Michael Hammer Added to Knoedler Gallery Fraud Lawsuit

Michael Hammer, chairman of New York’s defunct Knoedler Gallery, was sued by a fashion executive and his wife over a fake Mark Rothko.

Hammer “reaped tens of millions of dollars” “and took no steps to stop the fraud,” Domenico De Sole, chairman of Tom Ford International, and Eleanore De Sole said in their amended complaint filed in Manhattan federal court. Hammer and Glafira Rosales, a dealer in Sands Point on New York’s Long Island who consigned artworks to Knoedler, were among four new defendants in the complaint.

The lawsuit was originally filed on March 28 and amended last week. It’s one of three against Knoedler and its former director, Ann Freedman, by collectors claiming the gallery sold counterfeits. The plaintiffs are seeking combined damages of more than $70 million.

Charles David Schmerler, a lawyer for Hammer, didn’t return a call yesterday seeking comment on the suit. A call and e-mail to the Carpinteria, California-based Armand Hammer Foundation, where Michael Hammer is listed as president, chairman and chief executive, also weren’t returned.

‘Fake’ Pollock

Knoedler was founded in 1846 and closed on Nov. 30, 2011. The gallery shut its doors a day after it received a consultant’s report concluding that a $17 million Jackson Pollock it sold was a fake, according to court papers. Samples of paint recovered from the painting weren’t available until years after Pollock died, according to a suit filed by the buyer, hedge-fund executive Pierre Lagrange.

Photographer:Chris Warde-Jones/Bloomberg

Domenico de Sole, chairman of Tom Ford International. The fashion executive and his wife Eleanore sued Michael Hammer, chairman of Knoedler Gallery. Close

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Photographer:Chris Warde-Jones/Bloomberg

Domenico de Sole, chairman of Tom Ford International. The fashion executive and his wife Eleanore sued Michael Hammer, chairman of Knoedler Gallery.

The other new defendants in the De Sole case are Jaime Andrade, a former Knoedler employee who, according to the suit, introduced Rosales to the gallery, and Jose Carlos Bergantinos Diaz, who is described in court papers as Rosales’s companion and business partner. Their lawyers didn’t return calls seeking comment on the suit.

Knoedler sold “Untitled, 1956” for $8.3 million in December 2004 to the De Soles, the Hilton Head, South Carolina- based couple said in their complaint. Freedman told them an unnamed Swiss collector bought it directly from Rothko, and because the collector died, Knoedler was selling on behalf of his son, according to the complaint.

“The sales pitch, while convincing, was a scam,” the De Soles said in the complaint.

The gallery bought it from Rosales a year earlier for $950,000, and relied on her word about its previous ownership, the complaint said.

‘Inconsistent’ Technique

After the gallery closed, the De Soles’ lawyers hired a forensic conservator to investigate the work’s authenticity. The report found that its marks and composition were “inconsistent with Rothko’s technique,” according to court papers.

Freedman testified in December at a hearing about the Lagrange suit that Rosales had said her works were from a private collector who wished to remain anonymous.

“Do you know that these paintings weren’t painted by Mr. Diaz in Mrs. Rosales’s garage?” asked John Cahill, a lawyer representing Lagrange, who bought the painting he believed was by Pollock. Lagrange co-founded GLG Partners, Inc., a London- based hedge-fund firm.

“I have every reason to believe that these works are authentic and painted by the hand of the artist in each individual case,” responded Freedman, who left the gallery in 2009 after 32 years and now runs FreedmanArt in New York.

Lost Money

Freedman’s lawyer, Nicholas Gravante, said in an interview that the complaint against her is “wholly without merit, factually and legally.” Steven Kartagener, a lawyer for Rosales, said in the December hearing that Rosales “comes before the court maintaining that she’s not done anything wrong.”

Knoedler was purchased by Armand Hammer, the former chief executive of Occidental Petroleum Corp. (OXY) and Michael Hammer’s grandfather, in 1971. The gallery lost almost $4 million in 2009 and 2010, and its closing was under consideration for about a year, Michael Hammer said in a December declaration filed in the Lagrange case.

Hammer earned $295,000 in 2011 at the Armand Hammer Foundation, according to its tax return. His career includes corporate finance at the now-defunct investment bank Kidder Peabody & Co., positions at Occidental, film production, and founding, in the Cayman Islands, Grace Christian Academy and a nonprofit Christian radio station.

Another Complaint

His son Armie is an actor who played both Winklevoss twins in the 2010 movie “The Social Network,” about Facebook Inc. (FB)

Michael Hammer is among the defendants in a July 2012 suit filed by John Howard, chief executive of Irving Place Capital, concerning an artwork for which Howard paid $4 million. Freedman and Knoedler said it was by Willem de Kooning, the complaint said.

“The work is a forgery,” Howard said in his complaint.

At the December hearing, Matthew Dontzin, who represents Lagrange, cited a “federal grand jury investigation into the sale of forged works.” The lawyer said the U.S. Attorney’s office sent a subpoena requesting information about sales and purchases involving Freedman and Knoedler. Freedman is cooperating with the investigation, Gravante, her lawyer, said in court.

Ellen Davis, a spokesman for U.S. Attorney Preet Bharara in Manhattan, declined to comment on whether the office is investigating.

The case is De Sole v. Knoedler Gallery, 12-cv-2313, U.S. District Court, Southern District of New York, (Manhattan). The others are Lagrange v. Knoedler Gallery LLC, 11-CIV-8757, U.S. District Court, Southern District of New York (Manhattan), and Howard v. Freedman, 12-cv-05263, U.S. District Court, Southern District of New York (Manhattan).

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

To contact the editor responsible for this story: Manuela Hoelterhoff in New York at mhoelterhoff@bloomberg.net.

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