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Knoedler Gallery Accused of Selling Fake Rothko Painting

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Jan. 30 (Bloomberg) -- New York’s defunct Knoedler Gallery was sued by a Liechtenstein-based family trust, which accused the gallery of selling a forged painting by the late artist Mark Rothko for $5.5 million.

The Martin Hilti Family Trust, named for the founder of construction tool firm Hilti AG, alleged in a complaint filed yesterday in Manhattan that the gallery deliberately withheld information about the painting that would have hurt the sale.

The gallery, on East 70th Street in Manhattan, has been sued by other collectors who alleged they were duped into purchasing fakes of works by noted artists, including paintings purportedly by Rothko, Jackson Pollock and William de Kooning. Knoedler unexpectedly closed in 2011 after 165 years.

The Hilti trust alleged in its complaint that it purchased what was represented as a 1956 Rothko work“Untitled” in November 2002. The gallery and its chairman Michael Hammer and director Ann Freedman falsely described the painting as coming from a previously undiscovered cache of masterworks owned by an unknown collector, described in the complaint as “Mr. X.”

“At all relevant times, defendants knew that the Mr. X story was untrue,” lawyers for the Hilti trust said in the complaint. “Indeed, defendants privately equated Mr. X to the fictional ‘goose that laid the golden egg.’”

The gallery abruptly closed after the scheme and Freedman was asked to resign and served as a “scapegoat,” according to the complaint

“The Hilti complaint rehashes the same baseless claims contained in the prior lawsuits,” said Charles D. Schmerler, a lawyer for the gallery and Hammer, in an e-mailed statement. “We plan to aggressively litigate this case and expect to see Knoedler and Mr. Hammer fully vindicated.”

The case is The Martin Hilti Family Trust, 12-cv-0657, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Christie Smythe in Manhattan federal court at csmythe1@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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