Austrian Museum Settles on Painting Stolen by Nazis

Wall Street Journal 21 July 2010
By Kelly Crow

In a settlement that resolves one of the art world's longest-running ownership disputes, Vienna's Leopold Museum agreed Tuesday to pay $19 million to the heirs of a Jewish art dealer for the right to keep an Egon Schiele painting that was stolen by the Nazis during World War II.

According to the settlement, Schiele's 1911-12 portrait of his redheaded mistress Valerie Neuzil, "Portrait of Wally," will be exhibited at New York's Museum of Jewish Heritage for several weeks before going on view permanently at the Leopold.

       "Portrait of Wally'' by Egon Schiele.

In a statement, the heirs called the deal a historic victory for their family. Messages left Tuesday evening with the museum and its New York-based lawyer, William Barron, weren't immediately returned.

The painting originally belonged to Vienna dealer Lea Bondi Jaray, who was forced to flee to London in 1939. After the war, the U.S. military seized "Wally" from the Nazis and handed it over to the Austrian Federal Office for the Preservation of Historical Monuments, along with a group of paintings that had belonged to a Jewish collector, Heinrich Rieger.

Rieger's heirs eventually sold the Schiele to the Austrian National Gallery, which in turn sold it in 1954 to Viennese eye doctor Rudolf Leopold, who founded the museum that bears his name.

Bondi Jaray later asked Leopold to return her painting, but he told her he had bought it legally, according to court documents. She died in London in 1969.

The controversy over "Wally" erupted in 1997 when the Leopold loaned the painting to New York's Museum of Modern Art for its show "Egon Schiele: The Leopold Collection." Bondi Jaray's heirs complained, and Manhattan District Attorney Robert Morgenthau seized the work as potential Nazi loot. When the state's Court of Appeals ruled in 1999 that the city had to return the work, the federal government confiscated it as potentially stolen property and stored it with U.S. Customs, where it has remained until now.

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