Art dealer arrested in $88 million fraud

NEW YORK (CNN) -- A Manhattan art dealer was arrested Thursday on an indictment charging that he stole $88 million from clients and investors, including tennis champion John McEnroe, authorities said.

Lawrence B. Salander, 59, owner of the now-defunct Salander-O'Reilly Galleries, was indicted on multiple charges, including grand larceny, securities fraud, forgery, criminal possession of a forged instrument, falsifying business records and perjury.

He defrauded 26 victims, Manhattan District Attorney Robert Morgenthau said in a statement.

"Salander stole from his victims in two primary ways: He sold artwork not owned by him and kept the money, and lured investment money in fraudulent investment opportunities," Morgenthau said.

In other cases, Salander inflated the estimated cost of artwork, oversold shares in works, claimed to own works he did not, and misrepresented or failed to pay the full return on sales when money came in, authorities said.

In one instance, to secure a $2 million personal loan from Bank of America, Salander offered pieces owned by others, including McEnroe, as security by providing phony documents to establish that he and his wife owned the art, Morgenthau said.

Salander's lawyer Charles Ross told CNN affiliate NY - One that his client is trying to raise money for bail, which was set at $1 million.

"He has been aware that there is an investigation for quite some time and he has prepared for this day," Ross told NY - One. "And as I said, he entered a not-guilty plea and we're gonna fight the charges."

The scheme funded a lifestyle that included trips to Europe by private jet, and the purchase of a Manhattan townhouse and a 66-acre estate in upstate New York, officials said.

Salander's indictment points to dealings dating to 1994. If convicted, he would face up to 25 years in prison for grand larceny and additional time for other charges.

Salander-O'Reilly Galleries went bankrupt in 2007 after more than 30 years of operation.