We use cookies to give you the best online experience. By using our website you agree to our use of cookies in accordance with our cookie policy. Learn more here.Close Me
Even though the Michael Foundation, like the Saul Foundation,
took ample time until February 1, 2013 to prepare its Katz Form
990-PF, such Katz Form 990-PF suffers from a similar scarcity of
information as to the Michael Foundation's involvement with
Madoff. However, the Michael Foundation's situation is very
different from that of the Saul Foundation. (Capitalized terms not
otherwise defined herein shall have the meanings assigned to them
in Installments
90 and
89.)
What did the Michael Foundation 2011 Form 990-PF (the
"Michael Form 990-PF") disclose about Madoff and the
Settlement Agreement?
The Michael Foundation is the private family foundation of
Michael Katz and his spouse Dayle. Michael, the lesser known Katz
brother in the Mets/Sterling consortium, is listed
third in the hierarchy on the Sterling Web site and, as discussed
in Installment 90, is the custodian of the books of the Katz
Foundations and the Fred Foundation, among others.
The Michael Foundation was (i) unlike the Saul Foundation (and
the Fred Foundation for that matter), not a
defendant in the Wilpon Litigation, (ii) listed on Schedule 1(not
Schedule 2) to the
Settlement Agreement with an agreed allowed claim of $617,000
against Trustee Picard (the "Michael Foundation Claim"),
(iii) a signatory to the Settlement Agreement by reason of being
listed on Schedule 1 (a "Schedule 1 Signatory"), and (iv)
an unconditional assignor to Picard of the Michael Foundation
Claim.
The Settlement Agreement evidences that Michael¸
individually and as a participant in other accounts, in contrast to
the Michael Foundation, was a recipient of $1.1 million from Madoff
in excess of principal. As such, he was a defendant in the Wilpon
Litigation and a Schedule 2 Signatory who will benefit directly and
handsomely from the Settlement Agreement because Michael, like the
Saul Foundation and the Fred Foundation and their respective
presidents, will have a substantial portion of his monetary
clawback exposure (up to $1.1 million) in the Madoff bankruptcy
funded by the Schedule 1 Signatories, including the Michael
Foundation.
A number of additional observations can be made as to the
Michael Form 990-PF, which is available on GuideStar:
1. The Michael Form 990-PF reflects,
on line 15 of the Part II Balance Sheet as a substantial
"other asset," an item for $460,976 that is explained in
Statement 7 as "ESTIMATED SIPC RECOVERY FROM MADOFF THEFT
LOSS." It is puzzling that the $460,976 amount appears in an
IRS filing of the Michael Foundation made in February 2013, as it
is the same amount as that which was included in the 2009 and 2010
Forms 990-PF of the Michael Foundation. However, the $617,000
amount of the Michael Foundation Claim is the final court-approved
amount to which the Michael Foundation has agreed. It would appear
that an explanation of the difference or substitution of the known
agreed-upon figure would be materially superior disclosure than
continuing the estimated amount that the Michael Foundation has
carried in its Forms 990-PF for years.
2. The Michael Form 990-PF does not reflect any offset,
encumbrance or liability, either in the Part II Balance Sheet or in
an explanatory statement, as to the unconditional and voluntary
assignment in the Michael Foundation Claim to the Trustee pursuant
to the Settlement Agreement. Such assignment thereby
subjected the Michael Foundation Claim to substantial offset.
Installment
85 of this series discussed the Trustee's report on
distributions through September 19, 2012. Based on that report,
which was published more than than four months before the date of
the Michael Form 990-PF, we believe that the Michael
Foundation's share of the $67.3 million
"contribution" for the benefit of the Schedule 2
Signatories, including Saul Katz and Fred Wilpon and many other
individuals and business entities, had already reached
approximately $233,000. The effect of such contribution would be to
reduce the Michael Foundation Claim to $384,000 as of September 19,
2012, already well below the estimated $460,976 reported on the
Michael Foundation Form 990-PF.
Installment
76 went into some detail as to the problematic aspects of the
participation by a Schedule 1 Foundation in the Settlement
Agreement process and the related question of potential prohibited
"private benefit and inurement" to fiduciaries of the
Michael Foundation under Internal Revenue Service rules.
3. As was stated in Installment 90, for the first time Michael
executed the Michael Foundation Form 990-PF as a "Member"
rather than as "President."
4. In light of considerations such as those in items 1 and 2
above, as
stated in earlier Installments, an officer or trustee of a
private foundation should be aware that he or she signs a Form
990-PF under penalties of perjury that to the best of his or her
knowledge and belief, it is true, correct and complete.
[Part IV will be continued in Installment 93 after a
brief detour in Installment 92 to another Madoff-related
case.]
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
In Judge v. Shikellamy Sch. Dist., No. 17-2189, 2018 U.S. App. LEXIS 27229 (3d Cir. Sep. 24, 2018), the 3rd Circuit Court of Appeals adopted a new approach to constructive discharge cases where an employee alleges...
On 11 June 2018, the U.S. Supreme Court held in China Agritech, Inc. v. Resh that the tolling rule first stated in American Pipe & Construction Co. v. Utah ...
On Oct. 16, the Securities and Exchange Commission (SEC) issued an investigative report warning that public companies victimized by cyber fraud could also face enforcement action for violating federal securities laws by failing to maintain sufficient internal accounting controls.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Behavioral Sciences Approach to Risk Management 
