In a decision Washington's National Gallery claims was done “to avoid the heavy toll of litigation” the gallery has agreed to return Picasso's pastel drawing "Head of a Woman" to the heirs of German-Jewish banker, Paul von Mendelssohn-Bartholdy. 

The descendants of the banking Mendelssohns (a branch of the family of composer Felix Mendelssohn-Bartholdy) have long claimed that the artwork created by Picasso in 1903, belongs to them, believing that Mendelssohn-Bartholdy was pressured to sell the artwork as a result of the spread of Fascism and the Nazis coming into power in Germany in 1933.

Ousted from the Central Association of German Banks and Bankers in 1933, and then subsequently from the board of the Reich Insurance Office in 1934, Mendelssohn-Bartholdy sold the artwork “Head of a Woman” to dealer Justin K. Thannhauser in 1934.  He later died of heart failure on 10 May  1935.

Thannhauser, one of the most important dealers of modern European art, managed both the Munich gallery of his father, and a second gallery, Moderne Galerie in Berlin (1927–37) before relocating first to Paris in 1937, then after the outbreak of World War II, to Switzerland, and then to New York. 

The National Gallery listed the provenance of the artwork as follows:

PROVENANCE

Paul von Mendelssohn Bartholdy, Berlin, until 1937; Justin K. Thannhauser, New York; The Solomon R. Guggenheim Foundation, New York; (sale, Sotheby's, New York, 21 May 1981, no. 533); (sale, Sotheby's, London, 28 June 1988, no. 26); The Ian Woodner Family Collection, New York; (sale, Christie's, New York, 5 November 1991, no. 44, unsold); gift to NGA, 2001.

While there is no (direct) evidence that the American collector who donated the artwork to the Washington's National Gallery knew they were acquiring a forced sale Picasso, the combination of seemingly legitimate middlemen, and the zeal by which wealthy art collectors purchased renowned artists' artworks after World War II, alongside an unwillingness to ask probing questions of dealers and donors, had a predictable outcome. 

One has to ask though, with a 2001 donation date, why the one of Washington's most important museum institutions didn't look further into the pedigree of this creation, asking the tough questions they needed to ask, when accessioning this artwork into its collection.