Grossman LLP | Former Knoedler Director Ann Freedman Reaches Another Settlement
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  • Former Knoedler Director Ann Freedman Reaches Another Settlement
    This blog—like the rest of the art world—has closely followed the legal developments that continue to unfold in the wake of the Knoedler scandal, which exploded in 2011 when one of New York’s oldest art galleries closed following revelations that it had sold dozens of artworks (over the course more than a decade, in deals totaling about $60 million)—purported to be by Rothko, Pollock, Motherwell, and other famed Abstract Expressionists—that later turned out to be forgeries.  As is more fully discussed in our earlier posts, the works all came to Knoedler through a Long Island art dealer, Glafira Rosales, who claimed to represent an anonymous collector selling his father’s collection of previously-unknown masterpieces.  But the anonymous seller was a total fiction, and the works were actually created for Rosales by a little-known artist in Queens (who has since fled the country).

    Since the scandal broke, nearly a dozen collectors have initiated civil suits in connection with the counterfeit artworks they bought.  Defendants in these suits have included not only the gallery itself, but its parent company; the owner of the parent company, Michael Hammer; the gallery’s former director, Ann Freedman; gallery employee Jaime Andrade; Rosales and her co-conspirators; and even, in one case, an art expert who had weighed in on one of the pieces.  Most of the  legal claims are grounded in a theory that the Knoedler-affiliated parties must have, or at least should have, known the works were forged, although Freedman has maintained that she too was an unknowing victim of Rosales’s scheme.  Several of the civil cases have ended in settlements; most recently, as we wrote in February, one of the cases settled after three weeks of trial just before Freedman and Hammer were scheduled to take the stand.

    This month, it was reported that Ann Freedman has now reached a settlement with another swindled collector: casino owner Frank Fertitta III, who sued in 2014 over a “Rothko” he bought from Knoedler.  See Docket No. 14-CV-2259 (S.D.N.Y.).  On October 14, the parties filed a stipulation dismissing all Fertitta’s claims against Freedman individually.  The other defendants—including the gallery, Hammer, and Rothko expert Oliver Wick, who had assured Fertitta about the work’s authenticity—still remain in the case for now.

    Meanwhile, at least two other lawsuits (besides Fertitta’s) remain in court.  One is by the Martin Hilti Family Trust, an entity based in Lichtenstein that bought a “Rothko” from Knoedler.  See Docket No. 13-cv-00657-PGG-HBP (S.D.N.Y.).  The other is by California collector Frances White, who bought a fake “Pollock.”  See Docket No. 13-cv-001193-PGG-HBP (S.D.N.Y.).  Most of the claims in these cases have already survived various motions to dismiss, and the parties are now wrapping up fact discovery, with expert discovery to follow.  We’ll be monitoring further developments in the Knoedler story, which remains a major focus of discussion throughout the art world, even as new forgery scandals continue to emerge.