Rothko case

[1][2][3][4][5] The revelations in the case of greed, abuses of power and conspiracy[6] by financial interests in the art world were described by the New York Court of Appeals, the highest court of New York state, as "manifestly wrongful and indeed shocking",[1] serving as a cautionary tale for both artists and their gallerists.

"[8] One year later Rothko died by suicide on February 25, 1970, leaving an estate consisting primarily but not entirely of 798 of his paintings.

Further, the 100 paintings 'sold' after Rothko's death by the estate executors through Marlborough were not sold to bona fide purchasers, but were instead retained by the gallery which shuffled the sale monies through its accounts in Europe, and which then quickly 're-sold' the works to actual purchasers for 5 to 6 times the value declared by the estate.

Marlborough disputed the return of the paintings and was able to prevail as to those works it had sold during the proceedings in defiance of the court's orders to the contrary.

Those works remained in the hands of collectors, including Rothko's 1953 oil on canvas painting, Homage to Matisse, which later sold at public auction for US $22.4 million.

The courts involved in litigating the Rothko matter were faced with many complex issues as part of and beyond the wrongdoing of the Marlborough group as estate executors.

[7]The Internal Revenue Service audited the Rothko Foundation and determined that Mark Rothko's former friend and ex-estate executor Bernard Reis was liable for various self-dealing excise taxes under section 4941 of the Internal Revenue Code of 1954 (IRS code) for the years 1970 through 1974 in the total amount of $18,582,500, and additions to tax under sections 6651 and 6684 for the same years in the respective total amounts of $518,125 and $2,112,500.

Reis' estate (he was dead by that time) lost its summary judgment motion to make the ruling go away.