The trial over Marguerite Hoffman’s confidentiality agreement is the subject of a Wall Street Journal piece today that rightly focuses on the important effects a ruling might have on private art transactions. Hoffman is upset at the fact that a work she sold privately with a great emphasis on confidentiality came up for sale again three years later at Sotheby’s and was easily identifiable as the work she had owned.
But the fun of the story lies deeper down where various individuals are described as having almost supernatural powers over their clients to influence their market behavior:
Mrs. Hoffman’s legal complaint is replete with allegations of behind-the-scenes dealings. Mr. Mnuchin’s gallery obtained an extra $250,000 commission in the initial 2007 sale, paid by the buyer, that was hidden from the seller, her complaint says. When the painting was later consigned to Sotheby’s for auction, Mr. Mnuchin broke the news to the Hoffman camp, allegedly saying he felt “simply terrible” but had been powerless to stop the sale. He didn’t tell Mrs. Hoffman and her representatives that he allegedly had played a key role in persuading Mr. Martinez and Studio Capital to sell the Red Rothko at auction, her complaint claims.
Bill Carmody, an attorney for L&M Arts, said “anybody can throw sensationalistic things into a complaint, but there’s no support for this sort of allegation.” He said Mr. Mnuchin had no incentive to push the painting toward a Sotheby’s auction, because he only makes money from private sales, not from an auction.
Sotheby’s Mr. Meyer auctioned the painting off for Studio Capital in 2010. According to the complaint, Mr. Mnuchin told Mrs. Hoffman’s representative that Mr. Meyer had “seduced” Mr. Martinez and his associates into selling the Rothko painting at auction. Mr. Meyer declined to comment.