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Archive for Sunday, October 24, 2010

The deceptions and betrayal of the art world’s Bernie Madoff

October 24, 2010

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— In an uptown bistro, not far from the studio where as a child he watched his father paint bold abstract masterpieces, Earl Davis contemplates the greatest loss of his life.

Not his beloved father, Stuart Davis, who died in 1964 when Earl was 12. Nor his father’s work, which Davis, an only child, spent three decades trying to document and showcase. Even the loss of the millions of dollars that the paintings were worth — Davis’ inheritance, swindled from him in the cruelest fashion — is not what hurts the most.

The biggest loss, Davis says, was the love and friendship of the man he trusted with everything — his confidences, his dreams, his father’s life’s work.

Even now, several years after the unraveling of one of the most elaborate art frauds in history, Davis has nightmares about confronting Lawrence Salander. Why did the art dealer spend decades cultivating his friendship even as he sold more than 90 of father’s paintings behind his back, dismantling a collection that Davis had sought so hard to preserve? What of those endless, richly satisfying conversations about art and philosophy and life? Was any of it real?

The same anguished questions have tortured dozens of other victims — from celebrities to wealthy collectors to artists and those managing their estates — defrauded of some $120 million by the man some call the Bernard Madoff of the art world.

Earlier this year, Salander pleaded guilty to 29 counts of grand larceny and fraud. In August, he was sentenced to six to 18 years in prison. In court documents and testimony, the 61-year-old Salander outlined his schemes: How he would sell art he didn’t own, sometimes peddling the same painting or shares in a painting to two or more buyers. How he falsified records, lied to investors, submitted fraudulent loan applications, sold paintings that were for exhibit only, and pocketed the money to pay for private jets, his multimillion dollar Manhattan town house, his 66-acre estate upstate.

Was it all a great con from the start? Or did Salander, as some suggest, cross to “the dark side” of the art world, taking advantage of a strangely unregulated place where priceless works are often consigned to galleries with little more than a handshake.

Ellyn Shander, a psychiatrist who lost her late father’s art collection to Salander, calls him, “a sly, manipulative sociopath, a con man with no soul.” But others describe Salander as a misunderstood visionary who was passionate about great art, who ultimately felt betrayed himself by the backers who once believed in him.

“Was he a cheat? Yes. Was he ruthless? Yes,” says artist Paul Resika, who exhibited with Salander for 19 years and lost much of his work. “But he did tremendous things for art.”

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The art world, with its clubby nature and casual intimacy between dealers, collectors, galleries and artists, is particularly vulnerable to exactly the kind of fraud that Salander masterminded. “It’s a world of relationships, friendships, handshakes,” says longtime Manhattan gallery owner Joan Washburn.

It’s also a world of fabulous wealth, enormous egos and creative pride. Artists, eager to have their work exhibited in the finest galleries, hand over paintings with few safeguards. Paper trails can be murky. Title is not always clear. And the agreements that are signed when a work is handed to a gallery for sale or for exhibit offer little protection if the gallery owner is dishonest or goes bankrupt.

Salander became a towering presence in this world, rising from relatively modest beginnings managing his father’s small gallery in Manhattan and another in Wilton, Conn. Salander’s charm, his prodigious knowledge of art, his energy and passion were irresistible to many.

“It was such a beautiful location, and Larry was very personable, and we were really looking to showcase the art and give Suzy and George a bigger market presence,” says Kinney Frelinghuysen, nephew of abstract artist Suzy Frelinghuysen and her husband, artist George Morris.

Even gallery staff felt anointed by Salander. Paula Hornbostel, hired as a researcher in 1996, spent a thrilling 11 years at her dream job working for a boss who inspired her. Salander nicknamed her “Supe” — short for “superwoman” — because of her ability to verify the work of obscure painters. In 2000, Salander flew her to Boston and introduced her to the Lachaise foundation, whose directors were so impressed that they named her curator.

“It was just all so exciting and I was learning so much,” Hornbostel says, recounting traveling expeditions to Budapest and Prague and parties at Salander’s country estate.

But privately many questioned how he was paying for it all. In the fall of 2005, when Salander moved the gallery to a 25,000-square-foot mansion on East 71st street, other gallery owners wondered if he was over-stretched.

Then, almost overnight, the mystery was revealed.

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For Davis, the first hint of trouble came in 2005 when he began asking basic accounting questions about hundreds of paintings stored with Salander. He was shocked to learn that several pieces had been sold without his permission. Salander stalled, promising that Davis would be paid, offering vague answers about the whereabouts of other works.

Davis was worried. Trade magazines were reporting on legal complaints by collectors and others saying they hadn’t been paid. Finally, when Davis demanded a return of all the work, Salander produced a favorite piece from his father’s Ashcan period. Davis felt so relieved, he stopped asking questions, at least for a time.

Davis says he eventually discovered that Salander had simply borrowed back the piece temporarily to falsely reassure his friend. In fact it had been sold. Later, dozens of similar tales would unfold, many detailed in a blizzard of lawsuits. “The level of deception was just staggering,” Davis says. “And the level of control.”

Artist John Crawford, son of artist Ralston Crawford, sits Oct. 8 in his living room with his father’s abstract photo “Leaves,” left, and painting “St. Gilles,” in Brooklyn, New York. Also pictured are John Crawford’s own sculptures “Arch of Sphere,” left, and “Tower 2,” right.

Artist John Crawford, son of artist Ralston Crawford, sits Oct. 8 in his living room with his father’s abstract photo “Leaves,” left, and painting “St. Gilles,” in Brooklyn, New York. Also pictured are John Crawford’s own sculptures “Arch of Sphere,” left, and “Tower 2,” right.

But, by 2007, lawsuits were mounting and things were spiraling out of control.

Salander dismissed his problems as “cash-flow” issues, saying everything would be resolved after the opening of one of the most ambitious exhibitions of old masters paintings ever. Anchoring the show: a rare Caravaggio on loan from a London dealer. Salander boasted he could sell it for $100 million.

But that wasn’t enough to assuage the growing unease.

In Massachusetts, Frelinghuysen had become suspicious when a collector from California called to praise a piece he had just bought from the collection stored with Salander. The piece was not for sale. Salander assured Frelinghuysen that the gallery had made a mistake, and that he would be paid. Court documents indicate that Frelinghuysen’s foundation was defrauded of 41 works worth more than $2 million.

Brooklyn artist John Crawford, son of Ralston Crawford, became so uneasy he drove his truck into the city, marched into the gallery and loaded any of his father’s paintings that he could find. In Wyoming, his brother Neelon called a New York City detective in the art fraud division. The detective made a short, laconic phone call to Salander and Crawford’s work was shipped to Wyoming that week.

Hornbostel, Salander’s “superwoman,” was not so lucky. Told by another staff member that a Lachaise sculpture was being carted off in a shipping truck, she burst into Salander’s fifth-floor office, crying out that the piece was not for sale. But by the time Hornbostel raced back down to the ground floor, it was gone.

Hornbostel remembers the chaotic day the gallery closed, ordered padlocked by a court after Salander’s biggest investor filed a series of legal motions to end Salander’s control. It was the opening day of the Old Masters exhibit. Earlier that day, the London dealer had marched into the gallery and removed the Caravaggio from the wall.

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About six months later, Hornbostel was having lunch with her husband and young children when Salander and his wife walked into the restaurant. He smiled warmly, never mentioning the gallery. Hornbostel could barely contain her anger. The Lachaise Foundation, for which Hornbostel had been responsible, had lost an estimated $6.6 million.

“There was no apology, no remorse,” Hornbostel says. “I kept looking at him thinking: How could you? Who are you?”

Salander offered no public explanations. His sobbing apology in the courtroom seemed, to many of his victims, to be entirely self-centered.

“I’ve lost my wife, my business and my reputation,” he said. “I am utterly and completely disgraced.”

Salander, now in Riker’s Island, has said no more; through his lawyer, he declined to be interviewed.

If there are clues to his actions, perhaps they lie in the pages of his unpublished manuscript, “Soul Wars,” a rambling 578-page treatise in which Salander laments a decaying society in which “too many of us have prostituted our beautiful souls for money.”

There is one chapter titled “Betrayal.”

“All betrayals are to some degree premeditated,” Salander writes. “Betrayal is never an accident.”

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