Bernie Madoff isn’t the only Ponzi schemer on New York’s Upper East Side, at least according to prosecutors. Last Thursday, Lawrence Salander, a prominent art gallery owner, joined Madoff on that illustrious list when he was charged with bilking a slew of high-profile clients, including John McEnroe and Robert DeNiro, out of $88 million on high-priced art deals, over more than fifteen years.
Salander never fired any US Attorneys, or helped bring down the financial system — so far as we know. But we thought he was worth our attention because the charges against him are part of a surge in Ponzi cases brought by authorities since the start of the year. That uptick appears to be the result, in part, of the financial crisis, which, as in Madoff’s case, caused investors to withdraw their money en masse, leaving schemers without enough capital to keep up the charade. Call him another mini-Madoff.
The details of Salander’s alleged scam remain unclear, but he is accused of selling expensive paintings to multiple would-be buyers, promising each that he would share the works’ proceeds evenly between himself and each benefactor. But, say prosecutors, he frequently kept all proceeds for himself. According to Manhattan District Attorney Robert Morgenthau, Salander’s ultimate goal was “to finance his self-imposed mission to corner the market in Renaissance art.”
Salander certainly acted the part of the high-living art world sophisticate. For 38 years, he ran the Salander-O’Reilly Galleries, which dealt mostly in Renaissance paintings, and in 2003 was named the best art gallery in the world by a luxury art magazine. His business partner William O’Reilly left the Gallery in the mid 1990s, but Salander never changed the name.
With his wife Julie, he lived in a 66-acre property in upstate New York, routinely spent thousands on expensive jewelry at Sotheby’s, and frequently traveled on a private jet. But slouched in a hoodie sweatshirt last Thursday in New York state Supreme Court, where he was charged with 23 counts of first and second degree grand larceny, Salander’s once-fabulous lifestyle seemed a distant memory.
There had been hints this was coming. When Salander-O’Reilly filed for bankruptcy in 2007, Salander was hit with over 100 lawsuits, in which investors hoped to recoup a total of $300 million tied to the gallery.
One of those came from McEnroe, who served as an apprentice to the gallery as his tennis career was winding down in 1993. According to Bloomberg, the mercurial left-hander bought from Salander two paintings by the Armenian-born 20th century modernist Arshile Gorky for $2 million, and was promised a 50 percent interest on their sale. But Salander allegedly made the same deal on the same paintings with Morton Bender, a Washington-based developer, to nab another $2.2 million. He then sold one of the paintings to a third person, for $2.5 million and kept all the profits. (“Why sell it once when you can sell it three times?” Morgenthau asked of the operation.) When Christies’ Auction House told McEnroe that he could not move the painting because Bender had lien on it, McEnroe sued Salander, at which point New York prosecutors contacted the former tennis star.
Salander also allegedly stole nearly 50 paintings from DeNiro, all of which were painted by the actor’s father. After Salander was entrusted with the paintings, DeNiro claims in his own suit against the dealer, Salander sold them to help settle the estimated $100 million debt he was facing following the bankruptcy.
As his scheme crumbled, said prosecutors, Salander used “innuendos and bullying” to dissuade disgruntled investors from speaking to investigators. Assistant DA Micki Shulman pointed to an email to investor Earl Davis in which Salander said he would protect his gallery at all costs. “It will not be pretty but believe me Earl I don’t think you understand what you would be in for,” he wrote.
If convicted, Salander could face up to 475 years in jail.