(Updates with Lachaise curator comment in 19th paragraph.)
July 19 (Bloomberg) -- Leigh Morse, the former director of New York’s Salander-O’Reilly Galleries and dealer for actor Robert De Niro, was sentenced to serve weekends in prison for four months and make restitution of $1.65 million for defrauding the estates of artists.
Morse, 55, was also given five years probation by Judge Michael Obus in New York state Supreme Court in Manhattan today. Prosecutors said Morse withheld information about sales of artworks so the original owners wouldn’t demand payment.
A New York jury on April 6 found Morse guilty of one count of scheming to defraud. She was found not guilty of a grand larceny count alleging the theft of $65,000 from De Niro, who testified at the trial. The gallery represented the estate of De Niro’s father, a painter.
Morse has been free on $75,000 bail since she was arrested on July 14, 2009. She must report to prison on Aug. 6, Obus said.
She sold more than 80 artworks, valued at $5 million, from four estates without notifying them, Manhattan District Attorney Cyrus Vance Jr. said in a statement. Vance’s office sought a sentence of 1 to 3 years in prison and $9.1 million in restitution, said Micki Shulman Hendricks, an assistant district attorney. The prosecution is the first by the DA’s office in which a gallery owner and director were convicted and sentenced, said Joan Vollero, a spokeswoman for Vance.
Lawrence Salander, the gallery’s president, had pleaded guilty to 30 counts of fraud and grand larceny in 2010 and is serving 6 to 18 years in prison. Prosecutors said he ran a Ponzi scheme out of his Upper East Side gallery to finance spending sprees in Renaissance art and an extravagant lifestyle for himself and his wife and seven children.
“There’s certainly no doubt that Lawrence Salander was the architect” of the scheme and not Morse, the judge said at today’s hearing.
Obus added that the jury found that Morse participated in the fraud and the evidence supports the verdict.
“The term stonewalling here is an apt one,” Obus said. “This is not a failure to be heroic. This is a betrayal of trust.”
In a tearful statement to the judge before the sentence, Morse said she was sorry she hadn’t been forthright with victims. She said she hadn’t anticipated the demise of the gallery, which filed for bankruptcy protection in November 2007.
“I never suspected that Larry would be unable to pay his debt,” she said. “I always thought that everyone, including me, would be paid in the end.”
Morse asked to remain free to care for her husband, Sigmund Batruk. He attended the hearing with the aid of a walker. He said in an interview that he suffered brain and spinal cord damage in a car accident in Haiti about 15 years ago while working in shipping. He said he’s no longer able to work.
After leaving Salander-O’Reilly in 2007, Morse has continued to deal art on the Upper East Side at Leigh Morse Fine Arts.
“Leigh has had a hard time dealing with this,” her husband said. Morse declined to comment after the sentencing, said her lawyer, Andrew Lankler.
Earl Davis, the son of modernist Stuart Davis, is owed $1 million in restitution; the Lachaise Foundation, which promotes the legacy of sculptor Gaston Lachaise, $500,000; the Frelinghuysen Morris Foundation, promoting the work of abstract artist Suzy Frelinghuysen and George Morris, $100,000; and the estate of Elie Nadelman, the sculptor, $50,000.
Salander was ordered to pay restitution of over $100 million. Now at Mid-State Correctional Facility, in Marcy, New York, he hasn’t paid anything to victims.
Witnesses at the five-week trial included other consignors of art, plus former employees and customers of the gallery. At today’s hearing, Davis and T. Kinney Frelinghuysen, the nephew of Suzy Frelinghuysen, told the judge they blamed Morse for their anguish and financial losses.
The DA’s office began investigating the gallery in 2007, with Shulman Hendricks and Assistant District Attorney Kenn Kern leading the prosecution. Shulman Hendricks read a statement from the Lachaise Foundation that accused Morse of being “the right- hand woman to the Madoff of the art world.”
“I was sorry to see Leigh punished,” said Paula Hornbostel, curator of the Lachaise Foundation, in an interview. “But behavior like that is intolerable and leads to irreparable losses.”
The case is People v. Morse, 09-03581, New York State Supreme Court, New York County (Manhattan).
--Editors: Mary Romano, Stephen Farr
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