Review Finds Orchestra Did Not Violate Tax Law

An internal review by the New Jersey Symphony Orchestra has concluded that, while the organization’s leaders misled the board and the public about the value of 30 stringed instruments the symphony purchased in 2003 from a private collector, their actions did not appear to violate any tax laws.

The orchestra paid $18-million for the violins, violas, and cellos it bought from Herbert R. Axelrod, a book publisher and patron of the orchestra.

At the time, Mr. Axelrod said the instruments were worth $50-million, and he offered to donate the difference between the selling price and that value.

Publicly, the orchestra accepted Mr. Axelrod’s $50-million valuation, even though it had obtained informal estimates that put the value of the collection at $15.3-million to $26.4-million, according to the three-member committee appointed to conduct the internal review. While some board members knew of those lower estimates, they did not tell the rest of the board, the committee said.

“The orchestra clearly wanted publicity to put itself ‘on the map’ but should have refrained from use of the $50-million number,” the committee said.

Lack of experience in handling very large transactions and reliance on volunteers to conduct business were among the reasons the orchestra overstated the value of the instruments, the committee said.

However, officials did well to avoid giving Mr. Axelrod a receipt for his claimed donation, the panel concluded.

Since the orchestra only provided Mr. Axelrod with a receipt for the $18-million purchase price, it was not party to any possible scheme to claim an inflated charitable deduction for the gift.

The orchestra “did not acknowledge any ‘gift’ or any amount of a ‘gift’ to the NJSO from the Axelrods,” the panel said. “This wise decision has clearly enabled the orchestra to protect itself from any suspicion of criminal involvement.”