Tuesday, February 9, 2016

The End? The Knoedler Trial Appears Over

I arrived for the afternoon session of the Knoedler trial today (February 9) full of anticipation, as both Michael Hammer and then Ann Freedman were expected to take the stand.  By the time the proceedings were to have started, the room was as packed as I have seen it (the crowd included an art law class from NYU). There was much excitement as the main event was about to begin, with the two key players in the case, Michael Hammer and Ann Freedman about to face a cross examination from the lawyer of a very angry former client of Knoedler & Co.  

As time passed, it became clear that something was up; Judge Gardephe runs a tight ship, and things begin on time in his courtroom.  We had a glimpse of Michael Hammer as he walked through the courtroom, but I did not see where he went.  Luke Nikas, Ann Freedman’s attorney came in and sat in the audience.  Finally, the courtroom clerk called the defense and plaintiff’s council to the judge’s chambers; a few minutes later they all came back, the jury came in, and the judge simply said that “there had been some unexpected developments in the case” and the proceedings were adjourned.

Judge Gardephe opined that the jury would probably be delighted to go home early, but what about the rest of us? Talk about a buzz-kill!  Just as the case was reaching a crescendo, we all had to leave.  The judge stated that proceedings would start again tomorrow at 9:30, but until then we will all be waiting for the other shoe to drop. According to MM Miller at Artnews, the Knoedler attorney Charles Schmerler said that it was simply a scheduling conflict.  However, his client, Michael Hammer, was in the room, according to Miller.  Luke Nikas told Miller that Freedman was in the building as well. 
All the principles were in place; everyone on the jury was at their post, all the various lawyers were there ready to get going. From the way it stopped, it just seemed the break was because the case was about to settle, or perhaps the judge was asked for additional time to allow settlement negotiations to continue.  Brian Boucher at Artnet made this exact point and correctly called the sudden pause “abrupt.”
Of course, it could have been million other things.  Maybe the judge got given last-minute tickets to “Hamilton” and wanted to go home early to get changed and have an early dinner.  Maybe one of the attorneys had a family emergency.  We just don’t know.  Someone I spoke to in the court who seemed quite familiar with the case did not believe that a settlement was brewing, but the way it all went down today it was the way it felt. 
The morning session, which I missed, was completely taken up by the continuation of Ruth Blankschen’s testimony.  She is the CFO of both Knoedler and 8-31 Holdings, and, according to what I read, 8-31 used Knoedler and its other holdings as piggy-banks, to be raided whenever Michael Hammer needed a new Rolls Royce.  There was also a focus on the very fishy way in which Glafira Rosales was paid for the paintings she was bringing in, almost always a combination of wire transfer, check and an envelope with $9,000 cash…a figure just below the threshold for reporting to the government.  While Knoedler never hid these payments on its own books, it is still an extremely unusual request from a consignor.  In my career at art galleries, there were maybe a handful of times when people came in and paid with cash; this was always a gigantic pain for the bookkeeper who had to count it all out and fuss over it, bring it to the bank and so forth.  Legitimate art galleries that sell paintings for millions of dollars are simply not cash businesses.  Never, ever, that I can remember, did I ever work for a gallery that paid a consignor or bought an artwork directly from an owner or their agent with cash.  Even the combination of a check and wire would have been odd, it is really one or the other.  And the $9,000 figure is also just wrong.  Why would Freedman trust someone who was being so blatantly devious?  I don’t want to go on and on about this testimony, since I didn’t see it myself, but from what I read, this bit is pretty rancid.

The judge scheduled proceedings for tomorrow at 9:30.  I remain hopeful that Hammer and Freedman will have to explain themselves and that a jury will pass judgement on this case.  I realize that this hope comes partially from my own fascination with the drama it all and that the trial is not being held for my entertainment.  The De Soles came to the court seeking justice and if they are offered compensation for their injury that they deem adequate, then that is the whole point of all this.  Nonetheless, as someone who wants an orderly and ethical marketplace for fine art where buyers and sellers can devote most of their attention to the visual pleasure and intellectual stimulation that art can provide, I feel there is still work to be done.  Fingers crossed…I expect this is over, but hope springs eternal.

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