http://www.theartnewspaper.com/news/article.asp?idart=11667

US acts to seize Picasso from Chicago arts patron
Marilynn Alsdorf is alleged to have violated the National Stolen Property Act
By Martha Lufkin

The US government has moved to confiscate a Picasso painting from Chicago collector Marilynn Alsdorf, in a case that raises new legal questions in the ongoing spate of lawsuits over Nazi-looted art. The attempt is a rare instance in which federal prosecutors, apparently for the first time in California, are invoking the US National Stolen Property Act (NSPA) against an individual collector in an attempt to seize art in a Nazi-loot claim, on the theory that the work is stolen goods which crossed state lines.

The painting has been served with a federal seizure warrant but remains in Ms AlsdorfÇs custody. Ms Alsdorf is a life trustee of, and major donor to, the Art Institute of Chicago.
The case also appears to be the first instance in which a government confiscation attempt turns on the allegation that a collector knew a work of art was stolen because the Art Loss Register (ALR), the organisation which maintains the leading database of Nazi-looted art, notified her of its finding that it was. The case also raises questions as to how a US court would apply French law; the collector asserts that she has good title to the allegedly Nazi-looted work, ÑFemme en blancî, based on the good faith, under French law, of her dealer who bought the work in Paris in 1975.

The confiscation suit, commenced on 22 October in the Los Angeles federal trial court by US Attorney Debra W. Yang, alleges that Ms Alsdorf transported the painting, which is worth an estimated $10 million, across state lines in December 2002 Ñwith knowledge that it was stolenî, in contravention of the NSPA.
 
The painting is already the subject of two other lawsuits. The first, brought in California state court in December 2002 by Thomas C. Bennigson, grandson of the paintingÇs prior Jewish owner, Carlota Landsberg, seeks to recover the work from Ms Alsdorf. Mr Bennigson sued after the ALR notified him that he owned the painting as LandsbergÇs heir and that the work was in Ms AlsdorfÇs possession.

In September 2004, Ms Alsdorf began a separate federal lawsuit in Chicago, seeking a declaration of good title to the painting. She acquired valid title from a dealer who had a Ñsuperior right of ownership against all othersî under French law, she says.
According to the US complaint, Carlota Landsberg fled Berlin in about 1938 after sending the painting for safekeeping to a French dealer. The work was stolen by Nazis in 1940 from the dealerÇs home, the US says. The painting was included on a list of Nazi-looted paintings in 1947, the complaint says.

In 1975, Ms Alsdorf and her husband bought the painting in New York from dealer Stephen Hahn, the government complaint says. In January 2002, at the request of David Tunkl, of David Tunkl Fine Art, Los Angeles, where the painting had been briefly exhibited the previous year, the work was shipped for possible sale to Geneva, where the Paris dealer Didier Imbert viewed it. Mr Imbert contacted the Art Loss Register in London as part of a due diligence inquiry before possible purchase, the complaint says.

According to the complaint, Sarah Jackson, the Historic Claims Director of the ALR, told Mr Imbert that the painting was reported as having been looted by Nazis. From April 2002 and in other instances before December 2002, representatives of the ALR told Ms Alsdorf, her attorney or Mr Tunkl that the painting had been stolen by Nazis, the complaint says, and provided documentation which was forwarded to Ms Alsdorf.
The confiscation suit follows Ms AlsdorfÇs shipment of the painting from Los Angeles, where the work was again being held at David Tunkl Fine Art, to Chicago on 18 December 2002. In a December 2002 court filing seeking a restraining order to stop the painting from leaving California, BennigsonÇs lawyer, E. Randol Schoenberg, said that the Ñprecipitousî move of the painting would make recovery more difficult. According to the government complaint, Ms Alsdorfís lawyer, Stephen Bernard, told Schoenberg that he believed Illinois law would be better for his client than California law. The court granted the restraining order, but the painting had already left the state.

Ms Alsdorf says that even if the work was stolen by the Nazis, French law governs her purchase, because her dealer, Stephen Hahn, bought it in Paris. In an affidavit filed with AlsdorfÇs Chicago lawsuit, two French professors of law say that by operation of French law, Alsdorf acquired valid title because Hahn was told that the painting came from Ña distinguished private collectionî.

In a separate affidavit, Mr Hahn says that the Paris dealer who sold him the Picasso, Maurice Covo, Ñnever said anything to me about any irregularity in the history of the paintingî and Ñcertainly never mentionedî Nazi theft. Ms AlsdorfÇs assertion of good title will presumably be used to contest the governmentÇs argument that she knew that the painting was stolen when she transported it across state lines.

The California Supreme Court is considering whether California state courts can hear Mr Bennigsonís lawsuit against Ms Alsdorf, who is a resident of Illinois. Ms Alsdorf will ask the Los Angeles federal court to determine which court should hear the governmentÇs confiscation case.

Ms Alsdorf is represented by attorneys Richard H. Chapman and others of FagelHaber LLC, Chicago, and Roscoe Howard of Sheppard, Mullin, Richter & Hampton, of Washington, DC.