Sunday, October 28, 2007

"The art business used to be one where people would shake hands and pictures would go out for millions of dollars and everybody got paid"

James Barron and Patrick McGeehan have a story in tomorrow's New York Times on "the widening legal and financial crisis that has made [Salander-O’Reilly Galleries] the talk of the art world." They give emphasis to two factors in particular: (1) the $154,000 a month rent for the East 71st gallery space and (2) Salander's recent attempt to "expand beyond his long-established niche" -- i.e., "to show and sell old masters after years of specializing in 20th-century American art." The result is by now well-known:

"Salander is facing a tangle of lawsuits from angry collectors who say he and Salander-O’Reilly defrauded its customers and business partners. The lawsuits accuse him of falling millions of dollars behind on obligations like the rent and the payments he had promised the well-connected people who invested in paintings with him. One lawsuit described the gallery as 'nothing more than a Ponzi scheme.' Some artists’ estates say the gallery sold consigned paintings without their permission for less than the paintings were worth, and never paid them. Some artists’ relatives say they have discovered works entrusted to Salander-O’Reilly in other galleries or museums. The Manhattan district attorney’s office says it has been reviewing complaints about Salander-O’Reilly, and at least one artist’s family has gone to the police."

The article closes by connecting this "tumble" with the recent Berry-Hill Galleries bankrupcty:

"To some dealers, Salander-O’Reilly’s problems bring to mind a scandal that rocked the art world in 2005 and culminated in a bankruptcy filing by another East Side gallery, the Berry-Hill Galleries. ... Ian Peck, the chief executive of a firm that arranges financing for dealers and collectors and that was Berry-Hill’s lead lender, suggested that the Berry-Hill bankruptcy and the Salander-O’Reilly situation point up the pitfalls of the art market, in which it can be hard to figure out who owns a painting, much less what it is really worth."