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The Worth of Warhol

In response to:

'The Warhol Foundation on Trial' from the May 13, 2010 issue

To the Editors:

Edward Hayes’s letter [NYR, May 13] falsely accusing the Warhol Foundation of undervaluing its inventory of Andy Warhol’s art to avoid meeting its obligation to distribute 5 percent of its assets annually to charity is a legacy of his disastrous lawsuit against his client, Andy Warhol’s estate, for an astonishing legal fee.

I was one of the attorneys opposing him in that lawsuit. He had already collected $4.85 million and sought many millions more, claiming that he was entitled to a percentage of the value of the estate. In doing so he had to overcome an appraisal by Christie’s, hired by Fred Hughes whose commission as executor would be determined by it, that was extensive (many thousands of works), neutral (Christie’s had no motive to artificially reduce the values), sophisticated (it is a model for the application of a blockage discount to a vast collection), and fair.

That appraisal and the foundation’s regular annual reappraisals of its art inventory that are required for purposes of the 5 percent rule (and of which Mr. Hayes is evidently ignorant) have always been accepted by the IRS as accurate and complete for purposes of the rule. In fact the foundation’s contributions to charity, which now approach $200 million, have far exceeded the minimum required under that rule.

Mr. Hayes not only lost his claim, he was ordered to pay back to the estate over $1 million of what he had collected. In his bankruptcy proceeding to evade that obligation, the court ruled that it could not be discharged in bankruptcy because it grew out of a violation of his fiduciary duty as an attorney to his client the estate. Mr. Hayes should stop trying to get even by continually making this allegation; he must know that it is utterly false.

Peter Gates
New York City

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