Leopold Pays $19 Million to Keep Schiele’s ‘Wally’

"Portrait of Wally" (1912) by Egon Schiele. The Leopold Museum in Vienna paid $19 million in a settlement, ending a decades-long dispute between the museum and the heirs of Jewish art dealer, Lea Bondi Jaray. Source: Leopold Museum via Bloomberg

Austria’s Leopold Museum paid $19 million to the heirs of the Jewish art dealer Lea Bondi Jaray to settle a decades-long dispute over Egon Schiele’s portrait of his lover Wally, stolen by the Nazis in the 1930s.

A U.S. district attorney seized “Wally” in 1998 on suspicion that it was stolen after the painting had been on exhibition at New York’s Museum of Modern Art. For the past 12 years, the dispute has been enmeshed in the U.S. court system and was about to go to trial in Manhattan on July 26.

“Justice has been served,” representatives of Bondi’s estate, who were not identified by name, said in an e-mailed statement sent by their lawyers, Herrick, Feinstein LLP. “After more than 70 years, the wrongs suffered by Lea Bondi Jaray are at last being acknowledged, and to some degree, corrected.”

The “Wally” case pitted the U.S. government against the Vienna museum founded by the Austrian optician and art collector Rudolf Leopold in 1994. The portrait’s tortuous journey through the U.S. courts came to symbolize the legal complexities of Nazi-era restitution claims. The year it was seized, 44 countries came together to draft international guidelines for the return of looted art known as the Washington Principles.

Death of Leopold

Leopold died on June 29 at the age of 85, leaving behind several unresolved claims for artworks in his foundation’s collection. The museum has 44 Schiele paintings and 180 works on paper, the biggest collection of the artist worldwide.

“The Leopold Museum is very pleased that this long-lasting case in New York has ended with a settlement with which all parties are satisfied,” the museum said by e-mail. “We look forward to the happy return of “Wally” to Vienna.”

Yet waiting this long to settle the claim may have cost the museum: The painting was valued at more than $2 million in 2002. Since then, new records have been set for Schiele works: The highest price paid at auction was $22.4 million for “Houses With Mountains” at Christie’s in New York in 2006, according to the Artnet price database.

The museum’s legal costs alone have mounted to as much as 3.5 million euros ($4.5 million), Peter Weinhaeupl, the managing director of the museum, told a press conference today in Vienna.

The Leopold Foundation will finance the purchase by selling paintings, Weinhaeupl said. Before his death, Leopold selected a group of works that may be sold to buy “Wally,” Weinhaeupl said. The list is under review and the art will be sold gradually, he said.

“Believe me, it is a difficult process to give something away, but to save ‘Wally,’ we decided on this,” he said.

Muse and Model

Schiele painted the portrait in 1912, a year after he met the 17-year-old Wally Neuzil, who became his muse, model and lover. He painted his “Self-Portrait With Chinese Lantern Plant,” which hangs in the Leopold Museum, at the same time. The museum hung the two portraits alongside each other until “Wally” was seized.

Schiele portrayed her with wide blue eyes, auburn hair and a pale complexion. When he married Edith Harms in 1915, Schiele wanted to maintain his relationship with Wally. Yet Wally left him at once. Klaus Pokorny, a spokesman for the museum, said in a telephone interview that she later enlisted as a nurse in World War I and died of fever in Croatia in 1917.

Lea Bondi was the owner of an art gallery in Vienna and acquired the painting some time before 1925, according to U.S. court documents. Although she sometimes exhibited it, the work hung mostly in her own apartment. She began negotiating the sale of her art gallery in 1937 to a Nazi called Friedrich Welz. They failed to reach an agreement.

When German troops occupied Austria in 1938, Bondi’s gallery was earmarked as “non-Aryan” and therefore subject to confiscation. Bondi sold it to Welz and then emigrated to Britain with her husband in 1939.

Bureaucratic Accident

Welz also took “Wally.” The U.S. government said in court that he seized it from her under duress with no compensation, while the Leopold Museum contended that it was included in the gallery sale and that Welz paid 200 reichsmarks for it. Chief Judge Loretta Preska ruled last year in the federal court in Manhattan that the painting was stolen from Bondi.

After World War II, U.S. occupying forces arrested and detained Welz for two years and seized his property, including art. The U.S. returned several works to the Austrian government for restitution to the rightful owners. Among those was “Wally.” Yet in a bureaucratic slip-up, it was restituted to the heirs of another Schiele collector who had been expropriated by Welz. They sold the collection to Vienna’s Belvedere museum.

In 1949, Bondi regained possession of her gallery, though not of “Wally.” She met Leopold and sold several works to him in London. She also asked him to help her recover “Wally.” Yet Leopold acquired it himself in 1954 though a swap for another Schiele painting with the Belvedere.

Seizure of ‘Wally’

Bondi died in 1969 without retrieving “Wally.” The portrait was shipped to the U.S. for an exhibition at New York’s Museum of Modern Art in 1997. Three days after the exhibition ended, Manhattan District Attorney Robert Morgenthau issued a subpoena for the painting. The State Court of Appeals ruled in 1999 that the seizure of an artwork loaned for exhibition was prohibited under New York State law.

The U.S. government then began a civil forfeiture action in New York and the painting was seized again, this time by the Customs Service. Bondi’s heirs asserted a claim to the painting and it was agreed that if the case was won, the government would hand it to the heirs.

Show in New York

Under the terms of the agreement reached late yesterday, the U.S. government dismisses its action against the Leopold Museum, the heirs drop their claim to the painting, and the portrait will be displayed in the museum with a sign detailing its full provenance, including Bondi’s former ownership, the statement said. Before “Wally” returns to Vienna, it will be exhibited at the Museum of Jewish Heritage in New York, according to the heirs’ lawyers.

It may not be the only artwork the Leopold Museum has to relinquish. Earlier this month, Austrian Culture Minister Claudia Schmied handed the museum a report from a government panel of independent researchers that found four further paintings, including one by Schiele, should be restituted to the heirs of prewar owners.

(Catherine Hickley writes for Muse, the arts and leisure section of Bloomberg News.)

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