A Billionaire Collector Is Suing Hirschl and Adler Galleries for Allegedly Swindling Him Over the Sale of a $12 Million Presidential Painting
Former hedge-fund manager Michael Steinhardt says the gallery misled him during a consignment.
A prominent philanthropist and art collector is suing a New York gallery for allegedly misrepresenting the value of a centuries-old painting to earn itself a higher commission at his expense.
According to a complaint filed in New York County Supreme Court last week, retired billionaire hedge-fund manager Michael Steinhardt approached Hirschl & Adler Galleries in 2017 to sell a multimillion-dollar full-length portrait of George Washington. At the time, the suit alleges, the gallery said the painting was difficult to value and had no market for resale.
The two parties settled on a $10 million “net to you” contract, meaning that Steinhardt was guaranteed that much money if the painting sold, and that Hirschl & Adler was eligible to claim any profits made on top of the $10 million—except Steinhardt now says that the gallery never made that second half of provision clear to him.
A year later, the painting sold to billionaire businessman Leonard Stern for $12 million, meaning the Hirschl & Adler pocketed $2 million. Now, Steinhardt is arguing that the gallery purposely misled him to earn that robust 17 percent commission.
“The gallery lied to Mr. Steinhardt about the value of the painting and how hard it would be to sell, so they could get a hidden and exorbitant commission,” Steinhardt’s lawyer, David Shapiro, tells Artnet News.
The complaint notes that Hirschl & Adler is a member of Art Dealers Association of America, and is thus bound to the organization’s code of ethics and professional practices. One article in the code states that, “Where a net price is quoted, the member should make clear to the consignor that the member will retain any amount received from a buyer that is in excess of the net price.”
Steinhardt’s complaint takes issue with that principle. “The use of ‘net to you’ contracts in the art world is a fraud on the art owner, a breach of the gallery’s fiduciary duty to the art owner and an unethical sales practice,” his lawsuit claims, and asks for an unspecified amount of damages to be paid to Steinhardt, who was “caught in this trap.”
The gallery, for its part, claims that Steinhardt knew the conditions of the contract upon signing it.
“After one year, the gallery sold the painting for more than double what Steinhardt had paid—earning Steinhardt a 100 percent return on investment—and this greedy attempt to claw-back the gallery’s well-deserved and eminently reasonable commission is a shameless and baseless attack on one of the country’s most well-respected galleries,” Hirschl & Adler’s lawyer, Judd Grossman, countered.
The artwork at the heart of the suit, titled Munro-Lenox, was completed in 1800 by Rhode Island-based painter Gilbert Charles Stuart—one of four identical portraits the artist made of the former president. Steinhardt purchased the painting from the New York Public Library in 2006 for $5 million. It currently hangs in the lobby of Hartz Group, a real estate firm founded by Stern, in midtown Manhattan.
Steinhardt has been embroiled in legal trouble involving his art collection before. In 2018, authorities in New York seized several looted ancient artworks from his personal collection.
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