By JAMES BARRON
A once-prominent art dealer was arrested on Thursday on an indictment charging that he stole $88 million from investors, collectors and artists who had consigned paintings and sculpture to his Upper East Side gallery, the authorities said.
The Manhattan district attorney, Robert M. Morgenthau, said the dealer, Lawrence B. Salander, sometimes sold the same painting to more than one buyer. Aides to Mr. Morgenthau said Mr. Salander sold one painting to three people, promising each a 50 percent share.
“Why sell it once when you can sell it three times?” Mr. Morgenthau said at a news conference called to announce a 100-count indictment accusing Mr. Salander of grand larceny, falsifying business records, scheming to defraud investors, forging documents and perjury.
Mr. Morgenthau said the charges covered transactions with 26 victims going back to 1994, among them the tennis star John McEnroe. Mr. Morgenthau said the investigation was continuing, raising the possibility that the extent of the theft could climb. One official with direct knowledge of the investigation said the authorities believed that Mr. Salander’s take actually exceeded $100 million.
At the news conference, prosecutors portrayed Mr. Salander as a master manipulator who operated out of a lavish gallery but trafficked in art he did not own.
At one point, they likened Mr. Salander’s dealings to the fraud at the heart of the Broadway musical “The Producers.”
“As I recall, Max Bialystock in that play said, ‘How many halves make up a whole?’ ” said Patrick Dugan, the chief of the investigations division in Mr. Morgenthau’s office.
Mr. Morgenthau said Mr. McEnroe believed that he was buying a 50 percent interest in two paintings by Arshile Gorky, the Abstract Expressionist, for $2.03 million in October 2003. Then Mr. McEnroe heard that one of the paintings was hanging in another dealer’s home and confronted Mr. Salander, Mr. Morgenthau said. Aides to Mr. Morgenthau said Mr. McEnroe later settled for full ownership of one of the two paintings. But even that was called into question in 2008, when another Salander customer laid claim to the same painting, “Pirate II.”
Mr. Morgenthau also said Mr. Salander, 59, listed “Pirate II” and the other Gorky painting, “Pirate I,” as security for a $2 million loan from Bank of America, even though he owned neither painting.
Mr. Morgenthau said the Gorkys were not the only paintings Mr. Salander sold that he did not own. “He was a master salesman,” Mr. Morgenthau said in a telephone interview. “People trusted him, and so he was able to sell to investors paintings two or three times. And when he didn’t pay, he always had a lot of excuses.”
Mr. Morgenthau said Mr. Salander used the money he pocketed “to finance his self-imposed mission to corner the market in Renaissance art” and to support “his extravagant lifestyle,” which included travels in a private jet. Mr. Morgenthau also said Mr. Salander had spent $60,000 on a party for his wife at the Frick Collection, around the corner from the Salander-O’Reilly Galleries on East 71st Street.
The arrest came 17 months after Mr. Salander’s gallery was shut down and 16 months after he filed for bankruptcy. If convicted, he could face up to 25 years in prison on each of 13 counts of first-degree grand larceny and up to 15 years on each of 10 counts of second-degree grand larceny, along with additional time for the other charges.
Mr. Salander was arrested at his home in upstate Millbrook on Thursday morning, and arraigned before Justice Michael J. Obus in State Supreme Court in Manhattan on Thursday afternoon. He wore a gray, hooded sweatshirt splattered with red paint, and looked unshaven. From time to time he looked over his shoulder at his wife, Julie, who was sitting in the courtroom with one of their children.
Mr. Salander’s lawyer, Charles A. Ross, said Mr. Salander was pleading not guilty to all charges. Justice Obus ordered Mr. Salander held in $1 million bail and set two conditions if he posted the money: hand over his passport, and restrict his travel to within New York State.
An assistant district attorney, Micki Shulman, told Justice Obus that Mr. Salander had defrauded friends and lived lavishly, at one point spending half a million dollars on jewelry at Sotheby’s while telling associates he could not repay money he owed them.
“For over a decade he lied to and stole millions from people who trusted him,” she said at the arraignment. “He looted the estates of others who entrusted him with their family legacies.”
Ms. Shulman told the judge that when Mr. Salander’s longtime friends questioned his business practices, he responded by berating and bullying them, and threatening them with lawsuits.
Mr. Salander’s gallery displayed paintings as different as English landscapes by John Constable and modernistic scenes by Robert De Niro Sr., the actor’s father, who died in 1993. But someone with direct knowledge of the investigation said the actor had not returned calls from investigators who wanted to know who had the paintings and what his own dealings with Mr. Salander had been since his father died.
A spokesman for Mr. De Niro did not return a call for comment on Thursday.
At the arraignment, Ms. Shulman said Mr. Salander’s family was being supported with $25,000 a month by a benefactor. That person, whom she did not name, was considering buying the family’s 66-acre estate in Millbrook for $5.1 million and letting the Salanders remain there, she said.
Colin Moynihan and William K. Rashbaum contributed reporting.