Thursday April 22, 2004 Havana Journal
Herbert Axelrod, the eccentric philanthropist who bestowed millions of dollars' worth of rare stringed instruments on the New Jersey Symphony Orchestra, has fled the country and taken refuge at a luxury marina in Cuba to avoid federal prosecution for tax fraud.
A federal judge issued an arrest warrant for Axelrod yesterday afternoon after the pet-care publishing tycoon failed to show up for his arraignment in Trenton. The United States has no extradition treaty with Cuba.
Assistant U.S. Attorney Michael Guadagno informed District Court Judge Garrett E. Brown Jr. that Axelrod was in Zurich, Switzerland, when the indictment was returned and was well aware of the pending criminal charges.
The combined charges against Axelrod carry a maximum punishment of five years in prison and a $250,000 fine.
The twist of events included the discovery by authorities this week that Axelrod had sold his home in Deal earlier in the month, as well as other properties around the country -- including several homes in Key West, Fla. Authorities say Axelrod's 50-foot yacht, the Lady Ev II, was missing.
Axelrod, 76, a multimillionaire who had turned his interest in tropical fish into a worldwide publishing empire, was a major benefactor to the New Jersey Symphony Orchestra. He suddenly became widely known for selling the orchestra a collection of rare Italian stringed instruments from the 17th and 18th centuries last year at a steeply discounted price.
While the deal with the New Jersey Symphony Orchestra was being struck, though, a criminal investigation against Axelrod was already well under way, and Axelrod was aware of the questions being raised into his finances as a result of a civil suit involving the 1997 sale of his company, TFH Publications.
In the two-count federal indictment returned last week, Axelrod was charged with conspiracy and aiding and abetting the subscribing of a false tax return. He was accused of funneling more than $1 million to a former employee by diverting payments from a European company into a Swiss bank account controlled by the employee. The money was concealed on the books of Axelrod's company as a marketing expense.
The 1998 lawsuit, which is still unresolved, involves Axelrod and the California-based company that bought his publishing business. Axelrod sold TFH Publications -- named for its flagship magazine, Tropical Fish Hobbyist -- for $70 million in cash and a $10 million loan from Central Garden & Pet Co., with the prospect of additional money contingent on the company's earnings.
A short time later, however, Axelrod filed suit against Central Garden for damages, accusing it of management failures that jeopardized prospects of achieving those higher earnings. Central Garden countersued, alleging fraud, misrepresentation and breach of fiduciary duty.
In its filings, Central Garden laid out the fraud charges, including the $1 million in payments to Hersch and $250,000 in contributions to the University of Guelph that were characterized in the financial statements of TFH as advertising expenses.
"After we bought TFH from Herb Axelrod in 1997, we discovered that prior to our purchase, Herb Axelrod had committed tax and other frauds, including the knowing sale of defective products that inflated the apparent value of TFH. We filed civil claims against him seeking damages and notified the U.S. Attorney's Office about the fraud we discovered," she said. "This indictment, and the fact that Herb Axelrod is now a fugitive from justice, validates our concerns about Herb Axelrod."
Central Garden also alleges Axelrod had extensive -- and improper -- business dealings in Cuba, including a cigar business.
According to documents filed by Central Garden, Axelrod had a European customer pay his Cuban expenses using money owed to TFH Publications. Axelrod allegedly disguised those payments by issuing false credits to the European company.
It is illegal for Americans to transact business in Cuba.
"He does research there on tropical fish, he has published a book about Cuban cigars," said the attorney. "He has many friends there."
Lebensfeld speculated there may be another motive behind Axelrod's decision to head to Cuba rather than deal with the criminal case.
"He's 76 years old, he's done a lot of good for a lot of people, he has paid millions in federal income taxes over the past decade," Lebensfeld said. "I believe at age 76, he feels that he shouldn't have to face this at the end of his life."
Since then, Axelrod has been arrested in Germany at an airport, he is facing return to the United States. - Aaron Frymire Cichlidboy@Hotmail.Com
Herbert Axelrod, the eccentric philanthropist who bestowed millions of dollars' worth of rare stringed instruments on the New Jersey Symphony Orchestra, has fled the country and taken refuge at a luxury marina in Cuba to avoid federal prosecution for tax fraud.
A federal judge issued an arrest warrant for Axelrod yesterday afternoon after the pet-care publishing tycoon failed to show up for his arraignment in Trenton. The United States has no extradition treaty with Cuba.
Assistant U.S. Attorney Michael Guadagno informed District Court Judge Garrett E. Brown Jr. that Axelrod was in Zurich, Switzerland, when the indictment was returned and was well aware of the pending criminal charges.
The combined charges against Axelrod carry a maximum punishment of five years in prison and a $250,000 fine.
The twist of events included the discovery by authorities this week that Axelrod had sold his home in Deal earlier in the month, as well as other properties around the country -- including several homes in Key West, Fla. Authorities say Axelrod's 50-foot yacht, the Lady Ev II, was missing.
Axelrod, 76, a multimillionaire who had turned his interest in tropical fish into a worldwide publishing empire, was a major benefactor to the New Jersey Symphony Orchestra. He suddenly became widely known for selling the orchestra a collection of rare Italian stringed instruments from the 17th and 18th centuries last year at a steeply discounted price.
While the deal with the New Jersey Symphony Orchestra was being struck, though, a criminal investigation against Axelrod was already well under way, and Axelrod was aware of the questions being raised into his finances as a result of a civil suit involving the 1997 sale of his company, TFH Publications.
In the two-count federal indictment returned last week, Axelrod was charged with conspiracy and aiding and abetting the subscribing of a false tax return. He was accused of funneling more than $1 million to a former employee by diverting payments from a European company into a Swiss bank account controlled by the employee. The money was concealed on the books of Axelrod's company as a marketing expense.
The 1998 lawsuit, which is still unresolved, involves Axelrod and the California-based company that bought his publishing business. Axelrod sold TFH Publications -- named for its flagship magazine, Tropical Fish Hobbyist -- for $70 million in cash and a $10 million loan from Central Garden & Pet Co., with the prospect of additional money contingent on the company's earnings.
A short time later, however, Axelrod filed suit against Central Garden for damages, accusing it of management failures that jeopardized prospects of achieving those higher earnings. Central Garden countersued, alleging fraud, misrepresentation and breach of fiduciary duty.
In its filings, Central Garden laid out the fraud charges, including the $1 million in payments to Hersch and $250,000 in contributions to the University of Guelph that were characterized in the financial statements of TFH as advertising expenses.
"After we bought TFH from Herb Axelrod in 1997, we discovered that prior to our purchase, Herb Axelrod had committed tax and other frauds, including the knowing sale of defective products that inflated the apparent value of TFH. We filed civil claims against him seeking damages and notified the U.S. Attorney's Office about the fraud we discovered," she said. "This indictment, and the fact that Herb Axelrod is now a fugitive from justice, validates our concerns about Herb Axelrod."
Central Garden also alleges Axelrod had extensive -- and improper -- business dealings in Cuba, including a cigar business.
According to documents filed by Central Garden, Axelrod had a European customer pay his Cuban expenses using money owed to TFH Publications. Axelrod allegedly disguised those payments by issuing false credits to the European company.
It is illegal for Americans to transact business in Cuba.
"He does research there on tropical fish, he has published a book about Cuban cigars," said the attorney. "He has many friends there."
Lebensfeld speculated there may be another motive behind Axelrod's decision to head to Cuba rather than deal with the criminal case.
"He's 76 years old, he's done a lot of good for a lot of people, he has paid millions in federal income taxes over the past decade," Lebensfeld said. "I believe at age 76, he feels that he shouldn't have to face this at the end of his life."
Since then, Axelrod has been arrested in Germany at an airport, he is facing return to the United States. - Aaron Frymire Cichlidboy@Hotmail.Com
