Robert De Niro Art Dealer Leigh Morse Found Guilty in New York Fraud Case

Leigh Morse, the former director of Salander-O’Reilly Galleries and once an art dealer for actor Robert De Niro, was convicted in a scheme that prosecutors said defrauded the estates of artists including painter Stuart Davis.

Morse, 55, was found guilty today by a New York jury of one count of scheming to defraud. She was found not guilty of a grand larceny count alleging the theft of $65,000 from De Niro, who testified at the trial in New York state Supreme Court in Manhattan. The jury of eight men and four women reached a decision in its fifth day of deliberations.

Prosecutors said Morse withheld information about sales to the owners of artworks so they wouldn’t demand payment and that she pocketed the $65,000 proceeds from the 2007 sale of two paintings by De Niro’s late father that the actor inherited, without the actor’s knowledge.

“Because the art industry is largely unregulated, it is particularly important to hold accountable those who fraudulently handle works of art entrusted to them,” Manhattan District Attorney Cyrus Vance Jr. said in a statement after the verdict. Morse is scheduled to be sentenced June 3.

Morse, who didn’t react when the verdict was read, remains free on $75,000 bail. She left the courtroom without answering reporters’ questions.

Photographer: Paul Goguen/Bloomberg

Leigh Morse, former director of the Salander-OReilly Galleries LLC, exits Manhattan criminal court in New York. Morse was sentenced to serve four months in jail on weekends and to make restitution of $1.65 million for defrauding the estates of artists. Close

Leigh Morse, former director of the Salander-OReilly Galleries LLC, exits Manhattan... Read More

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Photographer: Paul Goguen/Bloomberg

Leigh Morse, former director of the Salander-OReilly Galleries LLC, exits Manhattan criminal court in New York. Morse was sentenced to serve four months in jail on weekends and to make restitution of $1.65 million for defrauding the estates of artists.

Vance said in the statement that Morse sold more than 80 artworks, valued at $5 million, from four estates without notifying them. Andrew Lankler, Morse’s lawyer, had no comment after the verdict was announced.

Salander Pleads

Lawrence Salander, the gallery’s president, pleaded guilty to 30 counts of fraud and grand larceny a year ago and is serving 6 to 18 years in prison. Prosecutors said he ran a Ponzi scheme out of his Upper East Side gallery to finance spending sprees in Renaissance art and an extravagant lifestyle for him and his wife and seven children.

Witnesses at the trial included De Niro and other consignors of art, plus former employees and customers of the gallery, which was based in a rented neo-Italian limestone mansion that’s now on sale for $50 million.

Andrew Kelly, a former top assistant to Salander who pleaded guilty to fraud and grand larceny, testified for the prosecution.

Steven Harvey, who also worked at the gallery, pleaded guilty in March 2009 to falsifying business records and agreed to make restitution payments of $507,800 over three years. He didn’t testify. Nor did Salander or Morse, who now runs her own gallery.

First Class

The gallery’s inventory of art, valued at cost, quadrupled in three years to $89.3 million in January 2006, according to Maryann Cohen, a bookkeeper at the gallery. Employees flew first class and stayed in deluxe hotels, she said.

“There were limousine bills, car service, nobody took taxis,” Cohen testified. The gallery declared bankruptcy in November 2007.

Earl Davis, son of modernist artist Stuart Davis, testified that he became a close friend of Salander and “came to trust him completely.” He said he later learned the gallery had sold dozens of works by his father, who died in 1964, without informing or paying him. Prosecutors said Morse sold several of the works.

Morse was primarily a saleswoman at the gallery, Lankler said in his closing statement. Morse was owed $315,000 in back commissions when she left in mid-2007, he said. Lankler said that telling consignors about sales was Salander’s job, not Morse’s.

‘Not a Crime’

“It’s not a crime not be a hero,” Lankler said.

Morse followed a “don’t ask, don’t tell policy” to mislead consignors about sales, Assistant District Attorney Kenn Kern said in his opening statement.

Stanley Cohen, a 57-year-old juror who works for the city’s Department of Environmental Protection, said the jury agreed.

As for grand larceny, most jurors believed it was lawful for Morse to arrange that proceeds from a sale of Robert De Niro Sr. paintings be wired into her personal bank account because the gallery may have paid him later, Cohen said.

“If he’s eventually compensated, there’s no crime,” Cohen said.

Cohen said that while he wanted to convict on the charge, it was “hopeless” as most jurors were resolute to acquit.

Stan Rosenfeld, a De Niro spokesman, didn’t respond to an e-mail seeking comment.

The case is People v. Morse, 09-03581, New York State Supreme Court, New York County (Manhattan).

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

To contact the editors responsible for this story: Manuela Hoelterhoff at mhoelterhoff@bloomberg.net; Michael Hytha at mhytha@bloomberg.net.

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