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Three angry buyers quietly settle forgery cases with Knoedler

Six lawsuits over fake Abstract Expressionist works are ongoing while suspects in Spain face extradition

In the Abstract Expressionist forgery scandal that has shaken the art world, New York’s defunct Knoedler Gallery and its former director Ann Freedman have settled three of the ten lawsuits brought against them by angry buyers.

Since the scandal broke in 2011, they had been vigorously fighting allegations that they knowingly sold some $60m of fake paintings. Six cases against them are ongoing, as are criminal proceedings against individuals charged with creating and marketing the fakes.

Glafira Rosales, the Long Island art dealer who brought Knoedler the paintings, awaits sentencing for tax evasion and money laundering. Her companion, Jose Carlos Bergantinos Diaz, and his brother were arrested last year in Spain and face extradition to the US on criminal charges. Also under federal indictment is Pei Shen Qian, who painted the fakes and is believed to be in China.

The lawsuit against Knoedler and Freedman brought by Manny Silverman Gallery and Richard L. Feigen & Co., intermediaries in a fake Clyfford Still sale, was settled in August, and one by California collectors Martin and Sharleen Cohen over a fake Rothko was settled in July. Those settlements include Knoedler’s owner, 8-31 Holdings, and 8-31 head Michael Hammer. The third, by New York collector William Lane over a counterfeit Rothko, settled in April. The settlements’ terms are confidential. (The earliest lawsuit, by London hedge-fund manager Pierre Lagrange in 2011, was quickly settled in 2012.)

Are the recent settlements a prelude to resolving the other cases? “We continue to vigorously defend the remaining litigation,” says Charles Schmerler, the lawyer representing Knoedler, Hammer, and 8-31 Holdings. Ann Freedman’s lawyer did not respond to our enquiries.  

The prestigious gallery’s implosion “has diminished confidence in the art market as a whole”, says the art adviser Liz Klein. Another art adviser, Lisa Schiff, says it has affected the way everyone thinks about sales. “Now you have to cross all your t’s and dot all your i’s,” Schiff says.

The forgeries have also undermined confidence in experts, Klein says. The Kemper Museum of Contemporary Art in Kansas City, Missouri, and Basel’s Fondation Beyeler unknowingly displayed Knoedler fakes. Christie’s sold a fake Rothko originating with Knoedler for $2.2m and later refunded the money. “What does ‘expert’ mean any more?… Big people were duped,” Schiff says.