Former tennis champion John McEnroe has been duped - along with investment firms, art owners and collectors - in a sophisticated $88m art investment scam.
Art dealer Lawrence Salander, aged 59, was arrested at his New York home today, when he and his gallery were charged with 100 counts, including grand larceny and securities fraud.
Officials said there are 26 victims of Salander's scheme including Mr McEnroe, who invested $2m for a half share of two paintings, Arshile Gorky's ‘Pirate I and II’.
Mr McEnroe never recouped the money after his share in the paintings was sold to another collector.
The scheme, which lasted from 1994 to 2007, included luring investors who paid cash in exchange for shares of ownership of works of art.
Some of the scams worked like the plot of the musical ‘The Producers,’ which includes a get-rich scheme by overselling interests in a show, Morgenthau said. Similarly, Salander at times inflated the value of paintings to score greater investments that were not returned to investors.
The investigation of Salander, the former owner of Salander-O'Reilly Galleries, is continuing.
Mr Salander faces up to 25 years in prison on the most serious charge.
His lawyer Charles Ross did not return a call seeking comment.
Others who lost money included Renaissance Art Investors, a company focused on investment in old master paintings, which lost $45m.
Earl Davis, the son of American abstract painter Stuart Davis, lost $6.7m, authorities said, while Bank of America lost $2m after Mr Salander lied about paintings he owned to secure a loan.
Hester Diamond, the widow of late renowned New York art dealer Harold Diamond and mother of Mike D of music group The Beastie Boys, lost $6m, authorities said.
Mr McEnroe was alerted to the scheme when he learned an art collector owned the same painting he had, authorities said.
A spokesman for Mr McEnroe said he was on vacation and unable to be immediately reached.
Most of the artworks, which are yet to be valued, are being held in the custody of a bankruptcy court in Poughkeepsie, New York.
Many of the investors named have already filed civil claims against Salander and his gallery, which filed for bankruptcy and closed in 2007.
