What art collectors can learn from art thief Larry Salander

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Savvy collectors do more than verify the provenance of the artwork they buy: they do due diligence with the art dealer handling their purchase. Manhattan gallerist Lawrence B. Salander helped us learn that lesson.

In March 2010, Salander pleaded guilty to 30 counts of grand larceny and fraud, for stealing more than $100 million from clients and investors, including Robert De Niro and John McEnroe. Prosecutors say Salander carried out Ponzi schemes and other thefts to fund a lush lifestyle, including private jet shopping trips to Europe and a lavish party at the Frick Museum for his (then) wife. He is serving a six- to 18-year sentence in a medium-security prison 230 miles north of the two Upper East Side townhouses where he lived and worked.

Roy Lennox, a Salander victim and former senior managing director of hedge fund firm Caxton Associates, says he’s lucky to make money, but “I’ve learned that you have to work just as hard to keep it”. And that, too, is hard-won wisdom that Salander passed on to his former clients.

“The greed was overwhelming,” says Debra Force, an American art dealer who expertly witnessed another Salander victim. “It was so decadent. He became grandiose and lost sight of what his business was. Salander didn’t respond to our letter, sent to jail, asking for comment, but there are a lot of lessons here, from the dangers of doing business with “friends” in an obscure business you don’t really understand, to the ease with which art dealers who have served time in prison can continue to ply their trade.

American artist Stuart Davis in his studio. His son says convicted art dealer Lawrence Salander stole 96 of his father’s works worth more than $30 million from him.

Photo: Ralph Morse/Getty Images

“Inevitably, you find a small percentage that breaks the rules,” says Thomas C. Danziger, attorney at Danziger, Danziger & Muro. “Some of them are very good at covering up their schemes.” Salander was one of them.

SALANDER, NOW 65, HAS GROWN UP in Long Beach, Long Island, and became a third-generation antique dealer. When his father died in 1969, Salander left the University of Miami to run his father’s dealership, according to a filing in U.S. bankruptcy court. Salander opened his own outlet three years later, in Wilton, Connecticut, and soon after, a second, on Madison Avenue, adding fine art to the mix. At 27, he was the youngest elected member of the Appraisers Association of America, according to a 1977 article in the Connecticut newspaper The Hour.

Salander presented himself as a street educator-philosopher. “I think art is important,” he said in September 2007, when this reporter first interviewed him, along with fellow art market reporter Lindsay Pollock. “That’s the one thing we do that animals don’t do, that’s good.” Its Salander-O’Reilly Galleries have presented hundreds of exhibitions, many to acclaim, supplemented by works of art on loan from museums and self-published scholarly catalogues. Salander was a painter and essayist who rejected the herd mentality of the art market and championed what was unfashionable and underappreciated.

“He did some very interesting exhibitions and advanced the careers of several artists, living and past,” says Force. Salander railed against the excesses of the contemporary market. “People spend massive amounts of money on shit in the name of art,” he said. It was a message that appealed to the contrarian types on Wall Street and other sophisticated people.

But he also ensnared everyone he could. Earl Davis is the son of American artist Stuart Davis, who died in 1964. In the early 1980s, Salander introduced himself to Davis at a Christie’s auction in New York. Davis told the art dealer he wanted to create a Stuart Davis recieved catalog, a complete and annotated list of his father’s works. Salander-O’Reilly eventually came to represent the Davis estate; for two decades he provided free offices and grants for the catalog project. “His MO was to be nice to people and give them what they want, and they’ll trust you,” Davis says.

The publication of Davis’s three-volume set, by Yale University Press, coincided with the Salander-O’Reilly Gallery’s filing for bankruptcy. “No one had a clue what he was doing behind the curtain,” Davis says. We do it now: The tactics he admitted to in court included selling three half shares in the same painting and selling works without the knowledge of the owner.

Over the years, Davis came to store the majority of his collection of his father’s works at the Salander Gallery; it saved him money on insurance and storage and made it easier to arrange museum loans. Salander, who sprinkled “love” on his emails to his friend, had looted Davis’s collection, secretly dumping his father’s works. The betrayal was an irrecoverable emotional loss, Davis says, and a financial blow he estimates at more than $30 million, excluding legal fees. “If he sold one or two of my works because he had a cash flow problem, I could have lived with that,” Davis says. “But he sold 96 works, without any idea that there would be consequences. It’s inconceivable that a drug dealer would do that, because it’s professional suicide.

Art dealer Larry Salander is serving a minimum six-year prison sentence.

Photo: Paul Goguen/Bloomberg News

Meanwhile, Lennox, Caxton’s former hedge fund manager, met Salander through their children’s fashionable preschool at 92nd Street Y. (Salander has seven children from two marriages.) The dealer pointed to the men’s similar backgrounds. Lennox was born in Secaucus, NJ; his father worked in an aircraft engine factory and neither parent went to college. “He knew I came from nothing,” says Lennox, who eventually bought a home in Millbrook, NY, after touring Salander’s 66-acre lot, filled with a tennis court, swimming pool, and a baseball field.

In 2003, the glossy and gushing lifestyle magazine Robb Report named Salander-O’Reilly the best gallery in the world. That same year, Salander let Lennox participate in a seemingly large investment. The dealer claimed he was offered a landscape by 19th-century French painter Jean-Baptiste-Camille Corot for $800,000 and could return it for $1.25 million, according to an affidavit by Lennox and exhibits in the New York State Supreme Court. Since Salander was supposed to be short of cash, he asked Lennox to invest $400,000, for a guaranteed profit of $225,000 in one year. Lennox agreed and was repaid the principal plus a 56% return in 12 months.

Once hooked, Lennox accepted similar offers: $375,000 for half a 16th-century Italian sculpture, $300,000 for half a painting by Stuart Davis. When a payment was due to Lennox in 2005, Salander persuaded him to reinvest the proceeds — plus an additional $500,000 — in another “good deal,” according to court documents. Lennox was ultimately defrauded of some $3.6 million over three years, according to his court affidavit.

“I could shoot myself in the head,” Lennox says now, adding that his personal lesson is that “you don’t do business with friends in markets that you don’t fully understand.” You take someone’s word for it. If it doesn’t work, it’s your fault. »

IN THE LATEST OF THE GALLERY years, Salander made an all-in bet on European art from the 12th to 18th centuries, funded by millions of dollars from outside investors and the First Republic Bank. “There’s tremendous value in the Old Master market,” says Todd Levin, New York art adviser to the Levin Art Group. “But he wasn’t making informed, experienced decisions. It was an impending disaster.

Salander insisted that he pay off his considerable debts. It shouldn’t be. A resounding show in the Italianate Madison Avenue townhouse he rented for $183,000 a month was supposed to feature works billed as masterpieces by Titian, Botticelli and Caravaggio, but a judge of State, hearing lawsuits against the gallery, temporarily padlocked it before the night opening.

Salander’s former assistant, Leigh Morse, runs an eponymous East Side New York gallery after her conviction.

Photo: Paul Goguen/Bloomberg News

The gallery’s bankruptcy has yet to return any money to creditors, who have filed claims for nearly $300 million. Salander also failed to pay the court-ordered $115 million restitution. After being arrested but released on bail, he briefly opened a gallery in Millbrook. In prison, he reads, writes and paints, often on cereal boxes, says his friend Ron Gersten. “I think he feels a lot of relief,” says Gersten, a former Salander-O’Reilly employee who now sells art in Taos, NM. [relieved] him from a lot of stress.

Maybe so, but victims like Davis still live with the devastation. And remarkably, this saga continues. Leigh Morse, a former Salander assistant who was also found guilty of conspiring to defraud artists’ properties – by selling art without informing them – continues to run her eponymous Upper East Side gallery . Morse was sentenced in 2011 to a four-month weekend in prison and ordered to pay $1.7 million in restitution, something she failed to do beyond $84,000 at the end of March.

The month before, Judge Michael Obus, overseeing her case in New York State Supreme Court, had announced, “I don’t think she should run an art gallery. His

attorney, Ron Berutti, told the court, and again to Penta de Barronthat running a gallery is Morse’s only way to make a living, pay compensation and support her husband, who was injured in a car accident in 1991. Obus then scheduled a hearing to determine whether she can afford to pay $1.7 million and if she was diligent in trying, leaving open the possibility of further jail time.

Financial services executives with this type of record would be shut out of the industry and prevented from connecting with customers, but not in this overhyped, unregulated marketplace. Our advice to collectors: Develop a healthy level of paranoia. This will go some way to helping you avoid a Salander-type scam.

Quick Tips on Due Diligence

Find out the reputation of a potential art dealer with other experienced collectors, art advisors, museum curators and directors. Use an online lien search to identify coerced dealers, and if you leave a work in a gallery on consignment, always file a Uniform Commercial Code statement in the state where the gallery is located, clearly establishing your title on the painting. But beware: UCCs generally last for five years and must be renewed regularly.

—PB

E-mail: [email protected]

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