Last suit on violin fraud is settled Estate charged low appraisals, high-price sales By Howard Reich, Tribune arts critic Published December 2, 2004 When British violin collector Gerald Segelman died in 1992, at age 93, his multimillion dollar collection of rare Stradivari, Guarneri and Amati fiddles set off a flurry of fast sales and subsequent lawsuits from London to Chicago. The last of these disputes, in U.S. District Court in Chicago, is ending in an out-of-court settlement, attorneys for both sides said this week. They declined to reveal details of the agreement. The civil suits, filed in London in 1997 and Chicago in 1999, narrowly opened a window on how business is conducted in the rare-violin trade, detailing private transactions among sellers, buyers and middlemen. The Segelman estate alleged that several dealers and investors defrauded Segelman's charitable trust by providing low appraisals of the instruments before purchasing them, selling the instruments to one another at steep markups. But with each of the cases having ended in an out-of-court resolution, none of the legal issues raised by the estate has been resolved. Though Segelman's estate was set to go to a jury trial earlier this week against Kenneth Warren & Son, a Chicago rare-instrument dealer, the two sides have reached a settlement agreement in principle. Dismissal of the case by Judge Wayne R. Andersen is expected soon, according to Warren attorney Jack J. Carriglio and estate attorney Peter C. John. In the suit, the Segelman estate accused Warren & Son of partnering with London violin dealer Peter Biddulph in "providing unfair and unreasonably low expert opinions" of violin values, of "wrongfully purchasing property of the estate at substantially below market value" and of "wrongfully purchasing estate property in secret." Warren denied the charges in court documents, though he declined to comment on the case. In earlier cases, the Segelman estate asserted in court documents that Biddulph, Chicago dealer [unnamed Chicago violin dealer] Inc. and Chicago investor Howard Gottlieb acquired Segelman instruments at devalued prices, reselling them at steep markups. The dealers and investors disagreed, saying they were simply buying and selling instruments in the same manner the rare-violin trade always has been practiced. The estate charged that London-Chicago investors made six- and seven-figure profits on individual Segelman instruments. In one instance, Biddulph allegedly acquired a Guarneri del Gesu violin from Segelman for $950,000 and quickly resold it for $2.3 million, according to court records. Shortly after the start of a London trial in 2001, Biddulph settled, agreeing to pay the estate $4.5 million. In Chicago, the estate came to terms with Gottlieb in 2001, though both sides agreed not to reveal details. And the estate resolved its dispute with [unnamed Chicago violin dealer] in March 2002, again with a confidentiality agreement. So the concept of "unjust enrichment," an emerging concept in property law that surfaced repeatedly in these cases, was not tested here. "I think the whole matter was unfortunate," said [unnamed Chicago violin dealer], co-founder of [unnamed Chicago violin dealer]. "And its being completed now is a good thing for everyone concerned." Copyright © 2004, Chicago Tribune