Sunday, August 15, 2004 BY MARK MUELLER Star-Ledger Staff

NJSO to review purchase of Axelrod violins
In-house probe follows report casting doubt on instruments' authenticity

The New Jersey Symphony Orchestra will formally review its $17 million purchase of rare violins and other stringed instruments from philanthropist Herbert Axelrod last year, following revelations that some of the instruments are probably not authentic.

Simon Woods, the orchestra's president and chief executive officer, said the NJSO's executive committee decided on the move after a meeting last week.

Woods offered no details about the in-house investigation, refusing to say who will lead it, what it will entail or whether the collection's 30 violins, violas and cellos will be re-examined by experts to determine their value and authenticity.

"We are conducting an internal review, and we will have a public statement once we are concluded with that process," Woods said. "We're just starting on it now, and we will have some comments in due course."

The review follows an Aug. 1 Sunday Star-Ledger report that casts doubt on the authenticity of five instruments in the collection.

The report, citing the opinions of top experts in the stringed instrument trade, also disputed the collection's appraised value of $49 million. The experts said the symphony's $17 million purchase price represented, at best, market value for the instruments.

The five questionable instruments, while dating to the 19th century or earlier, were almost certainly not made by the famous craftsmen to whom they are attributed, the experts said. The instruments, four violins and a cello, are collectively valued in the NJSO's appraisal at $2.6 million.

Equally significant, the experts determined that a $3.3 million violin attributed to one of history's finest violin-makers, Giuseppe Guarneri del Gesu, was probably the work of Guarneri's father. The older Guarneri's instruments typically sell for less than $1 million.

In addition, the experts said, three violins by Antonio Stradivari are not original in important parts. Those violins, valued at $1.2 million, $1.6 million and $2 million, respectively, would probably fetch no more than $500,000 each, the experts said.

Three consultants hired by the NJSO to examine the collection warned orchestra officials that some instruments were not what they seemed, but those misgivings were never passed along to the full board of trustees, which ultimately approved the deal.

The Star-Ledger's findings led one NJSO trustee, Assemblyman Bill Baroni, to publicly call for an internal review. Baroni (R-Mercer) said the organization's supporters and the public deserve to know whether the purchase was carried out appropriately and whether the financially struggling orchestra obtained equal value for its money.

With interest, the NJSO still owes more than $20 million on the instruments.

"We'll all benefit from an examination of this purchase from the beginning to where we are today," Baroni said.

Axelrod, 77, was hailed as a hero of the arts community when the symphony brought his instruments, purportedly at a tremendous discount, in February 2003.

That image suffered a blow this past April, when he was indicted on two counts of tax fraud for allegedly helping an employee of his former publishing company, Neptune-based TFH Publications, skirt federal taxes through the use of Swiss bank accounts.

Axelrod, a former Monmouth County resident, initially fled to Cuba, then to Switzerland. He was arrested in Germany June 15 as he arrived on a flight in Berlin. He remains jailed in that city pending extradition to the United States.

The philanthropist's lawyer, Michael Himmel, said his client has not decided whether to return willingly to New Jersey to face the charges. Axelrod faces up to five years in prison if convicted.

"He's exploring his options," Himmel said.

Complicating matters for Axelrod, a federal grand jury is investigating him in connection with his dealings in old instruments, most of which date to the 17th and 18th centuries. The grand jury, impaneled in Trenton, is examining both the NJSO transaction and Axelrod's donation of four high-priced instruments to the Smithsonian Institution in 1997.

The inquiry is focused on whether Axelrod inflated the value of instruments in the two deals as a means of padding his tax deductions, according to a witness who recently testified before the panel. The witness, Dietmar Machold, is Axelrod's principal violin dealer.

Machold said he testified before the grand jury in early July.

"It was about Axelrod," he said. "They were asking about the Smithsonian and the New Jersey deal."

Specifically, Machold said, he was questioned about the appraisals in both transactions. Machold performed those appraisals, placing a $49 million valuation on the New Jersey collection and a $50 million price tag on the Smithsonian instruments: two violins, a viola and a cello, all made by Stradivari between 1687 and 1709.

Many instrument dealers and experts contend the Smithsonian appraisal bears no relation to reality.

While Machold did not characterize himself as a target of the grand jury inquiry, the FBI and the Internal Revenue Service continue to look into his appraisals. Three weeks ago, an FBI agent and an IRS agent questioned one of Machold's former employees, Manhattan violin dealer Bruno Price, about both his old boss and Axelrod, Price said.

Machold, whose Vienna-based operation is among the world's largest dealers of stringed instruments, said he is aware that investigators continue to ask about him.

"I know they are interested in me, but I have nothing to hide," Machold said. "It's understandable they would ask, 'What role did this man play?'"

Machold said he stood behind his appraisals when he appeared before the grand jury in early July, and he continues to do so today.

"The New Jersey orchestra paid $17 million for a wonderful collection," he said. "If I could buy it back for $17 million, I would do it on the spot."

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