New York art gallery, Sotheby's chairman settle fake Rothko case

Wed Feb 10, 2016 6:27pm EST
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By Nate Raymond

NEW YORK (Reuters) - Knoedler & Co, which before closing in 2011 was New York City's oldest art gallery, has agreed to settle a lawsuit over an $8.3 million sale of a fake Rothko painting, just as its ex-president was preparing to testify at trial.

The deal, confirmed on Wednesday by lawyers in the case, resolved the remaining claims in a closely watched trial in Manhattan federal court in a lawsuit brought by Sotheby's Chairman Domenico De Sole and his wife, Eleanore.

The settlement with the De Soles, who were seeking $25 million in damages, came after the collectors reached a separate agreement on Sunday with Ann Freedman, Knoedler's former president.

Freedman was expected to testify on Tuesday as the case moved forward against Knoedler, but the trial was abruptly halted due to what U.S. District Judge Paul Gardephe called "unexpected developments."

Terms of both settlements were not disclosed. Charles Schmerler, a lawyer for Knoedler and a related company, 8-31 Holdings Inc, said he was pleased a settlement was reached in light of Freedman's agreement.

Gregory Clarick, a lawyer for the De Soles, said they were not surprised by the settlement given evidence introduced at trial that he said showed Freedman and Knoedler lied to collectors to sell fakes.

"The outcome -- including that the true facts are finally on the table -- is exactly as we hoped and expected," he said in a statement.

The De Soles sued Knoedler and Freedman in 2013 after prosecutors brought charges against an art dealer, Glafira Rosales, for participating in a scheme to sell fakes to galleries.   Continued...