HERE’S HOW YOU GET AWAY WITH TOTAL FRAUD-SEE THE UPDATE BELOW
Three years after a jury found former Salander-O’Reilly director Leigh Morse guilty of scheming to defraud artist estates in the gallery’s wide reaching fraud, a state court judge gave the dealer another month before he imposes a plan for her to repay victims. “She is certainly in arrears as far as restitution is concerned,” State Supreme Court Judge Michael Obus said.
Her $1.65 million restitution would represent the first payment to victims since former owner Lawrence Salander pleaded guilty in 2010 to looting $120 million from customers and investors. He’s serving a six-to-18-year sentence at Mid-state Correctional Facility, north of Utica, New York, and is eligible for release as early as July 2015. On the first day of the seventh month after his release, he must begin paying $114.9 million of restitution. That’s a tall order: in November 2007, he and his gallery filed for bankruptcy protection. The personal bankruptcy was resolved in December 2013; the gallery case is ongoing. Victims haven’t received money in either case, although some retrieved art.
Morse owns a Riverside Drive apartment and a home in Mount Bethel, Pennsylvania. Obus said she must submit a financial statement before May 22 and be prepared to do whatever is “reasonably possible” to pay restitution. Andrew Lankler, a partner with the law firm Baker Botts who represents Morse, declined to comment as they boarded an elevator outside the downtown courtroom today.
On July 19, 2011, Morse was sentenced to four months of Saturday nights in jail, plus five years of probation and the restitution. At the time, Obus said that while Salander was the “architect” of looting artist estates and clients, Morse was an enabler, “stonewalling”‘ and betraying consignors’ trust by not disclosing sales. On March 26, 2014, Morse’s second appeal of her conviction was denied. “The appellate process ran its course,” Obus said today.
When a five-judge panel first upheld her conviction, in November 2013, it said the evidence established she “participated in a unitary scheme to defraud the victims, which included closely related acts of nondisclosure and active misrepresentation,” and that she acted in concert with Salander. The panel said Obus properly determined restitution, at less than a quarter of the Manhattan District Attorney’s estimate of victim losses she helped cause.
Friends of Morse, who currently runs her own eponymous gallery on the Upper East Side, have said that the only thing she is guilty of was being naïve about Salander’s deceptive business practices. Morse herself has said she believed that Salander, who turns 65 next month, would eventually fulfill all of the gallery’s financial obligations. Earl Davis, the son of modernist Stuart Davis who is owed $1 million of the $1.65 million of restitution.
THE RIDICULOUS UPDATE-SHE’S STILL AT IT!
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.”
“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.”
The court machinations are the latest delay in the glacial resolution of one of the biggest art frauds in New York history.