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Last Updated: Saturday, 8 May, 2004, 10:43 GMT 11:43 UK
Exiled US philanthropist 'probed'
By Damian Fowler
New York

This is a complex tale of Stradivari violins, Swiss bank accounts, a federal fugitive who specialises in fish, and America's top cultural institution.

Mr Axelrod
Mr Axelrod is a colourful figure

Herbert Axelrod, one of America's most prominent arts philanthropists, sailed to Cuba last month after being indicted on federal tax fraud charges.

The 76-year-old multimillionaire, who made his fortune from a pet care publishing empire, faces up to five years in prison if found guilty of defrauding the US tax authorities by hiding $700,000 in a Swiss bank account - a charge he denies.

He is reported to be staying in the exclusive Hemingway Marina in Cuba, where American authorities - lacking an extradition treaty with the island - cannot touch him.

But the recipients of his celebrated generosity at home are being forced to re-examine his legacy.


In 1998, Mr Axelrod donated a quartet of Stradivarius stringed instruments - which he allegedly claimed were worth about $50m - to the Smithsonian Institution - the world's largest museum.

Under US law, a charitable gift to a qualifying institution is tax deductible - allowing the donor to pay less income tax.

Government officials have now demanded that the Smithsonian hand over all materials related to that donation - and asked to review all donations of more than $10m received by the Smithsonian since 2001.

A spokesperson said the Institution was co-operating but added it was not the responsibility of the museum to appraise gifts or evaluate their tax value.

It's a great collection of instruments. It sounds fantastic and we know we paid a very good price for it
Simon Woods
NJSO president
Similar allegations have also affected other beneficiaries.

Last year, Mr Axelrod hit the headlines when he sold a collection of 30 rare stringed instruments, including 12 violins and a cello made by Stradivari and 3 Guarneri del Gesu violins, to the lesser-known New Jersey Symphony Orchestra (NJSO) for the allegedly cut-rate price of $18m.

Dubbed the Medici of the Meadowlands by the New York Times newspaper - in reference to the area of New Jersey he calls home - Mr Axelrod allegedly said the collection was worth $50m. He was lauded at a black-tie gala as the greatest arts benefactor in the state's history.

But the Senate finance committee is now investigating the value of that sale, too.

"This transaction raises the question of why someone would sell a multi-million-dollar instrument collection for what he claims is less than half of its appraised value, and what tax benefits he may have received in return," said Senator Chuck Grassley, the committee chairman.

Experts say the valuation of antique instruments is always subjective, even though several independent evaluators have challenged the $50m figure.

Still, the orchestra says it is happy with the purchase.

"In the process of acquiring the instruments, we went through due diligence," said Simon Woods, the NJSO's president and chief executive officer.

"It's a great collection of instruments. It sounds fantastic and we know we paid a very good price for it."

Pet questions

Mr Axelrod could not be reached for comment, but he did maintain he was innocent in a recent interview with New Jersey's Star Ledger newspaper, saying: "I am not a criminal. I don't feel like one."

Axelrod Atlas
Mr Axelrod made his fortune from publishing
He stressed he was not running away from the federal indictment, simply beginning his retirement overseas.

According to reports, he is now spending time fishing for marlin, smoking Cuban cigars and working on a new book about pets.

But his abrupt early retirement to Cuba has shone the spotlight once again on his scientific credentials and the integrity of his book publishing business, as well as his philanthropy.

Several fish experts have again questioned Mr Axelrod's discovery of an aquarium fish known as the Cardinal Tetra, noted for its red belly and a neon stripe, deep in the Brazilian rainforest.

He documented the existence of the fish, naming it after himself: Paracheirodon axelrodi.

His claim was at the time cast into doubt by a professor from Stanford University, George Meyers, but an independent international commission on naming creatures found in Mr Axelrod's favour.

Nonetheless, some still rage against the commission's adjudication.

"It's a bald-faced lie," says Alan Fletcher, former editor of The Aquarium magazine, which was a leading publication on aquarium fish.

Mr Fletcher alleges that the fish was first brought into the US by North America's largest importer of aquarium fish. Mr Axelrod, according to him, back-dated his description of the fish and later fabricated the story of its discovery.

As his empire grew more profitable, Mr Axelrod's credibility was again challenged in a civil lawsuit involving the 1997 sale of his company TFH Publications.

That lawsuit, which accuses him of fraud, misrepresentation, and a massive tax scam, prompted a federal investigation into Mr Axelrod's business practices - which has led to the current indictment.

Mr Axelrod says he has no immediate plans to return to the US.

Stradivarius' sound 'due to Sun'
17 Dec 03  |  Science/Nature
10m violin 'the real thing'
09 Oct 03  |  Oxfordshire
Smithsonian cash 'withdrawn'
05 Feb 02  |  Entertainment

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