Artemus, the art leasing company founded by investor and collector Asher Edelman, is suing Paul Kasmin Gallery for allegedly creating false documents in connection with the sale of a mixed-media work by Frank Stella, La Scienza della Fiacca, 3.5X (1984).
The lawsuit, filed in New York Supreme Court in July, reveals that the Stella work was part of a larger $3.4 million art transaction between Artemus and art dealer Anatole Shagalov and his gallery Nature Morte in 2016. Unbeknownst to Artemus, Kasmin still owned a 40 percent interest in the Stella work, a detail that the lawsuit claims was not disclosed by Shagalov at the time of the sale.
Artemus goes on to allege that Kasmin “created and backdated false invoices” at Shagalov’s request and provided a resale certificate to Shagalov, suggesting that the gallery was aware of his intent to sell the work to a third party. These documents ultimately caused “substantial financial harm, including out-of-pocket expenses” for Artemus, according to the complaint.
Kasmin is now moving to dismiss the lawsuit. “The gallery does not have any dealings with Asher Edelman or his art-lending business,” read a statement from the gallery. “It has been pulled into a dispute regarding a transaction in which it was not involved,” it says.
In its motion, Kasmin Gallery denies that there is any evidence of an intent to defraud. The gallery “is a complete stranger to Artemus—it was not a party to the multimillion dollar financing transaction at issue in the other litigation and had no communications with Artemus.”
Installation view of “Frank Stella: Shape as Form” at Paul Kasmin Gallery with Mosport (1982), right; and La Scienza della Fiacca, 3.5 X (1984), left. ©2015 Frank Stella. Photo courtesy of Paul Kasmin Gallery.
La Scienza was included in Kasmin’s exhibition “Frank Stella: Shape as Form” in the fall of 2015. The gallery described it at the time as “a masterwork that was illustrated in the monograph from the artist’s 1987 mid-career retrospective at the Museum of Modern Art.”
In August 2014, Shagalov purchased a 60 percent share of the Stella painting for $430,000 from Kasmin. The invoices later provided to Artemus, dated August 20, 2014, indicated that Shagalov had acquired the full title to the work in exchange for that amount. But in reality, he would have had to pay another $168,000 before owning the work outright.
“Artemus thereby was fraudulently induced to purchase something considerably less valuable than what it bargained for,” the complaint says.
But Kasmin argues that La Scienza—and the $168,000 portion that still belonged to the gallery—accounts for a minimal percentage of the overall $3.4 million transaction between Artemus and Shagalov, which was valued at $6.6 million total. (This was a typical financing transaction for the company, which purchases art for about 50 percent of its value as part of the lease arrangement.)
“Even without La Scienza, the loan was more than fully collateralized,” the motion to dismiss says. “Therefore Artemus cannot plausibly allege” that they wouldn’t have gone forward with the deal had they known of Kasmin’s stake in the painting.
Anatole Shagalov. Photo by Max Rapp, ©Patrick McMullan.
The sale to Artemus was finalized in April 2016, and included a second work by Stella, as well as works by Joseph Cornell and Keith Haring. Shagalov then leased La Scienza and the other works back from the company.
Shagalov’s lawyer, Neil Saltzman, told the Art Newspaper that when his client sold La Scienza to Artemus, Kasmin “had no ownership interest whatsoever in the Stella work, and it was not in their physical possession.”
Jim Walden, who represents Artemus, challenges this claim. “The documentary evidence is unequivocal: the Kasmin Gallery owned 40 percent of La Scienza at the same time they were helping Shagalov cover it up,” he told artnet News in an email. “Shagalov’s droning narrative that ‘Kasmin didn’t own any of it’ is a bare-faced lie.”
Asher Edelman. Photo courtesy of Patrick McMullan.
In July 2016, Kasmin began pursuing Shagalov for the 40 percent owed on La Scienza with a creditor. Artemus found out, told Shagalov that he was in breach of their agreement, and began selling the works that were held in collateral as part of their deal. In response, Shagalov filed a separate suit against Artemus in 2017.
Artemus is now holding Kasmin responsible for those legal fees. Kasmin, meanwhile, claims that Artemus is responsible for them since it chose to continue trying to sell Shagalov’s works even after he and Kasmin revealed that they were resolving their dispute over the remaining 40 percent ownership of the painting.
A hearing is scheduled for September 11.