The recently-painted work, a forest scene entitled Painters Garden, was being sent from Freud's London home to Acquavella Galleries on the Upper East Side when art handlers hired by the gallery found the crate it was shipped in was empty. It was left to Nicholas Acquavella, a co-owner of the gallery, to break the news to the 80-year-old Berlin-born artist. "He was very upset; we all were," he told the New York Times. "He had just finished it. We spent an anxious day wondering if we'd ever see it again. We didn't know whether it was gone on that side of the pond or on this side of the pond."

According to police, after stashing the painting in one of their cars two cargo handlers picked it up after work on Tuesday and drove it to a garage in an abandoned building in Jamaica, in the New York borough of Queens.

The entire episode was caught on surveillance video and when confronted with the tapes on Wednesday they confessed and led the police to the hiding place, authorities said. The antique gold frame that held the 24 by 18 inch canvas was slightly scratched but the work was otherwise undamaged. "The painting was insured for $1.5m but this isn't just about money," said Mr Acquavella. "Even if they'd got away with it, they didn't know what they had. You can't get much for it on the black market, because everyone knows where it came from. It's not like diamonds."

Kirt Garvey, 19, and Rajmohan Autar, 29, were charged with grand larceny and possession of stolen property and could face up to 25 years in prison if convicted.