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Art Dealer Convicted of Fraud

Leigh Morse, former Director of the Salander O’Reilly Galleries, was found guilty on April 6, 2011 of one count of scheming to defraud in the first degree. She was found not guilty of a second count of grand larceny. The trial was by jury in New York: People v. Morse, 09-03581, New York State Supreme Court, New York County (Manhattan).

The owner of the Salander-O’Reilly Galleries, Lawrence Salander, pleaded guilty last year to operating a $120 million art Ponzi scheme that involved 30 counts of grand larceny. Due to the onslaught of lawsuits brought by consignors demanding payment, the gallery was forced to close in 2007. Salander is currently serving a sentence in state prison.

Morse’s scheme to defraud involved the sale of more than 80 works of art from four estates without notifying owners. According to the NYT, this cheated artists out of approximately $5 million.

The larceny charges, for which Morse was ultimately acquitted, related to the mishandling of art belonging to Robert DeNiro’s father, now deceased. In mid-March, DeNiro took the stand to testify that proceeds from the sale of his father’s paintings were improperly deposited in Morse’s personal bank account. According to Bloomberg, most jurors decided this practice was lawful, because Morse would have been compensated for the sales eventually. However, it was a close call for the jury on this count, with one juror even stepping forward after trial to apologize to DeNiro

Scheming to defraud in the first degree carries up to four years in prison. Sentencing is set to take place on June 3, 2011.

“Because the art industry is largely unregulated, it is particularly important to hold accountable those who fraudulently handle works of art entrusted to them,” Manhattan District Attorney Cyrus Vance Jr. said in a statement after the verdict.

Read more at The New York Times and Bloomberg