Art: Furor over Two Long-Lost D

The American who bought them is out $450—or is it $10 million ?

The young ex-serviceman at the door of Edward Eliçofon's Brooklyn home had a knapsack full of paintings for sale. They had been bought at a flea market in Germany, the young man said. Eliçofon, a lawyer and passionate collector, was intrigued. He did not know, on that afternoon in 1946, that what the man offered was a collector's dream—and ultimately, a $10 million disappointment.

Eliçofon paid the ex-serviceman—whose name he says he has long since forgotten—$450 for two 11 -in. by 9½-in oil-on-wood portraits, one of a man, the...