Portrait of Wally case settled for $19m

Less than a week before trial, the United States government, the Estate of Lea Bondi Jaray and the Leopold Museum of Vienna agreed that the Leopold Foundation will pay the Bondi heirs to keep the painting

Parties in one of the longest-running Nazi looted art cases in the US settled the dispute today, in an agreement reached less than a week before trial. The United States government, the Estate of Lea Bondi Jaray and the Leopold Museum of Vienna agreed that the Leopold Foundation will pay the Bondi estate $19 million to keep the painting, which the United States had sought to confiscate as Nazi-looted art illegally imported into the country. The work, Portrait of Wally by Egon Schiele, was seized by federal authorities in 1999, after a failed attempt by New York authorities to investigate its status as stolen art. The work had been sent to New York in 1997 for a loan show.

Trial was scheduled to start in the case in Manhattan federal district court on 26 July. The work was stolen from Jaray, a Jewish art dealer and collector, by a Nazi agent in the late 1930’s in Vienna, as Jaray prepared to flee Nazi-controlled Vienna.

Under the settlement agreement, the Jaray estate will release its claim to the work and the government will dismiss its forfeiture action. The settlement was approved by US District Judge Loretta Preska.

The Leopold Museum also agreed that it will permanently display signage next to the painting, both on its premises and at any other venue where the museum allows the work to travel, detailing the painting’s Nazi-looted history. The label will include a statement that, “based on the evidence presented in the case”, the federal court in New York concluded in 2009 that the painting had been Jaray’s personal property, and that Friedrich Welz, a member and collaborator of the Nazi party, stole it from her in Vienna in the late 1930s.

Before the work goes back to the Leopold in Vienna, it will be publicly exhibited at the Museum of Jewish Heritage in New York.

The work had been Jaray’s personal property and not part of her business or art dealership. But using pressure as she prepared to flee, Nazi art dealer Frierich Welz obtained the painting from Jaray, after he had “aryanized” her art dealership under Nazi laws that allowed the transfer of property from Jews to non-Jews, generally Nazis or Nazi sympathizers, at token prices. The Nazi, Friedrich Welz, had not aryanized Jaray’s personal property. Jaray died in London in 1969, but never recovered the painting.

In 2009, Judge Preska ruled that based on evidence in the case, the painting had been Jaray’s personal property and that Welz, a member and collaborator of the Nazi party, stole it.

Announcing the settlement, representatives of the Jaray estate said: “Justice has been served. Finally, after more than 70 years, the wrongs suffered by Lea Bondi Jaray are at last being acknowledged and, to some degree, corrected.”

The public display of the painting in New York, and the signage agreed to by the Leopold, will place the painting in a setting which memorializes the sufferings of the holocaust and ensures that the public is always told the real story of the work’s Nazi theft, they said.

The 1912 portrait depicts Valerie Neuzil, the artist’s primary model and his lover for about four years. After World War II, Schiele became one of the most prominent 20th-century Austrian artists.

At the end of the war, US armed forces returned the painting to the Austrian government to be restituted to its proper owner, but the portrait ended up at the Austrian National Gallery (ANG). According to the US confiscation suit, in 1953, Dr Rudolph Leopold, an Austrian collector of works by Schiele, learned from Jaray that her painting was at the ANG, but rather than helping her retrieve it as he told her he would, Leopold obtained it for himself. Jaray’s effort to recover the work from Leopold did not succeed in her lifetime, and the work passed with Leopold’s other art to the Leopold Museum in 1994.

The sole issue left for trial was whether the Leopold Museum could prove that Dr Leopold did not know the painting was stolen when it entered the US for the 1997 loan show. This would have required overturning evidence by the US that he did.

The federal prosecutor for Manhattan, US Attorney Preet Bharara, said the settlement was “another small step towards justice” for WWII property crime victims, and gave hope to others who lost “property and art to Nazi theft.” The director of US Immigration and Customs Enforcement, John T. Morton, said that the case had “caused those who deal in art to be extremely vigilant about works caught up in the holocaust.” The litigation over the “Wally” painting brought major changes in how the art world deals with art that could have changed hands in Europe in the Nazi era.

In a strongly worded statement dated 21 July, signed by Dr Diethard Leopold for the board of directors, the foundation disavowed any wrongdoing by Dr Leopold, and criticised the Austrian government’s actions in the case. The statement said that Dr Leopold’s death before Wally was returned added “an additional bitter aspect” to the painting’s long history. Each side had continued to believe that it would win, the statement said, adding that Dr Leopold had “always believed” he was “in the right” but initiated settlement negotiations because his strength was failing.

The statement said that from the beginning, Dr Leopold had desired a settlement, which would have cost only $2m in 1998, but that Austrian government representatives on the Leopold board had urged him to approve a legal battle instead, which ultimately cost “over twice” that much. The Leopold “has gone to the absolute limits of its financial possibilities” in agreeing to the settlement, and the Austrian government’s failure to participate remained “a discordant note” which will affect the foundation’s relationship with the government “for some time,” the statement said. The government should have borne “some of the costs of the legal battle,” which it explicitly recommended, the statement added.

The foundation said that it would act “out of its moral responsibility to do justice to the history of Austria and of its Jewish citizens,” and would take steps to reach settlements that satisfy both sides. Other works in the museum’s collection are also alleged to be Nazi loot. But the foundation also said that it had a duty to “ensure for the Republic of Austria that important artworks remain accessible to the general public.”

Updated with a comment from the Leopold Foundation

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