A long-running dispute over a collection of roughly 1,800 paintings attributed to Russian modernist masters has escalated after a litigation funder said it may have been misled about the works’ authenticity. The development has added a new layer of tension to a case already entangled in competing ownership claims, criminal investigations, and multimillion-dollar lawsuits across several countries.
The controversy centers on the late Palestinian collector Uthman Khatib, his son Castro Ben Leon Lawrence Jayyusi, and their Prague-based litigation funder, LitFin. Beginning in 2023, LitFin backed lawsuits brought by the Khatibs against Israeli-Russian businessman Mozes Frisch, whom they accuse of stealing all 1,800 paintings. They are seeking the return of the paintings or damages of approximately $323 million, the collection’s purported fair market value. The collection includes paintings attributed to El Lissitzky, Natalia Goncharova, and Kasimir Malevich.
But the paintings themselves have a long and checkered history. Their original owner, the late Israeli art dealer Itzhak Zarug, was convicted in 2018 in Germany of selling forgeries. As part of the investigation into Zarug, Germany’s Federal Police (BKA) seized the 1,800 artworks in 2014. The BKA previously told ARTnews that it believed all of the works were forgeries, citing improper storage conditions and what they described as implausible or opaque provenances supported by assessments from dubious art historians. All of the paintings seized in 2014 were registered with the Art Loss Register, the world’s largest database of lost and stolen art, in 2018. While the paintings were under confiscation in 2015, Zarug sold Khatib a 49 percent stake in the collection. But just months after German authorities returned nearly all of the seized paintings to Zarug in 2019, Frisch allegedly removed them from a German storage facility.
The Khatibs filed a lawsuit against Frisch in Frankfurt in 2023, accusing him of theft, a charge he has denied, maintaining that he is the lawful co-owner of the collection. He has based that claim on a private ownership agreement between him, Khatib, and Zarug in 2020 that purported to divide the collection. (Khatib and Zarug both died last year.)
However, as the court battle drags on, the relationship between the Khatibs and LitFin has soured. In October 2024, Castro accused the litigation funder of breaching their contract by halting payments toward legal fees after disbursing roughly €3.7 million of an agreed €8.5 million litigation-funding package. That December, Dentons, the law firm hired by the Khatibs, formally notified LitFin that it was in breach of contract, and in February 2024, initiated arbitration in Germany. Castro has accused LitFin of refusing to pay further legal bills unless it was granted greater control over the lawsuits, including becoming a signing party to settlements, negotiating directly with defendants, and requiring the family to waive potential claims against the funder.
Castro told ARTnews, through SFA Associates, the PR firm representing the family, that he believes LitFin breached the litigation-funding agreement by failing to meet its funding obligations and by initiating settlement discussions with Frisch without authorization or the Khatib family’s knowledge. He said that he has received legal advice estimating that a breach of contract claim against LitFin could be worth €100 million.
LitFin has denied those allegations. In a statement to ARTnews, Ondrej Tylecek, a partner at the firm, said Castro’s claims are “entirely false and misleading.” He added that LitFin “has always honored its contractual obligations and has never made payment of legal bills conditional on taking control of any lawsuit.” As for the €100 million claim, Tylecek called it “absurd.” Additionally, Tylecek said LitFin now believes “it might be the case” that it was misled by Castro over the purported authenticity of the paintings.
Castro, for his part, strongly disputed the idea that LitFin was misled. In an email to ARTnews sent via SFA, he wrote, “We have never had any communication with LitFin regarding the authentication and valuation of the collection. LitFin has never advised the Khatib family of this [claim about being misled], nor of any supporting evidence or argument.”
The dispute between the Khatibs and LitFin only grew messier last summer, after Khatib’s death in July. In August, LitFin filed an affidavit in an Israeli court asserting secured-creditor rights in Uthman Khatib’s estate and seeking the appointment of a court-supervised executor. The filing claimed LitFin had provided more than $4 million in collateral-backed financing and was entitled to repayment ahead of other heirs, a figure Castro disputes.
The affidavit also alleged that Castro had engaged in behavior that LitFin characterized as having “criminal relevance,” without specifying the alleged incidents. The firm also cited what it described as Castro’s prior criminal conviction as grounds for concern about his suitability to manage the estate. LitFin warned that estate assets could be moved beyond judicial oversight absent the appointment of a neutral executor. (In 2015, Castro was convicted in Germany of intentional market manipulation, for which he received a two-year prison sentence, suspended on probation.)
Through SFA Associates, Castro rejected the characterization and said the affidavit further demonstrated LitFin’s efforts to exert control over the litigation.
Tylecek told ARTnews in November that the affidavit reflected standard litigation-finance practices rather than an attempt to take over the case. He said the assignment of rights referenced in the filing was a common security mechanism under German law and that funding was halted only after what LitFin described as serious, unremedied breaches of the agreement. He declined to detail those breaches, citing confidentiality obligations.
ARTnews has reviewed messages that LitFin is alleged to have sent to Dentons in 2025 while Heiko Heppner (then a partner at the firm) was representing the Khatib family. The communications outline a proposed restructuring of the litigation that would have expanded LitFin’s financial and strategic role. The proposals include LitFin’s participation in settlement negotiations, the suspension of court and arbitral proceedings, and the use of irrevocable instructions or powers of attorney. They also envisage LitFin’s involvement in handling the seized artworks, including their authentication, valuation, custody and escrow arrangements, and potential sale.
LitFin told ARTnews that, due to “strict confidentiality,” it could not confirm the authenticity of the documents and denied that the proposals amounted to an attempt to take control of the litigation. “There are no suggestions to ‘take over’ the claim mentioned in the document,” the company said, adding that litigation funders often assist in complex negotiations at the request of clients or their legal advisers.
LitFin has also disputed public characterizations of its conduct. In August, Heppner told Bloomberg, “Funders always try to spend as little as possible and profit as much as possible, but they usually stay within the bounds of ethics and the law. It became quite apparent that LitFin was crossing those boundaries.”
Tylecek claimed to ARTnews that Heppner had since withdrawn the statement. Heppner, now a partner at Bird & Bird, declined to comment. The quote remains in the Bloomberg article; the news organization declined to comment.
The Frisch case remains unresolved. In 2024, French authorities raided Paris-based art authentication firm ArtAnalysis and seized 135 of the missing 1,800 paintings, after the Khatibs reported the works stolen. The seizure aimed to secure the artworks—valued at €200 million by Doer Dallas Auctions—while competing ownership claims and provenance disputes are adjudicated.
ArtAnalysis owner Laurette Thomas, together with Frisch and art collector Olivia Amar, sued the Khatib family seeking the return of the works and €29.3 million in damages. In early 2025, however, a Paris court upheld the seizure, finding that Frisch and his co-plaintiffs had failed to establish ownership or lawful possession of the paintings and ordering that the works remain secured while the Khatib estate continues to pursue its claims internationally.
“The court in Paris made the right decision, as did the Frankfurt courts, and we expect the courts in Tel Aviv will follow suit,” Castro said in a statement in January 2025. “When we have possession of our collection once more, it will be our turn to seek compensation.”
Frisch did not respond to requests for comment.
Through it all, the Khatibs have maintained that the paintings are genuine. In 2024, the family issued a public statement, stating that it had “undertaken extensive due diligence into the provenance of the collection as a whole and is confident in the origins of the works.”
“Put bluntly,” the statement continued, “the Khatib family continues to invest considerable sums of money, and hours of time over many years, into the legal action to recover the collection; and would not be doing so if it had doubts about the authenticity of the collection.”
