A New York appeals court upheld an earlier ruling affirming that former tennis star and art collector John McEnroe is the rightful owner of an Arshile Gorky painting that got caught up in the tangled business dealings of the Salander-O’Reilly Galleries. The gallery’s disgraced former owner Lawrence Salander is now serving a six-to-eight year prison term for his fraudulent business dealings, including selling shares in the same paintings to multiple parties with the promise of a gain on investment. McEnroe was one such victim (see Will Larry Salander’s Fraud Victims Get Their Money Back? and Supreme Court Declines Investor Claim for $21.6 Million From Salander-O’Reilly Swindle).

In 2004, McEnroe made a deal with Salander to buy a half-interest in two Gorky paintings, known as Pirate I and Pirate II. Unbeknownst to McEnroe, Salander had also made the same deal with a Washington, D.C.-based investor, Morton Bender. McEnroe and Bender eventually settled their claims against one another and in 2009, brought a complaint against  a third party, New York dealer Joseph Carroll, who had taken possession of Pirate II as a result of a separate deal he made with Salander.

In the March 24, 2015 decision, which was recently reported by the Courthouse News, the court cited the earlier decision of September 2013, by Manhattan Supreme Court judge Shirley Werner Kornreich, which sided with McEnroe and Bender, ruling that the sale to Carroll of the Gorky paintings by Salander was a “grossly undervalued transaction in which [Carroll] made insufficient inquiry” as to Salander’s authority to sell the work and that the price of the paintings (which were much lower than market value rate) should have raised red flags.

Larry Salander with his former wife Julie. Photo: Patrick McMullan/PatrickMcMullan.com

“The court properly determined that [McEnroe and Bender], not [Carroll], own Pirate II,” the appeals court wrote in the latest ruling. “The court properly rejected defendants’ claim that plaintiffs, who were partners with [Salander-O’Reilly Galleries], were bound by The Group’s sale of Pirate II to Caroll under New York Partnership Law. Without any evidence that [Salander] conveyed title to The Group, Carrol could not have received good title from The Group, which, defendants concede, was a non-existent entity.”

“The Group” refers to a sham entity that Salander set up, titled “The Seven Salander Children Group,” in order to shift ownership of certain works and further perpetrate his fraud (see Judge Tells Art Fraudster Leigh Morse To Get Out of the Art Business and Alleged Art Swindler Luke Brugnara Threatens Judge With Retribution).

“The sham conveyance was not in the ordinary course of the partnership’s business,” the court wrote in the latest ruling, “nor did Salander or SOG have apparent authority to bind plaintiffs.”

The decision further noted that the court considered Carroll’s remaining claims for replevin and declaratory relief, and found them them “unavailing.”