Axelrod arrested

[Shane]

Very strange... My wife was working at Smithsonian when he made this donation and I remember it clearly.
Cheers from the banks of the Tigris,
-Shane


Smithsonian Benefactor Arrested In Germany

By Jacqueline Trescott
Washington Post Staff Writer
Friday, June 18, 2004; Page C01


The inquiry into a gift of Stradivarius instruments to the Smithsonian
Institution took a dramatic turn this week when the donor, Herbert Axelrod,
was arrested in Germany.


The multimillionaire philanthropist had fled the United States in April for
Cuba and was arrested Tuesday night in Berlin after taking a flight from
Zurich. Axelrod, 76, is charged with defrauding the Internal Revenue
Service in a business matter, but that inquiry opened up questions about
whether he had deliberately exaggerated the value of instruments he gave
the Smithsonian and the New Jersey Symphony Orchestra to get a substantial
tax break. Orchestra officials say the FBI is reviewing that transaction.

Beginning in 1986, Axelrod, a New Jersey businessman who made millions in
pet products and pet care books, lent the National Museum of American
History four Stradivarius stringed instruments: a 1687 violin, a 1709
violin, a 1695 viola and a 1688 cello. The instruments, which collectively
were known as the Axelrod Quartet, were formally given to the museum in
December 1997. At the time the collection was said to be valued at about
$55 million, making the donation one of the largest in the Smithsonian's
history.

Questions about the value of the gifts, and the tax breaks for the gifts,
are not part of the federal case, said Michael Drewniak, a spokesman for
the U.S. attorney in Newark, N.J. "The charge has not changed," said
Drewniak.

Sen. Charles E. Grassley (R-Iowa), chairman of the Senate Finance
Committee, asked the Smithsonian for a history of its association with
Axelrod and has called a hearing for next Tuesday to look into "overvalued
deductions."

Smithsonian officials say it is not their policy or the procedure of any
museum to do independent appraisals of gifts.

"The Smithsonian does not provide donors with appraisals or fair market
valuations of items donated to its collection," Smithsonian Secretary
Lawrence M. Small said in a letter to Grassley. "The collections of the
Smithsonian are selected for their scientific, artistic, and historical
significance, not their monetary value."

In documents about the Axelrod gift sent to Grassley, museum officials
attached several different values to the gift. In 1986, the instruments
were given an insurance value of $5 million by Smithsonian officials. The
next year a value of $20 million was assigned to the quartet. Not two
months later, it was listed as $30 million.

When Axelrod formally donated the instruments in December 1997, a memo from
the Smithsonian general counsel's office noted a different value.
"[Axelrod's] attorneys yesterday informed me that the actual valuation for
tax purposes is $55 million," according to the memo.

Grassley said the papers did not clarify the Smithsonian's role in the
assessment of the instruments. "The letter raises more questions than it
answers," he said. "Specific to the Axelrod donation, I want to understand
why the Smithsonian refers to values of these instruments that are all over
the map."

Speaking of those numbers, Small said in his letter, "These values are for
insurance purposes only and are not based on the object's 'fair market
value,' the amount at issue when the donation is the subject of an income
tax donation."

The internal memos given to the Senate, said spokeswoman Linda St. Thomas,
"are not official Smithsonian statements on the value of these objects. The
only time we put an official number is when we put it on an insurance
policy."

When an artifact is displayed outside Washington, it is insured and the
museum follows the owner's estimate. "The Smithsonian also has no
involvement in the process of valuing an item so that its donor may take a
tax deduction," said Small in his letter.

Axelrod has supported the Smithsonian for many years, giving $2.8 million
in cash to the American History Museum, as well as the National Museum of
Natural History, and donating 17 instruments. Part of his cash donation
supported performances using the rare musical items.

Michael Himmel, Axelrod's defense attorney, said yesterday he had not
spoken to his client since his arrest and it could take months for the U.S.
attorney's extradition request to be resolved. Himmel said questions about
the donations are misguided.

"During the period of time when the government was investigating his
conduct [in the tax matters], they also subpoenaed documents related to his
violin collection. Had the government believed back then that they had a
case that they could prove concerning the value of the violins," it would
have been included in the indictment. "They knew I had experts lined up who
would weigh in on the true value of the instruments," Himmel said.

[Elspeth]

What I wonder is, what was he doing in Switzerland and Germany?!? Last I heard he had, er, "retired" in Cuba, with which the U.S. has no extradition treaties.

Seems he would have been fine if he'd just stayed put...

[S. Allen]

I question his state of mind... all this seems a bit odd to me, perhaps he's losing it?

[pturley]

S Allen Wrote:

I question his state of mind... all this seems a bit odd to me, perhaps he's losing it?

Never question to ignorance of arrogance.

From what I hear of his character, this statement would very likely apply.