Lawsuit frays strings of trust in
high-priced, secretive world;
Estate claims top dealers plundered collection of rare violins and violas
| Gwendolyn Freed; Staff Writer Londoner Gerald Segelman died in 1992 at the age of 93. His chain of movie theaters had made him wealthy, and he had spent the last 40 years of his life amassing one of the world's great collections of rare stringed instruments. He had at least 52 violins and violas worth from $15 million to $34 million. Yet he lived so quietly that his death didn't even merit an obituary. Now, eight years later, the executor of Segelman's estate claims in a lawsuit that a handful of the world's top violin dealers colluded to plunder the collection, robbing Segelman's estate of millions that he had willed to charity. |
| The repercussions from the lawsuit extend around the world and into
the Twin Cities, where some musicians wonder whether they've bought
instruments previously owned by Segelman and _ more important _ whether
they may have paid way too much for them. "The question now is whether
appraisers remain totally objective or are in fact influenced by unseen
factors such as their potential to profit from specific deals," said Jorja
Fleezanis, concertmaster of the Minnesota Orchestra, who is following the
case along with her classical music colleagues. New doubts about the accuracy of fine-instrument appraisals, such as those Fleezanis raises, arise from the details of the lawsuit. Segelman's executor, Timothy White, accuses several dealers of obtaining the rare instruments cheaply on the basis of fraudulent appraisals and then profiting when they were sold at hefty markups. The case, playing itself out in federal court in Chicago, provides a window onto the inner workings of a world where multimillion-dollar deals are made on the word of expert appraisers that an instrument is indeed valuable, and sealed with little more than a handshake. |
| The best-known defendant is [unnamed
Chicago dealer] of Chicago, America's largest dealer of high-end stringed
instruments. The company has done millions of dollars in business with
Twin Cities players alone. [unnamed Chicago dealer] is accused of conversion (misappropriation), fraud, breach of fiduciary duty and unjust enrichment. Lawyers for [unnamed Chicago dealer] , which is among the world's top three dealers, said in a memorandum filed with the court that "there is no factual basis whatsoever" for the suit. According to its lawyers' court filings, [unnamed Chicago dealer] considers the suit a "broad-brushed assault" on its reputation. [unnamed Chicago dealer], a cofounder of the company, said in a sworn statement that the company's reputation for honesty and integrity is "a vital and irreplaceable business asset, earned over many years and in many hundreds of transactions." [unnamed Chicago dealer] recently sold a 1737 Guarneri del Gesu violin for a record $6 million, it was reported last month in the Chicago Tribune magazine. The firm, the article said, sells roughly 30 instruments a month at prices ranging from $10,000 to $5 million, yielding annual revenues in the tens of millions. |
| In a sworn statement in the case,
[unnamed Chicago dealer] provided a glimpse into the world of
buying and selling fine instruments. "The high-end stringed instrument
business operates predominantly on gentleman's handshake agreements," he
said, adding that "documentation for these transactions is typically
minimal." "Authenticity and provenance of these instruments is vital to the market," [unnamed Chicago dealer] added. "And only a limited number of persons worldwide buy and sell these instruments." [unnamed Chicago dealer], who bought at least one violin from Segelman before his death, described him in a 1988 letter: "He is, although little known, one of the greatest collectors of fine violins in the world today. I have known him for about 10 years and during that period of time have seen absolutely extraordinary examples of all the great makers in his collection." |
| A legacy of strings At the time of Segelman's death, however, the value of his collection wasn't immediately clear, according to White, a lawyer and the executor of Segelman's estate, who filed the suit in Chicago. White said he knew through his uncle, who had been Segelman's lawyer for 30 years, that Segelman fancied old violins and had owned a number of them. But White said he "had no idea of the full extent or value of the collection," according to a sworn statement filed in the case. Enter Peter Biddulph, a prominent British violin dealer and a protege of Charles Beare, Britain's top dealer and chief industry consultant to the movie "The Red Violin." Three days after Segelman's death, Biddulph appeared at White's office and began to reveal the extent of the cache of violins, according to White's statement. |
| "He made it clear . . . that he was the only dealer with whom Mr.
Segelman had any contact and he was the person to whom Mr. Segelman had
provided details of his collection," White said. As a result, White and his uncle had to "rely on him [Biddulph] completely, and we trusted him completely." So Biddulph prepared probate insurance valuations of the collection, according to White, and White and his uncle then instructed Biddulph to sell the instruments. "Biddulph was confident that the estate would get much better prices selling the instruments individually than by selling the entire collection through a major auction house such as Sotheby's," White said in his statement. Biddulph was to retain a 5 percent commission on the sales. By January 1993 the violins had been sold, or so Bidulph told the Whites. |
| But a full accounting of those sales was delayed for several years
as a result of squabbling among family members and Segelman's longtime
live-in secretary over the estate. Ultimately, White said, he was forced to use a court proceeding to compel Biddulph to open his books in 1997. Here the plot thickened. According to White's sworn statement, Biddulph's records revealed that he had "sold instruments at below market rates for the benefit of dealers with whom he had longstanding relationships; sold instruments at prices higher than reported to the executors and kept the difference; received secret commissions from buyers and had secretly purchased instruments from the estate." White claimed that these records revealed secret dealings between Biddulph and three Chicago entities: a wealthy arts patron and lifetime trustee of the Chicago Symphony Orchestra named Howard Gottlieb, and two respected violin dealerships, Kenneth Warren & Son and [unnamed Chicago dealer]. The three parties are defendants in White's suit, brought on behalf of the Segelman estate. White seeks monetary damages. [unnamed Chicago dealer]and White declined to comment personally for this article. Gottlieb could not be reached, and Warren did not return phone calls. |
| Biddulph refused to comment. Robert Berger and Jack Carriglio,
attorneys for Gottlieb and Warren respectively, made brief statements
denying the allegations and vowed to defend their clients vigorously. Key parts of White's suit are allegations that Gottlieb, [unnamed Chicago dealer]and Biddulph were aware of the extent of Segelman's collection before his death and that "they acted in concert with Biddulph to defraud the estate." In the year before Segelman's death, for instance, Biddulph wrote a letter to a Japanese dealer that said in part: "I have now seen all his stock or the bit that I faxed to you but he keeps on surprising me with other violins. He simply states that when I am ready to buy with a banker's draft, he will go to the bank and get anything I want!" Included in White's statement are references to other violin transactions that show the close ties among the dealers, how they allegedly worked together to engineer profits for themselves at the expense of Segelman. In 1991, a year before Segelman's death, White asserts, Biddulph bought two Del Gesus violins, "the Mary Portman" and "the Lord Coke" from Segelman for $1.1 million each and then resold them to Gottlieb. |
| The instruments then were consigned to
[unnamed Chicago dealer] for
restoration and resale, according to White's statement. The deal called
for paying a commission and restoration fee to
[unnamed Chicago dealer], and
said half the balance from the sale was to go to Gottlieb and the other
half divided equally between Gottlieb and
[unnamed Chicago dealer]. The markups on the violins were stunning. The Mary Portman sold for $2 million _ or at least that's what Biddulph said he believed the price was, according to White's statement. The Lord Coke sold in October 1991, four months after Biddulph bought it from Segelman, for $2.3 million. White outlined other profit-sharing deals on other Segelman violins and quoted part of a letter Biddulph sent to a prospective buyer that his stake in a particular violin could not be increased: "I am sorry it could not be more, but there are too many other flies around the honeypot," Biddulph wrote. "Among those buzzing," White asserted in his statement, were the Chicago dealers. After Segelman's death, White said, the group continued as before, "with the added bonus for them that they no longer had to negotiate a price with Mr. Segelman." Now, claimed White, they could simply set their own price. |
| Gwendolyn Freed is a Star Tribune editor. |
| Segelman's collection This list, filed with court papers, was prepared by Peter Biddulph for the executors of Gerald Segelman's estate. All the instruments were made in the golden period of Italian violin-making, 1650-1750. The values listed are approximate current market values supplied by John Waddle, a St. Paul stringed-instrument dealer. 1. Antonio Stradivari, $1 million-$3.5 million 2. Antonio Stradivari, "Rode," $1 million-$3.5 million 3. Antonio Stradivari, "Arditi," $1 million-$3.5 million 4. Joseph Guarnerius, "Mary Portman," $1.5 million-$4.5 million 5. Joseph Guarnerius, "Lord Coke," $1.5 million-$4.5 million 6. Carlo Bergonzi, $700,000-$900,000 7. Carlo Bergonzi, $700,000-$900,000 8. Giovanni Paolo Maggini, "Dumas" viola, $400,000-800,000 9. Giovanni Paolo Maggini, "Dumas" violin, $300,000-$600,000 10. Peter Guarnerius, $350,000-$500,000 11. Michael Angelo Bergonzi, $200,000-$300,000 12. Nicholas Bergonzi, $200,000-$350,000 13. Nicholas Amati, $200,000-$400,000 14. Nicholas Amati, $200,000-$400,000 15. Hieronymous Amati, $100,000-$150,000 16. J.B. Guadagnini, $400,000-$800,000 17. J.B. Guadagnini, $400,000-$800,000 18. J.B. Guadagnini, $400,000-$800,000 19. Joseph Rocca, "Alard," $200,000-$250,000 20. Joseph Rocca, $100,000-$200,000 21. Joseph Rocca, $100,000-$200,000 22. Joannes Franciscus Pressenda, $200,000-$250,000 23. Francesco Rugeri, $250,000-$350,000 24. Tomaso Balestrieri, $175,000-$275,000 25. Camillus Camilli, $130,000-$200,000 26. Lorenzo Storioni, $250,000-$300,000 27. Lorenzo Storioni, decorated, $250,000-$300,000 28. Matteo Goffriller, $300,000 -$400,000 29. Michael Deconet, $80,000-$110,000 30. Marc Antonio Cerin, $75,000-$95,000 31. Sanctus Serafin, $200,000-$300,000 32. Joannes Tononi, $90,000-$120,000 33. J.B. Rogeri, $250,000-$350,000 34. Antonio Gragnani, $80,000-$120,000 35. Antonio Gragnani, $80,000-$120,000 36. Spiritus Sorsana, $80,000-$100,000 37. Carlo Antonio Testore, $100,000-$150,000 38. Giovanni Grancino, $150,000-$200,000 39. Carlo Ferdinando Landolfi, $175,000-$200,000 40. David Tecchler, $70,000-$120,000 41. Nicholas Gagliano, $150,000-$250,000 42. Nicholas Gagliano, $150,000-$250,000 43. Nicholas Gagliano, $150,000-$250,000 44. Ferdinand Gagliano, $120,000-$150,000 45. Alexander Gagliano, $200,000-$300,000 46. John Betts, $10,000-$25,000 47. J.B. Vuillaume, viola, $90,000-$150,000 48. J.B. Vuillaume, "Le Messie" copy, $80,000-$120,000 49. J.B. Vuillaume, $80,000-$120,000 50. J.B. Vuillaume, $80,000-$120,000 51. Jacobus Stainer, $85,000-$120,000 52. Francesco Gobetti, $150,000-$230,000 |