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Salander Gallery Is Locked Up as Judge Schedules New Hearing

By Philip Boroff

Oct. 18 (Bloomberg) -- A New York state judge ordered Salander-O'Reilly Galleries locked up until a hearing tomorrow, placing in doubt an agreement reached earlier this week with two creditors and allowing other claimants against the embattled art dealer Lawrence Salander to come forward.

New York State Supreme Court Judge Richard Lowe made his ruling yesterday in a telephone conference with lawyers. Salander, 58, and Salander-O'Reilly Galleries are accused in lawsuits of defrauding customers and business partners and failing to pay more than $30 million in debt.

``The judge wants to hear from people because he's concerned there are more claimants out there,'' said Stuart Slotnick, a lawyer with Buchanan Ingersoll & Rooney who represents New York investor Donald Schupak and participated in the telephone conference.

In the tentative agreement reached Oct. 15, Schupak was to have received 642 artworks. Roy Lennox, a senior managing director of hedge fund company Caxton Associates, was to have gotten a half-dozen pieces and Salander's library of rare books.

The judge ordered Salander's gallery to remain closed and secured for the rest of the week, Slotnick said. By court order, private security guards are conducting 24-hour surveillance of the gallery, paid for by Salander.

David Mollon, a Winston & Strawn partner who represents Salander, declined to comment. So did Lennox's lawyer, Howard Rubin of Davis & Gilbert.

Yesterday, Salander canceled what would have been the opening of his last exhibition after London-based dealer Clovis Whitfield removed about half of the artworks planned for display. That followed four days when the gallery was locked under an earlier order from Lowe.

Hundreds of people were turned away from the planned Oct. 16 opening of ``Masterpieces of Art'' and ``Caravaggio,'' according to a security guard who was there.

``The Caravaggio show has been postponed,'' a notice taped that night to the door at Salander-O'Reilly's townhouse said.

By yesterday, the notice was gone.

To contact the writer of this story: Philip Boroff in New York at pboroff@bloomberg.net.

Last Updated: October 18, 2007 00:03 EDT

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