Dealer Held in Laguna Art Sting : Arrest: A teacher helps police spring a trap on an antique-shop owner who is accused of selling seven fake works, including a bogus Picasso, for $25,000.

Using a local schoolteacher to set up a sting, police this week arrested the owner of a rustic antique shop on suspicion of selling seven pieces of fake artworks, including a bogus Picasso study, for $25,000.

“There’s that old adage, ‘If it seems too good to be true, . . .’ ” said Richard Neville, a Huntington Beach teacher and art collector. “Well, this just seemed too good to be true. But I get very fanatical about things. I’m very impulsive.”

Thomas Harbison Donahue, 26, was arrested Tuesday at his shop, Thomas H. Donahue Antiques, in the 1500 block of Coast Highway in Laguna Beach. Free on $10,000 bail, he faces a July 31 arraignment on felony charges of grand theft and forgery.

Donahue could not be reached for comment Thursday.

His attorney, Morton Fox, said he is not prepared to discuss some details of the case, but added: “The paintings that were sold . . . are not fakes, and to the best of my client’s knowledge are not fakes. He did research and bought them through estates or through other reputable dealers, and no complaints were ever made to my client” by Neville.

“If indeed those pictures are not genuine, my client had no knowledge of that,” he said.

While several large-scale forgery rings have surfaced in Los Angeles, they are rare in Orange County, making the Donahue arrest the buzz of gallery row in Laguna Beach.

“We’ve been involved in a lot of stolen artworks but no fakes, as far as I know,” said Police Detective Rick Seapin of the Laguna Beach fraud unit.

From late January through March of this year, police said, Donahue sold Neville six pieces of art for $11,000. Neville said the works were lying in the back of Donahue’s shop, undisplayed, and struck him as great bargains.

Most of these six were pencil or ink sketches, such as a picture of two boys said to be a study by Pablo Picasso for his 1906 work “Two Brothers.” It sold for $1,500.

All were signed by noted artists, such as German Expressionist Emil Nolde and American John Marin. Most were accompanied by what were said to be signed certificates of their authenticity from Christie’s, the world-renowned auction house.

And all, police said, are fakes.

Police still are not certain about the origin of the works.

Investigators said they believe that one watercolor was painted by a known French artist named Jean Dufy; a work by him would have been worth less, they said, than the supposed signatory: post-Impressionist Paul Signac.

Some may not have even been created with fraud in mind. Investigators said several of the sketches may have been created by talented students, copying the works of Picasso and others for art classes.

Neville discovered the scam in June, police said, when he contacted officials at Christie’s in Beverly Hills to try to auction off several of the pieces--only to learn that he had not in fact bought a Picasso, or a Nolde, or a Marin.

Neville--who runs a side business importing hammocks from Brazil and took out a $25,000 loan against his house to pay for his art collection--also put $3,000 down on a watercolor that he thought had been created by Signac.

After his discovery, Neville went to Laguna Beach police. Investigators encouraged him to complete the sale on the Signac to gain more evidence against Donahue. They gave him $11,000 in cash--the balance of the deal--and set up the sting.

Soon after Neville walked out of the shop with the purported Signac, officers moved in to arrest Donahue--as gallery owners in the neighborhood watched.

“It seemed like he was doing a real good business--a lot of people in and out,” said Kevin Shoaf, owner of the Bluebird Gallery, next door to Donahue. “He knew his field, no doubt about that. This was news to me. We were all very interested to see what it was all about.”

Donahue had set up shop in his present location within the past six months or so, neighbors said. Police said he may also own another gallery.

Donahue had a run-in last year over a stolen painting that was for sale in his shop, but charges were never filed because it could not be shown that he knew that the work was stolen, investigator Seapin said.

And, the investigator added: “Evidently, he’s been well-respected in the industry.”

The forgery charge against Donahue stems from the signature of Christie’s administrator Hillary Niblo on the certificates of authenticity. Authorities said the signatures are fake.

Niblo said she remembers Donahue coming in with several sketches and other pieces last year, but Christie’s art experts told him that they thought some of the pieces were not authentic.

Others are not worth putting up for auction, she said.

“The most amusing part,” Niblo said, “is that the Signac (certificate) was dated 1987, and I didn’t even start working at Christie’s until 1988.”

But for Neville, nothing about the experience has been amusing.

The schoolteacher said: “A couple of (the works) I enjoyed very much. . . . The work is still nice, but knowing you paid $3,000 for something worth maybe $50, that’s not enjoyable.”

And even Donahue’s arrest was a difficult time for him, Neville said.

“I had a very uneasy feeling afterwards, an uncomfortable feeling,” he said. “I didn’t feel good about it, even though he had taken $11,000 from me (for the last piece). It’s like a student in school having to be punished--I don’t like seeing anybody go to jail or suffer.”