Tuesday, June 30, 2009
Madoff-tainted Merkin to sell $300M in art
After funneling his clients’ billions into Bernard Madoff’s Ponzi scheme, Ezra Merkin will sell 15 Rothkos, Giacomettis and other works of art appraised at $310 million.
By Aaron Elstein
The Bernie Madoff scandal cost financier J. Ezra Merkin his reputation and his money-management business. Now, Mr. Merkin, one of the most important sources of funds in Mr. Madoff’s Ponzi scheme, is losing the heart of his art collection.
Mr. Merkin and his wife, Lauren, have agreed to sell 15 works of art, according to documents filed Tuesday in New York State Supreme Court. The works include paintings by Mark Rothko and sculpture by Alberto Giacometti, a source said, and decorated the Merkins’ palatial apartment at 740 Park Ave.
The art has been appraised at $310 million by Christie’s auction house and is expected to yield $191 million after taxes and broker fees, according to a letter from New York State Attorney General Andrew Cuomo’s office filed in court. The sale, which is subject to court approval, should be completed by July 15, and proceeds will be used to help Mr. Merkin’s clients recover Madoff-related losses.
It isn’t clear which exact works are to be sold, but Mr. Merkin’s collection includes two 9-by-15-foot studies for murals that Mr. Rothko executed for midtown’s Four Seasons restaurant and the Rothko Chapel in Houston, according to Bloomberg News, plus a smaller study for a Harvard University mural. The actual Four Seasons mural paintings are held in the National Gallery in Washington.
Mr. Merkin’s decision to sell his art comes after he was sued in April by Mr. Cuomo’s office for allegedly deceiving clients over how he invested their money. Mr. Merkin was, according to the attorney general’s office, a “glorified mailbox” who funneled $2.4 billion to Mr. Madoff without the knowledge or consent of his customers while pocketing $470 million in fees for himself. Several former clients have sued, including New York University, New York Law School and New York Daily News owner Mort Zuckerman.
In a prepared statement, Mr. Merkin’s lawyer, Andrew Levander, said: “As Mr. Merkin continues to defend against the actions brought against him by the New York attorney general and others, he and his wife have decided to sell the core of their art collection in a private sale. The Merkins believe the lawsuits are without merit and have agreed, without prejudice to their rights, to place the net proceeds of the sale in escrow while the litigation continues.”
Last month, Mr. Merkin agreed to step aside from running his investment business, which once served some of the city’s most prominent nonprofits and families.
“We believe it is only fair that Mr. Merkin liquidate his valuable art collection, which he purchased with the fees he earned from his investors,” Mr. Cuomo said in a prepared statement. “The $191 million that will be preserved in this way will not by itself make investors whole, but this is an important step in the right direction for investors.”
Source: Crain's New York