Art Museum seeks $1.5M for paintings lost in alleged scam

A pair of lawsuits filed this week detail a swindle that appears to have cost the Philadelphia Museum of Art $1.5 million.

The museum is trying to recover the money - not from the art dealer who swindled them, but from the insurance company that protects all of the museum's artwork from "physical damage or loss."

The origin of the dispute goes back to 2006, when museum officials decided to sell two works by a couple of America's leading Post-Impressionists, Maurice Prendergast and Arthur B. Davies.

They turned to Lawrence B. Salander, a prominent art dealer on the Upper East Side of Manhattan.

Salander had been a successful dealer for 30 years, specializing in 20th-century American art.

In mid-2005, he moved his business, the Salander-O'Reilly Galleries, to an opulent townhouse on East 71st Street, near the renowned Frick Collection. Salander's inventory expanded to include European masterpieces and Renaissance sculpture, and his expenses grew in tandem - his rent alone was $154,000 a month, according to the New York Times.

Within two years of the move, Salander's collection was swelling again, this time with lawsuits: artists who said Salander had sold their paintings and had never paid them; heirs who asked Salander to sell their family treasures and never got the proceeds; investors like tennis star John McEnroe, who gave Salander $162,500 to buy and resell art for a profit but never saw his money again, according to his lawsuit.

In October 2007, a New York State judge had the locks changed and the gallery padlocked, and, a week later, Salander and his wife declared bankruptcy. He is now under indictment and awaiting trial for allegedly stealing $88 million from an assortment of investors, art collectors and artists.

Dueling lawsuits - one filed in Maryland by the museum, the other filed in Manhattan by its insurer, AXA Art Insurance Corp. - agree on the basic facts in the Art Museum case.

In September 2006 - about two weeks after taking possession of the two museum paintings - Salander sold the Prendergast painting, "The Harbor," for $1.5 million to another New York gallery.

But he had a six-month concession agreement with the museum and didn't tell it about the sale. Instead, he told the museum that he was having trouble with the paintings, until February 2007, when he reported that a buyer was willing to pay $800,000 for the pair.

The museum agreed to the sale, and Salander promised a string of monthly $100,000 payments, beginning in May 2007.

He never made a payment. After Salander declared bankruptcy in November 2007, the museum filed a claim, but the bankruptcy is still pending. "What the museum may recover remains unclear to us," said a museum spokesman, Norman Keyes.

The museum is now claiming that it should be paid $1.5 million by its insurer.

AXA wants a federal judge in Manhattan to void the claim. The company contends that the policy was supposed to protect the museum's works from accidental damages, not financial fraud by a third party.

The Prendergast painting, a gift to the museum in 1983, is considered the more valuable of the two works. Keyes said the museum had decided to sell the paintings because its collection includes other, superior works by the two artists.

Meanwhile, the Davies painting, "Mountain Landscape," has apparently disappeared. It did not turn up in Salander's inventory after his business was seized, and investigators have found no record of what happened to it.