Tuesday, December 30, 2008
– The Country Music Hall of Fame reached a settlement with the estate of a Tennessee man, who gave instruments belonging to Bill Monroe and Mother Maybelle Carter, but set up a Ponzi scheme, to the hall for $750,000
Negotiations with Robert Waldschmidt, trustee for the Robert W. McLean Bankruptcy Estate, took more than a year. A motion to approve the resolution and settlement of all claims Waldschmidt was filed in U.S. Bankruptcy Court for the Middle District of Tennessee today. The settlement agreement is subject to Bankruptcy Court approval and requires the hall to pay within 30 days.
"Recovering gifts made to a non-profit organization poses a unique set of issues," said Waldschmidt, "and everyone involved in this lawsuit was sensitive to the historical significance of the instruments involved. However, the interests of the creditors in this bankruptcy proceeding, many who lost their life savings, could not be ignored either. This resolution is a fair compromise, and will benefit the bankruptcy estate and its creditors, while preserving the Museum's collection of instruments."
"We are pleased to avoid a costly court battle and get this matter resolved," said Museum Director Kyle Young.
Waldschmidt sought to recover approximately $l.54 million from the museum. The figure represents McLean's total cash payments to the museum plus the value of two Johnny Cash guitars that McLean had purchased outright and donated to the hall's permanent collection. As an alternative, Waldschmidt had asked the court to order the surrender of the instruments so they could be sold to satisfy the claims of McLean's creditors.
"McLean's "philanthropy" allowed the Museum to enter into confidential purchase agreements and acquire Mother Maybelle Carter's Gibson L-5 guitar and Bill Monroe's Gibson F-5 Loar mandolin, two of the most significant instruments in popular music history," the hall said in a press release.
Since McLean's involuntary bankruptcy and his death in 2007, the museum has continued to honor all the terms of those agreements. As a part of the settlement agreement, the museum agreed to provide additional value to McLean's creditors by subordinating its $870,850 proof of claim (the balance of all unfulfilled pledges made by McLean to the Museum).
McLean was accused of operating a Ponzi scheme, defrauding investors of more than $67 million over a period of several years.
"We are still not over the shock of this tragedy, which continues to reverberate in so many lives," Young said. "We did not have the money and, because we hold the instruments, like all of our collection, not for ourselves but in trust for the benefit of the public, we could not merely turn them over to the trustee," he said.
Music industry leader Scott Siman has been joined by museum chairman Steve Turner to lead a fundraising campaign to assist the museum in defraying all obligations incurred in connection with the acquisition of these historical instruments. Arrangements for a loan to supplement pledges not received before the settlement payment date are in place with the Music Row branch of SunTrust Bank.