United States: Picard V. Mets/Wilpon/Katz Madoff Settlement One Year Later - Part III: Was The Michael Katz Form 990-PF Worth The Wait? - Installment

Last Updated: June 19 2013
Article by Michael J. Kline

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.

Michael J. Kline
Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
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).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions