Wealthy fugitive's assets debated

Violin collector's holdings at stake

By MARYANN SPOTO
STAR-LEDGER STAFF

Herbert Axelrod, the New Jersey millionaire and violin collector who fled to Cuba after being indicted for conspiring to defraud the Internal Revenue Service, may have gone fishing yesterday. Perhaps he smoked one of his big Cuban cigars.

But his lawyer was in state Superior Court in Monmouth County, representing the 76-year-old fugitive's interests in a long-running legal battle that Axelrod has been waging there. The lawsuit stems from the Deal businessman's 1997 sale of his pet product and book empire, TFH Publications, to Central Garden and Pet. Co. of California.

Lawyers for Central Garden urged a judge yesterday to freeze whatever assets Axelrod has not already managed to liquidate and move offshore. Specifically, they were eyeing $30 million in European investment bonds whose existence has just come to light.

Axelrod's attorney, Alan Lebensfeld of Red Bank, said his client faxed him a certification attesting to their existence - from an unknown location - on April 29. He did not specify where they were or what other assets he may have.

Shortly before he was indicted last month, Axelrod quietly sold his oceanfront mansion in Deal as well as several homes in Florida, liquidating more than $10 million in property in New Jersey alone, according to court papers.

Lebensfeld said yesterday that the civil case can move forward without Axelrod. But, he said, he did not know how the court would enforce any penalties assessed against Axelrod if he remains in Cuba. The U.S. government has no jurisdiction there.

Axelrod sold his business to Central Garden in 1997 for $70 million in cash and a $10 million loan. Terms of the contract provided the prospect of additional money going to Axelrod, contingent upon the performance of the company under the new owners.

After the sale, Axelrod sued Central Garden for damages, alleging its poor management had deprived him of the prospect for additional earnings. Central Garden countersued, alleging fraud, misrepresentation and breach of fiduciary duty. The company claimed he reneged on a promise to repay a $10 million loan.

Eighteen months later, the company went to the U.S. attorney, alleging Axelrod had cooked his books, hidden millions in secret Swiss bank accounts and defrauded the government. The U.S. attorney returned a two- count indictment against Axelrod nearly three weeks ago.

Five times during the past six years, Central Garden has tried to have Axelrod's assets frozen or get him to place millions of dollars in escrow to cover possible damage awards. Each time, judges refused, saying Axelrod was free to invest his money as he pleased because there had been no ruling against him.

Since the civil case started, attorneys on both sides have filed - and several judges have heard - more than 90 motions, including six postponements of a trial date, related to the case.

Yesterday, with a probable fall trial date looming, Central Garden returned to court, fearful that all of Axelrod's assets would end up beyond the reach of the American judicial system.

Lebensfeld urged Judge William Gilroy to deny the request because Axelrod is still protected by the same rules.

But attorneys for his adversary said Axelrod changed the rules by fleeing to Cuba.

"Herbert Axelrod is a fugitive, and that changes everything," attorney Robert Gilson said.

Gilson also said Axelrod's certification on the bonds is meaningless.

"Now he wants to . . . selectively tell you what he wants," he said. "He is saying to you, 'Here are where my assets are and this is why you shouldn't be worried.' He's not telling you how much or where."

Lebensfeld argued that even though Axelrod is considered a fugitive, yesterday's request still boils down to whether Central Garden can show it will most likely win at trial. In the five previous requests, he said, no judge saw that likelihood.

"I wish he were here. He has made my life harder, but that's what I get paid to do," Lebensfeld told the judge. "It has to be decided on the merits, not on a knee-jerk reaction."

He proposed allowing Central Garden to renew its request 30 days before trial if Axelrod has not returned to the United States by then.

Attorneys for Central Garden flatly refused, saying they might ask the judge to decide the entire case in their favor if Axelrod remains a fugitive or if he does not adhere to any measures Gilroy might impose.

The judge said he would issue his ruling on Thursday.

_____________________________________________________________________________________________ Staff writer Mary Jo Patterson contributed to this report.

PHOTO CAPTION: AXELROD