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Ex-head of National Arts Club settles with NY

Wednesday - 7/10/2013, 2:50pm  ET

NEW YORK (AP) -- The former president of the prestigious National Arts Club has agreed to pay $950,000 to settle claims he mismanaged the institution and used its resources to finance a luxurious lifestyle, a New York official said Wednesday.

State Attorney General Eric Schneiderman sued O. Aldon James in September, saying James, his brother and an associate used more than a dozen apartments and other space at the club's Manhattan headquarters rent-free. He also said James spent tens of thousands of dollars from club funds on purchases at antique shops, flea markets and vintage clothing stores.

The lawsuit came after an 18-month investigation, years of legal battles and the removal of James as president in 2011.

Critics had accused James of being a compulsive hoarder because many of the items bought during shopping sprees at flea markets and Salvation Army and Goodwill Industries thrift shops were stored in space he controlled at the club.

The club was founded in 1898 by an arts critic for The New York Times and has been in a mansion adjacent to Gramercy Park since 1906. Its mission is to promote public interest in the arts. Members have included Mark Twain, Theodore Roosevelt and Martin Scorsese.

The attorney general's lawsuit said that if the club's apartments had been rented out, rather than used for personal living space and storage, they could have brought in at least $1.5 million in the last six years.

Schneiderman said the club will get $900,000, with the balance going to cover the state's costs. As part of the agreement, the club will use $274,000 of the settlement to replenish its Kesselring Fund, a restricted endowment to support the dramatic arts. The suit claimed James used the money to restores the club's facade.

The club has agreed to change how it operates and put tighter controls on finances.

A call to Gerald Shargel, James' lawyer, wasn't initially returned Wednesday. At the time of the lawsuit, he said James, who didn't take a salary, "acted only to benefit the club." He said James turned the club around and make it once again relevant on New York's cultural scene after becoming president in 1986.

"Today's settlement allows the club to close the door on years of bitter discord and start to recover from the havoc that Aldon James and his cohorts wrought," Schneiderman said.

Under the settlement, James and the others have to be out of their apartments by the end of July, can't contest being expelled from the club and are banned from serving as an officer, director or fiduciary at any New York nonprofit.

The district attorney's office in Manhattan had investigated the club, but decided James' actions did not constitute "provable criminal conduct" and the case was best handled in civil court.


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