Knoedler Fraud Sentencing Sends Out Mixed Messages To Our Unregulated Industry

The Knoedler & Co. gallery fraud case which involved selling $80m/£63m of fake Abstract Expressionist artworks, to unknowing collectors, seems to be edging to a lenient closure. The corrupt dealer Glafira Rosales has got off lightly!  Let me refresh your memories, Rosales worked alongside her boyfriend and a Chinese artist (who produced the fakes) she was central to the scam. She somehow managed to consign the paintings to the oldest established gallery in New York, the Knoedler Gallery, under the management of Ann Freedman. Freedman has always denied any part in the plot to defraud, even though the sale of the fake works of art accounted for the lion’s share of the profits made at the gallery, over a ten year period.  Slippery Freedman has never been charged. 

Glafira Rosales entered a guilty plea to the lesser charges of wire fraud, money laundering, and tax evasion in 2013, for which she served three months in jail. The court this time around seemed to be more interested in the fact that she used her car to transport fake masterpieces by Motherwell, Pollock, and Rothko to the gallery. She has been subsequently sentenced to nine months house arrest and three years probation for her part in the fraud. She had entered a guilty plea to charges of wire fraud, money laundering, and tax evasion.

“I apologize to you, to my daughter, to my family, to my friends, and to all those affected”, Rosales said through tears

“I’m not putting you back in jail,” Judge Katherine Polk Failla told Rosales Tuesday afternoon at United States District Court for the Southern District of New York in Lower Manhattan. “There would be no purpose served in putting you back in jail.” In deciding the sentence, she said, she heavily weighed Rosales’ testimony that she was coerced into the crime and that she cooperated with the authorities after her arrest.

Lawyer, Bryan Skarlatos of Kostelanetz & Fink, argued, Rosales boyfriend and the father of her daughter, José Carlos Bergantiños Diaz, coerced her into the scam and threatened her before fleeing to Spain. He also threatened her life after absconding Skarlatos said.

“Your concern for her would exactly motivate what you did,” said the judge in explaining her leniency, saying that the mutual concern between mother and daughter had become clear to her only by seeing them together in the courtroom.

Rosales has claimed that Diaz planned the entire fraudulent enterprise and threatened her life in order to keep her from backing out of the plan, according to the New York Post. Skarlatos also pointed out that Rosales was raised by an abusive father, making her vulnerable to Diaz’s abuses, another factor Failla said factored into her decision to depart from sentencing guidelines that would have allowed a sentence ranging from twelve and a half to fifteen years.

“I apologise to you, to my daughter, to my family, to my friends, and to all those affected” by her crime, Rosales said through tears. “I’ve had many hardships but none of that excuses what I have done. I am truly, truly sorry. I have no words … I’m so sorry.”

Diaz was arrested in Spain in 2014. Two years later, Spain’s national court turned down attempts to extradite him and his brother Jesus Angel Bergantiños Diaz to the US, as the latest filing notes.

The painter he hired, Pei-Shen Qian a former market trader on Canal St, created the fakes and even misspelled some of the artist’s names when signing them, was also named in the US Justice Department’s indictment. He fled to China.

The sentencing letter, filed on January 17, claims that Diaz created the plan when he was no longer able to work as an art dealer because “people in the art world began to question the authenticity of the works he was offering. Rosales “found herself working as a busgirl in a restaurant, struggling to live on a minimal salary and barely able to pay her medical expenses was press-ganged into the fraud. Skarlatos noted that he was representing Rosales pro bono.

Ann Freedman, the gallery’s former director, has settled several multimillion dollar compensation cases, including that of Collectors Eleanore and Domenico De Sole, a lawsuit against the gallery was filed in February 2016, after a years-long legal action over a fake Rothko painting which cost $8.4 million. The London Hedge fund manager Pierre LaGrange was also stung by the gallery. He sued over a fake Pollock which he had paid $17 million for. There have been nine lawsuits against Freedman and the gallery. Several are still outstanding. It is difficult to prove outside of a criminal court that Ms. Freedman was knowingly involved in this fraud. Hopefully, charges will eventually be brought against her but in the meantime,  Ms. Freedman, a so-called ‘art expert’, who let her clients down in fundamental ways, will hopefully never work in the art industry again.


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