Investigation of Phony Art Sales Fades

Nearly 16 months after authorities raided Upstairs Gallery in a sweeping investigation of phony art sales that sent tremors through the tightknit world of Beverly Hills art traders, most of the scandal has quietly faded.

The gallery--ultimately declared a victim--is going out of business and charges have been dismissed against a key target of the probe.

The highly publicized September, 1989, raid on the gallery’s flagship Rodeo Drive branch, described by police as the largest seizure ever of fake prints, resulted in confiscation of 1,600 lithographs. Los Angeles police declared that they had saved unsuspecting art lovers thousands of dollars and hinted that charges against the gallery might follow.

The following month, former gallery manager Lee Sonnier was arrested. Beverly Hills police alleged that he was running a side business out of the gallery, conspiring with a French art broker to sell phony Impressionist paintings to a Japanese businessman. Among them was a fake Renoir, the original of which was hanging in the Metropolitan Museum of Art in New York.

Today, only the French art broker, Frank DeMarigny, stands convicted of a crime. Another case is pending against the Upstairs Gallery’s supplier.

Sonnier, charged with five counts of grand theft, has been cleared. The district attorney decided against prosecuting him on three counts. Two other counts, both involving the phony Renoir, were dismissed during a preliminary hearing earlier this month.

Upstairs Gallery has never been charged with wrongdoing. Instead, it has been named as a victim in a criminal case filed against its supplier, Larry Groeger. Groeger sold the gallery the works seized in the raid, including prints credited to Joan Miro, Marc Chagall and Salvador Dali.

Nevertheless, the gallery will not survive. Its remaining five branches will shut their doors permanently Sunday. A spokesman said the chain, which pioneered the marketing of lithographs to novice art buyers, is the victim of bad publicity and a weakening art market.

“The whole art market is pretty bad right now and I guess the two things together have conspired to make our business so low that we couldn’t make a profit consistently,” said E. Timothy Applegate, the lawyer for the gallery. He also blamed the news media and police for the gallery’s plight.

“The press bought what the police had to say, lock, stock and barrel. The police view was allowed to stand of this horrible crime that had been committed and how they had cracked the case and brought us to justice. That impression with the public was allowed to stand and there is nothing that can be done about that.”

Applegate has maintained that the gallery did not know it was selling bad art, and said that in the wake of the raid the chain voluntarily refunded more than $1 million to customers who had purchased phony lithographs.

Sources involved in the investigation said the money was returned under pressure from the Federal Trade Commission, which could have filed a civil suit against the gallery had the refunds not been made.

Some in the Beverly Hills art business voiced anger at the outcome of the Upstairs Gallery probe. They said the gallery should have known that the works it was selling were not legitimate, and they blamed the chain for casting a pall on fellow art traders.

“The fact that they had so many of the same images of certain artists such as Miro and Chagall in so many of their galleries at the same time would clearly show” even the least knowledgeable art trader that the signed and numbered prints were not authentic, said Larry Steinman, owner of Carol Lawrence Galleries in Beverly Hills.

“It killed and hurt the art industry in Los Angeles,” added Steinman, who is president of a loose-knit art dealers association in Beverly Hills. “I’m having problems right now with a Japanese dealer because he says, ‘You people in Beverly Hills are notorious for selling bad things.’ ”

Others complained that police and prosecutors bungled the probe, especially the Sonnier case.

Authorities claimed that Sonnier bilked Japanese businessman Koichi Akemoto of $872,000 by selling him artworks that were never delivered. In this month’s preliminary hearing, Los Angeles Superior Court Judge Elva Soper declared the charges a civil matter, saying that there was not enough evidence that Sonnier knew the work was fake.

“The whole thing is just an incredible mess,” said lawyer Bradley Brook, who until two weeks ago represented Akemoto in a $3-million civil suit against Sonnier, DeMarigny, the gallery and others. “I can’t see how that stuff got dropped.”

Detective John Ambro, the Beverly Hills police officer who arrested Sonnier, said: “You win some and you lose some. This was one that we just weren’t able to prove in court.”

Through his lawyer, Sonnier declined comment.

Both Ambro and Los Angeles Police Detective William Martin, who handled the Upstairs Gallery investigation, rejected Brooks’ contention that the probe has fallen apart. They noted that DeMarigny is serving a 2 1/2-year prison term and that Groeger, the Upstairs Gallery supplier, faces a preliminary hearing next month on a charge of grand theft.

In a separate investigation, Anthony Gene Tetro, considered by prosecutors to be one of the nation’s most prolific art forgers, faces trial next month. That case, which is being investigated by the Los Angeles district attorney’s office, is not linked to the Upstairs Gallery or Sonnier cases, Martin said.

Ambro said the art fraud investigations have sent an important message to the public and the art industry, putting art dealers “on notice that either federal, state or local governments are going to be monitoring the sale of art.”

If there is any lesson to be learned from the Sonnier and Upstairs Gallery cases, authorities said, it is that prosecuting the sale of phony art is difficult unless there is evidence that the seller knew the work to be illegitimate.

In the DeMarigny case, police had audiotape from an undercover sting operation and a statement from the defendant, who pleaded no contest to two counts of grand theft and five of forgery.

“It is very frustrating,” said Reva Goetz, the deputy district attorney who is prosecuting the art fraud cases. “It’s hard to prove knowledge. That is the hardest thing unless you have the . . . smoking gun, a video or an audio or some kind of good admission.”