DISTRICT ATTORNEY - NEW YORK COUNTY

NEWS RELEASE
July 14, 2009

Contact: Alicia Maxey Greene
212-335-9400

Manhattan District Attorney Robert M. Morgenthau announced today the arrest and second indictment of former art gallery owner LAWRENCE B. SALANDER and the SALANDER-O’REILLY GALLERIES, LLC, on additional charges, and the arrest and indictment of LEIGH MORSE, the former director of the SALANDER-O’REILLY GALLERIES, for stealing from and defrauding consignors of art.

SALANDER, 60, was arrested and indicted today on additional charges involving the theft of over $5 million from several estates which provided their works to the SALANDER-O’REILLY GALLERIES for sale and exhibition. MORSE, 53, who was also arrested today, was indicted on charges of grand larceny and scheme to defraud. The crimes charged in the latest indictment occurred between October 1997 and November 2007.

This second indictment follows the previous 100-count indictment in March 2009, which charged the defendants SALANDER and the SALANDER-O’REILLY GALLERIES with multiple counts of grand larceny, securities fraud, forgery, criminal possession of a forged instrument, falsifying business records and, as to SALANDER, one count of perjury.

The victims on this second indictment include the Lachaise Foundation, who consigned the works of Gaston Lachaise, a French born American sculptor known for pushing the boundaries of nude figuration with his innovative portrayals of the female body, and the Estate of Robert De Niro, Sr., American abstract expressionist painter and father of Robert De Niro, Jr. Also reflected in this indictment is one count that will supersede a count from the previous indictment, namely, a charge of Grand Larceny in the First Degree from the Estate of Elie Nadelman, the well-known Polish born American sculptor who worked primarily in galvano, marble, and wood. The count is superseded as a result of additional evidence presented to the extended Grand Jury. Each of the three estates reflected in this second indictment began their consignment relationship with the SALANDER-O’REILLY GALLERIES in the mid- to late-1990s. They owned a number of works either sold by the Gallery without any notice, or sold without proper payment due to misrepresentations made by SALANDER as to the status of payments due the Gallery.

For example, the investigation revealed that the Estate of Robert De Niro, Sr. formally began a relationship with defendants in 1994 when the SALANDER-O’REILLY GALLERIES was made the exclusive representative of the Estate. As such, the Gallery was tasked with the promotion, sale, and exhibition of Robert De Niro, Sr. works. Throughout their 14-year relationship, SALANDER and other dealers of the SALANDER-O’REILLY GALLERIES, including MORSE, repeatedly sold De Niro, Sr. works, did not inform the Estate of the actual volume of sales, and did not pay the Estate for the majority of those sales. The investigation further revealed that SALANDER repeatedly used the stolen funds or the works of art themselves to satisfy SALANDER-O’REILLY GALLERIES’ debts. For instance, in June 2006, SALANDER and the Gallery entered into a settlement agreement whereby the Gallery relinquished full title and ownership of several works of art owned by the Estate of Robert De Niro, Sr. and other artists to a gallery in Italy, to satisfy the SALANDER-O’REILLY GALLERIES’ multi-million dollar debt to that Italian gallery.

With respect to the Lachaise Foundation, SALANDER sold over $2 million worth of Lachaise works without informing the Foundation. In one instance, SALANDER alerted the Foundation of a sale, but then claimed that the purchaser could not pay at that time due to personal family issues. SALANDER repeatedly offered that excuse for over four years as an explanation for the lack of payment to the Foundation, never ultimately paying any of the money due. In fact, the purchaser in that instance actually paid the SALANDER-O’REILLY GALLERIES in full within a month of the transaction. To reconcile the Galleries’ own business records regarding the ever-increasing payables to the Lachaise Foundation, SALANDER falsely generated an invoice to reflect a forgiveness of payables due to the Foundation. SALANDER substantiated this forgiveness by falsely claiming that the Foundation owed additional money to the Gallery on another transaction.

The investigation revealed that MORSE, the former Director of the Gallery, began working at the SALANDER-O’REILLY GALLERIES in 1995. During her 12 years at the gallery, MORSE sold many works of art from several estates represented by the Gallery, including those of Stuart Davis, Ralston Crawford, Elie Nadelman, Gaston Lachaise, and Robert De Niro, Sr. In her position as Director of the Gallery, she earned the trust of the estates that turned over possession of their inherited art for the Gallery to exhibit and sell. As numerous problems came to light, MORSE was contacted directly by several estates and made aware of the issues they had involving the location, status, and payment of works they consigned to the Gallery. As director and on many occasions as the primary contact for the estates, MORSE was well aware of the true status of many of the works about which the estates had inquired. This information included the sale or payment status on numerous works she personally sold months and even years prior, and for which she earned a commission. However, rather than communicate the truthful information to the respective estates, MORSE intentionally misled them or failed to disclose the true status of their works. By not informing the estates that their works were sold, in one case almost a decade earlier, MORSE prevented the estates from demanding payment for those sales or having the ability to make an informed decision about removing their remaining works from the Gallery. In the meantime, MORSE continued to sell works consigned to the Gallery from these and other estates. As a dealer, and the Director of the Gallery, MORSE’s conduct violated both the trust and the agency relationship with those estates.

The investigation further revealed that at the end of May 2007, MORSE sold two Robert De Niro, Sr. Estate works to one of her top clients. MORSE orchestrated and SALANDER permitted the entire purchase price of $77,000 to be wired directly from the purchaser into her personal bank account. MORSE was entitled to only a fraction of that amount as her commission on that sale.

SALANDER and the SALANDER-O’REILLY GALLERIES were indicted today on three counts of Grand Larceny in the First Degree, a class B felony, which is punishable by up to 25 years in prison, and one count of Falsifying Business Records in the First Degree, a class E felony, punishable by up to 4 years in prison. MORSE was indicted on one count of Grand Larceny in the Third Degree, a class D felony, which is punishable by up to 7 years in prison, and one count of Scheme to Defraud in the First Degree, a class E felony, punishable by up to 4 years in prison.

The first indictment charged SALANDER with 14 counts and the SALANDER-O’REILLY GALLERIES with 13 counts of Grand Larceny in the First Degree, 10 counts of Grand Larceny in the Second Degree, 3 counts of Grand Larceny in the Third Degree, 5 counts of Forgery in the Second Degree, 51 counts of Falsifying Business Records in the First Degree, and 1 count of Scheme to Defraud in the First Degree. SALANDER was additionally indicted on one count of Perjury in the First Degree and 2 counts of Falsifying Business Records in the First Degree.

Assistant District Attorney Micki Shulman, Deputy Bureau Chief of the District Attorney’s Frauds Bureau, and Assistant District Attorney Tanya Apparicio presented the case to the Grand Jury under the supervision of Frauds Bureau Chief Michael Kitsis and Deputy Bureau Chief Jeannette Molina. Investigator Siobhan Berry, Supervising Investigator Jeremy Rosenberg, Jack Patterson, and Jonathan Reid assisted in the investigation under the supervision of the District Attorney’s Investigation Bureau Chief Joseph Pennisi, Deputy Chief Terence Mulderrig, and Supervising Investigator Jonathan Savel. Trial Preparation Assistants David Lamb and Ariela Rosenberg of the Frauds Bureau, and IT Analyst Selena Ley and her supervisor, IT Deputy Director Steven Moran, also assisted in the investigation.

Defendant Information:

LAWRENCE SALANDER, 5/29/1949
Deep Hollow Road
Millbrook, New York

SALANDER-O’REILLY GALLERIES, LLC
22 E. 71st Street
New York, New York

LEIGH MORSE, 3/26/1956
417 Riverside Drive
New York, New York

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