Knoedler Scandal Head Fake, NY Times Swallows the Bait

By James Grundvig
James Grundvig
James Grundvig
James Grundvig is a former contributor to Epoch Times and the author of “Master Manipulator: The Explosive True Story of Fraud, Embezzlement and Government Betrayal at the CDC.” He lives and works in New York City.
August 30, 2013 Updated: April 24, 2016

The MO of Preet Bharara, the United States Attorney in the Southern District of Manhattan, has been to go whale and elephant hunting. Catch the big game. He hasn’t been dubbed “The Sheriff of Wall Street” for nothing. But Bharara, who has quite the batting average in taking down the big guys in high profile cases, prosecutes from the bottom up to the top, even though he knows conspiracies start from the top down.

That’s why it was interesting to read the New York Times parrot piece (8-20-13) regurgitate news fed to its’ journalist William K. Rashbaum from the U.S. Attorney’s office, updating the $80 million art forgery case at the shuttered Knoedler Gallery.

The article focused on the low end of the racketeering food chain: two bottom and one mid tier player. The Chinese art forger was Pei-Shen Qian, “a struggling 73-year-old Chinese artist who came to the United States in 1981,” as the Time wrote; Glafira Rosales, an obscure Long Island art dealer, who (not so) came out of thin air with missing masterworks; and her shady boyfriend and business partner in Jose Carlos Bergantiños Diaz, an art dealer no one ever heard of, but one who has been rumored to dabble in the dark art of forgery.

For the record: one month ago Preet Bharara’s office indicted Ms. Rosales on being the front for the paintings that were sold to Knoedler Gallery for more than $30 million, and then flipped for $80 million to wealthy investors. The profits were huge. In total, 63 fake paintings were listed as produced and laundered. They included iconic names of Jackson Pollock, Mark Rothko, and Robert Motherwell, but they had an “odious” air about them.

They were the supposed “missing masterpieces” from a private collection of a wealthy Mexican—Ms. Rosales’ heritage—who lived in Switzerland. The private collector was unknown. In reality, he never existed.

The next problem that shadowed the paintings was they had no provenance, or chain-of-ownership audit trail that showed them coming from the original artists to the private collector. Add to that hole in the story none of the artworks were listed in any of the late painters’ catalogue raisonné, and the odor goes from bad to worse.

During the initial indictment, Preet Bharara labeled Glafira Rosales “the artful dodger.”

At her July bail hearing, Rosales was denied bail; she was clearly a “flight risk” having made more than $12 million in profit. Her charges were of the simple sort, easy to prove in court, tax evasion—right out of the Al Capone playbook. That allowed Mr. Bharara’s to show her future of confinement in the U.S. prison system and force her to cut a plea deal.

Why then was she set free on bail a month later? Why would the prosecutor not challenge the “flight risk,” who posted bail of $2.5 million, if they didn’t get her to point the finger up the conspiracy ladder?

In a phone call with Julie Bolcer, the Public Affairs Specialist for the U.S. Attorney’s office, she confirmed Ms. Rosales next court appearance will be held on October 1 at 10:00 am.

‘Gray Lady’ Down

The bigger issue with the Times piece was its lack of introspection and examination of the facts. If Glafira Rosales was the top chief of the conspiracy, in the Bernie Madoff role, would the feds have ever let her walk at the new bail hearing? This after she was jackpotted with additional indictments, finally relating to art forgery? Absolutely not.

So why then was Ms. Rosales set free on bail?

Obviously, she not only copped a plea, but she sang like canary ready to fly from her cage. Did Rosales point the finger below her to the lowly and underpaid Chinese art forger? Probably. But to think a “struggling painter” was the mastermind behind one of the great art fraud heists of the century, duping one wealthy investor after another would be novel.

Clearly, Ms. Rosales, whose name and pseudonyms couldn’t be found in the U.S. Bureau of Prison system database when I checked after her indictment in July, that wiping of a federal database indicated larger forces were at work behind the scenes. That alone told this author that she must have been singing early and often to cut a deal to post bail. If she sang about the bigger fish in the food chain, the money people, the movers and shakers, it wouldn’t be about the Chinese painter or her MIA boyfriend, whose whereabouts are unknown. Try Mexico.

So who are the big names that weren’t mentioned in the Times article, “Prosecutors are Contemplating more Arrests in $80 Million Art Fraud Case?” No one, apparently.

Why didn’t Rashbaum mention the names of billionaire Michael Armand Hammer, who owned the storied Knoedler Gallery and is a philanthropist, who has ties to Occidental Petroleum, a company founded by his grandfather Armand Hammer; or the art investor and Canadian theater magnate David Mirvish; or the fired president of Knoedler in Ann Freedman?

It defies logic on two counts. One, Rosales would never have been set free on bail if she was the ultimate target of the federal probe, which includes the FBI’s special task force on art crimes that was setup in 2004—a decade after the forgeries hit the market. Two, the trio of big names have been targeted in more than one civil lawsuit stemming from the fraud, which no longer is alleged.

From more than one art expert I met, they said no way the “cleaning lady”—in looks and appearance in Rosales—was the brains behind “one of the most audacious art frauds in recent memory,” as the Times story opened.

What does that mean for Mirvish and Freedman, who share the same defense attorney in Nicholas Gravante, Jr., of Boise, Schiller & Flexner? When Preet Bharara goes forward with criminal indictments against them—and he will—under no circumstance will he allow them to be represented by the same lawyer.

The Whales of Wall Street

Look at Preet Bharara’s incredible winning streak in harpooning the whales of Wall Street. His office recently took down Fabrice Tourre of Goldman Sachs with the Securities Exchange Commission. How about his estimated $10 to $12 billion clawback of the Bernie Madoff Trustee resolution he called a “game changer?” What about the conviction of Raj Rajaratnam of Galleon Group on insider trading? Ditto for fellow Indian-American in Rajat Gupta. Now he’s gunning for the blue whale in Steven A. Cohen of SAC Capital.

Has Bharara learned how to play the press since telegraphing his target in Cohen? You bet. By putting the bulls-eye on Cohen, he was ridiculed for aiming high, announcing his target to the world, but then only taking down an underling at SAC Capital on insider trading. Perhaps Mr. Cohen isn’t laughing now that Mr. Bharara wiped the fabulous smile off Fab Tourre and his stellar defense team, the best big money could buy, with a conviction.

Preet Bharara is a court room killer. He reminds me of Rudy Giuliani cleaning up the Den of Thieves of Wall Street in the 1980s. A liberal Giuliani. An apt analogy for someone who is not finished cleaning up the great economic heist in the 2008 fixed income crash.

The whales in the Knoedler scandal are Hammer and Mirvish, while Freedman is the elephant. After she was fired from Knoedler Gallery in 2009 by Michael Hammer, she had the nerve to launch a new gallery in the Upper Eastside—Freedman Art Gallery at 25 East 73rd Street—just three blocks away from the venerable house she burned to the ground with the lack of vetting and due diligence on Ms. Rosales “odious” paintings. She had worked at the gallery for close to forty years. As a supposed art expert playing the naive defense card will be a losing strategy if Freedman faces off against Preet Bharara in court.

Ann Freedman didn’t respond to questions I emailed her that read:

Since the Knoedler Gallery funneled more than a dozen alleged fakes through your old gallery on your watch, what authentication controls did you have in place to ensure the artworks were authentic?  

What kind of controls are place today at the Freedman Gallery to ensure that a repeat of fakes don’t flow through your space?

The last question is critical. She has an upcoming schedule this fall that includes a show with Adelson Galleries in Boston, if she is not in jail by that time.

Why would Adelson Galleries do a joint exhibit with one of the main targets in the great art conspiracy in decades? Why associate yourself with Freedman’s baggage and swelling litigation? Adelson’s phone lines must be tapped like that of Ann Freedman. To think the FBI is not watching them, with “more arrests” on the way, would be really naïve.

Glafira Rosales’ lawyer didn’t return calls for comment.

David Mirvish dictated to his executive assistant in an email request for an interview: “Thank you for your inquiry. There are a number of civil cases and a criminal case before the courts that are currently pending. I don’t think it appropriate for me to make comment at this time.”

There will be more court cases to come. 

Pollock Shock and the CSI of Art

For art forgery to work, the artist must be dead so he can’t spot a fake. Take the abstract expressionist Jackson Pollock, who died in 1956. Last year, the Knoedler Gallery was shutdown for having a “forged” Pollock. There’s one problem with copying his work. Pollock used lead-based paints that were banned in the 1970s.

Another problem with Pollock: “The whites are no longer whites, they are now yellow, due to aging,” said a top art restorer and a watchdog to the New York City auction houses when I met him at his studio. “There are two ways to detect fakes. The good ones can spot the odious crap right away. If it’s a period piece, you flip over the painting and check the frame and canvas to see if it’s an original from that time period,” he explained.

He took a black light and ran it over a painting to show how pigments age and change color. “Today, forgers copy a work of art and coat it with polyurethane. They add dirt to it. They try to age it with paints and varnishes that dry cracked,” he said.

Like an arms race, it’s becoming harder to keep up with the technology to identify forgeries. And yet, it’s technology that can show the Chinese art forger used modern paints, pigments, and chemicals that are half as old as the artworks he faked.

Another art historian told me, “Paints, chemicals, and pigments evolve over time. The chemicals used in the early 1990s for Knoedler Gallery’s Pollock knockoffs were of more recent vintage, i.e. soft acrylics. Pollock used types of lead-based paints circa 1947-1955, in particular house and automotive paints that were not available anymore. Lead paint takes a long time to dry. It smells. Acetone moves lead paint, while xylene and toluene move acrylic. The latter two are not supposed to make a 65-year-old work by Pollock move. That’s where the Knoedler Gallery’s examples failed.”

He said all Ann Freedman had to do at the Knoedler Gallery when she first came in contact with the fake Pollock was “test it with acetone on a Q-tip (the fakes melt).”

But Freedman is from a different era of art, of backroom deals; she has no CSI or the use of technology in her veins.

If she did, she wouldn’t be wearing the bulls-eye of Preet Bharara’s next big target.

James Grundvig
James Grundvig
James Grundvig is a former contributor to Epoch Times and the author of “Master Manipulator: The Explosive True Story of Fraud, Embezzlement and Government Betrayal at the CDC.” He lives and works in New York City.