NEW YORK— In a settlement resolving one of the thorniest, most prominent restitution cases to stem from the Nazi pillage of Europe, an American judge has ruled that Egon Schiele’s war-looted “Portrait of Wally” (1912) will remain in the hands of Austria’s Leopold Foundation, with a $19 million settlement paid to the heirs of late Jewish art collector and dealer Lea Bondi Jaray. This decision, handed down by U.S. District Judge Loretta Preska, will render unnecessary a planned July 26 trial, in which the New York court was to rule whether or not collector Rudolph Leopold had known that the painting was stolen when he brought it into U.S. territory for a show at the Museum of Modern Art in 1997.