Photo by David Alexander Arnold

Salander-O’Reilly’s 71st Street gallery before a judge ordered it padlocked and put on a 24-hour guard.

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London Old Master dealer Clovis Whitfield, Lawrence Salander’s collaborator on the ambitious “Masterpieces of Art: Five Centuries of Painting and Sculpture,” had pulled the plug on the show and ordered the removal of the works just hours before the opening. The remarkable sidewalk scene was captured on film by a Bloomberg News photographer, who was punched by Salander’s enraged son.

“There was too much uncertainty around, and we didn’t feel secure in proceeding,” explains Whitfield, referring to the numerous lawsuits filed against Salander by former clients, landlords and creditors, including Sotheby’s. The plaintiffs are charging the charismatic and blunt-spoken dealer with acts ranging from stealing consigned paintings to creating an elaborate Ponzi scheme. Whitfield isn’t involved in any of the legal actions against Salander-O’Reilly, but, he says, “I had to look after the welfare of my pictures, my consignors’ pictures, my lenders’ pictures, and so with great regret, I decided to pull out.”

Just 10 days before, Whitfield, amiably accompanied by Salander, had welcomed this reporter into the gallery’s ornate neo–Renaissance town house, at 22 East 71st Street, to preview the exhibition, which would have been the 580th in the business’s 31-year history. The display included a roomful of loaned Caravaggios, one of which Whitfield had bought on behalf of a private client for $110,000 at Sotheby’s New York in 2001, when it was attributed to the “circle of Caravaggio.” It is now purported to be a version the artist made of his favorite picture, The Lute Player.

At the same time that the show was unraveling, tense negotiations over a court-approved agreement were under way between attorneys representing Salander and two of his major creditors: hedge fund executive Roy Lennox and Renaissance Art Investments (RAI), headed by Donald Schupak, chairman of Triumph Apparel Corporation (formerly Danskin). Lennox, a senior managing director at the $14 billion Caxton Associates, claims that Salander owes him more than $4 million from art investments he’d made through the dealer. As for RAI, which Schupak had formed with his son Andrew, it had partnered with Old Master Properties, LLC, to acquire the gallery’s inventory of Renaissance art, in a deal that required some $40 million in bank loans. Lennox would not comment, on advice from his attorney, and efforts to reach Schupak were unsuccessful.

New York State Supreme Court judge Richard Lowe III had authorized the removal of some 650 works from Salander’s celebrated holdings, as well as his world-class library of rare art volumes, as a way to settle the claims brought against the gallerist by Lennox and RAI. The library itself has been under a dark cloud since this fall, when New York–based book dealer Ursus, the source of many of Salander’s Old Master tomes, filed and then withdrew a lawsuit against the dealer claiming unpaid bills of $315,000. “I don’t want to throw away good money and valuable time over nothing,” Ursus founder Peter Krause says of dropping his suit, “because I’m convinced there’s nothing left to get except aggravation.”

Lennox was granted six pictures plus the library, with the remainder going to RAI, which immediately moved approximately 70 works to an art storage facility in Manhattan. During court proceedings on October 19, however, it became evident that more creditors would be entering the fray. In addition, RAI’s attorney, Barry Slotnick, alleged that Salander had spirited away an unknown number of the inventoried pictures, a charge that Art & Auction could not confirm. Judge Lowe ordered that the gallery’s locks be changed and that all comings and goings be monitored by his court to secure the safety of the financial records and the remaining art. He subsequently authorized the evacuation of several works uninvolved in the case, including Caravaggio’s Sleeping Cupid, which was on loan from the Indianapolis Museum of Art.

At this stage, it is unclear how Schupak and RAI's syndicate of investors will deal with the mass of unsold pictures, especially with possible bankruptcy looming for the gallery.

Also complicating matters is the hazy legal status of the hundreds of locked-down objects. As one attorney involved in an action against Salander in federal district court says, “It all depends on where all of that stuff came from.” Several lawsuits in different jurisdictions and at different stages of resolution are demanding the return of pieces that Salander alleges are part of his gallery inventory, and there are untold pending claims from dealers around the world with whom Salander has done business. A New York Old Master gallerist who is trying to secure the return of three pictures says, “He sold the same picture twice to unsuspecting dealers.”

Salander, who is widely credited by such respected colleagues as fellow New York gallerist Richard Feigen with jump-starting the now-booming market for blue-chip American modernist paintings, is also under mounting pressure to vacate the luxurious premises his business has occupied for the past two years. He has been late in paying the monthly rent of approximately $150,000, and the building’s owner, RFR Holdings, run by contemporary-art collector Aby Rosen, is threatening eviction. That is unlikely to happen anytime soon, however, since the building is enmeshed in Salander’s mounting legal issues.

Paul Rosenberg & Co., LLP, Salander’s previous landlord, at 20 East 79th Street, where the gallery was located for more than 16 years, has an ongoing suit against the gallery for back rent and more than $1 million in unpaid real estate taxes. “I’m just going along with the crowd,” says Elaine Rosenberg, the widow of the late art dealer Alexandre Rosenberg, who was the first president of the Art Dealers Association of America (ADAA). “He just doesn’t pay, not even the grocery store purveyor or the man with the van. That is bad, and that is one of the reasons why I sued him, to not let him get away with it.”

Rosenberg says that Salander had been a good tenant until about four years ago, when he became interested in selling Renaissance art and decided the 79th Street space wasn’t big enough. He leased the 22,000-square-foot 71st Street gallery in fall 2005 and, according to Rosenberg, “couldn’t afford to pay both rentals.” He let go of the smaller location a year later.

After his gallery was padlocked, Salander could not be reached for comment. But during an afternoon-long visit in early October, before the cancellation of the eagerly anticipated show, he took a few swings at his many detractors. “There’s no validity to these claims,” insisted Salander, who resigned from the ADAA this past spring after receiving written queries from the organization stemming from complaints about his business practices. He emphasized that the debts that clients are claiming are “chump change” compared with the tens of millions of dollars he made for them over the years. “These are people who I thought were some of my best friends,” he said.

Art & Auction has learned that there are more lawsuits in the pipeline, including a combined action by two estates and two living artists in the Salander-O’Reilly stable who have sold artworks and not received compensation, according to several attorneys acquainted with the situation. (Calls to those artists were not returned, nor were requests for comment from former gallery employees answered.)

Although it’s still too early to calculate the monetary damages from Salander’s activities, the publicity surrounding the scandal has already sounded alarms in the art-dealing world, where transactions are largely finalized with nothing more than a handshake. “Our community of art professionals does not benefit from such news any more than the business community benefits from the news of insider trading,” says ADAA president Roland Augustine, of New York’s Luhring Augustine. “On the other hand, one man’s behavior and violation of the trust of his clients should not be any barometer of the character of many serious and ethically grounded art dealers who serve their clients responsibly every day of the year.”

Another worry among dealers in the wake of the Salander contretemps is that collectors might start choosing auction houses over galleries when consigning works. “That’s a concern we have all the time,” says Paul Gray, of the Richard Gray Gallery in Chicago and New York. “Credibility is a huge part of any business’s assets, and it’s something that can evaporate rather quickly when you don’t take care of it. It certainly doesn’t help when one of our colleagues, especially one who is well-known and generally respected, is accused of wrongdoing.”

In trying to untangle the puzzling accumulation of problems facing the once incredibly successful gallery, an established New York art dealer familiar with Salander’s long history says, “It seems as if he went from being a real connoisseur of American modern pictures and knowing the field cold to believing in his own eye in the Old Masters field, one that he had very little experience in.” A noted museum curator concurs: “You can’t just wander into a new field and make your own attributions of everything and expect to be successful.”

As for Salander, he seemed in October to be in shock over his avalanche of legal problems. “In all of my 58 years, I’ve never been sued [before January of this year]. I never even set foot in a courtroom.” Pausing for a moment, he added, “I’m getting the shit kicked out of me, and it’s not fun.”

"The Reporter: Lock, Stock and Caravaggio" comes to ARTINFO from the December 2007 issue of Art & Auction magazine.