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Asher Edelman’s art lending company Artemus sues Paul Kasmin gallery over ‘false invoices’ in sale of Frank Stella painting

The gallery says it has been “pulled into a dispute regarding a transaction in which it was not involved”

Asher Edelman, co-founder of Artemus © Patrick McMullan

Artemus, the art leasing company co-founded by Asher Edelman, is suing Paul Kasmin gallery in the New York Supreme Court, claiming the firm “created and backdated false invoices” that Artemus relied on in the purchase of a Frank Stella painting in 2016.

In its complaint, Artemus contends that when it purchased the painting from the dealer Anatole Shagalov, the fact that Paul Kasmin gallery still retained a 40% share in the work was disguised. Artemus says that the gallery created two invoices backdated to 2014, which “falsely represented” that Kasmin had sold Stella’s La Scienza della Fiacca (1984) in its entirety to Shagalov for $430,000. Whereas, according to court documents, Shagalov had to pay at least another $168,000 to Kasmin to obtain the full title.

Artemus accuses Kasmin of creating the invoices in conjunction with Shagalov, who sold La Scienza to Edelman’s company as part of a $3.4m financing transaction, which also included a second work by Stella, a work by Joseph Cornell and one by Keith Haring. The company operates a model whereby it purchases works of art for around 50% of their retail value and leases them back to the owner—a form of “art financing”. Artemus claims the allegedly falsified invoices led it to enter into the deal.

In a statement, Paul Kasmin gallery says “it does not have any dealings with Asher Edelman or his art lending business. The gallery has been pulled into a dispute regarding a transaction in which it was not involved”.

Shagalov is not party to this fresh lawsuit, but he sued Edelman in the same court last August after Edelman sold some of the $3.4m portfolio to recuperate unpaid lease fees; Shagalov contested his right to do so. In a counterclaim, Edelman accused Shagalov of falsifying the same invoices at the centre of the new action, which Shagalov categorically denied.

Shagalov’s lawyer Neil Saltzman says that at the time Shagalov entered into the transaction with Edelman, Paul Kasmin gallery “had no ownership interest whatsoever in the Stella work, and it was not in their physical possession”.

Paul Kasmin gallery is seeking to dismiss the new complaint, brought to light this week by the Baer Faxt newsletter, saying Artemus is suing to recover the legal fees incurred defending the lawsuit brought by Shagalov. But, as Kasmin’s lawyer Amelia Brankov points out in the court papers, those proceedings only began after Edelman tried to sell works that were part of the financing deal, which Kasmin was not party to.

Brankov says Artemus has also failed to show that Paul Kasmin gallery intended to defraud the art lending firm. The “self-serving, unsupported and unspecified allegations fall far short of what the law requires in order to state a claim for fraud”, according to the court papers. The next hearing is scheduled for 11 September.