Then-district attorney Robert Morganthau, investigating the case, had lost an appeal and called the federal customs department on a Hail Mary pass, begging to keep "Portrait of Wally" in the U.S.
NYPD Commissioner Raymond Kelly, who headed customs at the time in 1998, issued an order on the spot that prevented the painting from going anywhere.
On Thursday, the 1912 oil portrait was displayed at the Museum of Jewish Heritage after a settlement between the Vienna museum that had possession and the family of the Jewish art dealer it was stolen from. The brightly colored portrait will stay there for three weeks.
"If we hadn't done it, it would've been gone," Kelly said of the painting. "I remember his impassioned plea," he said of Morganthau. "He is so 110 percent committed to everything he does and it was a classic case of Morganthau at work."
The agreement was reached shortly before a federal trial after 12 years of litigation. Under the settlement, the portrait will be returned to the Leopold Museum in Vienna and displayed with an acknowledgment that it was stolen by a Nazi agent. The museum will own the work, by Austrian expressionist Egon Schiele, after paying $19 million to the estate of art dealer Lea Bondi Jaray.
The work was among more than 100 paintings lent to MOMA by the Leopold Foundation for a 3-month exhibit that ended Jan. 4, 1998. At the time, it was estimated that "Portrait of Wally" was worth about $2 million.
Henry Bondi of Princeton, N.J., filed a claim that said the painting had been taken from his late aunt, a Viennese Jew, as she fled her home in 1939 to escape to London when Germany annexed Austria. She died in 1969. Henry Bondi also has since died. Morganthau and customs officials investigated the case.
The Leopold Museum has always insisted that it acquired the painting in good faith from legitimate postwar owners.
Bondi's son Andre said tearfully during the unveiling ceremony that he felt his family was finally vindicated.