Did something fishy go on when the New Jersey Symphony Orchestra splashed out on some ’great’ antique instruments? Alix Kirsta asks the 17 million dollar question..
The Symphony Palace Ball in New Jersey (pictured), on April 26 2003, is rated as one of the more memorable fundraising events of recent years. The invitation offered guests the opportunity to be “a part of orchestral history”. A disused 19th-century railway terminal in Liberty State Park was transformed into the Italianate Palazzo di Cremona, its interior swathed in silk and tapestries, shimmering in candlelight and brimming with floral decorations. A 14ft-high ice sculpture of the great Cremonese violin-maker Antonio Stradivari dominated the ballroom. Guests, who paid $2,500 ahead to attend, were welcomed by Italian-speaking attendants in 17th-century costume.
The Italian theme came as no surprise: the guest of honour, 76-year-old tycoon Dr Herbert Axelrod, was being feted for selling his “Golden Age Collection” of 30 rare 17th- and 18th-century Italian stringed instruments to the New Jersey Symphony Orchestra — for considerably less than it was worth. Axelrod, a renowned tropical fish expert who made his fortune from publishing and the manufacture of pet-care products, has long been revered as an exceptionally generous arts benefactor. In a New York Times profile he was dubbed ‘the Medici of the Meadowlands’; a reference to his home in rural New Jersey. In recent years the Chronicle Of Philanthropy named him one of America’s top 60 benefactors. A former amateur violinist, he built up one of the world’s largest collections of fine Italian violins, which he loaned over the years to promising students and such virtuosos as Itzhak Perlman, Pinchas Zukerman, Joshua Bell, Maxim Vengerov and Gidon Kremer.
He has written books on Paganini and Jascha Haifetz, and donated 17 Stradivari to the Smithsonian Institution, whose Axelrod Stradivarius String Quartet has toured the world since the 1980s. In music circles alone he has donated tens of millions to the New Jersey Symphony Orchestra and the Metropolitan Opera, supported music academies including New York’s Juilliard School and the Curtis Institute, which in 1997 organised a star-studded gala at Carnegie Hall for his 70th birthday. In 2003, after he donated instruments to Vienna’s Kunsthistorisches Museum, Axelrod was granted Austrian citizenship.
Recently, he helped fund the restoration of Verdi’s childhood home and donated a 1669 Stradivari violin to the civic museum of Cremona — the historic birthplace of violin-making. In return, the mayor, Paolo Bodini, made Axelrod and his wife, Evelyn, honorary citizens of Cremona, a distinction that had last been conferred on the great cellist Mstislav Rostropovich.
Everyone at the Symphony Palace Ball had something to celebrate. Local politicians and artists hailed Axelrod’s deal with the 82-year-old orchestra as a triumph for the economically depressed state of New Jersey. For the ailing NJSO, long overshadowed by such world-class neighbours as the NewYork Philharmonic, the deal seemed a miracle. Axelrod’s collection, originally valued at $50m, included 13 Stradivari, three Guarneri del Gesus, an Amati, and violins, violas and cellos by other Italian masters, all beyond the means of almost any musician. Now the orchestra had made history by owning more Strads than any other band in the world; and thanks to Axelrod’s generosity, it was all theirs for $17m, about a third of the market value.
Never before played in public
That night, all 30 instruments were played together for the first time in a brief concert. Except for one event in Cremona in 1937, so many Stradivari have never before been played in public. Before the last note of Tchaikovsky’s Serenade For Strings ended, the audience — including three former New Jersey governors — stood and cheered. Axelrod, a stocky, slightly dishevelled white-haired man, wept with joy. What he described as an “unattainable goal” had materialised after a year of often stormy negotiations with NJSO officials, during which he had turned down offers of up to $55m for his collection from the world’s top orchestras. In a series of press statements he gave at the time, Axelrod stressed what this meant to him: ‘I want to put New Jersey on the map. I want this to be the best-sounding orchestra in the world... I go to concerts once, sometimes twice a week. I would love to be able to go down the road and hear my instruments being played regularly.”
The ice sculpture of Stradivarius was beginning to melt as the last guests filed out of the “palazzo”. Some $700,000 had been raised that night to help fund the orchestra’s new instruments. Everybody agreed that the NJSO now had an opportunity to become world class. Publicity and prestige surrounding the $50m collection would generate new subscriptions, sponsorship, recording contracts, world tours; crucially, the orchestra’s superior instruments and improved tone were expected to attract top-calibre artists.
What no one expected was how soon Axelrod would be the centre of media attention of an altogether different kind. A year later, in April 2004, the news that the US Attorney’s office in Trenton, New Jersey, had indicted Axelrod on charges of conspiring to defraud the US government made headlines across America. Although the federal charges related solely to Axelrod’s former business empire, TFH Publications Inc — his alleged diversion of company funds into Swiss bank accounts, and the filing of false tax returns — a frisson went though the many cultural institutions with which he was associated.
Washington’s Smithsonian Institution, as well as the NJSO, promptly came under the scrutiny of both the FBI and the criminal branch of the Internal Revenue Services (IRS), as well as a Senate committee investigating cases of inflated tax relief on donations of grossly overvalued gifts to charity. On April19 Axelrod failed to answer a court summons to hear the charges against him, and instead went on the run. When tracked down by reporters in Cuba, he denied any wrongdoing, saying he had no plans to return to the US. “This trip was planned well in advance. I am not a criminal. They are making a big thing out of bogus charges.”
Apprehended in Berlin
From fish fancier to jailbird: Herbert Acelrod hoped to be remembered for his philanthropy. “That’s all gone,” he said after his trial for tax fraud.Although a warrant was issued for Axelrod’s arrest, he remained a fugitive for two months, travelling around Europe on a newly acquired Austrian passport. He was eventually arrested last June at Berlin’s Tegel Airport on a flight from Zurich, where he and Evelyn, his wife since 1955, had settled. After almost six months in a German prison awaiting extradition, he was deported and imprisoned without bail in New Jersey. In December he pleaded guilty to one count of aiding and abetting a former employee to commit tax fraud: it was the less serious and extensive of the two charges originally made against him, because Germany had refused to extradite him on another charge of conspiracy to defraud the US government.
This year, on March 21, in a packed New Jersey court, Axelrod was sentenced to 18 months’ imprisonment followed by a year’s probation, and fined $40,000. With the time he has already served, he may be free by the end of this year. His voice breaking with emotion, Axelrod told Justice Garrett E Brown, the judge who tried the case: “It was always my goal to be remembered as an outstanding philanthropist. That’s all gone. Instead, I will be remembered as a person who disrespected his country, his government, the law and this court. It is the biggest mistake of my life.”
The sentence, described by Axelrod’s lawyer Alan Lebensfeld as “punitive and heartless’; was just one chapter in a bizarre saga that has gripped the US since last year. On April 11, Axelrod was again in court, where the company that in 1997 bought his publishing and pet-care empire, TFH Publications Inc is claiming $70m in damages. In the civil action (in which Axelrod is counter-claiming damages for defamation, negligence, fraud and sums of money arising from the purchase) he is accused of failing to disclose transactions and Swiss bank accounts to the IRS, and of inflating the value of TFH before selling it. The buyer — who provided criminal investigators with information that led to Axelrod’s original indictment — alleges that Axelrod conducted illicit business ventures in Cuba and fraudulently boosted sales figures.
Financial allegations
According to court documents, regular payments were made to a female dental hygienist whom Axelrod put through law school. Other funds were allegedly used to buy rare violins. A $250,000 donation to the University of Guelph in Ontario, which honoured him by founding the Axelrod Institute of Ichthyology (the study of fish), was allegedly written off in company accounts as “advertising expenses”. Axelrod denies all the allegations: he claims the buyer, Central Garden & Pet Co, is responsible for its losses, and failed to pay him bonuses he had been promised as an employee. The hearing, which Axelrod attends each day flanked by his prison warders, is expected to last up to three months and will focus on alleged activities that took place between 1984 and 1998.
Meanwhile, investigations by the FBI and other authorities into his donations to cultural and scientific institutions — $150m in cash and gifts in the past decade alone — have raised questions about how much Axelrod’s beneficence was a self-serving exercise, a bid to gain massive tax relief and fame.
But while the arts community is still in shock, experts in ichthyology saw the writing on the wall long ago. Their memory of Axelrod, a graduate of New York University, goes back to the early 1950s, when he launched the magazine Tropical Fish Hobbyist. By 1965, he had built it into TFH Publications Inc, a private multi-million-dollar empire, becoming America’s largest publisher of books about tropical aquarium fish and other animals.
While Axelrod’s fortune grew through fish farming and the invention of scores of lucrative pet products, such as the Nylabone dog chew and freeze-dried worms for fish food, he also established himself as one of the world’s leading ichthyologists, a reputation that owes more to his talents as a self-publicist than to academic achievements. “Herb is not a qualified ichthyologist; his PhD is in biometrics,” says aquatic biologist Alan Fletcher, a former professor from Cornell University. “Although he is an expert on tropical aquarium fish, he has only written popular literature, never scientific papers. Scientists won’t criticise him because he offered them opportunities to publish new work In return, he managed to get many fish named after him:”
His contemporaries, such as 77-year-old Fletcher, editor of a rival magazine when Axelrod launched his company in the 1950s, remember him as a dynamic entrepreneur — but one whose picaresque tales were often regarded with suspicion. At 4 various times, he has claimed to have studied maths with Einstein, gone spear-fishing on the Amazon with King Leopold III of Belgium, hunted rare jaguars for the Walt Disney Corporation, discussed marine invertebrates with Emperor Hirohito (a noted fish expert) and corresponded with Winston Churchill on the subject of goldfish. Fletcher has reason to be outraged by the Churchill anecdote: “It was I who corresponded extensively with Churchill and, with the help of the US Air Force, also sent him some rare goldfish for the outdoor pool at Chartwell,” he says, showing me copies of some of Churchill’s letters.
Tropical Expeditions
One of Axelrod's publications: He has written thousands of articles and dozens of books, and is said to be able to identify more than 5,000 kinds of fish. Axelrod’s expeditions to remote tropical regions, where he discovered hundreds of unknown species, are documented in thousands of his articles and over 50 books. Credited with being able to identify over 7,000 types of fish by sight, he reportedly has more species named after him than anyone else in the world. Dozens are now popular aquarium fish, like the red-bellied cardinal tetra, or Cheirodon axelrodi, which he claims — despite evidence to the contrary — to have discovered and imported from Brazil.
When you add up the many millions of dollars, the valuable fish specimens and fossils donated by Axelrod, as well as the endowments of chairs, curatorships, projects and departments bearing his name, it is not surprising that few have challenged even the more grandiose of his claims. Nobody from the departments of ichthyology at the Smithsonian Institution or New York’s American Museum of Natural History was willing to talk to me about him.
As many of Axelrod’s contemporaries have discovered, the lively bonhomie conceals ruthless business instincts and a determination to protect his interests through the courts. When aquarium historian Albert Klee wrote an articlein the l960s criticising the concept behind one of Axelrod’s enterprises, without mentioning him by name, Axelrod sued Klee and the magazine in which the article appeared. “The publisher agreed to sell his magazine in return for Axelrod dropping the suit. I had reviewed several of his books negatively, so he proposed to drop the suit against me if I agreed never again to publish anything about the aquarium hobby. I refused. Axelrod subsequently dropped the suit, but it almost ruined me financially,” says Klee. “A year later, Axelrod sent me a letter as if nothing had happened, asking me to review a manuscript for a book he was considering publishing.”
By 1965, as Axelrod himself admitted in an interview with Sports Illustrated magazine, he had been sued 14 times, either for using other people’s material without permission, or for publishing defamatory remarks about rival businesses. In 13 of them he had countersued and won. He lost only the first, in 1955, when a federal court found him guilty of reproducing, in his first book, sets of illustrations taken from an earlier work by a leading fish expert. In the Sports Illustrated interview, Axelrod said that he thrived on quarrels and litigation; he had no doubt about winning, and claimed that the filing of each suit gave him “as much joy as the discovery of a new species of fish”. Now the arts world has discovered this side of Axelrod’s nature.
An offer the Orchestra could not refuse
One evening in March 2002, Axelrod invited the New Jersey Symphony’s then president and CEO, Lawrence Tamburri, over to his home for a chat. While Axelrod had generously supported the NJSO since 1989, recently endowing it with $lm for a new concert series, Tamburri was stunned by the proposal Axelrod now put to him. He told Tamburri he had decided to sell 30 of his finest Stradivari, Guarneris and other violins, violas and cellos, valued at a total of $50m. Because of his commitment to the orchestra and his friendship with the board’s chairman, cardiologist Victor Parsonnet, they could have the collection at half price.
It looked like an offer the orchestra could not refuse — even with a $15.8m annual budget and a $1.lm deficit. Borrowing $25m was seen as a calculated risk, likely to guarantee the orchestra’s survival and raise its standing. In a press statement, Parsonnet spelled out the importance of the offer. “No orchestra has ever gotten a gift such as this. We can’t lose on this. What it will do for the orchestra, in terms of attracting attention worldwide, is worth it. It would be a revolutionary sound for all our first violinists to play Stradivarius and del Gesu violins.”
But there were problems with the deal from the outset. For example, the orchestra had only 120 days to raise $25m. Axelrod insisted the sale must be completed by June 30, and no one appeared to find the time limit odd, or questioned why he was in such a hurry to sell. What they did not know at the time was that Axelrod, aware since 2000 that a criminal investigation had begun into his business affairs, was also selling his 18 properties in Florida and New Jersey, putting his $6.5m home on the market and transferring his money abroad. Eventually, an eight-member “instrument committee” headed by Tamburri got the deadline extended. A frantic scramble to raise $25m yielded only half.
By late 2002 the sabre-rattling began: Axelrod repeatedly threatened to abandon the deal, informing the NJSO and the press that he had offers of over $50m from top orchestras, including the New York and Vienna Philharmonics. At one point he announced that a representative of the Bank of Austria, which buys instruments to loan to the Vienna Philharmonic, was on a plane with a cheque for $55m. After pleas from New Jersey governor James McGreevey as well as Parsonnet, Axelrod agreed to further postponements, eventually dropping his asking price to $17m. The sale was completed in February 2003.
Ruthlessness
The extent of Axelrod’s ruthlessness, and its impact on the NJSO, emerged only during a recent internal review carried out by three NJSO board members, including a local politician, all uninvolved in the purchase. The report includes evidence presented at a 2004 federal grand jury investigation into Axelrod’s negotiations with the orchestra. Their most disconcerting finding is that, apparently to avoid angering or offending Axelrod, no one challenged his assertions, including the $50m valuation of his collection.
However, the NJSO’s lawyer, Scott Kobler, argues that the valuation was not taken at face value: “We should never have mentioned the $50m in our PR material — that got a life of its own because Axelrod was running his own publicity machine. But we did look at his offer very sceptically and took time to examine and value the collection ourselves. Had we told him to get lost, we might have squandered an opportunity to wrestle these assets from him and acquire something uniquely distinctive.”
But how distinctive in fact was the collection? It seems that the NJSO was unaware that many leading violin dealers, familiar with most of the instruments, had long been shaking their heads over their claimed quality and value. Everyone in the trade had seen a book published by Axelrod, The Evelyn and Herbert Axelrod Stringed Instrument Collection, in which he trumpeted the history, make, and value of each item in his collection, illustrated with colour photographs. “It shows Axelrod is a typical vanity collector who doesn’t know much about instruments,” observes violinist Stefan Hersh, a dealer and Professor of Music at Chicago’s Roosevelt University.
Grace under fire: the New Jersey Symphony Orchestra at work. The organisation now has $20m of debt and is negotiating new repayment schemes to stay in business. Experts brought in by the NJSO had reservations about the instruments from the outset. Stewart Pollens, curator of musical instruments at New York’s Metropolitan Museum, was asked to photograph about half the collection. He had instant misgivings. “My immediate impression was that this was an impressive collection, but that a number of the instruments had been heavily restored or were composites and had very serious condition problems. Some of the labels did not agree with my visual impressions.”
Pollens sent the photographs to London dealer Charles Beare, recognised as the world’s foremost appraiser and authenticator of stringed instruments. But while Beare commented on each of the instruments, Beare’s partner and the firm’s director, Simon Morris, insists these initial remarks were strictly off the record. “I made the NJSO an especially low, flat-rate offer of $10,000 for Charles to come and assess all the instruments” Morris recalls. To his surprise, he received no reply. “When I called them, they said it had all been sorted, because Charles couldn’t examine the instruments until September, which was too late for the June deadline — which, however, was then extended.”
Eventually, the NJSO’s own experts — a violin restorer and a small NewYork dealer identified in the internal report only as “Expert X”, chosen primarily because they had had no prior dealings with Axelrod — put the value of the instruments at between $15.3m and $26m. They found that up to two-thirds of the 30 instruments, attributed to Stradivari, Guarneri del Gesu, Montagnana, Balestrieri, Rogeri and Guadagnini, were either in poor condition or of dubious origin. At least five instruments were found to be copies, with lingering doubt over the authenticity of two Guarneri del Gesu violins valued originally at $3.3m and $3.8m,4 but probably each worth $2m less. A further three Stradivari, each valued at between $1.2m-$2m, are composites, reducing their value by over 50%, according to the experts; other instruments were found to be extensively restored or damaged.
Market Rate
It became clear that far from getting a bargain, the orchestra would end up paying the market rate, but the $50m valuation continued to appear on fund-raising brochures, press releases, even the orchestra’s 2004/5 advance programmes, as well as publicity for the Symphony Palace Ball. Axelrod’s claims of $50m offers from other orchestras also turned out to be spin: there never were any offers. When I contacted representatives of the New York and Vienna Philharmonics, both assured me no offer had ever been made. “Mr Axelrod tried to offer the Vienna Philharmonic these instruments, via intermediaries. In principle, the orchestra obtains its top instruments on loan from the Austrian National Bank. Therefore the direct purchase of his instruments wouldn’t have been an attractive deal,” says Professor Wolfgang Schuster, the Philharmonic’s press officer. “The orchestra hadn’t any interest in buying that collection, and the stated value of it seemed doubtful.”
Although Scott Kobler of the NJSO insists that the committee considered Axelrod’s threats a “negotiating tactic’ many trustees genuinely believed him. More seriously, the internal report found that, when Lawrence Tamburri received a memo warning him that Axelrod was being investigated by the FBI and IRS over a possible tax scam involving a 1998 donation of instruments to the Smithsonian Institution, he kept the information to himself, having apparently been told by an official at the Smithsonian that it was “a rumour”. Tamburri, who has since joined the Pittsburgh Symphony Orchestra, refuses to discuss the matter, although he did issue a statement last December. “I applaud the New Jersey Symphony Orchestra for undertaking this exhaustive internal investigation,” he said then. “While the report found flaws in the process, it concluded that the opportunity to acquire such valuable instruments was in the best interests of the organisation.”
Had Tamburri looked into the Smithsonian affair, however, he would have discovered more than a rumour. During Axelrod’s negotiations with the NJSO, the criminal division of the IRS was informed of Axelrod’s alleged tax fraud by an investment banker, Neil Fitzgerald. An economics adviser with special knowledge of arts and antiques, Fitzgerald was the first person outside the violin trade with sufficient inside information to blow the whistle on what he calls Axelrod’s ‘massive over-valuations” of four decorated Stradivari, donated to the Smithsonian Institution in 1998. Their reported $50m valuation in 1997 made this one of the largest donations in the Smithsonian’s history.
Or maybe not. In fact, the record price for a fine Stradivari quartet, bought by the Nippon Foundation in 1994, is $15m. The highest auction price for a single Stradivarius violin is $2.032m for the famous ‘Lady Tennant Strad’ sold in New York in April this year.
Many experts claim that the Axelrod Quartet — two violins, a viola and cello — on loan to the Smithsonian since 1986 is worth at most $12m: only the front of the viola is thought to be authentic, while Axelrod had a decoration added to a plain Stradivarius cello to make it appear part of the quartet’s matched set. According to four consecutive appraisals provided by Axelrod in 1997, the quartet increased in value by 100% in under a year. Since the IRS received Fitzgerald’s tip-off, a grand jury as well as the Senate finance committee has investigated the case, although it is unlikely that any criminal charges will be brought.
No proof of impropriety
Although criminal investigators grilled NJSO offiicials after Axelrod’s indictment, they found no proof of impropriety in the sale of the Golden Age collection. Scott Kobler believes this was due to the orchestra’s ‘wise decision’ to record the transaction as a straight purchase for $17m, without acknowledging a ‘gift’ of any value. While Kobler admits Axelrod nay have planned to claim a huge tax deduction, by going on the run he failed to file his 2003 tax returns. As part of his recent plea agreement he must now do so, taking no deduction for the sale.
Only the next months and years will tell whether the NJSO made a mistake or a wise choice in its purchase. There is no suspicion of any illegal dealings, but the orchestra suffered months of adverse publicity and is fighting to regain public credibility. “It has been damaging and we worry it may affect our ability raise money to keep the orchestra together. That would be a major tragedy, because the purchase was a success. We got a lot of great instruments at a fair price,” says John Forrest, an NJSO trustee and member of last year’s internal review panel. Despite good reviews and unanimous praise from musicians for the new instruments, the future of the NJSO hangs by a thread.
With a $20m debt and a 41% decline in subscriptions sales since 2001, the orchestra is now negotiating new repayment schemes to stay afloat. In America, many believe that recent investigations into Axelrod’s philanthropic acts may eventually have ave repercussions for the arts. Future donors could be deterred from making large gifts for fear of attracting attention from the authorities. Already the Senate finance committee has announced plans to amend US tax laws to limit or exclude certain types of gifts donated to non-profit organisations.
Whether Axelrod’s reputation as a philanthropist is permanently eclipsed by the current scandal remains to be seen. But whatever the outcome of the current civil hearing, which may end with him being ordered to pay (or gaining) more than $70m in damages, his relish for the law has suffered a massive reverse. At his recent sentencing, it emerged that in late 2003 he had rejected an offer from prosecutors willing to recommend he be spared a prison sentence if he pleaded guilty to the criminal charge against him. Axelrod dismissed the offer, apparently for fear of being sent to prison despite the prosecutors’ recomrnendation. That proved to be his undoing. In 1965, he stated in an interview: “I like to match wits. A lawsuit is a chess game. When there’s no challenge, l’m not interested.” As he faces possibly his final challenge, have those words come back to haunt him?
This article in its entirety is copyright © 2005 Alix Kirsta.
First published in the Guardian, 11 June 2005
Latest Update (April 2007)