Recap-Madoff Investor’s Art Dealer Got $26.5 Million in Rothko Sale, Yazzy's at www.williamverdult.com
Tuesday, August 18, 2009 at 09:00AM
AP

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 According to Bloomberg News.

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.

According to the Commercial Recording Division for the State of Connecticut, TLIA, LLC is registered to 83-year-old retired art collector and adviser Ben Heller. Heller, reached by phone at home, declined to comment.

PaceWildenstein, the gallery representing the Rothko estate, received $11 million as agent for the anonymous buyer. Andrea Glimcher, a gallery spokeswoman, declined to comment.

Art dealers and advisers were reluctant to carp, but conceded that the commissions seemed steep.

“On the face of it, without having all the facts, it does seem high,” said art adviser Liz Klein. “The seller’s fee does seem high, compared with what Pace made.”

“It is a lot of money,” said Ronald D. Spencer, head of the art practice at law firm Carter, Ledyard & Milburn LLP. “But when you are talking about a $310 million deal, it’s hard to evaluate the fees without knowing what services were provided by the agents.”

Madoff Victim

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.

Heller knew Merkin’s collection intimately; after all, he was instrumental in putting it together. From 2003 to 2008, he helped the financier and his wife assemble the largest private Rothko collection in the world, hung in several rooms in the Merkins’ Park Avenue apartment. Heller arranged special lighting and wall tones to complement the collection.

Started Collection

Heller met the Merkins through friends. A few months later, Lauren Merkin phoned Heller to discuss collecting.

Heller came up with a plan to buy a series of Rothko paintings, known for their spiritual quality evoked through bands of floating color against a flattened surface. The Latvian-born Jewish artist committed suicide in 1970.

Heller contacted Arne Glimcher at PaceWildenstein. “It was my conception,” Heller said. “I went to Arne.”

Merkin bought seven paintings from the artists’ heirs in a bulk sale, paying about $90 million, according to sources involved with the transaction. Rothko had always said he preferred to have his paintings exhibited in groups, so the deal was desirable to his children, who hoped the Merkins would make their home available to critics and scholars.

In June 2004, Pace filed a lien on five of the works. Two months later, Pace extended the lien to include two more Rothkos. Pace provided Merkin with extended payment terms. He had paid for only half of the artworks by the end of 2008.

Pace’s $42 million lien on behalf of Rothko’s heirs -- Kate Rothko Prizel and Christopher Rothko -- was cited in court papers. Merkin also borrowed $19.3 million from HSBC Bank USA, using the art as collateral, according to court records.

Burgundy Murals

Merkin’s collection included two large burgundy-hued mural studies: the nearly 15-foot-wide 1965 “Untitled (Rothko Chapel- Related painting),” and the 14-foot-wide 1958-59 “Mural No. 7 (Seagram Mural Sketch).” Each of those paintings is valued at about $15 million to $25 million today, according to dealers active in the Rothko market.

Among the finest works in the Merkin collection is a ravishing 1954 canvas, “No. 12 (Red and Yellow),” with an estimated value of $30 million to $40 million, even in today’s depressed art market.

Heller also worked with the Merkins to acquire five more Rothkos, buying from other dealers and at auction.

Before selling art, Heller worked at William Heller Inc., a textile firm founded by his father. By the mid-1950s, Heller had become friendly with Rothko and was an early and avid collector of his works and other American Abstract Expressionist painters. He owned seven Rothkos at one point, he said. Rothko called Heller’s Central Park West apartment, “the Frick of the West Side.”

Jackson Pollock

Heller also owned five large Jackson Pollock drip paintings. In 1973 he sold one of those, “Blue Poles,” to the Australian National Gallery in Canberra for $2 million -- a record for a painting by an American artist at the time. Heller had paid $32,000 for the work in 1956. Two other Pollocks were sold to MoMA, along with works by Franz Kline and Arshile Gorky. Heller donated a major Barnett Newman painting.

His clients included Norton Simon, Andrew M. Saul and Frederick R. Weisman, he said.

Heller is married to Patricia Rosenwald Sedgwick, the mother of actress Kyra Sedgwick.

-- With assistance from Joshua Fineman. Editors: Jeremy Gerard, Jeffrey Burke.

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