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Aug. 31 2009 - 2:01 am | 1,322 views | 0 recommendations | 3 comments

Six degrees of Mark Rothko and Bernie Madoff

Rothko, 1949, Museum of Modern ArtIn 1970, when Mark Rothko committed suicide, he left behind no note, just large, gorgeous, completely unique paintings.

Soon after, in a highly-publicized lawsuit, Rothko’s two young children sued the three executors of the estate and succeeded in having them removed from their posts due to conflict of interest.  The executors sold the paintings for less than their true value to the Marlborough Gallery.  One of the three executors was the owner of Marlborough.  In addition to being removed as executor,  he was fined approximately $9 million for both selling as a representative of the estate and buying as the owner of the Gallery,  at prices less than their true worth, and then allegedly splitting the difference with his co-executors and granting himself years to pay at no interest.

Fast forward to Mark Rothko paintings, August 2009, when a disgraced financial advisor does a little Rothko business of his own.   J. Ezra Merkin lost an alleged $2.4 billion of his clients’ money by farming it out to Madoff.   With his assets frozen while under investigation by Andrew Cuomo, Merkin has sold his considerable Rothko collection to an unknown buyer through retired art dealer Ben Heller, who put the collection together for Merkin years ago:

Aug. 14 (Bloomberg) — J. Ezra Merkin, whose Ascot Partners LP invested billions with convicted Ponzi schemer Bernard Madoff, sold his Mark Rothko-packed art collection for $310 million last month to a still-unknown buyer, according to court filings.

The sale generated $37.5 million in fees and left art dealers also puzzling over the identity of Merkin’s agent, named in court documents as “TLIA, LLC.”

That mysterious entity received $26.5 million for its role in the transaction.

Heller, the no-longer “mysterious” agent, is married to the mother of “The Closer” star Kyra Sedgewick.  Kyra Sedgewick is married to Kevin Bacon.  All are victims of Madoff:

In an interview earlier this year, Heller told Bloomberg News that he is among Madoff’s victims, having lost $3.4 million in a charitable trust and over $10 million in personal funds.

The sale was approved by New York State Attorney General Andrew Cuomo, who froze Merkin’s assets and is suing him for concealing his $2.4 billion investment with Madoff. If Cuomo wins, funds from the art sale will go toward recouping investor losses. The sale produced $191 million, after fees, taxes and legal expenses, to be held in escrow.

The visual arts have become so outrageously priced and traded that even best practices rival the trappings of our banking system and brokerage houses, and investors have taken over the asylum.

Art brings out the very best, and the very tragic, in its creators.  And apparently, it inspires the rest of the deadly sins in its collectors.

via Madoff Investor’s Art Dealer Got $26.5 Million in Rothko Sale – Bloomberg.com.


3 Total Comments
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    Nice work putting together these pieces. I am always interested in the lineage of works of art or collections of art and I think that the offselling that occurred after the Madoff disaster will be one for the historu books. 50 years from now it may increase a paintings worth if it can claim on its backlog that it was once owned by a famous hedgefund manager who lost his fortune to Madoff. But, more on the post, I think it’s very strange that Heller was labeled anonymously on the court documents. I think its important to note that where others are losing their money, there are still others who stand to make a profit. At least a portion of the profits from the sale of the paintings should be donated to the Madoff fund to pay back those who lost everything.

  2. collapse expand

    Nick, don’t you think following the “lineage of works of art,” as you say, is just like that great old movie — Mike Harvkey, if you see this, what is the title? — in which we see all the owners of a gun? The film traces their individual stories at the time they come into possession of it. As for who’s making what money on all this, it has been repeatedly asked in coverage of the Merkin story, as you ask, why the fees seem unusually high and why all the secrecy. As with the auto industry leadership who flew around on private planes even after their greed was made public, this is a sale expressly okayed by Andrew Cuomo so that the profits can benefit Madoff victims, and the money removed from the sale for other purposes is in question and deserves transparency.

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