Madoff-Scandal Fallout Props Up Art Market

Date: Thursday, April 9th, 2009

Author: Shelly Banjo

NEW YORK -- Many victims of Bernard Madoff's Ponzi scheme are raising cash by selling prized artwork and collectibles, creating a windfall for some collectors.

A number of rare works of art, antiques and collectibles are on sale for the first time in decades -- and at good prices. This so-called Madoff inventory has surfaced primarily in Palm Beach, Fla., auction houses and antique dealers, as well as at shops specializing in Judaic art.

"Rare and one-of-a-kind artifacts and antiques are now surfacing that haven't seen the light of day in generations as the effects of the sinking economy and the Madoff scandal congeal," says Jonathan Greenstein, chairman of J. Greenstein & Co, an auction house specializing in antique Judaica including rare Jewish ritual objects, books and manuscripts.

His company's auctions typically average 130 items, but in June he will be offering more than 200, including many rare pieces sold "under duress" due to Madoff losses, he says. This is at a time when prices for Judaic art are drastically lower than they were a few years ago, he adds.

Many of Madoff's clients were wealthy investors, many of whom owned valuable collections of art, antiques and jewelry. A number of victims were Jewish investors as well as those living in Palm Beach and surrounding communities.

One of Greenstein's clients who had invested with Madoff is the widow of Rabbi Alexander Schindler, a past president of the Union for Reform Judaism. "Rhea consigned an 18th century silver Torah pointer, used so that fingers never touch the sacred text, that's expected to sell for up to $30,000," Greenstein says. Schindler couldn't immediately be reached for comment due to the Passover holiday.

Greenstein also will offer an 1814 Menorah from Prague that "would never have seen the light of auction had the consigner not needed the money," he says.

Other gems have surfaced out of Palm Beach county, including a "very important old-master's painting for sale from a client who got Madoff-ed" and who has a house in Palm Beach, says Richard L. Feigen, president of Richard L. Feigen & Co., a New York dealer specializing in old masters and other museum-quality art.

Half of the items in an upcoming estate sale at Palm Beach's Kofski Antiques are "Madoff inventory," including oriental rugs, silver and a 50-year old collection of English art, says owner Chris Hill.

Kofski has an advance purchasing program, which is attracting people who want -- or need -- cash now, Hill says. They can avoid selling on the spot at lower prices by arranging to delay the actual sale of an item for a period of time, usually up to three months. The company typically advances a percentage of an object's present-day value immediately and, when it sells, the seller receives the net proceeds.

"I'm sorry that it's under these circumstances, but we're seeing some very attractive pieces for bargain prices -- it's definitely a buyer's market," Hill says.

Not everyone hit by Madoff is apt to sell their hard assets. Some are holding on to them, says Tobina Kahn, vice president of House of Kahn Estate Jewelers with locations in Palm Beach and Chicago.

One Palm Beach resident victimized by Madoff "said there was no way she would sell her diamond necklace because it was the only thing they had that was worth anything," Kahn says. "Many of the ladies are holding on to their jewels."

(Shelly Banjo is a Getting Personal columnist who writes about wealth management and philanthropy; she covers topics including tax and estate planning, investment strategies, charitable giving and the independent sector.)

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