LOS ANGELES (CN) - A former Los Angeles art dealer faces grand theft charges for failing to pay out $1 million to former Disney head Michael Ovitz for two pieces of art taken on consignment, Los Angeles prosecutors said Friday.
County prosecutors charged Perry Rubenstein, 62, with three counts of grand theft by embezzlement. He is scheduled to appear before a judge today at the Clara Shortridge criminal court in downtown LA.
According to the Los Angeles County District Attorney's office, Rubenstein sold two of artist Richard Prince's paintings for Ovitz for more than $1 million in 2013.
"In both instances, Rubenstein allegedly never paid his client and kept the proceeds," the District Attorney's Office said.
Alexander Rufus-Isaacs, an attorney who represented Rubenstein in three related civil cases, said he was "astonished" when heard that his client had been criminally charged.
Rubenstein had reached a settlement with Ovitz earlier this year, Rufus-Isaacs said, and as part of that agreement the businessman had agreed not to take his claims to law enforcement.
Perry Rubenstein Gallery declared bankruptcy in 2014.
"Perry's trying to get back on his feet and he's going through a very painful divorce," Rufus-Isaacs said during a phone interview. "It's very upsetting for him that he's now facing these criminal charges when our view, very strongly, is this really isn't his personal responsibility. It's his failed business' responsibility and he really shouldn't be in this position."
According to prosecutors, Rubenstein previously sold a painting by Takashi Murakami — referred to in court records as the "Murakami Scroll" — on behalf of Michael Salke, but failed to pay him proceeds.
Salke sued Rubenstein in May 2013, claiming the dealer "secretly" sold the artwork for $630,000 but only paid Salke $415,000, leaving a balance of $160,000 after the dealer took a commission.
About two and half years ago, Ovitz — the former head of the Walt Disney Company and co-founder of talent agency CAA — sued Rubenstein for breach of contract and fraud claiming he took Prince's two pieces but then refused to hand over proceeds from sales.
One piece identified as "Nobody's Home" was sold for $475,000 even though Ovitz asked that it not be sold for less than $575,000, the Nov. 26, 2013 complaint said.
Ovitz said he never received proceeds from the second piece, "Untitled (de Kooning)." He asked for a minimum of $650,000 for the artwork, according to the complaint.
The 69-year-old Ovitz filed a notice of settlement in the case in February according to court records, and a judgment of dismissal was entered in Los Angeles County Superior Court last month. Rufus-Isaacs told Courthouse News that all three related civil cases — including a complaint by a New York plaintiff seeking to enforce the purchase of "Nobody's Home" — had been resolved.
Prosecutors are recommending a bond of $1 million. If convicted, Rubenstein faces up to 15 years in state prison.
His case number is BA444929. White collar crime attorney Marisa Zarate is prosecuting the case. The Los Angeles Police Department's Bunco-Forgery Division's investigation into the case is ongoing, according to the DA's office.
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