That's All Folks

Even as an anticlimax, this was anticlimactic.  As was widely expected after yesterday’s sudden suspension of proceedings, the De Sole v. Ann Freedman/Knoedler case was settled this morning (February 10).  While expectations of seeing Freedman and her boss, Michael Hammer, on the witness stand were significantly lowered yesterday, there was still some faint hope that the case would keep going.  However, I did not take it as a good sign that when I walked in a tech person was winding up AV cables off the floor, all the computers were off, and the opposing attorneys were chatting and laughing together with the courtroom clerk.  At that point, it was just a matter of waiting for the judge to come in and announce the settlement and thank the jury for their service and dismiss them…which never happened. I did wonder if the judge let the jury off in private to allow them to escape back to their lives without being harassed by the journalists and TV producers in the audience.  But we never even saw him again, unless he came out much later after everyone was gone.  I thought there would be some sort of final ending to the formal proceedings, but we all sort of gave up and got on with the day.

Eventually, the various attorneys made themselves available to the small crush of reporters and all of them reveled very little, except to say how happy their clients were.  Indeed, despite the fact that they had been snarling at each other for years through their counselors, the parties now professed to be in a high state of contentment.  I can assure you that is not the way the audience felt.  It was as if we had been watching Star Wars and it stopped before Luke Skywalker blew up the Death Star. For those of us who had hoped for a reckoning of some sort, this was a let-down. 

The obvious thing to wonder is why it stopped now?  Was it in direct response to the testimony of Knoedler’s accountant who spoke of Michael Hammer’s lavish lifestyle and casual way of ignoring standard corporate practice and simply grabbing money from his holding company’s subsidiaries whenever he liked?  While that testimony was, I hear, pretty obnoxious, the defense had to have been prepared for that; she was and is an employee of Hammer’s after all and they would have met with her numerous times and would know what kind of witness she would be.  Also, it just doesn’t ring true to me that Hammer would fold up his tent in direct response to that.  After all, he appeared in the courthouse wearing a velvet jacket and skinny jeans, sporting a deep tan (the courtroom artist said she was going to use the same color on him as she did on the De Sole’s ‘Rothko’!) so I can’t see that he was at all embarrassed or concerned about being perceived as unduly rich.

More likely, Hammer and his counsel got serious about settling after Freedman cut and ran.  For one thing, while the jury was told by the judge to disregard that fact, that it shouldn’t color their judgement, it would be easy to conclude that the jury might take that as an admission of guilt.  And if Freedman was to be perceived as having done the wrong thing, then it would be very hard for Hammer to have skated. 

Eileen Kinsella from Artnet managed to elicit some words from Hammer’s attorney Charles Schmerler that, while rather bland, hint at the effect that Freedman’s settlement might have had on their thinking. She reported that he told her it was “a fair, reasonable and good settlement and added that he was pleased to see the settlement with Ann Freedman, which happened this past weekend and had enabled today’s agreement.”  Marion Maneker at the Art Market Monitor has the opinion that this could mean that they wanted Freedman to share some of the costs of the settlement, which might well make some sense.  

The more I think about it, the more I am convinced that once Freedman settled, this trial was doomed.  Of course, they waited until after some more witnesses suffered on the stand.

Greg Clarick, the attorney for the De Soles, was also pretty robotic in his comments to the assembled but he did gloat a little bit, in that he said that the wrongdoing was obvious and that he and his clients were glad to have gotten the facts of the case out in public.  I suppose that the plaintiff in any case that settles before the jury gets the case usually can claim victory, but the consensus is that he and his partners had put forward a strong case.  Clarick did go on to say how proud he and his firm were of the De Soles in that they toughed it out and went to court. 

On that point I agree with him.   Mr. and Mrs. De Sole have indeed done a great service to the art world, especially the New York art world, by going as far as they did.  This case has made it clear that dealers shirk due diligence at their own peril and that being an ethical secondary market dealer requires the ability to actually look at the goods with a critical eye.  It also should be an opportunity for the conversation about how to produce catalogs raisonne in a way that fairly compensates the scholars, protecting them from legal actions while requiring them to so the work without regard for the market.  That won’t be easy.

I am not suggesting the De Sole’s motives were altruistic; they wanted to get compensation for the huge amount of money they lost when they bought the fake Rothko. It is not up to them to sponsor the creation of case law that will guide the practice of art dealing. Yet by their endurance has yielded some potentially positive results and for that they should be congratulated.

The legal system is not perfect, but the same can be said for the self-policing system the art world has regarding the conduct of art dealers.  In this case, while the plaintiffs got some sort of recompense and while many of the witnesses who had played a role in this mess got some comeuppance, there was collateral damage.  So while the De Soles should be congratulated, I would also like to suggest gratitude towards people like Melissa de Medeiros, Edye Weissler and Frank Del Deo, employees at Knoedler who suffered when the business imploded, and now had to go through the process of being deposed and then examined at trial…when Ann Freedman did not.

I should note here that I had previously written that Jimmy Andrade was completely blameless…he is the former doorman at Knoedler who apparently introduced Glafira Rosales to Knoedler.  I may well have been wrong about him, having read through the various complaints and so forth.  I plan on doing some more follow-up, so will refrain from saying more, but his role may well have been more complicit than I understood. [Note: I finally found the memorandum which dismissed him from the case on summary judgment.  As I originally thought, the guy was innocent, having merely introduced Rosales to Freedman; coincidentally, he was also acquainted with David Herbert.  For this reason, the original complaint included him as part of a conspiracy, and I couldn't find the order dimissing him form the case..but now I have.  He did nothing wrong.] 

While I am on the subject of my being wrong, I would also like to point out that I had previously assumed that the De Soles had been offered their money back but they were angry because the work would be worth way more had it been real, and that Freedman had never called them up when the truth was coming out…they read it in the papers.  While I remain convinced that if Freedman had exhibited a modicum of graciousness towards her clients, some of their rancor would have been lessened, I now understand that the original offer by the defendants to the De Soles was for less than half of what they had paid.  Furthermore, as I now understand, pretty much all the rest of the parties that have settled have done so for far below what they originally paid.  For example, it was revealed yesterday during the examination of Ruth Blankschen that one of the other victims, Pierre LaGrange, accepted $6.4 Million against a $17 Million loss on the ‘Pollock’ he bought.   Thus I was quite naïve.  Obviously, the huge expense of skilled lawyers is a factor in all of these settlements, as is the incredible hassle of suing someone.  The buyers of these fakes who settled before trial avoided both of these considerable burdens, and also were spared the public embarrassment of having been taken by a faker.  Of course, these names have spilled out at trial, but as far as I can tell, nobody is calling attention to them, so that is worth something.  It should also be noted that Glafira Rosales was assessed a huge fine and presumably some of her assets will go to the victims here.  I am also wondering aloud if these buyers can't write the loss off against their taxes or perhaps claim it on an insurance policy.  But I think it is safe to say that despite how happy their lawyers say they are, Ann Freedman and Michael Hammer will notice that there has been a decrease in their net worth.

My current thinking is that it was extremely beneficial and bracing to have the adversarial gaze of the law profession cast upon the art world.  All of us can benefit from the reminder to be more aware of the things we say, the documents we create and the need for solid research.  But by the same token, the underlying reasons that allowed works of art to be sold without solid provenances and airtight attributions have not disappeared, nor have the temptations to buy into an impossible fantasy. I think most informed people in the art world understand this to be an extremely atypical situation, whereby a gallery of this prominence and a person who had distinguished herself to the degree that Freedman had got caught up in something like this. 

I plan on posting a few more pieces on the trial and the aftermath, but I did want to thank everyone who has provided me with positive feedback about this blog during the trial.  It is extremely gratifying.  I can promise you that I will not be able to write 2,000 words a day going forward and that I certainly do not consider myself a journalist.  On this blog, I am able to say and do things that real journalists cannot.

Again, I would like to point out that the New York art press absolutely killed it when it came to covering this case. Eileen Kinsella, Cait Munro and Brian Boucher at Artnet , Michael Miller at Artnews and Laura Gilbert at The Art Newspaper have done a great service in providing a record of what went on, from the voir dire to the…well…whatever it was that today was…the end anyway. 

There are still 4 active cases pending in this entire matter, but it is hard to imagine that these will not now settle as well.  Freedman and Hammer didn't stand up and swear to tell the whole truth this week so there is little reason to see why they ever will.

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.

Ann Freedman made a lot of money

Day 10 (Friday, February 5, 2016) of the Freedman/Knoedler/De Sole trial turned to the financial aspects of the sales of the fakes, with an accountant, Roger Siefert, who was hired by the plaintiffs, presenting his analysis of the gallery’s books.  Before that, James Martin finished his testimony about his forensic examination of the paintings, which I did not see—I heard he was just as engaging and effective as he was the day before.  I missed the first half hour Siefert’s testimony as well, but much of it was reiterated over the afternoon.  At the end of the day, the videotaped deposition of E.A. Carmean, the in-house scholar at Knoedler was shown, but only partially; this will continue Monday. 

Robert Siefert is a forensic accountant.  I was not there for the beginning of the testimony where they talk about the witness’ credentials, but he seemed very lucid on the stand.  Like James Martin, he was able to use normal language to explain some esoteric things, he was extremely prepared, and clearly is a seasoned expert witness.  The De Soles are playing to win, so my guess is that he is near the top of his profession.  Probably like most people who chose art as a career, math is not my strong suit and when they started talking numbers, I sometimes found it hard to follow.

What I did not find hard to follow was Ann Freedman’s eye-popping compensation.  I have always wondered how much these big-shots get paid, but it appears to be more than I ever imagined.  Freedman’s base salary was bumped up to $300,000 per year in 1998.  That didn’t surprise me—she was running one of the top galleries in New York, operating at a very high level.  That is (I am sad to say) a lot of money in the gallery world, even today, but she was at the top of the pyramid.  What did shock me was her “profit sharing”, which seemed just a fancy term for “commissions.”  In that same year, 1998, her commission on sales went up from 10% to 15% of the profit!  In 2002 it went up again and apparently was as high as 30% before the end.  That is just off the charts.  Usually, the salespeople get a salary plus 5% commission, from what I have heard.   In some situations, if a salesperson brings in a work from a seller and then sells it on, they might get 10% (5% for bringing it in, and 5% for selling it).  Galleries vary and it is hard to get solid information, and I am not speaking from personal experience, only from hearsay.  But I am willing to go out on a limb and say that I would be very surprised if any employee at a New York gallery that is not the owner gets a big salary AND 30% commission on sales. 

Turning to the Rosales fakes, Mr. Siefert said he calculated that Ann Freedman received $10.3 Million on top of her salary as profit sharing from the sales of these fakes from 1994 – 2008.  It also came out in the cross examination that she was equaling her profit sharing from sales of non-Rosales works in a number of years.  The chart on the screen was hard to read from afar and they were speaking quickly, but in two of the years they mentioned, 2003 and 2006, Freedman made $2.2 and $2.5 Million respectively from profit sharing in addition to what she got from selling the fakes,  meaning that in 2006, she knocked down over $5 Million, plus her salary. 

I mean, wow.  Again, she did not own the gallery, she just worked there, and she made $5 Million.  2006 was a very good year in the art business.  If I recall, even I made a decent living that year as a dealer.  But Freedman was living large.  Now I know how she can afford such an able legal team.

They also flashed up how much EA Carmean was making.  From 2004 - 2009, he made, total, about $330,000…again, don’t quote me, but that’s what I think I saw on the screen.  The highest was in 2008, when he made $78,000 and in 2009, he made $60,000.   The lowest was $36,000 in 2006.  I believe he was a free-lance employee at Knoedler throughout this period, from what has been said so far, doing research with a specific focus on the connection between David Herbert and "Mr. X."  This is actually a lot of money for such a job, especially since we heard that other Knoedler employees were conducting such research as well.  Maybe he was coming in every day (doubtful) and perhaps this is reimbursement for expenses and so forth, but (again, I am sad to say) free-lance research just doesn’t pay that much.  My strong suspicion is that he was being paid for his distinguished name and credentials.  This pay also might explain why he was such a dogged advocate for the works in the face of mounting evidence against them and why he might have suggested to James Martin, the conservator from Orion, to change his report.

I have said elsewhere that it really stinks that we cannot come up with a way to pay experts and scholars appropriately.  Here we have a case where an art dealer was making $5 Million one year, while the people she relied were getting paid much less.  It is sad that scholarly work is poorly compensated when it creates such immense value.  But looked at from another angle, there are ethical guidelines for scholars which, it could be said, Carmean crossed.  It certainly seems that his scholarly reputation has been diminished by his actions in the Knoedler case.  The relatively high level of pay Carmean received does little to tip the scales in the other direction.

At any rate, turning back to Siefert’s testimony, the bomb he dropped, which was in the De Sole’s complaint, is that without the Glafira Rosales pictures, Knoedler Gallery would have operated at a loss from the time she brought them her first treasure in 1994 until the gallery closed in 2011.

It needs to be pointed out that the two professions, accounting and art dealing, do not play nicely together.  In my experience, bookkeepers at art galleries and accountants who have such clients experience a very high level of frustration.  For one thing, the personalities are different: accountants deal in facts while art dealers think in hypotheticals and help their clients dream a little bit.  The purchase of a work of art rarely is done out of necessity and the structure of accountancy is sort of set up from the opposite point of view, that economic activity proceeds in some rational way out of transactions between parties that have financial benefits for both sides. 

Art galleries, then, are fairly atypical businesses from an accounting point of view.  Take, for example, the idea of a ‘receivable’.  When a manufacturer or their broker ships items to a factory in response to an order, they expect to get paid and they put a receivable on their books…indicating that they think they will be paid very soon.  Art dealers, by contrast, very often ship works ‘on approval’…no deal has been done yet.  Obviously, it’s not yet an occasion to put a receivable on one’s books.  But this can drag on for a while…the work could be ‘on approval’ for quite some time.  Even worse, the salesperson might create an invoice, in anticipation of consummating the sale when they go visit their client.  So now, the bookkeeper has a receipt for the work having left the gallery, as well as an invoice on their desk.  But it still is not a receivable! So they have to put such annoyances aside until all of a sudden they are told it actually is a sale, but, as often happens, the owner has decided on a different piece.

Along the way in this imagined transaction, a million other things can happen which, while not affecting its status on the books, can drive a bookkeeper crazy.  The sale is agreed, but the invoice is changed four times as the client changes their mind about which entity or family member will actually be buying the piece.  Or perhaps they decide they want the work in Aspen, so it comes back to the gallery and is shipped out of state, meaning sales tax is not collected, which means the bookkeeper has to re-do the sales tax return they had just drafted.  Or it is invoiced in December and paid for in February--in which year should the income be booked?. Or perhaps it is an editioned work and the wrong edition number is on the invoice and nobody tells the bookkeeper that until the previous year’s books have been audited and now it needs to be changed.

Then, let’s imagine that the work in question needed conservation.  Let’s say it went to the conservator with another work and the conservator created a bill without itemizing how much of the bill was for which piece.  Or maybe the dealer charged the client for shipping and then calculated a discount with the shipping charge added in.  The actual shipping expense needs to be backed out to figure the actual profit and it needs to be decided what to pay the consignor.

All of these things, of course, can be handled by a good bookkeeper by the use of copious journal entries and long hours at the computer, with a calculator and pencil and a pad of ledger paper handy.  But it also requires them to ask questions of the salesperson, who often is very busy and doesn’t really care.  I hasten to add that the salespeople and gallery owners do care deeply about having proper books and are very skilled at business (indeed, to keep a gallery of contemporary art open for any length of time requires a great deal of business acumen).  What I mean is that, as long as income is recognized and offset properly with expenses, most dealers will call it a day.  Why bother meeting with the bookkeeper to help them divvy up expenses among the various sales?  Should an expense be booked immediately or added to a cost-of-good sold and deducted only when the work is paid for?  Who cares!  There are a million other things that need to be done to insure the business stays afloat to get into that level of detail.

So, in the absence of sustained contact with the sales staff, the bookkeepers and accountants make these calls themselves.  In their first few months or years at the job, they might stand outside the bosses’ office for a while and might even occasionally gain access, but in the end, everybody realizes that little is gained and, as time goes by, if the business grows, the bookkeepers find themselves on another floor of the building or even in a different neighborhood altogether, only to awkwardly meet the sales staff at the holiday party or when the salesperson needs something immediately, like the check for their commissions.

So it is with this in mind that makes me think, to some extent, it was a mistake for the plaintiffs to put it as Knoedler “would have operated at a loss” if not for the Rosales fakes.  Basically, what Siefert did was take the overall numbers, subtract out the Rosales profits and, at the same time, he did his best to subtract out any expenses that related to these works, the idea being that if you remove the profits, it is only fair to remove expenses as well, to get an accurate picture of how the business was doing, aside from the Rosales works.

But under cross-examination, the defense lawyers were able to show that it didn’t always happen, that there had been some expenses that may have directly related to the Rosales materials that were missed.  Of course they were missed! Who has time for that crap when there is an art gallery to run?

Siefert replied that in the big scheme of things, the amounts missed were small compared to the massive numbers that the Rosales works were putting up.  He also said there were all sorts of notes handwritten on the invoices that described various expenses which didn’t make much sense and that of course he was going to miss some expenses, what with how art galleries are such strange businesses.  While his replies were plausible, it simply opened the door to some awkward questions for him and began to undermine the confidence we could all have in his spreadsheets by making it clear that was flying blind at least some of the time.

The defense also asked him if he had done any calculations about what Knoedler would have been able to do if they weren’t working so hard on the Rosales works?  Obviously that would have been impossible.  But it is a good point…if Ann Freedman hadn’t ever met Rosales, she probably would have been using her considerable abilities to persuade other potential consignors to let her sell their works of art.  Indeed, as her lawyer pointed out, in many years Freedman generated profits that equaled those from the tainted works…so it wasn’t as if she was completely useless at her job without these paintings.

Of course, this all assumes that all of Ann Freedman’s other professional activities were completely aboveboard and without unethical behavior that might have attracted other civil lawsuits, but I digress.

There was also the very important fact that Siefert included the years 2009, 2010 and 2011 in his calculations, when Knoedler stopped selling any Rosales works in 2008 and when Freedman left in 2009.  As well all know, those were absolutely awful years in general for most businesses and there were big losses for Knoedler.    If he had stopped the clock in 2008 or even 2009, the gallery was profitable, even without the proceeds of the Rosales works.

The point really isn’t that the gallery wouldn’t have been profitable at all, in my opinion, but rather that the profits on the fakes dwarfed all of Knoedler’s other profits, as well as the fact that and that they made way more than the consignor.  Overall, the proceeds from the Rosales works was over $69 Million, of which Rosales was paid $23 Million, leaving $46 Million for Knoedler, which is way more than they made on the rest of their operations.

The wide disparity between what the made off of Rosales versus the rest of their network is the smoking gun, if there is one.  As a general rule, the person who owns a work of art should make more than the gallery that sells it on their behalf.  In many cases, the gallery was buying the work directly from her and, it is true, that in these situations, a gallery will make a big mark-up, as they are generally taking on more risk.  But in this case, the works, had they been real, could have been readily sold by almost any dealer with half a brain, even taking into account the fact that the seller wished to remain anonymous. 

As I think of it, maybe that’s not true.  For example, if I had called up the De Soles and told them I had a Rothko that was from a guy who was the son of a guy and so on, they probably wouldn’t have bought it from me.  So in a sense, Knoedler was getting paid to erase any doubts, and the assumption was that a gallery like them knew a real from a fake and had done due diligence.  But my sense is, that even then, they were getting overpaid (Martha Parrish who testified last week…I missed that…made this very point).

At any rate, I think that the plaintiffs overreached when they got their guy to say that the gallery wouldn’t have been profitable, because to do so they had to throw in a few years that were irrelevant.  Even worse for them, it allowed the defense to point out that in 2011, the Knoedler building was sold for $18 Million, which, if you add that in, means that they made a big profit over those years.  Siefert said that this was liquidating an asset, and he was focusing on the core business activities, but again, the defense got to show that there were a lot of assumptions that the accountant made.  As it turns out, Knoedler was paying the underlying mortgage on the building.  The defense asked, why did you include those payments as an expense when you then excluded the monies from the sale of the building?  Again, this is a fair point.  Adding in those last few years when Freedman was gone and no Rosales paintings were sold seemed like a mistake.  The numbers speak for themselves: Knoedler made a profit of $36 Million from the Rosales paintings, with Ann Freedman getting an addition $10 Million, which is way more than they made doing anything else.  Why not just leave it at that?

While I think the defense did a pretty good job beating Siefert back, there was an odd sequence out of Luke Nikas, Freedman's lawyer.  In 1997, Freedman wanted to buy one of the Rosales works herself, so she traded Knoedler a Rothko work she owned in lieu of cash.  Knoedler later sold this work for $225,000.  Thus, Nikas asked the accountant, since the work she got in exchange was worthless, couldn’t we say that she actually LOST money for the years 1994 – 1998, since her commissions were very low from Rosales sales.  This makes no sense.  Not only was Nikas now himself guilty of cherry picking a time period (even assuming she ‘lost’ money, she got $10 Million from Rosales works by the end), unless Freedman knew the painting she traded for was worthless, how could anyone know she was on the losing end!

The judge couldn’t resist observing at this juncture that we are all assuming the painting she gave Knoedler was authentic.  Funny.

At any rate, Nikas has gone on and on already about how in the early years, Freedman actually made no commissions from the fakes.  I still don’t see where he is going with this, but I doubt he is without a plan. It may be that this will help Freedman deny there was a racket.  Nikas also repeatedly drew attention to the fact the Freedman was able to make a lot of sales and generate a lot of profits outside of the fakes.  This just drives home the tragedy of all of this for me.  She was a very effective dealer without all of this nonsense. 

There was also much testimony about 8-31 Holdings, the company that owned Knoedler (and still owns Hammer Galleries).  I must confess at these points to be a little bit lost.  One thing I am certain the plaintiffs were trying to make clear is that a lot of money flowed up from Knoedler to 8-31 and that this largely came from the fakes.  Additionally, and I may be unclear here, is that 8-31 engaged in a bit of financial slight-of-hand to perhaps hide the fact that this was a gush of money by classifying it as one thing and then reclassifying it as another down the road. 

Whatever the case, the testimony got very specific and dense, and the audience did not have a clear view of the various documents and spreadsheets, so it is hard for me to say.  Suffice it to say that the owner of 8-31, Michael Hammer, is a very rich man and makes full use of tax and corporate attorneys to structure his financial dealings in a complicated way that must help him protect his wealth.

The last half hour of the day was taken up by the videotape of Carmean testifying.  First the plaintiffs will get to show their edited version of the deposition; afterwards the defense will do so.  It already does not look pretty, especially in light of the changes that Carmean suggested to James Martin’s report as well as Jack Flam’s testimony.  The plaintiffs are focusing on how Carmean may have been the means by which the David Herbert fiction was disseminated into the Beyeler Foundation catalog essay for the Rothko show that included the De Sole's fake.

We are promised Ann Freedman and Michael Hammer on the stand soon thereafter.  Fasten your seatbelts.

Thank You, Flam

Let the record show that on February 3, 2016, an expert at the Knoedler trial finally used declarative sentences to express opinions about the authenticity of a work of art. Jack Flam was the star witness of the morning session and after a number of uncooperative experts and halting progress, it was bracing to watch Flam cut loose. As usual, I was unable to attend the all of today’s proceedings, but the initial questioning of Flam by the De Sole’s attorney Greg Clarick was completed before the break. 

Flam was itching to tell his story involving the fake ‘Motherwells’ that passed through Knoedler Gallery on Ann Freedman’s watch. Mr. Clarick, Judge Gardephe and even the court reporter asked him on numerous occasions to slow down as he unloosed a torrent of information, facts and opinions, all of which he clearly intended to damage Freedman. 

Flam is a serious scholar.  He is head of the Dedalus Foundation, which seeks to preserve the legacy of Robert Motherwell, and, not incidentally, is one of the authors of the Motherwell catalog raisonne. Flam had no problem distinguishing between the various different paintings as the discussion shifted among them.  He seemed to have reviewed his calendar and notes before appearing in court and had dates and facts at his fingertips.  As such, he was a very compelling witness and, in my opinion, his testimony did indeed hurt Freedman as he almost certainly intended.  He probably would have been an even better witness had he been more concise and less freewheeling.  Flam often had the bit between his teeth as he answered and often found himself ending up far away from where the question had begun.  He also sprinkled his answers with art historical and technical terms which may well have meant very little to the laymen of the jury. 

There were four Motherwells that Glafira Rosales brought to Knoedler in total, although not all were sold to outside clients.  At least one is apparently still in Knoedler’s possession, while another was bought by Freedman herself. Flam picked them all apart with cruel precision.

In short, Flam’s testimony today was that starting in 2007, he repeatedly warned Freedman that these works were likely fake but she rebuffed him every time, obstinately clinging to the fantasy of their mysterious provenance.  Flam stated that he first saw one of the group in early 2006, was told the story about David Herbert and “Mr. X” and so forth.  By later in 2007 he had seen some of the others and began to involve his staff and board at Dedalus in the process of vetting them.  While numerous meetings with Freedman took place, Flam and his colleagues began closely examining the works and doing research, after which he became deeply suspicious of the authenticity of all of them.  Flam started expressing his doubts to Freedman around then, and ever more so as time went on as his inquiries yielded worrying results.  Freedman for her part maintained all along that they were authentic.  At an impasse, they mutually decided to submit the works to forensic testing in early 2008 but Freedman was not forthcoming about the outcome of this testing.  By November, 2008, after repeated nagging from Flam, Freedman finally showed him some of the results of this scientific examination, which was damning.  Freedman nevertheless persisted in requesting additional research, which Flam/Daedalus did and which again seemed to prove that the works were fake.  Finally Freedman stopped returning his calls. 

Flam was asked if he authenticated Rothkos, which he does not and Flam expressed “extreme surprise” that Ann Freedman had out his name on the list of experts that she gave to the De Soles, stating that she never asked his permission to do so.

The expert then began explaining how a work of art is authenticated stating that there are four factors:  connoisseurship, provenance, fitting the work into the historical narrative of the artists life, which involves the work’s date, and, lastly, forensic testing.  It was his ability to explain how an expert looks at a painting and determines its authenticity that I found the most compelling.

Flam then started dishing details in a way that made it clear to me that he wanted to cast aspersions on Ann Freedman.  About the David Herbert story, he quoted Freedman as saying that Herbert was homosexual and so was Mr. X and that they were lovers, and also that the son of Mr. X is a homosexual, and because homosexuality is frowned on in Mexico it would be dangerous for any details about their identity be revealed.  He claimed that Freedman’s story "had a lot of moving parts" and that it kept changing and had also included Alfonso Ossorio.  This was all told with a great deal of eye rolling on his part.

At one point, Flam said, Freedman opined that Motherwell had gone to Mexico on a trip in the 1950s, around when the paintings were said to be made and been a guest of Mr. X.  However, Flam was at that very moment compiling a chronology of Motherwell’s life and told Freedman that the artist had not visited Mexico between 1944 and 1968.  On this, as on may other occasions, Flam portrayed himself—convincingly—as having a great command of the facts of Motherwell’s life and art which he contrasted with Freedman’s lack of interest in discussing anything but David Herbert.

As Flam came into close contact with the purported ‘Motherwells’, he started seeing problems.  The signatures on all of them were identical…”as if a template had been used”.  One of them was titled on the back “Spanish Elegy” which was indeed the title of a series that Motherwell used, but which was never, ever written on the back of any canvas.  The paint application, the areas of matte versus glossy, and the drip marks were not typical of Motherwell, in his opinion. 

Flam says he told her all of this, but she “kept bringing up David Herbert” and would never engage with his observations about the physical qualities of the works.

Of another painting he saw, Flam noticed that it was done on an old canvas, with old nail holes and an image of something else underneath it, not by Motherwell….according to Flam, this was untrue of any other Motherwell he had ever seen.  Motherwell simply did not take used canvases to make his works, it seemed fishy to him, as if someone was trying to give the appearance of age to a fake by using an old canvas. 

Furthermore, the support was warped, but the paint layer was absolutely pristine; if a canvas bows, then the paint should crack, he noted.  The whites were too white, he also said. 

All of this he told Freedman, but, Flam said, she just offered more about David Herbert, never giving her own observations about materials, methods or techniques, only provenance.

Finally, Flam agreed that he would keep an open mind if she could give him some information about Mr. X, or even the person who brought in the works, which never happened. Instead, she sent him the opinions of two experts, one of them Stephen Polcari, who "loved" the work, which Flam found laughable.

EA Carmean, the former National Gallery curator who was working for Knoedler payroll at this point, also seems to have been an advocate.  Flam told Carmean over lunch after they both examined one of the ‘Motherwells’ that “the work looked more like the Elegies than the Elegies”.  Carmean tried to argue that maybe someone else had written the wrong date on the back.  No, said Flam, that was pretty unlikely. 

The chemical testing then came about.  Supposed to bring closure to the issue, Freedman was unresponsive, said Flam, until 9 months later when she said that they had a “draft report”, but she wanted to wait until it was completed. 

Then, in January, 2009, Flam got a package containing the report, in “redacted form”, via messenger, from Knoedler that said he could read it over night, but could not copy it or discuss it with anyone else and had to bring it back the next day.  This report, while final, was not complete, because Carmean “disagreed” with some of it, so they seem to have withheld the conclusions. The next day, Flam brought it back, but at this point he was even more convinced of the fakery.  The work, according to the forensic analyst, had been sanded down with an electric sander…not the way Motherwell worked, to Flam’s knowledge.  Worse yet, there was a layer of acrylic paint UNDERNEATH the oil paint…acrylic paint which Motherwell did not use until the 1960s and which wasn’t even commercially available in 1953 when the work was said to have been executed.

Freedman stuck to her guns, asked Flam to verify that Motherwell never used a sander or that he might have had a studio assistant that did so.  According to Flam, Freedman even wondered aloud if ‘someone else’ might have signed the works, which “horrified” Carmean (objection!).

Anyway, he have his staff look into the sanding business but no dice.  Motherwell was bad with tools, didn't have a studio assistant at that time and no other paintings they knew of had ever been sanded down.

Unlike a lot of the other experts who were on the Knoedler list given to the De Soles, Flam was never in a position of having to flatter Freedman.  He never, ever said nice things about the fakes. (actually, I read Brian Boucher’s coverage of the entire day and it seems that when he first walked into Knoedler he was initially  taken…but he quickly changed his tune as he started really looking).  There are no emails or little essays or letters saying how wonderful he thought they were, in contrast to many of the other experts who are now saying the opposite. 

The cross examination was to come next, which I had to miss, but Flam was, I think, easily the most damaging witness to have testified to date.  Regardless of who one believes in this case, I think it cannot be argued that hearing Flam speak so freely and frankly was a breath of fresh air.

As a professional in the art world, I am very grateful that Flam actually described how an expert examines a painting and how they go through the process of determining authenticity.  Rather than wave a magic wand and say something is right or wrong, he laid out, in plain speech what one looks for.  The paint being perfect, for example, when the canvas is warped.  He compared the works in question to examples of Motherwell's paintings which are known to be authentic and noted significant differences. 

The defense has all along pointed out that for much of the period covered by the Rosales affair, forensic testing was not in wide use in the art world, that the technology did not exist.  So I expect that fact will be brought to bear on these ‘Motherwells’.  But even without the science, Flam showed that there is a solid methodology that can be employed, it's not hocus-pocus.  I have been complaining all along how bad this trial is making everyone look.  Flam was the exception, his behavior in this instance was something that the art world can be proud of.

Flam has spoken many time advocating for scholars and experts to stand up and say if they see fakes, he decries the secrecy that is commonplace in the art world, he thinks it gives cover to nefarious actors. It certainly is easy for him to say; he has a steady paycheck and a staff to help him perform authentications.   But he does have a point.  If more people were as thorough and transparent as he was, it would be a good thing. 

Stephen Polcari

While Flam was the star witness of the day, he wasn’t the first.  Polcari received a final going over to begin the morning session.  Luke Nikas, Ann Freedman’s attorney, reminded Polcari that he had said he never “authenticated” anything…and then flashed on the screen a number of the tear-sheet essays and catalog entries that Polcari had written which said things like “I am convinced of their quality and authenticity.”   Ouch.  Nikas actually tried to repair some of the damage that Polcari had caused himself as a witness when he had stated he couldn’t tell the Rothkos apart by pointing out that it was a long time ago.  Nikas also rattled off Polcari’s considerable academic credentials and the fact that he has done work for IFAR. 

Thus, it seems to me now that the plaintiffs wanted him to look like a buffoon to undercut Freedman…that she relied on someone she shouldn’t have…and the defense need him to be credible enough to give her cover…that she relied on someone reliable.

Polcari looked drained, beaten down.

Frank Del Deo

Frank Del Deo was called next.  Del Deo is an affable man who was a rising star in the art world, working as Associate Director at Knoedler from 1999 – 2009, and then was made President from 2009 – 2011, after which he left.  Del Deo was one of the principle salespeople at the firm, contributing to the success of one most well respected, powerful galleries in the universe and is certainly part of the considerable collateral damage that the implosion of Knoedler caused.  However, unlike some of the other employees at Knoedler, his career is far from over and he now runs a gallery with another former Knoedler employee, Ben Barzune.

While Del Deo probably had some bad luck, or at least bad timing, he can be thankful that he never sold any of the Rosales works.  It is typical among a competitive sales team within a gallery that the person who brings in the material often has the chance to sell it.  For one thing, compensation is generally calculated on one’s sales and profits.  So why would Ann Freedman share such a windfall with her subordinates? Del Deo did admit to having chatted with Rosales “several times” and been in a meeting or two, but he seemingly dodged the bullet as Freedman was playing keep-away. 

The De Sole’s lawyer, Emily Reisbaum, tried to establish what percentage of profits that Del Deo typically earned on sales, if there was a difference between consigned and owned inventory and so forth, the obvious intent was to demonstrate that Freedman was earning an astronomically high percentage compared to normal gallery practice.  Del Deo didn’t really play ball and gave ranges and hemmed and hawed, but Reisbaum was able to pin him down a bit on some of it. 

Del Deo was asked about any collectors who ever got refunds from Knoedler and he was aware of two, both because of material that Rosales had brought to them. 

There was discussion of how he became to be President (Freedman was suddenly gone) and why he decided to leave Knoedler suddenly.  Del Deo did offer the information that Michael Hammer, Knoedler’s owner, was selling the building, and they hadn’t found other space (they were thinking of moving to Chelsea!).  But as the questioner drilled down, it became clear that the entire business was in turmoil and that the FBI was nailing subpoenas to their door (not literally, I am trying to be funny).  They closed on December 12, 2011, while Charles Simonds’ show was still on view.

Because Del Deo had extensive contact with Knoedler’s lawyers as the gallery was going down in flames, a lot of discussions were covered by attorney/client privilege.  There were numerous side-bars and objections, redacted letters and so forth.  Add to that some technical glitches, as well as Del Deo’s doggedly opaque testimony and I didn’t feel that Reisbaum made too much headway.  There was a lot of “I don’t recall” out of Del Deo…hard to believe that details about such a cataclysmic event would elude the man, but they really had to drag it out of him.  They did get him on the old ‘does this refresh your memory as I read back your deposition’ once or twice, but Del Deo simply had trouble remembering a lot of stuff.

I suppose there is very little upside to Del Deo opening his mouth.  Sure, he’s probably love to see Freedman eaten by fire ants after what went on, but that might well happen without his help, and he runs the risk of exposing himself to all sorts of pain if he lets something slip while trying to twist the knife.   None of anything I have ever read before this trial, or during it has ever linked Del Deo to any of this, so he had every right to pull up the covers and hope the lawyers went away and eventually they did.  Once again, this whole affair has caused a lot of pain.

"All Rothkos Look Alike"

The Knoedler/Freedman trial carried on casting aspersions on the entire ecosystem surrounding the collecting of high-end art today (February 2, 2016).  This time scholars and art historians took a turn at being made to look bad.  Two experts, Dr. David Anfam and Dr. Stephen Polcari gave testimony.  As usual, I attended only the morning session of the trial, so only got to see the cross-examination and then redirect of Anfam, and the initial questioning of Polcari by the plaintiffs who called him as a witness.   I’m not sure who came off worse, quite frankly, but I am going to go with Polcari who actually said—twice—that “all Rothkos look alike.”  Great.  Not only are all art dealers crooked, the whole thing is an emperor’s new clothes thing, confirming the suspicions of that guy I met at a party who told me his kid could do that.  I will do my best below to put it into context, but I will say it again:  This trial makes the art world look pretty ugly.

The strategy of the plaintiffs is rather clear at this stage.  At the time of the sale, Ann Freedman proffered a list of experts to the De Soles which stated that they had all ‘viewed’ the painting, which the De Sole’s said they construed as meaning that these people had specifically authenticated it.  The De Soles also assert that Freedman verbalized at least some of these names to them and that she specifically said that they said that the work was authentic.  Thus, the De Sole’s attorneys are going down the list and asking all of these various experts what actually went on.  Naturally enough, they are horrified that Freedman put their names on such a list and so far, all of them have said that they aren’t in the business of providing authentications in the first place and that they never did so in this instance, or any other instance involving the Rosales material. 

Indeed, anyone sitting through this trial would have to conclude that nobody in the entire world authenticates works of art, except if they are practicing attorneys and they are wearing a burka.  I can’t say I blame any former art authenticators who have now decided to stop providing such services.  The pay is lousy and one might end up in a court being made to look foolish trying to explain to a jury that even the best of them get it wrong sometimes....or as Polcari put it "...They were very good works, they just happened to be done by other artists."

Instead, people who might have at one point said a work was authentic (such as the person writing a catalog raisonne) now go through this whole routine of qualified statements, euphemisms, and code words that unfortunately can make their conclusions seem overly subjective.  We would all like an art world where such experts could do their jobs without fear of getting sued, but the stakes are very high and connoisseurship is by its very nature opaque.   

David Anfam

David Anfam, a distinguished scholar of Abstract Expressionism who wrote the catalog raisonne of Rothko’s paintings was painted as a flip-flopper by the defense, eager to tell anyone who was listening to him what they wanted to hear.  I didn’t get to hear the first part of his testimony, which presumably was a bit less harsh (here is Brian Boucher at piece about Day 6 on  artnet). 

Anfam is hard of hearing, so the proceedings were quite slow as questions were often repeated. The glacial pace of the trial at this point may have made Anfam seem less than forthright; certainly Luke Nikas, Ann Freedman’s attorney was trying to paint him as such and may have worked this angle to his advantage.  Nikas seized on the fact that Anfam had numerous transparencies in his files of paintings, including the fake Rothko, from the tainted Rosales collection and that Anfam had admitted seeing all of these works in person except the De Sole’s.  Nikas even did that thing where he asked a question that he knew would be forbidden, something along the lines of: “Isn’t it true that you actually did see the De Sole’s painting in person at Knoedler and are not telling the truth.”  The question was withdrawn in response to a loud objection, but, well, you know…the jury heard it, etc. etc.  Sometimes life imitates television.

Another line of attack concerned a phrase that Anfam used twice in written communications about the works, that something “strains the limits of credibility”.  Before everything went south, in a letter to Jack Flam at the Daedalus Foundation, Anfam wrote to plead Knoedler’s case, as Flam seemed to be having doubts about the ‘Motherwell’ works in the collection.  Anfam told Flam he had seen many of the works from Rosales and that it “strains the limits of credibility” that they could all been done by the same artist.  But, later, when it was pretty clear that the whole group was a bunch of fakes, he used the same words to express doubt to the FBI (which was investigating Rosales at that point) that a single collector would have owned so many undocumented works.  Nikas also brought up the fact that Anfam had sought payment for advocating for one of the paintings to the Albright-Knox museum, and he left a document up on the screen where Anfam had written to one of Freedman’s subordinates that “Ann should soon think of how” she was going to pay him for his work.

Nikas took a few more whacks at him, getting Anfam to acknowledge that he told people at Knoedler that he was 99.99% sure that the various works were real and that they “looked right” and again contrasted that to his later statements of doubts to the FBI.  He also mocked Anfam for telling the FBI that "it always struck me as strange" that all of the works were so small, as if the forger was scared of making larger works where the forgery would be easier to detect, getting Anfam to acknowledge that he was aware of the sizes of all the works all along.

Nikas had used this "strains the credibility” line in his opening and I expect we haven’t heard the last of it.  He is trying to convince the jury that his client had been given many signals by Anfam that the works were OK and that he is not to be trusted now.  Anfam's defense is that he didn't know all of the facts, such as the fact that IFAR had rejected one of the Rosales paintings, or that 30 paintings had come from the same source.

Charles Schmerler, the holding company’s attorney was next up and he tried to build on Nikas’ work.  He got Anfam to admit that Anfam had provided an authentication of a Rothko being sold at Christie’s in 2011, where the owner was not revealed to him.  Schmerler also established that Anfam did not use any "high tech” methods when writing his catalog raisonne, as they didn’t really exist in 1998.

On redirect, the De Sole’s attorney again brought up the fact that Ann Freedman never told him that John Elderfield had expressed doubts in the 1990s about some of the ‘Diebenkorns’.  And to top it off, Freedman never revealed that 30 works had come in from the same source.  That would have ‘rung alarm bells’ for Anfam, because, he said, it would, …wait for it…“strain credulity” that there could be 30 authentic yet undocumented works from a single source.

In sum, Anfam came across as a bit arrogant in the way that many people from England do.  Part of it is just the flowery speech and hyperbole he uses, but he did say that he considers himself the foremost expert on Rothko and never took a single opportunity to self-deprecate.  His manner is to brush off questions that might do him harm, which may or may not have carried weight with the jury. 

Stephen Polcari

Dr. Polcari introduced himself as a retired art historian and quickly made it clear that he doesn’t authenticate works…he ‘reviews’ them, as well as explains their meaning.  Fair enough.  But as he went along, it came out that he started working free-lance for Knoedler from the 1990s – 2011 and that part of his work included, well, the kind of things that one does when trying to authenticate art works, such as going to the Ossario archives to look for information that would prove that Ossario had had a role in the Rosales material (which was the original story that Rosales had spun).  Polcari’s letter to Eugene Thaw, asking him to bless a Pollock was shown as well, further making it seem as if he was acting as an authenticator would.  Polcari also wrote a letter to Jack Levy, who returned a ‘Pollock’ to Knoedler after IFAR had rejected it, which strongly advocated for the works authenticity.

Polcari began his description of working for Knoedler as that of writing essays and curating shows at Knoedler, so it was a bit of a surprise when the conversation turned so quickly to these other activities.  Also surprising was when Polcari estimated that he had been paid $3,000 by Knoedler for his work.  Was that for a single essay?  No, he replied, that was for all of my work over the years.

Holy Shizzit!  Just in case anyone was thinking of taking on student debt to obtain an art history degree, here is a reason not to.  $3,000?  Over 10 years?  The attorney asking the question probably made more than that while reading Polcari’s deposition.  Ann Freedman probably spends more than that every year at Jim’s Shoe Repair.  Unbelievable.

It really is absurd how little these scholars make.  Anfam was made to look bad because he earned a commission by helping Knoedler sell a work to the Albright Knox, for example, when Knoedler was making an absolute mint.  Other experts also got paid to help with the Rosales fakes.  Why shouldn’t people get paid well for their work?

On one level, of course, we are all afraid that money will corrupt the scholarly process.  People writing catalogs raisonne are not supposed to get paid by galleries who have an interest in their decisions, for obvious reasons.  And all those little write-ups Polcari was producing to help sell paintings probably don’t add much value, so I don’t want to overstate the case.  But having these people live like church mice while the dealers who benefit from their work knock down hedge-fund money (well, OK, junior partner at a hedge fund money) is just a disaster which waited to happen and then did so at Knoedler.  Polcari said in a letter that he ‘stood by’ opinions which were attributed to other experts but which he had learned of from Freedman herself.  He didn’t actually check with those other experts…and why would he?  He was making $3 an hour.  Of course, I am sure he would have, if he could do it over.

I learned that in the afternoon, Polcari revealed that Ann Freedman was actually paying his legal bills; Cait Munro at artnet had this in her piece about the trial yesterday.  How generous.  Somehow, that makes me feel even worse that a majority of the money flowing Polcari's way for his efforts on Knoedler's behalf are going to his lawyer.

Polcari was a bit jangly as a witness.  I got the sense that, like Ann Freedman’s assistant last week, Polcari was trying to cover his ass a bit.  In contrast to Anfam, who simply waved away questions where he looked like he was changing his tune, Polcari labored.  His answers were sometimes contrasted with his earlier deposition and shown to be inconsistent.  (The dreaded ‘Does this refresh your recollection’ was trotted out a few times). 

At the end of his testimony, Polcari was asked about something he had written in relation to a Rothko at Knoedler, and the point seemed to be that he had identified the incorrect one from a group of them.  I honestly couldn’t see how this mattered, since what was written seemed to be inconsequential.  But it was at this point that Polcari stated that Rothko, like many artists made ‘variations on a theme’, and that ‘they all look alike’ so he really couldn't say exactly which Rothkos he had or hadn’t seen and/or written about.  This comment drew a lot of laughs so he repeated it.  This is a man who spent his whole life writing about abstract art, including some well received books, who taught students art history, who felt comfortable contacting collectors and scholars.  They all look alike?  I felt that his credibility as a witness was eroded completely (perhaps it strained credulity?) at this point and it probably scored points for the plaintiffs.  Obviously, the defense got a crack at him after lunch, and I am sure that they landed some punches of their own, but the fact that Freedman used an expert who would say something like that damaged her case, in my opinion.

Luke Nikas said last week that ‘an art dealer is not an expert’, she instead relies on others, such as scholars.  Now we have a scholar saying that many of Rothkos works look the same to him.  I am not looking forward to the next salvo to the profession, but I sense there is more to come.

 

De Sole Will Not Be Denied

The gloves were off at the Knoedler trial.  I missed the first part of Domenico De Sole’s testimony where his own lawyer examined him, but this morning (Thursday, January 28), the bulk of the defense's cross examination of him took place, having only just begun the day before.  As a number of journalists noted, Mr. De Sole is angry.  He conveys his anger by tightening his body and by speaking in clipped, curt sentences.  Color rises through his face and his eyes flash.  An extremely elegant man, De Sole, by simply withdrawing his cultivated manner, becomes quite formidable.  He is also not afraid of lawyers or judges and often went way off-piste in his answers, repeatedly posing questions to the attorney questioning him as well as talking over his opponent.

The first defense lawyer to take a whack at him was Charles Schmerler who represents the holding company that owns Knoedler and which probably has enough assets to actually pay damages should they lose.  Burly with dark hair in contrast to De Sole’s lithe silvery appearance, the two of them duked it out.  Like De Sole, Schmerler is intimidating and neither of them backed down.  Schmerler asked De Sole if he had ever asked Ann Freedman straight up about the authenticity, which De Sole hadn’t.  Freedman mentioned numerous experts in connection with the work, did De Sole find it unusual that she was making such a big deal about authenticity when she hadn’t even been asked?  He did not.  Upon making the purchase of the fake Rothko, De Sole had asked Freedman to put all the things she had said in writing, and she indeed sent him a list of the experts. Schmerler asked had De Sole read this?  He hadn’t, only his wife did and told him it arrived in the post.

Throughout all of this, De Sole stuck to his guns.  He said when they first saw the ‘Rothko’, Freedman “did all the talking”.  She went on and on about how beautiful it was and basically talked until they bought it.  Freedman is known for being a gifted saleswoman and here the court saw that hers is definitely the hard sell. De Sole said he trusted Knoedler, that this was a top gallery and it never crossed his mind to check up on any of the various claims.  He often spat out his answers and repeatedly was warned by the judge to not answer questions with questions. 

The document that Freedman sent him was shown up on the screen and it’s pretty clever.  This was the famous list of experts, including Christopher Rothko, et al.  The top of it reads “This Painting Has Been Viewed by the Following Experts with Special Expertise on the Work of Mark Rothko.”  Schmerler implied that anyone who bothered to read this document would immediately see that it wasn’t making a very strong claim.  There were short, glowing biographical notes on each of the experts, but all it said was that they viewed it.  Unbelievably tricky.

Of course, Knoedler’s invoice is much less ambiguous and is obviously a breach of the Uniform Commercial Code.  However, the defense is trying to imply that the De Soles didn’t do anything that well-informed collectors like themselves should have done.  The De Soles don’t want a refund, they want damages, so the bar seems to be getting set much higher…at least, that’s the intent here. 

What Schmerler seemed to be saying was that Freedman’s own documents and behavior should have alerted her clients to the fact that the evidence supporting the painting’s authenticity was flimsy.  Wow.  Again, this case is harming the art dealing profession.  Who wants to walk into a shop where the buyer is supposed to have to constantly monitor the salesperson’s actions for insight into the authenticity of the goods?  Buying art is supposed to be enjoyable.  I suppose a visit to a used-car lot would require one to be alert, but art dealers, especially ones like Freedman are not supposed to be in that category…maybe this sentence should have used the past tense.

Schmerler spent the rest of his time picking at Mr. De Sole’s formal complaint, trying to show parts of it where it could be seen as incorrect.  For example, his complaint stated that Freedman never told him that Knoedler itself owned the work at the time he bought it and that they should have—but Mr. De Sole admitted that it really didn’t matter to him who owned it, that he trusted Knoedler.  These seemed like minor points to me, but I suppose Schmerler didn’t want to leave any money on the table.

One of his attempts to trip up De Sole went horribly awry.  Schmerler asked De Sole about some specific language in the complaint to which De Sole replied to ask his lawyer, that he himself ‘was not a lawyer.’  Wait, said Schmerler, I thought you were a lawyer.  The counter punch was vicious.  Referring to his job at Gucci which made him rich, De Sole said “I am no longer a member of the bar.  I have been selling handbags for the past 25 years.  Very successfully I should add.  And all the handbags I sold were real.”  The courtroom cracked up, the jury was in stitches…all the tension that had built up was relieved and the energy released seemed all to flow in De Sole’s direction.  Schmerler sat down soon after.

Next up was Luke Nikas, Freedman’s attorney.  He spent a little time going over some of the same ground Schmerler did, making it clear that De Sole had never asked for any specific warranties and so forth.  He also used some questions to reinforce some of his points in his opening, such as the fact that the De Sole’s painting had been loaned to an important exhibition at the Beyeler Foundation in Switzerland (an extremely inconvenient point for the plaintiffs and for the many experts involved in that episode). 

There was some discussion about a phrase in the invoice where Knoedler said that it was verifying “good title” to the work.  Amazingly, De Sole seems to think that means that the seller owned the work.  Later questioning revealed that he actually is not clear on the concept.  “Good title” means that the work has never been stolen or hasn't any liens against it…that the owner is able to convey the property to another person without encumbrance.  It doesn’t matter if the person the buyer pays is the owner or a broker.  For such an educated man who spends vast sums on art to not know this was shocking.  Not sure who won that round, but it was really the only time I was not deeply impressed by De Sole.

At the end, Nikas asked De Sole if he was angry, and indeed, De Sole was and is.  Why?  Because they wouldn’t give it back.”  “Give what back, your money?” said Nikas.  “Yes.”  

At this point, Nikas was midway through a question when the judge interrupted him.  The question began, “Well isn’t it true that…” and, in that context, I was convinced he was about to say that Knoedler had offered to refund his money.  Remember, De Sole wants triple damages here.  Pretty much all of the other parties who made purchases of fakes from Knoedler, that have been made public, have settled.  This is the only one to have come to trial, so I assume that Knoedler offered him his money back.

At any rate, I am guessing that bringing up the possible fact that Knoedler may have offered a refund would have somehow been a legal no-no.  There was a long side-bar and Nikas ended his questions.

Freedman’s problem is that De Sole would rather spend millions of dollars on an extremely costly trial that he may well lose than simply get his money back.  Here is a guy for whom $8.4 Million is not enough to make him go away.  Again, I don’t know any of this for sure, I am just guessing.  But I assume Knoedler made him an offer which he turned down.  My feeling is that De Sole doesn’t care about the money at this point and he probably will get his $8.4 Million back anyway since there is no question that the work was fake.  No matter what happens, I think that all of the details that are coming out will damage Freedman beyond repair.  She pissed off the wrong guy.

Eugene Thaw

The legendary expert Eugene Thaw took the stand after Mr. De Sole stepped down.  As is customary, he was asked to state his profession, which he modestly gave as ‘retired art dealer’.  Calling Eugene Thaw a ‘retired art dealer’ is akin to referring to Deion Sanders as a ‘retired baseball player.’  Sanders was an excellent ball player to be sure; he led the league in triples one year and played on championship teams.  But he played two sports: when the baseball season ended, he was a star in the NFL—Sanders is the only man to have played in both the World Series and the Super Bowl.  Like ‘Neon’ Deion, Thaw is a polymath of the highest order and put up some electrifying stats.  He is a founding member of the Art Dealer’s Association, having opened his gallery in his early 20s and is, I believe, still a board member; moreover he co-authored the Jackson Pollock catalog raisonne (the reason for his visit today).  These achievements alone would comprise a career of which anyone could be proud, but only begin to describe his success.  He and his wife have donated over 400 master drawings to the Morgan Library (where he is a trustee), and there have been five (five) exhibitions of these gifts over the years,  which included artists such as Rembrandt, Piranesi, Cezanne, Picasso and so on.  For good measure, his collection of nomadic art from the Eurasian steppes was shown at the Metropolitan in 2003, and his collection of Native American art toured several museums in the US, including the Cleveland Museum and the Dallas Museum of Art.  The court seemed unaware of his stature and I wonder why the plaintiffs’ attorneys did not do more to show his prodigious connoisseurship.

Thaw seemed to have some mobility issues, but he spoke clearly and would suffer no fools.  Whenever any lawyer would show him a letter he had written and ask him to explain what it meant, he would shoot back “I cannot think of any clearer way to put it than I did in the letter you just read out loud.”  It was these letters that were the focus of his testimony.  Being a Pollock expert, two scholars, who were trying to authenticate “Pollock” works that Knoedler had for sale, approached him for his opinion.  Both Stephen Polcari and E.A. Carmean wanted him to weigh in and in two short, concise letters, Thaw demurred.  He didn’t exactly say they were inauthentic and he gave some excuses, saying he was ‘unwilling’, or ‘the committee is dissolved and I’m not really doing this sort of thing anymore’…that kind of thing. 

Freedman’s lawyer, Luke Nikas, pointed to some of these phrases and noted that Thaw never said any of the Pollocks were inauthentic in the letters.  He asked Thaw if he had ever told these two scholars that any of the works were inauthentic to which Thaw replied “No…but the language I was using meant they were wrong.”  

Here, spelled out for all to see, is the problem we all have at the moment in the art world with authentications.  Thaw made it clear to the court that he thought the paintings were fake, but he was not willing to come right out and say it.  He had to resort to nudges and winks in an attempt to convey his doubts, signals that Carmean and Polcari evidently failed to pick up on. 

Should they have known?  That is a question for the jury.  Most people I speak with in the art world think they—and Freedman—should have.  But in a legal sense, I can easily see the jury making the reasonable observation that Thaw’s letters were equivocal; their neutrality may leave enough space for Freedman to succeed in her claims, legally. 

As I understand it, there simply was no upside for Thaw to make a public statement...he would be at risk of a disparagement claim and some hefty legal bills.  He could, of course, have entered into a private agreement with Knoedler to give his opinion without such risk, but what was in it for him?  He had already used his silent dog whistle to Carmean and Polcari and it was up to them to heed it.  Thaw seemed quite disgusted that they didn’t.  It is a shame that experts like Thaw cannot speak freely in the current legal environment, a lot of grief might have been avoided.

JIM KELLY

After Thaw came the affable dealer Jim Kelly.  Kelly has a well-regarded gallery in Santa Fe, where he opened in the 1990s, but he has been on the scene longer than that.   He explained that in addition to running a gallery, he often worked as an art consultant, and that he did so for the De Soles.  Kelly referred to them as both “friends and clients” and used their first names.  He said his involvement with the current mess had to do with the De Soles asking for his figure out what the proper selling price of the painting should be.  (The painting itself is not on view, but I could see it propped up behind the screen in the courtroom).

Kelly saw the painting and was proffered the list of 10 or so experts who had supposedly praised the work and he explained that he was under the impression that “they had approved it”—meaning they had said it was authentic.  He was asked if he ever did research into provenance when he was involved in a transaction, to which he replied that when he was on the buy side, he did not…only as a seller. Anyway, he was called in to consult on price and that is what concerned him the most.  Using his network, expertise and auction records, Kelly concluded that the ask, $8.5 Million, was fair, but his clients asked him to try and get a discount.  He called Freedman and she offered $200,000, which he could ‘do with as he wished’.

It was at this point that Kelly got a little shaky.  Freedman was giving him $200,000, but he was to decide how much of that was a discount that would flow to the De Soles and how much was his commission. Kelly decided that he would take $100,000 and give the De Soles a $100,000 break.  He interrupted his testimony and went back to this bit of information and it seemed clear to me that at that time, his clients were not aware of how much he was going to make and he seemed slightly embarrassed. At any rate, this line of questioning was shut down.  The art world is full of these transactions, where principles don’t know how much the middle men make, so it’s not really that big a deal, but Kelly did seem a little delicate about all of this.  This trial is laying bare all sides of a number of transactions and nobody seems particularly happy about it.

Another interesting document is the invoice itself.  Knoedler actually invoiced Kelly, who tacked on his commission and then invoiced their daughter.  This is rather inconvenient and probably required all sorts of legal calisthenics to allow the De Soles to sue Freedman.  I don’t pretend to understand how this happened, but the complaint does refer to Kelly as their ‘agent’. 

I had to leave when the lunch recess was called, the defense was asking him about another Rothko that he had advised the De Soles to buy where a good bit more due diligence seemed to take place.

Kelly, a well-liked ADAA member, seems to be yet another person who sustained collateral damage in this case, but the De Soles seem not to blame him and I expect he will take his lumps here and move on.

Unfortunately, I won’t be able to make it in to court tomorrow, but plan on attending some sessions next week.  Stay tuned.