A New York collector reached an out-of-court settlement with the now defunct and discredited Knoedler Gallery. The gallery closed in 2011 amid a multi-million dollar forgery scandal.

The case brought against Knoedler and former gallery director and president Ann Freedman was one of two lawsuits against the gallery that was due to go to a Manhattan federal court in January.

According to the Art Newspaper, on Wednesday Freedman and Knoedler’s owners, 3-81 Holdings, informed the court that they reached a confidential settlement with collector John Howard, who spent $4 million on a fake Willem de Kooning painting from the once-revered gallery in 2007.

Howard’s lawyer John Cahill told the Wall Street Journal that his client was pleased that all parties were able to resolve the case.

Howard sued Knoedler and Freedman in 2012, seeking over $4.5 million in damages and accusing the defendants of fraud. He alleged that they were liable under the federal RICO law [Racketeer Influenced and Corrupt Organizations Act] which triples a plaintiff’s damages. The settlement, therefore, means that the defendants dodged a potential $12 million liability.

Former Knoedler Gallery president and director Ann Freedman has always maintained her innocence.
Photo: Patrick McMullen

Freedman has always maintained her innocence, claiming she was swindled into acquiring the works by art dealer Glafira Rosales, who pleaded guilty to fraud in 2013 and is currently awaiting sentencing.

According to court documents Freedman’s lawyers said the former director “believed in the works, sought opinions from experts around the world, exposed the works to critical eyes at every opportunity, and even purchased works for her own art collection.”

Freedman and Knoedler always maintained that the accusers should have conducted their own due diligence before purchasing the works.

Collector Domenico de Sole, who is now chairman of Sotheby’s board, is suing over a Mark Rothko painting that turned out to be fake.
Photo: Courtesy of Sothebys.com

A separate suit, brought against Freedman and Knoedler by Sotheby’s executive Domenico de Sole in 2012 over a fake $8.3 million Mark Rothko painting, will still go ahead. That trial is scheduled to begin on January 25.

De Sole’s attorney Gregory Clarick said “We are confident that the jury will find that Freedman and Knoedler engaged in a decade-long conspiracy to profit from the sale of fake paintings and will award our clients a full recovery.”