Knoedler Masterworks Forgery Case Sees Action in the Southern District of New York

On October 9, Judge Gardephe in the Southern District of New York ruled on motions for summary judgment in an action stemming from the infamous Knoedler forgery case. From 1994 until 2009, an independent dealer Glafira Rosales provided Knoedler Gallery – through Knoedler’s director of contemporary art Ann Freedman – with 32 forgeries of prominent modern artists. Among the fake works sold to now-disgruntled collectors were alleged “masterworks” by Pollock, Rothko, and Motherwell. The case has involved multiple lawsuits, three of which have settled to date.

The current suit has been brought by two plaintiff-purchasers De Sole and Howard against the gallery, the gallery’s owner (and his holding company), Ann Freedman, and Glafira Rosales, who admitted to selling the fake works and pled guilty in a criminal case against her. On October 9th, Judge Gardephe ruled that there were material issues of fact on several of the claims and denied in part a motion for summary judgment. Most interestingly, Gardephe dismissed the motion on claims of fraud and fraudulent concealment against Knoedler and Freedman, as well as RICO claims against those same defendants. Judge Gardephe found that there was ample circumstantial evidence to indicate Freedman satisfied the scienter requirement for fraud, a “mental state embracing intent to deceive, manipulate, or defraud.” He cited evidence such as fabricated stories of provenance, efforts to devise a “cover” story for a mystery seller, and Freedman’s demonstrated doubt as to the authenticity of other works sold by Rosales.

With respect to the required element of reliance in order to demonstrate fraud, the “Court [could not] conclude—as a matter of law—that Plaintiffs’ alleged sophistication and experience rendered them unreasonable in relying on Freedman and Knoedler’s representations concerning the paintings.” Judge Gardephe pointed to multiple representations – written and oral – made by Knoedler and Freedman regarding the authenticity of the works, and a general presumption against deciding the issue of reliance as a question of law.

The case will proceed to trial in January.

De Sole v. Knoedler Gallery, LLC, No. 12 Civ. 2313, 2015 WL 5918458 (S.D.N.Y. Oct. 9, 2015). Graham Bowley, Lawsuits in Knoedler Forgery Case Are Set for Trial, N.Y. TIMES, Oct. 12, 2015, at C1.