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New York's art world was shocked when the city's oldest gallery closed its doors more than four years ago. A few days later, the Knoedler and Company gallery was accused of selling paintings that, had now admits, were forgeries. The gallery and its former president face several lawsuits by angry collectors. The first trial began this week. And as NPR's Joel Rose reports, the case offers an inside look at how art dealers balance principal and profit.
JOEL ROSE, BYLINE: The paintings definitely looked like masterpieces by Jackson Pollock, Willem de Kooning and other prominent abstract expressionists. They weren't, but the forgeries were good enough to fool experts and to command prices into the millions of dollars each. Even Ann Freedman, the president of the gallery that sold the paintings, says she was duped. Luke Nikas is her lawyer.
LUKE NIKAS: Ann Freedman believed in these paintings. She showed them to the whole art world, she showed them to experts, and she has piles and piles of letters from all of these experts informing her that the works are real.
ROSE: Nikas says Freedman even bought some of the paintings for her own personal collection. But the plaintiffs in this case and other pending lawsuits say Freedman overlooked glaring problems with the paintings' backstories. Knoedler bought them from a woman named Glafira Rosales, who pleaded guilty to fraud and money laundering charges in 2013. According to Freedman, Rosales told an elaborate story involving a European collector known only as Mr. X, who bought the paintings with cash in the 1950s when he was having an affair with an assistant at two top galleries in New York.
AMY ADLER: It's quite a tale, and people bought it.
ROSE: Amy Adler teaches art law at New York University.
ADLER: I suppose the temptation would be there not just for buyers but, yes, even for sellers to think that they'd happened upon these magnificent, undisclosed masterpieces.
ROSE: In the end, Rosales admitted to selling Knoedler 40 counterfeit paintings over more than a decade. The plaintiffs argued that Freedman knew, or at least should've known, that something was amiss. It's hardly the first time an art dealer has been accused of deliberately looking the other way.
KEN PERENYI: From over 30 years' experience with art dealers, I would say there most certainly are individuals out there in the trade that will turn a blind eye.
ROSE: Ken Perenyi is a professional art forger. He wrote about his career in the book "Caveat Emptor." Perenyi says he faked thousands of 18th and 19th-century paintings and sold them to auction houses and art dealers over his three-decade career.
PERENYI: In my experience, I've seen paintings of mine turn up in dealers' catalogs that they had to know about it, and they chose to buy it and sell it anyway.
ROSE: Still, it surprised everyone that a blue-chip gallery like Knoedler would get caught peddling fakes. The gallery had been in business since before the Civil War. Even other art dealers relied on its good name. Richard Feigen is a prominent dealer on the Upper East Side. He helped broker a sale involving one of the Knoedler forgeries but gave his commission back when the work turned out to be fake. Feigen says it's a reminder to art dealers not to cut corners.
RICHARD FEIGEN: I think it will cause people to be much more careful because even a name as old as Knoedler is no guarantee, obviously, that you can be sure of.
ROSE: The Knoedler affair should also be a wake-up call to buyers, says Amy Adler at NYU School of Law.
ADLER: Yeah, a lot of these people were very sophisticated businesspeople. They'd made a lot of money. But they bought art based on sort of magical, romantic stories. It's the kind of transaction they would never would've engaged in had it been a regular business deal.
ROSE: But, Adler says fakes are getting better. And as the price of art has climbed, fewer experts are willing to make public judgments about a work's authenticity because they're afraid of getting sued. That can be very expensive. Just ask Ann Freedman's lawyer, Luke Nikas, standing outside a federal courthouse in Manhattan.
NIKAS: The bigger the dollar amount, the bigger the mistake in the end if you get it wrong. If this had been a painting that was purchased for $5,000, it wouldn't be here in the southern district in New York. This would be over.
ROSE: But it was purchased for more than $8 million by a collector who thought it was painted by Mark Rothko. The trial is expected to last several more weeks, and Freedman's lawyer says she will take the stand in her own defense. Joel Rose, NPR News, New York.