Knoedler owner Michael Hammer may be liable for fraud over fakes, New York judge finds

Laura Gilbert

Michael Hammer seated at the defense table during the 2016 Knoedler fakes trial Photo: Elizabeth Williams, courtesy Illustrated Courtroom

In a warning shot to gallery owners, a Manhattan federal judge has sent to trial two collectors’ claims that Michael Hammer and his company 831 Holdings, which owned the now closed Knoedler gallery, are liable for fraud the gallery allegedly committed in selling forgeries.

Judge Paul Gardephe based his 8 May ruling on the loose ways Hammer and 8-31 did business. With 8-31 reimbursing Hammer for personal expenses, and Knoedler transferring funds to 8-31 that were unrelated to work performed, a jury could conclude that Hammer and 8-31, and in turn 8-31 and Knoedler, were one and the same, and therefore just as liable as Knoedler, the judge said.

His decision concerns the last two of ten lawsuits accusing Knoedler of knowingly selling fake Abstract Expressionist paintings, a massive scandal that caused the once-venerable gallery to implode in 2011.

“The decision is both a guidepost and a warning” for the informal art market, says William Charron, who represents one of the plaintiffs, the Martin Hilti Family Trust, which bought a work purportedly by Mark Rothko for $5.5m in 2002, which turned out to be a fake. The other plaintiff is Frances White, who with her then-husband spent $3.1m on what turned out to be a fake Jackson Pollock in 2000.

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