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December 16, 2009 at 07:00 PM
Presidential Life Corp. has disclosed that a foundation overseen by its former founder and CEO filed a tax return that failed to comply with Federal rules, according to a document filed with the U.S. Securities and Exchange Commission.
According to the document filed by Presidential Life, the Kurz Family Foundation Ltd. admits its 2008 federal tax return did not comply with rules in the Internal Revenue Code. Herbert Kurz, the former founder and CEO of Presidential Life Corp., Nyack, N.Y., is a director of the foundation.
The foundation’s 2008 tax return discloses “potential noncompliance with various sections of the Internal Revenue Code, including Sections 4941 [taxes on self-dealing], 4943 [taxes on excess business holdings] and 4945 [taxes on taxable expenditures],” the SEC filing states.
An investigation of the 2007 tax return for the Kurz Family Foundation, which holds about 21% of Presidential Life outstanding common stock, reveals a pattern of self-dealing and use of charitable assets for non-charitable personal expenses, according to document filed by the company.
The foundation included the tax return in an application submitted to the New York State Insurance Department about foundation efforts to acquire a controlling interest in Presidential Life.
A special committee of independent directors of the company has begun an internal investigation and has retained independent counsel. Presidential Life earlier informed the New York State Insurance Department of its investigation and says it is cooperating with an investigation being conducted by the department.
Upon discovering irregularities in the foundation’s 2007 tax return, Presidential Life’s board removed Kurz as chairman and Charles Snyder, who prepared the return, as its chief financial officer.
Kurz, who is 89, is trying to reinstate himself as Presidential Life’s CEO, pushing aside the current president and CEO, who assumed the position in May after the company adopted a succession plan that Kurz approved. Kurz also is seeking to replace Presidential Life’s other directors with his own hand-picked slate.
The special committee concluded in a report filed Dec. 8 with the SEC that Kurz and the foundation 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.
