"This is not bread and milk," he said. "You can't have galleries on every corner."
Cote said his net worth of more than $3 million had been erased. Gone are his marriage, his house and most of his possessions. He doesn't blame his divorce entirely on his galleries' failure, he said, but "it certainly didn't help."
He shut his last store in December and has filed for bankruptcy protection.
"At this point, I've got a dog and an apartment, and that's it," Cote said. "This is not where I thought I'd be at 56."
Kinkade's lawyers deny Cote's allegations.
As Hazlewood, Spinello, Cote and other Signature gallery owners were faltering, the company's stock plummeted from a high of nearly $25 a share to less than $3. Former dealers allege that Kinkade allowed them to sink in order to drive down the stock price, so he could buy back the company at a bargain basement price -- a charge the artist and his lawyer said was absurd.
"There was no conspiracy to shoot ourselves in the foot," Kinkade testified in the arbitration case that was just decided. "Nobody wanted to hurt the dealers."
Kinkade, who co-founded the company as Lightpost Publishing in 1989 and took it public in 1994, bought it back in 2004 for $4 a share. Investors who had put their faith and their fortunes in the Painter of Light -- a moniker he trademarked -- were left holding a mostly empty bag.
"I took a bloodbath, an absolute bloodbath," said De la Carriere, the Los Angeles art dealer, who said she invested her inheritance in Media Arts Group stock at more than $20 a share.
But even as the company ran aground, Kinkade and others in top positions prospered, according to testimony.
From 1997 through May 2005, Kinkade earned $53 million for his work, the company's assistant controller testified. That figure includes $11.8 million from top-of-the-line "studio proofs," small-edition canvas prints that Kinkade personally retouched, or "highlighted"-- with as much as 65% of the profit going to him.
Kinkade wasn't the only one who got rich.
Barnett, then head of retail sales and now an executive vice president, also made millions as the Signature galleries were failing. Unbeknownst to the dealers, he reaped commissions on all art sold to them at wholesale, averaging more than $2 million a year for 1999, 2000 and 2001, according to testimony.
