Over 200 artworks once promised to New York's American Folk Art Museum will reportedly be up for auction at Sotheby's.

Art collector and jeweler Ralph Esmerian, who is currently serving a six-year prison term for wire fraud and other charges, had promised 263 works of folk art to the museum in 2005. Some of the same works were used as collateral to secure multi-million-dollar loans from Sotheby’s and Christie’s by the former museum chairman.

While the museum was allowed to retain 53 artworks by Manhattan’s US Bankruptcy Court in a March settlement, the bulk of Esmerian's prized collection will be sold at auction. According to court papers, Sotheby’s will offer the works in December 2013 or January 2014 to repay Esmerian's creditors, and to the chagrin of rival auction house Christie's.

“Esmerian, who went to jail for doubly pledging collateral to his creditors, apparently defrauded his victims in a similar manner by doubly promising exclusivity rights to both auction houses,” Christie’s said in a court filing that contests Sotheby's pending sale of the artworks.

A bankruptcy judge will review the case in July.

NOTE: A previous version of this article incorrectly stated that the museum would be selling artworks promised by Esmerian. The museum is debt-free. The works of art promised by Ralph Esmerian, other than the 53 works that the museum is keeping, are reverting to trustees who represent the bankruptcy estate of Ralph Esmerian. (4/30/13)