Art Dealer Salander Faces State Jail Term After Bankruptcy Sale

Lawrence Salander, who once sold Old Masters from a lavish Manhattan gallery, faces years pacing the few feet of a prison cell.

The New York dealer is scheduled to be sentenced for his multimillion-dollar fraud on Aug. 3 -- seven years after his Upper East Side gallery was named the world’s No. 1 by the Robb Report, a luxury chronicler.

New York State Judge Michael Obus said he may sentence the 61-year-old to as much as 18 years in a state prison. That is not good news for the former Old Master dealer, who used to divide his time between his Manhattan mansion two blocks from the Metropolitan Museum of Art and a 66-acre enclave in Millbrook, New York.

William Maher, a state court judge in Peekskill, New York, said in a telephone interview that white-collar criminals in the know prefer to do time in federal prisons.

“In state prisons, the population is generally people who committed violent crimes,” Maher said. “And I hear the food is better in federal prisons. That’s the rumor.”

If Salander is indeed sentenced to six to 18 years, he’d have to serve six before being eligible for parole.

“The length of the sentence would dictate a medium- or maximum-security prison,” said Ted Poretz of the law firm Ellenoff Grossman & Schole LLP. “But the nature of the crime dictates less. My guess is he will go to someplace intermediate.”

Salander was arrested in March 2009 and pleaded guilty in March 2010 to stealing $120 million from clients and investors such as John McEnroe and Robert De Niro. In his last years in business, Salander operated out of an Italianate mansion on East 71st Street with a base rent of $154,000 a month.

Taking Advantage

Some of his victims are incredulous that he remains free, four months after he admitted to selling artworks he didn’t own while failing to remit proceeds, among other crimes.

“They feel he’s been taking advantage of the system since his guilty plea,” said Lawrence Sunden, whose Harrington Park, New Jersey, graphic design company filed a claim in bankruptcy court that it’s owed $933,000 by the defunct Salander-O’Reilly Galleries.

Before the guilty plea, Salander’s criminal lawyer, Charles Ross, requested that the dealer have a chance to raise restitution for victims. That Salander hasn’t raised anything isn’t surprising to Micki Shulman, a Manhattan assistant district attorney. She noted in court on June 23 that earlier efforts to enlist a friend to buy back property Salander forfeited in his personal bankruptcy case also came to naught.

Lottery Tickets

“He’s unable to give us anything more concrete about his ability to produce restitution than he would about his ability to win the lottery,” she said. “He can, literally, come in here with lottery tickets and say he’s trying. That doesn’t count.”

In May, Salander met with the gallery’s lawyers and art adviser to discuss art that was recovered. The aim was to help creditors maximize the art’s value. Ross said Salander was prepared for further meetings.

Shulman described the first and only meeting as a “wild goose chase.”

“He had no concrete information about where he bought it, who his art experts were, how he authenticated these objects,” she said.

Alan Jacobs, the liquidating trustee of the gallery, confirmed Shulman’s account.

“He didn’t provide useful information or helpful responses to our questions,” he said in an e-mail.

Latest Auction

On July 24, carpets, old English and American furniture, first-edition books plus artworks that Salander himself created that were taken from his Millbrook country home go on the block.

The auction, at Stair Galleries in Hudson, New York, will be at least the sixth Salander sale since he and his Salander- O’Reilly declared bankruptcy in November 2007.

No one will confuse the Stair sale with an evening auction at Sotheby’s in Manhattan. Most of the approximately 240 items have a high estimate of less than $1,000. Exceptions include: a mahogany sofa, for as much as $2,000; a Chippendale mahogany bureau for $5,000; and a Steinway baby grand piano for $4,000.

In May, Stair raised about $472,000 selling furniture and carpets seized from the Upper East Side townhouse where Salander lived.

Colin Stair, president of Stair, said the July 24 items are “one or two tiers” below what was recovered from the Manhattan townhouse -- but desirable nonetheless.

“People thought Larry had trouble paying for things, but he had a very good eye.”

Some 2,400 artworks recovered from the gallery remain unsold, as does the Millbrook property, with a price of $4.5 million. Thomas Genova, the trustee overseeing the personal bankruptcy case, said he will seek to lower the asking price of the property to about $3 million to entice buyers.

The case is People v. Salander, 03581/2009, New York State Supreme Court (Manhattan).

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

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