Since dealer Leigh Morse was convicted of fraud four years ago, she’s complained that her professional reputation has suffered and hurt her ability to repay artist estates victimized by her former employer, Salander-O’Reilly Galleries. State Supreme Court Judge Michael Obus yesterday offered a solution.

Morse’s soiled reputation is “well deserved,” Obus said in a hearing in lower Manhattan. “I don’t think she should be running an art gallery.”

Obus said he was frustrated by the slow pace that Morse, 58, has paid her court-ordered restitution. Now the owner of Leigh Morse Fine Arts, on the Upper East Side, she’s made $22,000 in payments, according to Assistant District Attorney Kenn Kern. She owes $1 million, a total that’s increasing by $346,000 annually until it reaches $1.7 million.

“It has been the same song and dance by the defendant with no sense of urgency,” Kern said in court.

Morse has resisted the DA’s request to sell residences she owns on the Upper West Side and in Mount Bethel, Pennsylvania. She also owns art, which Obus said she’s used as collateral for loans. “She was expected to sell whatever could be sold as promptly as possible,” the judge said. Added Kern: “Sell, sell, sell,” he said. “That’s all that needs to happen.”

One of New York’s Largest Art Frauds

The court machinations are the latest delay in the glacial resolution of one of the biggest art frauds in New York history. The 2007 bankruptcies of the gallery and proprietor Lawrence Salander generated millions of dollars in fees for bankruptcy professionals and returned art to victims but no cash. Salander, 65, is serving a six-to-18-year sentence at Mid-State Correctional Facility. He owes $115 million in restitution.

Ronald Berutti, Morse’s new lawyer and at least the third attorney to represent her in criminal court, said she expects to to pay about $200,000 of restitution in the next 45 days. Obus scheduled the next hearing for March 20. She served four months of Saturday nights in jail and Obus raised the possibility of “re-sentencing” her to more time or adding to her five years of probation.

“I expect there will be a substantial sum made available for victims,” Obus said yesterday. “The more that can be done in this direction the better it is for Mrs. Morse.”

Berutti declined to comment outside the courtroom, as did Michael Lee Hertzberg, who represents Earl Davis, the son of modernist artist Stuart Davis. Earl Davis saw much of his collection of his father’s artwork looted by the gallery and is entitled to $1 million of restitution in the case.

For more coverage of this news story, see Judge Tells Leigh Morse Get Ready To Pay $1.7 Million Salander Restitution and Judge Threatens to Put Convicted Dealer Leigh Morse Behind Bars Again.