Art law Controversies News USA

Arrested dealer’s property may be turned over to the tax man

A lawyer for Glafira Rosales says the criminal case against her could leave her unable to pay out in any civil cases if she is found liable

Glafira Rosales and her lawyer, Anastasios Sarikas. Photo: Yelena Tylkina

The federal criminal case against the art dealer Glafira Rosales will likely bankrupt her if convicted, according to the lawyer who is representing her in several civil cases. “All her property will most likely be seized to satisfy the tax man,” says Anastasios Sarikas. Rosales would then have nothing left to pay out to plaintiffs should she be found liable in the civil suits, he says.

On 21 May, Rosales was arrested on criminal charges of evading taxes on what Manhattan US Attorney’s office described as “millions of dollars in income from dealing in fake artworks for fake clients”. The government says that Rosales evaded taxes on art she sold Knoedler and another gallery and hid the proceeds in bank accounts in Spain. It also says that “some” of those works “have been conclusively determined… not to be by the hand of the artists that Rosales represented”. Rosales’ criminal lawyer, Steven Kartagener, did not respond to inquiries but told the New York Times that Rosales “intends to defend herself [against the criminal charges]… and is confident that when all the facts become known she will be vindicated”.

The government’s complaint cannot be used as evidence in the five civil suits against her, says the lawyer Gregory Clarick. He is representing the collectors Domenico and Eleonore De Sole in a suit in which they say they paid $8.3m for an allegedly forged Rothko. In another case, the collector John Howard says he paid $4m for an allegedly fake work by Willem de Kooning.

In pre-trial testimony in both these cases, Rosales invoked her Fifth Amendment right not to answer questions on the grounds that they may incriminate her. Her civil lawyer says Rosales would also plead the Fifth if called to testify in the other suits. This means that when those cases go to trial, the jury can presume she answered those questions in a way that is contrary to her interests or favorable to her opponents, Sarikas explains. “It’s devastating for the case against her,” says Clarick.

The civil lawsuits also name the now defunct Knoedler gallery, which sold some of the disputed works and closed in 2011, and the gallery’s former director Ann Freedman. Rosales, Freedman, and Knoedler have each consistently denied they knowingly sold fakes.

The lawyer for Knoedler, Charles Schmerler says the gallery “will continue to assist the authorities”. Rosales’ arrest “does not affect our core positions… in the litigations”, he adds. Freedman’s lawyer, Nicholas Gravante, says the government’s allegations “are not harmful [to Freedman] except from a public relations perspective… The court says if the plaintiffs can’t prove the works are fake, they don’t have a case. We have our experts, [the plaintiffs] have theirs”.

Some of the defendants’ lawyers say that at least some Rosales works could be forgeries. “It could be that some were fake and some were real,” says Gravante. “If they are fake, then Freedman was a victim.” Rosales’ lawyer Sarikas says that “even if the art was fake, the government would still be hard-pressed to prove she knowingly and intentionally sold fakes,” noting that the US Attorney’s charges are for tax evasion not selling forgeries. “It may turn out Rosales is the biggest victim,” Sarikas says.

“It’s too soon to know the significance of the Rosales arrest because we haven’t seen the full scope of the government’s investigation,” says an attorney who practices in the field, who requested to remain anonymous. “There is clearly more coming.”

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