Sam Zell’s such a sharp operator that even when he’s the victim of fraud, someone else ends up taking the loss. The Courthouse News Service reports on the suit between Zell’s insurance company and the gallerist who ripped him off:

In a $5.8 million demand in Los Angeles Superior Court, Chubb Indemnity Insurance sued David Tunkl and his art gallery Worldwide Masterpiece. Chubb sued as subrogee of Samuel and Helen Zell and The Samuel Zell Revocable Trust.  […]  Chubb claims the Zells delivered three pieces of art to Tunkl and Worldwide in 2007 and 2008, […] The works were Balthus’ “The Cat With Mirror III,” which was appraised at $5 million; Leger’s “Study for the Tugboat,” which the Zell Trust had bought for $375,000; and Leger’s “Mona Lisa with Keys (First State),” which the Trust bought for $900,000.

The insurer says that in June 2009, “Tunkl confessed to Mr. and Mrs. Zell that he had sold the three artworks without the Zells’ authority to sell the artworks, and that the updates about interested buyers that he previously had given the Zells had been false. “Tunkl further acknowledged to the Zells that he had spent the money he had received from the sale of the three subject artworks, and had no funds remaining at that time with which to pay the Zells.” Chubb says it forked over $5,775,000 to the Zells, under the terms of its policy. Now it wants Tunkl and Worldwide to pony up.

Zell Says LA Art Dealer Took Him for Millions (Courthouse News Service)