NEW YORK— Last year, art dealer Larry Salander was featured on a huge billboard that covered construction work on a new First Republic Bank branch on 79th Street and Lexington Avenue. Salander and his daughter, Ivana, who is also in the business, were shown as clients of First Republic, and the bank urged new clients to join them. The ad also ran in Playbill and other publications that target the cultured rich.

Now the charming, voluble dealer, who opened Salander-O’Reilly Galleries 31 years ago, is being sued by First Republic and about 20 other parties, all of whom claim he owes them money. The business is now some $200 million in debt and soon to be homeless, its fall from grace so complete that no one in the trade can recall such a sudden collapse of a well-known gallery.

On October 11, Judge Richard Lowe of the New York State Supreme Court ordered that the gallery, which occupies the former Forstmann mansion at 71st Street and Madison, be locked up with security guards posted—at Salander’s expense—to ensure that works of art do not leave the premises. The order came under pressure from Donald Schupak, a principal in the Nevada-based art fund Renaissance Investors Inc., an entity in which Salander was also a principal and acted as "art partner." On Monday, October 15, Salander settled with Schupak, giving the investor access to 619 Renaissance paintings stored in the gallery’s basement, according to Schupak’s lawyer, Barry Slotnick. A settlement reached the same day gave six paintings and the contents of the gallery’s formidable library to New York hedge funder Roy Lennox of Caxton Associates, who charged that Salander was running a "Ponzi scheme" in which the dealer used Lennox’s money—allegedly some $14 million—to cover outstanding debts involving other deals.

Settling those lawsuits was supposed to leave Salander free to open two much-anticipated autumn exhibitions that he hoped would end his financial woes. "Caravaggio," a show mounted in partnership with the London dealer Clovis Whitfield, offered "Apollo the Lute Player," which the gallery attributed to Caravaggio and priced at $100 million. The other exhibition, titled "Masterpieces of Art," offered a range of Old Masters from Tintoretto to Carracci. The shows never opened. On the afternoon of October 15th, Whitfield carted away more than 40 paintings, claiming he did not "feel secure" having them in the gallery, and other lenders followed suit.

Salander’s dream team of well-heeled clients is now a procession of litigants. The estate of Stuart Davis has demanded an accounting of hundreds of paintings deposited at the gallery, charging non-payment in the millions of dollars and accusing Salander of diverting proceeds for other purposes. The estate of Leonard Baskin has already changed galleries, and its representatives moved all of Baskin’s work out of Salander-O’Reilly’s premises. Former tennis star John McEnroe, who, like many of the plaintiffs, was close to Salander personally, alleges that Salander broke a promise to double his $162,500 investment in five months. Aby Rosen, Salander’s landlord (as well as a major collector of contemporary art), seeks unpaid rent for the $183,000-per-month space. Dealer Elaine Rosenberg, who was Salander’s landlord from 1999 to 2006, when his gallery was on 79th and Madison, has filed two lawsuits against him. One is for back rent and the other is for the unpaid share of proceeds from the sale of a 2005 Stuart Davis painting in which she invested $200,000.

Before the debacle, Salander-O’Reilly seemed to have found the perfect equation. Known for his innovative mix of American modernists, Renaissance paintings and Baroque sculpture, he was perceived as one of those rare dealers who can combine purism with profit. His oft-stated goal was to channel some of the new wealth on Wall Street away from the "overrated and overpriced" contemporary market and toward the refinement and value of the Renaissance and Baroque. Clients responded, and soon Salander was living large, flying in private jets and hyping high-priced sculptures by Bernini and Donatello and paintings by Arshile Gorky and Rembrandt at Maastricht.

But his success formula turns out to have been too good to be true, and there had been skeptics all along who questioned the extent to which the Old Master clientele could be expanded. "It’s never worked," says dealer Richard Feigen. "It’s a question of supply—there isn’t any, when you’re talking about world-class paintings." Another dealer recalls, "We all knew the extravagant lifestyle, and we all knew the extravagant attributions." Indeed, the "Caravaggio" that Salander hoped would bring $100 million was sold as "School of Caravaggio" at Sotheby’s in 1991 for $110,000, and a museum curator who asked not to be identified called it a "pastiche, and certainly not a Caravaggio." Caravaggio specialist John T. Spike lists it as a "copy" in his 2001 monograph on the artist.