TANGLED WEB OF ART DEALS TO BE UNWOUND AT HEARING OF DEALER

A rare, revealing look at how the other half spends--and sometimes loses--its money in the world of contemporary art trading is expected to emerge next week in a Los Angeles criminal courtroom.

Doing business in the art trade can be so loose that buyers may seal deals for artworks worth far more than the average person’s home with little more than a handshake. They may never set eyes on paintings or sculpture for which they have paid hundreds of thousands of dollars. They may shrug off losses of tens of thousands of dollars.

And they may ignore or hush up reports of rip-offs that would quickly send less wealthy consumers complaining to authorities.

It is a business world that appears ripe for abuse and, until recently, has been good to Douglas James Chrismas, the 42-year-old owner of the chic Flow Ace Gallery on Melrose Avenue in West Hollywood.

Long regarded in art circles as one of the country’s most important dealers in contemporary American art, Chrismas is scheduled for a preliminary hearing next Tuesday on seven felony charges that he stole more than $1 million worth of artworks by some of this era’s master artists--Robert Rauschenberg, Andy Warhol and others.

While these are the most serious accusations ever made against Chrismas, they are not the only ones.

For nearly a decade, he has faced more than a score of civil lawsuits in state and federal courts over his questionable business dealings. He has lost suits charging that he has failed to pay for property acquired or leased over the years in the trendiest parts of Venice; that he has not paid artists for artworks sold by his galleries, and that he has not delivered artworks bought by collectors.

In the suits, he has been accused of using stalling and delaying tactics that have thwarted creditors’ repeated efforts to recover their losses. Delays in one case may have led a frustrated elderly woman to kill herself.

“There are a great many number of people (who) had to struggle with him (Chrismas) over the years,” noted New York art dealer Leo Castelli said in an interview. “He got into so much trouble with so many people that he got lost. He couldn’t cope with it anymore.”

Chrismas declined to be interviewed but willingly referred questions to his defense attorney, Richard G. Hirsch.

Chrismas and his companies have filed three Chapter 11 federal bankruptcies since 1982, effectively barring most of his creditors from collecting the money owed them.

(Firms filing under Chapter 11 of the bankruptcy law may continue operating as they reorganize. The firm is protected from creditors, and the filing automatically stays or suspends all civil actions taken by creditors to collect their claims.)

Stymied by one of those bankruptcies, one art collector in January filed a criminal complaint against Chrismas with the Los Angeles Police Department. The dealer was arrested and arraigned in Municipal Court in February. He pleaded not guilty to the charges and was freed on $40,000 bail.

“We were absolutely shocked that other people hadn’t gone to the public authorities,” said Los Angeles attorney J. Christopher Kennedy. “I think some people have a great deal of embarrassment.”

Until Kennedy’s client, C. Fredrick Stimpson, a Vancouver, Canada, real estate developer, went forward with his criminal charges, complaints about the art dealer rarely surfaced beyond the art world’s own grapevine.

Stimpson said in an interview that he had dealt with Chrismas for more than 15 years.

“You just became rather aware,” Stimpson said, “that there were people that he (Chrismas) had offended one way or another.

“I wasn’t going to do anything until I thought that maybe there’s a public service duty here. . . . Had I lost only one piece and it had cost only $20,000, I might have written it off as experience.”

Even after Chrismas’ arrest, few clients or customers have been willing to discuss their ties to him.

“Almost anybody who is a notable art collector in this town has had dealings with Doug Chrismas,” said Ken Wilson, assistant to television producer and art collector Douglas Cramer.

Wilson said he bought a painting and a sculpture from Chrismas last year and, cautiously, acknowledged that “it took some time” and “an unusual amount of effort to close the deal.

“Eventually, it worked out fine,” Wilson said. “I don’t feel comfortable saying unkind things; it would portray some people in a very bad light.”

New York art collectors Jane Ordway and Dexter Guerrieri also eventually received artworks they bought from Chrismas, but only after they went through nearly two years of litigation, a federal trial in Los Angeles and a court order forcing Chrismas to hand over two pieces that they bought from him.

Chrismas may have had no right to sell the New York couple one of the pieces.

Stimpson claims one of the pieces was among seven works by well-known contemporary artists Rauschenberg, Warhol, Donald Judd and Frank Stella that Stimpson, over a six-year period, bought and left in Chrismas’ care.

According to a civil lawsuit Stimpson filed against Chrismas in Superior Court in 1985, the dealer was to store some of the artworks and had permission to seek buyers for others. Chrismas was not to sell any works without permission, according to the suit, and was to deliver to Stimpson the money from any sales.

Based in part on information contained in Stimpson’s civil suit, the district attorney charges that Chrismas sold some of Stimpson’s pieces and used others as collateral on loans.

Attorney Hirsch said he expects to contest Stimpson’s claim of ownership to some of the disputed pieces as well as the terms under which Chrismas was holding them.

“Some of the documents that I’ve seen (show) there were understandings that Doug had the right to dispose of some of these pieces,” Hirsch said.

Stimpson has not recovered the missing artworks. L. A. Police Department Detective Dorothy Pathe began investigating the case last fall, after Stimpson first complained that the pieces had been stolen. In a police report accompanying felony charges filed in February against Chrismas, Pathe traced some of the pieces across the country:

--Rauschenberg’s “Narwale” was found in the custody of the artist, who had acquired it after a complicated series of dealings involving the purchase from Chrismas of another Rauschenberg piece by Malibu businessman Sidney Goldfarb.

--”Shoal,” another Rauschenberg, was in the possession of Santa Barbara collector Berry Berkus. He acquired it in an $85,000 deal with Chrismas.

--Rauschenberg’s “Atlas Colonnade Jr.” was bought in June, 1982, by Ordway and Guerrieri along with another piece for $110,500. They finally took possession in October, 1984.

--A fourth Rauschenberg, “Rodeo Palace,” was found in the possession of the Margo Leavin Gallery in Los Angeles, which had acquired it from the First Beverly Bank in Century City. The bank had loaned Chrismas $200,000 secured by the Rauschenberg, but Chrismas defaulted on the loan.

--Pathe traced an untitled Donald Judd sculpture that may have been Stimpson’s to a New York auction. Pathe concluded that Chrismas may have used the Judd piece as collateral to obtain insurance.

--Frank Stella’s “Kanonika Stomilow IV” apparently was sold in 1984 to an unidentified collector for $50,000, money that Chrismas never passed on to Stimpson, according to Pathe’s statement.

--In March, 1985, Chrismas delivered to Stimpson one of a 15-print series of Andy Warhol lithographs called “Portrait of the American Indian.” According to the police report, the print given to Stimpson was not the same piece of art that he’d purchased from Chrismas six years earlier.

If brought to trial and convicted, Chrismas could be sentenced to nearly 10 years in state prison.

Despite the allegations made against the art dealer, at least one artist has elected to stand by him. Chrismas has represented Los Angeles sculptor Guy Dill for 15 years, and, said the artist, “In my dealings with him, I’ve never once been dissatisfied. I’ve never come to doubt his integrity or his ethics.”

Dill said that he has never had serious financial problems with Chrismas. Sometimes, Dill acknowledged, payments have been “a day or two off, maybe a week, maybe two.

“If he has been late, maybe he has to be coaxed. He ultimately gets it to you. . . . I’ve never been so unhappy where I’ve had to take any steps to get the money I’m owed.”

According to attorney Hirsch, Chrismas’ business has not suffered seriously since his February arrest. In the weeks immediately following, Chrismas’ Melrose Avenue gallery held two major art openings and, Hirsch said, at least two more are planned for the near future.

“Personally it’s been very difficult, very hard on him (Chrismas),” Hirsch said. “He’s concerned about his reputation, concerned that it may affect his relationships with artists and collectors in the future.”

Chrismas is a native of Vancouver who came to Los Angeles in 1969. He still carries a Canadian passport and driver’s license. At age 17 he opened his own frame shop and gallery in Vancouver. The Vancouver Sun newspaper soon was heralding Chrismas as “a new force” in the local art world.

He originally spelled his name Christmas, but apparently changed it sometime after his move to Los Angeles. At one point, he had a gallery in Paris as well as those in Vancouver and Los Angeles.

As Chrismas’ art empire expanded, he also invested heavily in Venice real estate, especially the now-trendy area along the strand near Windward Avenue and Market Street. According to a 1984 lawsuit brought by a commercial tenant accusing Chrismas of arbitrarily raising rents, Chrismas once declared that he would someday “own all of Venice.”

For a while, he did control a large portion of the area. Chrismas owned or held master leases to much of the Venice open-air retail area where vendors sell their wares to weekend beachgoers.

Through a firm called Flow Inc., Chrismas and his longtime companion Jane Erickson also owned the Charmer’s Market restaurant and retail complex in Santa Monica near Venice. Flow Inc. filed for bankruptcy in 1982, and the market was sold by its trustee last year to a new owner.

Among creditors clamoring for a piece of the Flow Inc. business is the estate of Kate Walden, a pharmacist. According to court filings, she killed herself in 1983 amid a prolonged, 18-month legal fight with Chrismas over a broken hip the 69-year-old woman sustained falling on his property in 1981.

Walden committed suicide by walking into the deep end of her swimming pool, her attorney said. On her bed in her room, she had laid out the clothes she wanted to be wearing for her funeral, papers relating to the ownership of her home and a set of interrogatories in her personal injury suit against Chrismas’ Flow Inc.

“You don’t have to be Freud to figure that out,” said her attorney, Mark Allen Klieman. “She became extremely depressed and despondent over the whole thing.”

Like other claims against Chrismas, the Walden estate’s action was stalled by one of his bankruptcies. A stay in the case was lifted in March, however, and the Walden suit is proceeding in Superior Court.

In addition to the Flow Inc. bankruptcy, Chrismas filed a personal Chapter 11 bankruptcy in 1984, and his gallery business filed under Chapter 11 in 1985.

Chrismas’ current difficulties come after more than 20 years in the business.

Vancouver art critic Joan Lowndes wrote that Chrismas’ first major coup was to bring Robert Rauschenberg to the Canadian city in 1967 for a one-man show of his lithographs. Then relatively unknown, Rauschenberg eventually became one of North America’s leading contemporary artists.

Defending one 1982 lawsuit, Chrismas claimed he was “particularly known for his representation” of the artist and “is the most significant dealer in Rauschenbergs in the world today.”

Rauschenberg, who lives and works near Fort Myers, Fla., refused to talk with The Times about his relationship with Chrismas. Instead, a reporter was directed to a 1983 lawsuit in Los Angeles federal court in which Rauschenberg sought $500,000 from Chrismas’ Flow Ace Gallery. The artist won a $140,000 judgment in the suit in 1984.

Despite that disagreement, Chrismas “still has ties and good relationships with Rauschenberg,” said attorney Hirsch. “Doug is the only gallery person who traveled with Rauschenberg on his recent show in Japan and the Orient. Doug went to China, Venezuela and Mexico City with him.”

Hirsch’s view is disputed, however, by David White, Rauschenberg’s New York curator. White called the lawsuit “very acrimonious” and said it marked the “end of any kind of business relationship, certainly, and the end of other kinds of dealings” between the artist and the art dealer.

Chrismas also owes noted New York-based painter Leon Polk Smith several thousand dollars. Smith successfully sued Chrismas in Los Angeles federal court in 1983 when he couldn’t collect for his paintings and drawings that were on consignment to Flow Ace Gallery. But Smith’s judgment, too, has been thwarted by a Chrismas bankruptcy, and the artist now holds a lien on one of the dealer’s properties.

“Most everyone I spoke to in New York advised me most strongly to have nothing to do with Doug Chrismas,” the 80-year-old Smith recalled, acknowledging that he went ahead and dealt with him anyway.

“I’ve always prided myself on my ability to judge human character,” Smith said. Chrismas “had a very wonderful way, and he really knows the art world and has a good eye for paintings. . . . He’s very thoughtful and kind to artists--up to the point of paying them.”

The problems between the two came to a head in the summer of 1981, when Smith’s accountant met with Chrismas and demanded $39,000 or the return of Smith’s paintings and drawings. Chrismas turned the artworks over to a shipping company. Smith didn’t receive them, however, because the shipper seized them to cover Chrismas’ unpaid bills for previous shipments, Smith said.

In late 1983, a judge ordered Flow Ace Gallery to pay Smith $40,000 but denied payment for damages that Smith claimed had occurred to the pieces.

Chrismas agreed to make monthly $3,000 payments to Smith beginning in February, 1984. But the payments stopped seven months later, according to court records, and Smith was forced back into court.

As Chrismas was fighting Smith’s lawsuit, he asked well-known local art collector, attorney and real-estate developer Frederick M. Nicholas for a $200,000 loan, according to the Police Department report accompanying the criminal charges.

Nicholas, vice chairman of the board of the new Museum of Contemporary Art in downtown Los Angeles, was also a member of the board of directors of the First Beverly Bank in Century City at the time.

According to the police report, Nicholas helped arrange for First Beverly Bank to lend Chrismas the $200,000 in 1983. Police records show that Chrismas put up two Rauschenbergs as collateral--”Rodeo Palace” and “Tribal Quarterly.” According to the report, Chrismas eventually defaulted on the loan, and the bank sold the pieces to the Margo Leavin Gallery in Los Angeles.

Unknown to First Beverly Bank, though, “Rodeo Palace” apparently belonged to Canadian collector Fred Stimpson. He had bought the huge painting from Chrismas for $200,000 in March, 1981, and left it with the dealer for safekeeping. (Stimpson estimates the current market value of the piece at $600,000-$700,000.)

Other collectors also acquired artworks from Flow Ace Gallery that Stimpson claims in his criminal complaint and civil suit are his.

In June, 1982, Chrismas offered New Yorkers Dexter Guerrieri and Jane Ordway two Rauschenbergs for just $110,500, about one-fourth their market value, Chrismas testified in a sworn declaration.

According to court documents, Chrismas wanted to make the deal with the New Yorkers because he was in urgent need of cash to pay a debt to New York artist Frank Stella. Guerrieri and Ordway paid $90,000 of the purchase price directly to Stella, and the balance went to Flow Ace Gallery.

Chrismas asked Guerrieri and Ordway to wait three months before taking delivery of the artworks, to give him the opportunity to repurchase the pieces at the sale price.

But Chrismas did not repurchase them and when time on his option ran out, he asked Guerrieri and Ordway for an extension. They refused and demanded that he hand over the artworks.

A sworn declaration in the case by one of Chrismas’ associates said that the art dealer planned to “submarine” the deal on the two Rauschenbergs, “transfer them to someone who would be willing to give cash to the gallery rather than surrender” them to Guerrieri and Ordway.

When Guerrieri and Ordway filed suit, Chrismas countersued, claiming that the deal was a “disguised loan transaction” at the usurious rate of 115% per year.

More than two years after Guerrieri and Ordway made their deal with Chrismas, a federal judge ordered him to deliver the two Rauschenbergs to the New York couple.

Another year passed before they learned that Chrismas may have never had the right to sell one of the pieces to them in the first place.