From Muppet Wiki

Fred is Ernie's artist cousin, who has been mentioned in at least two Sesame Street books.

In the 1983 book Ernie's Little Lie, Ernie receives a painting of a tiger in the mail from Fred which he inadvertently submits in an art contest. The painting is so good that it receives high praise from all the participants, and ultimately wins the grand prize. When Ernie comes to grips with the truth about Fred's painting, Mr. Hooper, who has judged the contest, agrees that the set of paints should be sent to Fred as the deserving candidate.

Fred continues to send his artwork to his cousin. In Grover's Bad Dream (1990), Big Bird's friends have gathered for his birthday party, where Grover has hand-made his own card for Big Bird. Ernie also presents him with a hand-drawn card, but this one has been created by cousin Fred, and again gains the higher praise (much to Grover's chagrin).