Lagrange v. Knoedler
LAWYERS CHASE ELUSIVE FIGURE IN KNOEDLER LAWSUIT
A lot of reputations have been raked through the coals since the once eminent Knoedler gallery shut down abruptly in December amid major fraud accusations. Most of the heat has fallen on former gallery president Ann Freedman and Glafira Rosales, the small-time Long Island art dealer under FBI investigation for selling Knoedler 20 or so possibly forged Ab-Ex paintings, supposedly by the likes of Robert Motherwell, Jackson Pollock and Mark Rothko.
But, until now, the name that sits at the top of the empire -- Michael Hammer, who has owned Knoedler since inheriting it from his grandfather in 1991 -- has gone largely unmentioned throughout the scandal.
To be sure, there’s at least one good reason for that. He’s not listed as a defendant in the lawsuit that’s at the heart of the upheaval. That case, over a possibly fake $17 million Pollock sold by Freedman (via Rosales) to Belgian hedge-funder Pierre Lagrange, was launched the day before the gallery closed its doors, and it targets Freedman and the gallery -- rather than Hammer directly. (The same is true of a more recent lawsuit from a South Carolina couple charging that Freedman sold them a forged Rothko for $8.3 million in 2004.)
Yet Lagrange’s lawyers at the Dontzin Law Firm are now saying that they don’t care if Hammer’s not technically a party to the suit. Hammer, who also runs Manhattan’s Hammer Galleries and is chairman emeritus of the Hammer Museum in L.A., has information that could be relevant to their case, and they want to subpoena it. Plus, Hammer voluntarily submitted an affidavit in December as part of a smaller hearing over Knoedler’s assets, which automatically made him a witness, in their eyes, and therefore subject to subpoena.
The only problem, the Dontzin Law Firm says, is that they haven’t been able to find him. No address was listed on his affidavit, and each of the more than 11 attempts made to serve Hammer with a subpoena in the last few months -- at his galleries, at his residences in several states, via certified mail and to his lawyers, who had declined to accept subpoenas on his behalf -- went unanswered.
"Michael Hammer has gone to great lengths to avoid facing responsibility for the fraud perpetrated at the gallery he owns, including ducking a subpoena to provide documents and testimony for over two months,” said Matthew Dontzin, who is seeking all documents related to the gallery’s purchases from Rosales, the decision to close Knoedler, its pricing structure and the federal investigation.
“Wouldn't a responsible corporate CEO of the sort Mr. Hammer claims to be do everything in his power to help his former clients recover their losses, rather than engaging in shenanigans to avoid facing up to the unfortunate facts surrounding the massive fraud at Knoedler gallery? By avoiding service by any means possible, Mr. Hammer behaves like someone with information to hide -- or worse."
Yet attorneys for Hammer say that their client isn’t dodging anything. Two days ago, Apr. 16, 2012, Hammer’s firm, Fulbright & Jaworski responded to the subpeona left at Hammer’s Santa Barbara residence with a letter stating, “Hammer objects to the subpoena because it was improperly ‘served.’ The subpoena was taped to the gate of Mr. Hammer’s house when he was out of town. That does not constitute adequate service of a subpoena.”
Nevertheless, Fulbright & Jaworski attorney Charles Schmerler read over the requests and sent back a list of objections. “Virtually all of the issues addressed by the subpoena are either irrelevant or were already addressed by the court in a lengthy hearing in which Knoedler gallery prevailed,” Schmerler told Artnet Magazine, referring to the assets ruling in December.
In that hearing, Hammer did provide some details on his decision to close the gallery, which he has always said was unrelated to the lawsuit. “Although the plaintiffs assert that the closing of Knoedler was ‘sudden’ and 'stunning,’ the decision to close Knoedler has been under consideration for about a year,” he wrote. The business had apparently lost nearly $4 million over the previous two years and Hammer sold the building that housed it in February of 2011 for a discount price of $31 million.
“After the sale, I re-evaluated whether Knoedler could be operated profitably under the circumstances, including moving to a smaller, less expensive location,” he continued. “I made a well considered and difficult decision to close the business and expect to realize significant savings in ongoing expenses.”
The next step for Lagrange’s lawyers is to seek a court order compelling Hammer to undergo a deposition and hand over the documents. In the meantime, Hammer’s team is no doubt already drafting a motion to dismiss the entire case. So while it’s almost certain that the scrutiny will eventually turn to Hammer -- and if it’s found that he had knowledge of any wrongdoing, he could ostensibly be charged for aiding and abetting fraud -- it could be a very long time.