By STEVE STRUNSKY
The Associated Press

April 23, 2004 8:14 PM

NEWARK, N.J. - After years of playing second fiddle to esteemed institutions such as the New York Philharmonic, the New Jersey Symphony Orchestra got a boost in prestige with a new concert hall in 1997.

And, in a widely publicized coup last year, the orchestra acquired a unique collection of fine Italian stringed instruments from one of its chief benefactors.

Now the benefactor is a fugitive in Cuba after fleeing federal tax fraud charges in the United States, and the value of the collection has been called into question - and the embarrassing odor of scandal is wafting from one of the state's most elite cultural institutions.

In indictment of philanthropist Herbert Axelrod has focussed an off-color spotlight on the orchestra, now based at the highly praised New Jersey Performing Arts Center in Newark, after years at the acoustically challenged Newark Symphony Hall.

"It's unfortunate," said Cliff Zukin, director of The Star-Ledger-Eagleton Poll at Rutgers University. "New Jersey does not need to be tarred with another scandal, because we have enough. And usually the arts are so separate from politics that it's tragic that something that's arts-related is tainted by something that is part of the culture of our state."

A federal fugitive warrant has been issued for Axelrod, 76, on charges he conspired to defraud the IRS by helping a former executive of his pet book publishing company hide $700,000 in bonus payments in a Swiss bank account between 1990 and 1996. Neither Axelrod nor any lawyer for him showed up at an arraignment Wednesday, and prosecutors say he fled on his boat to the Hemmingway Marina in Havana, Cuba.

He has not returned calls by The Associated Press.

The charges against him are unrelated to an unusual deal last year in which he sold the so-called Golden Age Collection of 30 violins, violas and cellos crafted by legendary luthiers Antonio Stradivari, Giuseppe Guarneri del Gesu and others during the 17th and 18th centuries.

The orchestra characterized the transaction as a gift. The selling price was listed at $18 million - including $4 million that was financed by Axelrod himself and later forgiven - well below the $50 million at which Axelrod valued the collection.

But even before Axelrod's indictment, the appraised value he put forth was questioned by some experts.

"They might be worth as much as they paid for them - or not," Robert Bein of Bein & Fushi Rare Violins Inc., in Chicago, said of the selling price. "It certainly has nothing to do with the figure that was being touted in the newspapers, and that he discounted them. There was a lot of hype."

It was unclear whether Axelrod took a tax deduction on the difference between the sale price for the Golden Age Collection and its appraised value. INS Special Agent Alan Drucker, a spokesman for the agency's criminal investigations branch in New Jersey, declined to say whether the agency was investigating Axelrod's tax history beyond the charges involved in the indictment.

The president of the New Jersey Symphony Orchestra, Simon Woods, downplayed any impact Axelrod's indictment might have on the orchestra's image, noting it had recently acquired renowned conductor Neeme Jarvi as musical director, and insisting "this is an orchestra of absolutely fantastic musicians."

Woods defended Axelrod as having been "extraordinarily generous" to the orchestra, and said he did not believe the INS was looking into the Golden Age deal, which he defended as a sound investment.