Herman Finesod

Finesod ran two sequential tax shelter operations using the same structural architecture. The first, Hambrose Stamps Ltd, sold rare postage stamps to investors as tax deductions: stamps acquired for $3.60 each were sold at $106,000–$207,000 each, with the price differential presented as a deductible investment loss. Over $160 million in philatelic notes were issued. The United States sued Finesod under 26 U.S.C. § 6700, the statutory provision prohibiting the promotion of abusive tax shelters, in litigation documented in Newmyer v. Philatelic Leasing, 888 F.2d 385 (6th Cir. 1989) ¹.

The second and larger operation was Jackie Fine Arts Inc. Reproduction rights to Picasso works and other masters were acquired through intermediary AMI from Paraselenes SA — a company controlled by Marina Picasso — at approximately $10,000 per master, then sold to more than 2,000 investors at $225,000–$250,000 each, supported by fraudulent independent appraisals ¹. Sigmund Rothschild and F. Peter Rose, who shared an office and a secretary, valued the same masters at $700,000–$750,000; Rothschild paid Rose a $50 kickback per transaction ³. By 1986, Jackie Fine Arts carried notes receivable in the hundreds of millions, and its parent M and J Holding Corporation reported $1.33 billion in total assets ². The IRS disallowed all resulting deductions, and the Sixth Circuit affirmed that the art master packages lacked economic substance ³. Finesod also faced copyright disputes involving Museum Boutique Intercontinental during the same period ¹.

A review of filings on SEC EDGAR shows that Finesod appeared in 16 filings, all related to Electronic Control Security Inc (CIK 0000803044, Clifton, NJ, SIC 3669) and MFC Development Corp (CIK 0001125532, New Rochelle, NY) — two entities distinct from the art and stamp operations, indicating continued corporate activity into the 1990s ⁴. Records indicate he challenged the IRS in the Southern District of New York on two occasions, in 1987 and 1992 ⁴. Review of records across multiple state registries — Florida, New York, New Mexico, Pennsylvania, California, the USVI, and the United Kingdom — has not located any corporate registration for Jackie Fine Arts ⁴.

Civil litigation against Finesod and Jackie Fine Arts began in 1983 and extended through at least 1992 across more than ten federal districts ³. Cases included Turner v JFA (SD Cal 1983), Menish v JFA (CD Cal 1984), Ross v JFA (DSC 1985), Westheimer v Finesod (SD Tex 1986), Nichols v JFA (D Me 1987), Bergin v JFA (D Minn 1987), Faircloth v JFA (EDNY 1:89-mc-00437, not terminated until 2016), and multiple Ross actions in SD Cal through 1992 ³.

At trial in the Eastern District of New York, a jury found Finesod liable for fraud, civil conspiracy, and RICO violations; Finesod did not appear at trial ³. The jury awarded $469,839 in compensatory damages, trebled to $1,409,517 under RICO, plus $2.5 million in punitive damages against Finesod personally, $5 million in punitive damages against Jackie Fine Arts, $500,000 in punitive damages against Rose, and $615,170 in attorney fees ³. On appeal, the Fourth Circuit reversed the state law fraud claims but affirmed the RICO judgment and issued a permanent injunction ³. Gold and Wachtel, through William Wachtel, appeared on brief as defense counsel for Finesod in this appeal Connection #1086.

A review of court records indicates that Finesod filed personal bankruptcy in the Western District of Pennsylvania in 1994, docketed as case 94-20640 ⁴. Total civil judgments against him exceeded $9 million across the stamp and art operations ¹. As of November 2018, at approximately age 84, building owner 200 East 62nd Street Owner LLC filed suit against him in New York state court, indicating continued residence at 200 East 62nd Street on the Upper East Side ⁵.

Bernard Indyke served as manager and board member of Jackie Fine Arts Inc, Finesod's principal operating entity, during the period of the fraud Connection #1076, Connection #1082. Jackie Fine Arts was a client of Gold and Wachtel, and Bernard's position at the company predated his son's employment at the firm Connection #1082. Bernard placed his son Darren Indyke at Gold and Wachtel in 1986, where Darren first encountered Jeffrey Epstein as a client; Darren returned to the firm after Cornell Law School and subsequently became Epstein's exclusive in-house attorney for over two decades Connection #1089.

William B. Wachtel, of Gold and Wachtel, defended Finesod on appeal in the Fourth Circuit RICO case while employing Bernard Indyke's son Darren at the same firm Connection #1086. Wachtel was personally on brief as defense counsel during Darren Indyke's concurrent tenure at the firm Connection #1086. When subsequently asked by The Daily Beast about Bernard's role at Jackie Fine Arts, Wachtel described him as a mailroom employee; the Faircloth appellate record identifies Bernard as manager and board member of a Gold and Wachtel client Connection #1082.

The institutional chain runs from Finesod through Jackie Fine Arts to Gold and Wachtel to Epstein: Finesod controlled Jackie Fine Arts, where Bernard Indyke served as manager; Gold and Wachtel represented both Jackie Fine Arts in fraud litigation and Jeffrey Epstein from 1988; and Darren Indyke, placed at the firm through his father's connection, went on to manage Epstein's corporate infrastructure Connection #1089. Analysis of the Jackie Fine Arts record indicates that the structural practices used there — shell entity layering, inflated professional valuations, coordinated third-party opinions, and non-recourse notes — have parallels in the Epstein corporate network Darren subsequently managed ¹³.