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Flash News & Analysis, 4-18: Smoking Guns & Low Blows
At Graham Trial, Truth is Outing

"The new corporation purchased on 12/1/56 the existing school of dance which Martha Graham had been carrying on. The corporation agreed to pay Ms. Graham $50,000, and Ms. Graham agreed not to permit the use of her name...in connection with any other school or company."

--Louis Goodkind, attorney for the Martha Graham Foundation, in a 1957 letter to the Internal Revenue Service

"This is a tremendous New York City-based institution that we believe is the true owner of the rights."

--Marla Simpson, assistant attorney general, the State of New York

By Paul Ben-Itzak
Copyright 2001 The Dance Insider

Dancers and choreographers, themselves with little financial resources, have often relied on the kindness of strangers: Doctors, dentists, lawyers, publicists, chiropractors, psychotherapists and accountants willing to provide free or discounted services to support the arts. One such unsung hero is Rubin Gorewitz, accountant to Merce Cunningham, Katherine Dunham, Paul Taylor, Alvin Ailey, Twyla Tharp, Jasper Johns, Robert Rauschenberg -- and Martha Graham. On Tuesday in a Manhattan courtroom, 45 years after he helped Graham ease her personal tax burden by convincing her to sell her school to a new not-for-profit Martha Graham School, in the process giving it exclusive educational rights to her name, Gorewitz returned to help the school hold onto that name.

Graham's other heir, Ron Protas, is suing the Martha Graham School of Contemporary Dance and the Martha Graham Center in Federal court, seeking an injunction to prevent the two entities from using the name Martha Graham, or advertising that they teach the Martha Graham technique. Both the name and the name with the technique, Protas argues, were registered as trade or service marks several years ago, with Protas claiming ownership.

But the case had no sooner gone to trial when, on March 23, Center and School lawyers dropped a bombshell: They'd found evidence which, they said, showed that in 1956 Graham, for tax purposes, sold the school, which she had owned, to a new not-for-profit Martha Graham School of Contemporary Dance, granting it, among other things, the right to use her name exclusively among educational institutions. Thus, they argue, Protas did not have the right to register trademarks for a name or technique he did not exclusively own; furthermore, they contend, he was remiss to the point of "fraudulence" in ignoring a Graham estate lawyer's advice that he investigate the ownership question.

Protas has declined to comment at all to The Dance Insider. Graham's will leaves him everything she owns, but the will is rather vague as to exactly what that is.

In their own investigations -- particularly in looking through a warehouse of Graham records -- center and school lawyers have been unable to turn up the actual purchase agreement selling the school to the new not-for-profit. However, they have found other evidence, including an unsigned 1956 application for tax-exempt status and Gorewitz, who they called Tuesday to authenticate the application and testify that he had in fact recommended the arrangement.

In 1956, Gorewtiz testified, Robert Dunn, a pianist for Merce Cunningham for whom he prepared taxes and who also played for Martha Graham's classes, introduced him to Graham. "She had some tax problems, (and) had to raise $2,000 to pay taxes," Gorewitz, looking smart in a silver-gray suit, striped white shirt and bow-tie, recounted. "There were a lot of expenses. She had failed to deduct, and (wanted) to be able to reduce her tax liability."

Gorewitz found enough deductions for Graham -- on traveling expenses, costumes, and other dance clothing -- that, he says, "She was very pleased with the return. It was audited and accepted as filed, and her tax was reduced substantially."

So, Gorewitz said, "She...asked me what I could do to help with the school, because it was running into difficulties and had difficulty making ends meet. I told her she should sell the school to the Martha Graham School of Contemporary Dance, a tax-exempt foundation we would set up. There would be less tax consequences to her personally."

Here Judge Miriam Goldman Cedarbaum interjected, "If she transferred the school to a not-for-profit foundation, the foundation would become (the owner), and therefore fund all of the necessary financing of the salary and operating expenses of the school?"

"Exactly," answered Gorewitz.

"Did she proceed with the sale?" continued Marla Simpson, the assistant New York State attorney general who questioned the CPA for the Defense. (The charities department of the AG's office has intervened as a defendant, Simpson later told The Dance Insider, because "this is a tremendous New York City-based institution that we believe is the true owner of the rights... The attorney general has a statutory and historic mandate to protect the rights of charitable institutions.")

"Yes," Gorewitz answered. "I structured an outline of how it would take place."

Gorewitz identified the tax exemption request, IRS form 1023, that the Graham school had filed in 1956. When Protas lawyer James McGuire later pointed out that the document was not signed, Gorewitz insisted that the application actually sent would have had similar language.

Simpson also introduced a series of documents including tax returns for the school from the 1950s and 1960s, board meeting minutes which referenced the school's still owing Graham payments on the purchase price, and annual reports. The annual report for 1966, and minutes from 1967, as read by Gorewitz, indicate that the school at those points still owed $15,550 to Graham on the purchase.

Simpson concluded her examination by eliciting, from Gorewitz, that he had plead guilty several years ago to one charge of conspiracy to conceal income, that he had served his sentence, that he was currently a CPA in good standing, and that this matter -- whose basis appears to have been some ill-advised advice Gorewitz gave to an artist friend, and did not involve the CPA's actually signing a return -- is unrelated to his work for Graham.

McGuire, his efforts at assailing that work apparently frustrated, tried to draw Gorewitz out on the subject of the conspiracy charge. The judge let this continue for a while, until finally telling the Protas attorney that all that was really relevant to the proceeding was the one charge to which Gorewitz had admitted, and that he'd made his point regarding possible questions of credibility.

The other bombshell entered into evidence Tuesday by the Graham attorneys was a 1957 letter from then-Graham attorney Louis Goodkind to the IRS, supporting the tax-exempt status of the new not-for-profit school.

As quoted by Graham attorney Dale M. Cendali, Goodkind, responding to a letter from the IRS expressing skepticism about the application, answered that "the new corporation purchased on 12/1/56 the existing School of Dance which Martha Graham had been carrying on." The corporation agreed to pay Graham $50,000, and "Ms. Graham agreed not to permit the use of her name...in connection with any other school or company." She also, the letter as quoted by Cendali says, granted to the school almost all of her theatrical properties, including sets by Isamu Noguchi from 16 dance-dramas, and various equipment and costumes.

When McGuire argued that the letter was not admissible because it was an "unsigned, un-notarized document," the judge didn't buy it. The absence of any more witnesses from 1956, she explained, gives paper documents an added value.

The Goodkind letter, she explained, "shows the nature of the information conveyed to the IRS that ultimately resulted in the exemption of this organization. In the context of this case, this document has many indicia of reliability. At the moment I (am not considering) it as evidence for ownership of the Noguchi sets; that's for another day. I will deny your motion to exclude this as evidence Martha Graham sold her individual proprietorship to the Martha Graham School, to a not-for-profit corporation, incorporated in New York State: the Martha Graham School of Contemporary Dance. This is evidence that she transferred the name the Martha Graham School of Contemporary Dance to a corporation for a school that taught what her school taught: the Martha Graham Technique."

As well, the judge noted, the letter is an "effort to persuade the IRS that dance is an educational service...that contemporary dance is one of the major performing arts, and of the importance of training in contemporary dance education."

Tuesday's events also included the testimony of Scott Martin, the lawyer who filed the trademark registrations for the terms "Martha Graham" and "Martha Graham technique" several years ago. Martin, who appeared tie- and jacket-less, got off to a bad start, the Judge admonishing him, "So you are a litigator. Do you normally dress down in court?" By the time he returned to be cross-examined after lunch, he was sporting a smart jacket and tie.

The cross-examination by Defense lawyer Victor A. Kovner, representing longtime Graham board chair Judith Schlosser, center executive director Marvin Preston IV, and others, was brief. Kovner later pointed out that the Defense's charges of fraud do not apply to the lawyers who registered the trademark, but to Protas, for representing that he owned it.

"This plaintiff," Kovner said, referring to Protas, "was advised on more than one occasion by lawyers who represented the estate of Martha Graham to conduct an investigation into what he had actually inherited. I think the record will show that he withheld questions by his counsel...." which lead to "material misrepresentations made by Mr. Protas to the patent office. And I think the record will show that they were knowingly fraudulent."

Protas, as noted, has refused to comment to The Dance Insider. However, that does not mean he was not heard from Tuesday in court.

Egon Dumler, whom Protas hired in February 1999 to continue negotiations for a licensing agreement of the Graham ballets with the center, read a memo from Protas written during the negotiations. The memo, Dumler read, outlines new points Protas wanted to raise, and includes this Protas comment: "One does not have to be Wittgenstein to believe I am in negotiation with a hostile group of people."

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