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Orchestra expects violin deal will stand
Agreement re-examined after seller indicted on unrelated charges
Saturday, April 17, 2004

Officials at the New Jersey Symphony Orchestra do not believe Herbert Axelrod's indictment this week for tax evasion will affect the unique violin collection acquired from him last year.

While the U.S. Attorney's Office has already said the sale of Axelrod's rare Italian instruments was not jeopardized by the criminal charges, the orchestra has been re-examining the structure of the sales agreement since learning of the indictment.

Attorney Scott Kobler, a partner at McCarter & English, which represents the New Jersey Symphony Orchestra, yesterday said the situation is not unlike that of someone who purchases a house and then later discovers the seller has unrelated tax problems with the Internal Revenue Service.

"Would the IRS come and take your house back? No," Kobler said, describing the deal as a bona fide purchase carried out with no knowledge of Axelrod's interactions with the IRS.

The orchestra's collection of instruments from the 17th and 18th centuries acquired from Axelrod included a dozen Stradivarius violins; a Stradivarius cello; three Guarneri del Gesú violins; a 1620 Amati viola; and violas, violins and cellos by such makers as Giovanni Guadagnini and Matteo Goffriller.

Kobler said the orchestra purchased the instruments from Axelrod and his company outright, and that Axelrod retained no security interest in the instruments.

"In the sale agreement, we've done as much due diligence as we could do, including representations from the Axelrods about their knowledge of the provenance (previous claims of ownership) of the instruments, but that's unrelated to his tax controversy," said Kobler. "This is not a tax liability involving the symphony."

The orchestra's purchase was structured as three loans: $9 million from Commerce Bank, $5 million from the Prudential Foundation, and $4 million in unsecured notes to the Axelrods. The Axelrods have since forgiven $1 million and assigned the remaining $3 million to other charitable organizations.

Sheila Bridgeforth, director of global communications for the Prudential Foundation in Newark, declined to comment on the sale. James Vogel, a Commerce Bank vice president, said they were still examining the ramifications of the matter.

Axelrod, 76, who made a fortune through a pet-care publishing empire, was indicted earlier in the week on charges he concealed hundreds of thousands of dollars in payments to a former employee through secret Swiss bank accounts.

In the two-count indictment, Axelrod was charged with conspiracy and aiding and abetting the subscribing of a false tax return. The indictment said the wealthy Deal resident funneled bonus and severance payments to an unnamed company vice president into Swiss accounts between 1990 and 1997.

Reached by phone, Axelrod's personal attorney, Douglas Calhoun, would not discuss the pending criminal charges.

"Your reporting is inaccurate and it would be inappropriate for me to comment," he said, before hanging up on a reporter.

Axelrod is due to be arraigned on Wednesday afternoon before U.S. District Judge Garrett E. Brown Jr. in Trenton.

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