hasn't been implicated yet. I'll talk to him tonight and sort things out."
When Houghton ran into Frel later, he asked whether he had spoken to McNall.
"Don't worry about that, Arthur. It's an issue that concerns McNall and McLendon, not us."
Houghton was agitated. Hadn't Frel seen the recent article in the
Los Angeles Times
about the IRS investigating museums for accepting fraudulent appraisals of gemstones?
"Arthur," Frel said dismissively, "we don't collect gemstones."
T HE NEXT DAY, Houghton flew to New York and had lunch with his personal attorney. The assistant curator laid out in detail what he'd learned about Frelâa list of criminal activities ranging from forgery and tax fraud to bribery and embezzlement. He asked his attorney to write a legal opinion, based on a "hypothetical curator's activities," that Houghton could use to convince Frel how serious the matter was.
At the end of June, with his legal memo in hand, Houghton asked to talk with Frel privately. The two took a long stroll around the Getty's colonnade bordering the reflecting pool. As they walked, they passed bronze replicas of the statues found at the Villa dei Papiri.
"When I'd talked to you about my concerns about the donations in the past, I was ignorant of the law," Houghton began. "I've asked an attorney to tell me what laws a curator might be breaking by doing these things. It's called conspiracy to commit tax fraud."
The "hypothetical curator" would expose not just himself but the entire institution to a range of criminal and civil liability under the U.S. tax code. Houghton's legal memo concluded by highlighting the irony of Frel's actions:
I cannot think of any reason for anyone to engage in the kind of behavior in this hypothetical example, especially if the museum in question was a nationally recognized, well-endowed institution which had no compelling reason or excuse for engaging in such activities. I would not be alone in viewing this sort of deliberate tax fraud as no better than outright theft from the Government.
The blunt memo did not have the desired effect. "Honestly, Arthur, I had hoped to bring you in more," Frel said. "I see that's not going to be possible. I'll have to reveal less of myself to you."
The next day, Frel learned that several other Getty donors had had their appraisals questioned by the IRS, including Alan Salke, president of McNall's movie production company; entertainment attorney Ken Ziffren and his partner, Skip Brittenham; Stanley Silverman, a doctor in Huntington Beach; and Lowell and Michael Milken.
Frel informed Houghton, adding that he had taken home the last of the blank appraisal forms and burned them when he learned the news. Frel vowed that there would be no more donations, aside from the five or so that were still coming in. Frel also said that he had spoken to an attorney friend, who had advised him against discussing the issue with anyone else at the Getty.
Houghton believed that Frel was trying to limit the circle of people who knew about the donation scam. For the first time, Houghton began to wonder if he might be in physical danger. He was, after all, threatening Frel's entire way of life: his position, his income, his reputation. If Houghton was the only one who knew, would Frel be tempted to try to silence him? Houghton imagined himself driving along the Pacific Coast Highway to work one day and suddenly finding that his car had no brakes. Would Frel do such a thing? His best protection, Houghton thought, was to increase the number of people in the loop. He urged Frel to consider talking to Harold Williams. The antiquities curator said that he would consider it once the IRS cases were settled. But he wasn't exactly contrite.
"You have no idea what goes on in other museums, Arthur. They accept total junk, and the donor takes twenty times the value in his tax write-off. It's the normal practice."
Houghton decided that it was time to go over Frel's head.
A T THE GETTY'S annual
When Houghton ran into Frel later, he asked whether he had spoken to McNall.
"Don't worry about that, Arthur. It's an issue that concerns McNall and McLendon, not us."
Houghton was agitated. Hadn't Frel seen the recent article in the
Los Angeles Times
about the IRS investigating museums for accepting fraudulent appraisals of gemstones?
"Arthur," Frel said dismissively, "we don't collect gemstones."
T HE NEXT DAY, Houghton flew to New York and had lunch with his personal attorney. The assistant curator laid out in detail what he'd learned about Frelâa list of criminal activities ranging from forgery and tax fraud to bribery and embezzlement. He asked his attorney to write a legal opinion, based on a "hypothetical curator's activities," that Houghton could use to convince Frel how serious the matter was.
At the end of June, with his legal memo in hand, Houghton asked to talk with Frel privately. The two took a long stroll around the Getty's colonnade bordering the reflecting pool. As they walked, they passed bronze replicas of the statues found at the Villa dei Papiri.
"When I'd talked to you about my concerns about the donations in the past, I was ignorant of the law," Houghton began. "I've asked an attorney to tell me what laws a curator might be breaking by doing these things. It's called conspiracy to commit tax fraud."
The "hypothetical curator" would expose not just himself but the entire institution to a range of criminal and civil liability under the U.S. tax code. Houghton's legal memo concluded by highlighting the irony of Frel's actions:
I cannot think of any reason for anyone to engage in the kind of behavior in this hypothetical example, especially if the museum in question was a nationally recognized, well-endowed institution which had no compelling reason or excuse for engaging in such activities. I would not be alone in viewing this sort of deliberate tax fraud as no better than outright theft from the Government.
The blunt memo did not have the desired effect. "Honestly, Arthur, I had hoped to bring you in more," Frel said. "I see that's not going to be possible. I'll have to reveal less of myself to you."
The next day, Frel learned that several other Getty donors had had their appraisals questioned by the IRS, including Alan Salke, president of McNall's movie production company; entertainment attorney Ken Ziffren and his partner, Skip Brittenham; Stanley Silverman, a doctor in Huntington Beach; and Lowell and Michael Milken.
Frel informed Houghton, adding that he had taken home the last of the blank appraisal forms and burned them when he learned the news. Frel vowed that there would be no more donations, aside from the five or so that were still coming in. Frel also said that he had spoken to an attorney friend, who had advised him against discussing the issue with anyone else at the Getty.
Houghton believed that Frel was trying to limit the circle of people who knew about the donation scam. For the first time, Houghton began to wonder if he might be in physical danger. He was, after all, threatening Frel's entire way of life: his position, his income, his reputation. If Houghton was the only one who knew, would Frel be tempted to try to silence him? Houghton imagined himself driving along the Pacific Coast Highway to work one day and suddenly finding that his car had no brakes. Would Frel do such a thing? His best protection, Houghton thought, was to increase the number of people in the loop. He urged Frel to consider talking to Harold Williams. The antiquities curator said that he would consider it once the IRS cases were settled. But he wasn't exactly contrite.
"You have no idea what goes on in other museums, Arthur. They accept total junk, and the donor takes twenty times the value in his tax write-off. It's the normal practice."
Houghton decided that it was time to go over Frel's head.
A T THE GETTY'S annual
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