Immediately after the theft, the FBI identified three gallery insiders who might have contacts with professional burglars, and—either through them or independently—with organized crime.
Suspect one was Bob Horvath, the owner of one of the stolen Rockwells, who had done extensive business with Elayne Galleries. There was a federal investigation into his affairs in progress at the time of the theft, and it involved money laundering, the kind of activity that might connect him to the crime. Evidence presented in the court case alleged the following chain of events:
In October 1975, a colleague of the Horvath brothers, Thomas O’Shaughnessy, drove a truck onto the beach at Folly Cove, on the Massachusetts coast. A few minutes later, a boat nosed ashore. O’Shaughnessy and a man named Dawson unloaded the cargo, a holdful of marijuana. The Horvaths had previously paid Dawson $40,000 for the weed.
O’Shaughnessy drove the truck to Minneapolis. It was one of several loads belonging to the Horvaths that were brought to the Twin Cities over a five-year period. Court records refer to one of those deals as “a million-dollar transaction.”
About a year after the Folly Cove caper, O’Shaughnessy took up residence for a while in a motel in Ardmore, Oklahoma. By then he was under surveillance. His activities led the feds to believe that something illegal was in the works, and it might occur at a nearby airport. On December 30, 1976, police seized two aircraft and four trucks containing 17,000 pounds of marijuana at an airport near Ardmore. The occupants of the trucks were arrested.
Neither the Horvaths nor O’Shaughnessy were in Ardmore when the bust took place, and they did not stand trial in connection with the seizure, but it was cited as “a likely source of income” when the Horvath brothers, O’Shaughnessy, and a lawyer named Robert Malone stood trial for tax evasion in 1982. According to a summary of the case, “The Horvaths were in the business of distributing marijuana from 1975 through 1979. In addition to failing to report income from this illegal venture, the Horvaths allegedly made various purchases with cash through other parties under fictitious names, or through corporations, to conceal both their income and its sources.” Essentially, they were caught for money laundering.
O’Shaughnessy, a jack of all trades, was implicated in several of those transactions. One involved a $25,000 investment in a phantom oil company, with O’Shaughnessy serving as middleman. Another was the purchase of a home by Bob Horvath, with O’Shaughnessy acting as a real estate agent. Cashier’s checks from fictitious remitters were used in both deals.
Starting in 1976, the Horvaths’ money-laundering activities allegedly involved their high school buddy Robert Malone, who was practicing law in Minneapolis. Malone’s first task was collecting payments against an undocumented loan Bob Horvath claimed he had made to the owner of Spanky’s Saloon, in downtown Minneapolis. Malone deposited the payments in a bank account, which was characterized in court records by what it was not—neither a trust account nor a savings account with a beneficiary.
On two occasions, Paul Horvath brought Malone checks that he said were the proceeds of gold transactions. Malone deposited them in trust accounts, the ownership records of which “made no reference to the Horvaths.” Malone later made withdrawals from those accounts and delivered the money to the Horvaths.
Malone testified against the Horvaths at their tax evasion trial. After his testimony, he was acquitted of all charges. The Horvaths and O’Shaughnessy were convicted.
Much of the evidence used at trial against Bob Horvath was collected while the investigation of the art theft at Elayne Galleries was active and shared with agents pursuing that case. The art theft investigators considered the possibility that Horvath bought and sold art to launder money—and may have set up the theft of his own Rockwell.
Within days, they decided that he had nothing to do with the theft. The record is mum on how that conclusion was reached, but the fact that the painting he lost was not insured must have been a factor.
Horvath threatened to sue the gallery for the loss of his painting, but never did. “If I remember correctly, the statute of limitations passed while he was in prison,” says Minneapolis defense attorney Joe Friedberg.