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December 10, 2009 at 07:00 PM
Documents filed with the U.S. Securities and Exchange Commission give more information about the conflict between a New York life insurer and a major shareholder.
Herbert Kurz, an 89-year-old director of Presidential Life Corp., Nyack, N.Y, (Nasdaq:PLFE) has been trying to replace the company’s other directors.
The other directors have responded by saying they have stripped Kurz of the title of chairman and notified the New York State Insurance Department that a tax return filed by a foundation affiliated with Kurz, the Kurz Family Foundation Ltd., New City, N.Y., may have misused foundation funds.
The foundation is the beneficial owner of about 21% of Presidential Life’s outstanding common stock.
The foundation included the tax return in an application submitted to the New York insurance department in connection with foundation efforts to acquire a controlling interest in Presidential Life.
A committee made up of independent Presidential Life directors concludes in a report filed Dec. 8 with the SEC that Kurz and the foundation, through Kurz, likely engaged in improper self-dealing; made taxable expenditures; and used foundation assets “in a manner that is inconsistent with its charitable status” under Section 501(c)(3) of the Internal Revenue Code.
The committee concludes that Kurz probably used foundation money to make excessive payments to the foundation’s directors, most of whom are family members, and to pay for, among other things, personal medical expenses, including personal caretakers and individual doctors; other personal expenses, including meals, utilities bills and legal bills of counsel that is representing Kurz; tuition for at least one family member and for friends and children of friends; and questionable consulting fees to family members and friends.
The New York insurance department has issued a subpoena to the foundation with respect to certain expenditures made by the foundation, the committee says.
The committee says Presidential Life’s independent directors discovered that Kurz inappropriately had coverage under the company’s health care plan extended to his daughter, members of their extended family, a personal aide and his wife’s personal health care provider, though all were non-employees who were ineligible to participate.
