director of the Smithsonian Institution Archives of American Art. Last December, Polcari submitted a court document in the Lagrange case that stated, in his opinion, that the $17-million "Silver Pollock" and the De Sole Rothko, among other Rosales collection works, were authentic. The only work he was unsure of was a De Kooning entitled "Woman With Bicycle," which had attributes he felt "create[d] a reasonable doubt" about who actually painted it.

The new lawsuit suggests that the existence of one forged De Kooning should have caused "art professionals acting in good faith to seek a great deal more information about the authenticity of the works of art in that collection," since they purportedly came from the same place (the artists's studios). But Knoedler ignored the De Kooning in question and continued selling the Rosales works without disclosing Polcari's negative finding to potential buyers.

So, what does this mean? Is Howard's De Kooning real? The fact is, no one knows and it's likely no one will ever know. Accroding to Gravante, "Filing a complaint is easy, but showing up in court in an art authentication case like this, and proving what they are alleging is another matter. It’s a battle they can’t win."

At the end of the day, this fresh lawsuit brings up many more questions than it answers.