NYC art gallery owner charged in $88 million theft

NEW YORK (AP) – The owner of a now-closed Manhattan art gallery with a star-studded clientele is being portrayed as a thief who stole $88 million from art owners, a bank, and investors, including tennis great John McEnroe.

Lawrence B. Salander used the money to try to corner the Renaissance art market and to support an extravagant lifestyle that included private jet travel, a lavish party for his wife at New York’s Frick Collection museum, and the purchase and maintenance of his Manhattan town house and a 66-acre estate, Manhattan District Attorney Robert Morgenthau has alleged.

Morgenthau said Salander defrauded a total of 26 victims in two primary ways:

In one, he sold artwork not owned by him and kept the money. The district attorney said Salander sometimes sold a piece of art owned by someone else several times.

“Why sell it just once when you can sell it three times?” Morgenthau said.

In the other, Morgenthau said, Salander lured investors into bogus or nonexistent “ghost” investment opportunities. He said this was the scheme Salander used to bilk McEnroe out of more than $2 million.

Morgenthau announced last Thursday that a 100-count indictment names Salander and his Salander-O’Reilly Galleries LLC on charges that include grand larceny, securities fraud and forgery.

Salander was arrested Thursday morning at his home in Millbrook, New York. He was arraigned in Manhattan’s state Supreme Court and held on $1 million bail. Justice Michael Obus set April 8 as his next court date. Salander faces up to 25 years in prison if convicted of first-degree grand larceny.

Defense attorney Charles Ross said he expected Salander to make bail and be released by Friday. He said his client “pleaded not guilty to every charge and we’re going to vigorously defend against every allegation in court.”

Prosecutor Micki Shulman said during arraignment that the investigation is continuing and that Salander’s thefts could eventually total $100 million.

The gallery, established in 1976, had advertised works by artists ranging from 19th century master Gustave Courbet to Armenian-born American abstract expressionist Arshile Gorky to Robert De Niro Sr., the actor’s late father.

The criminal investigation began in October 2007 after allegations arose that the gallery was stealing its wealthy clients’ art and money. Soon afterward, a state judge in Manhattan halted sales and ordered the gallery’s contents seized.

That order left art owners and their lawyers clamoring for pieces that are still being held. Prosecutors said Thursday that 4,000 works from the gallery are in the custody of federal bankruptcy authorities in Poughkeepsie.

The crimes charged in the indictment occurred between July 1994 and November 2007, Morgenthau said.

Shulman told Justice Michael Obus that in late 2006 into 2007, even as Salander’s clients begged for their art and money, he was buying his wife $500,000 worth of jewelry, paying $150,000 for a family trip by private jet to Europe, and paying $67,000 for a family trip by private jet to California.

Morgenthau said the biggest loss was suffered by Renaissance Art Investors which paid Salander $42 million for 328 Renaissance period art works. He said the next biggest loss of $6.7 million was sustained by Earl Davis, son of artist Stuart Davis, whose 96 paintings were consigned to Salander for sale.

In McEnroe’s case, Salander sold the tennis star a half-interest in an Arshile Gorky painting and said they would split profits when the painting was sold to someone else, Shulman said.

McEnroe later learned the painting was on someone’s wall, but Salander had not reported the sale or any profits to him, Shulman said. When McEnroe confronted Salander, the gallery owner gave him a half interest in another Gorky painting.

McEnroe lost that painting after he gave it to Christie’s for an exhibit and the auction house refused to return it, Shulman said. She said officials there told him someone else had claimed the painting and put a lien on it.

McEnroe does not currently have a civil lawsuit pending against Salander, according to his lawyer, Philip R. Schatz.

Of Salander’s indictment, Schatz said, “I’m really not surprised.”

Copyright 2009 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

AP-CS-03-26-09 1744EDT