A Kodak board member's impeccable timing
(Photo by Stephane Ruet/Sygma via Getty Images)
For Kodak, July 29 looked like a miracle. The beleaguered film company's stock, which started the week at $2.10, was soaring — at one point reaching $60. The market was reacting to the news that the Trump administration was loaning the company $765 million to enter the generic pharmaceutical business.
Two weeks later, reality has come crashing down. The loan is on hold, pending multiple investigations by the SEC and Congress. The investigation will examine stock purchases by the Kodak CEO Jim Continenza and others while the deal was negotiated, Kodak's decision to award Continenza and other top executives lucrative options the day before the deal was announced, and the company's purportedly accidental leak of the deal to local media on July 27. On Tuesday, Kodak had fallen to $10 per share.
But a Kodak board member took advantage of the temporary spike in stock price to secure a massive tax exemption. On July 29, the board member, George Karfunkel, and his wife donated "donated 3 million of their 6.3 million Kodak shares to Congregation Chemdas Yisroel in Brooklyn, N.Y." On that day, the donation was worth approximately $116.3 million, making it the largest charitable gift to a religious institution in history. As a result, the gift "could generate tens of millions of dollars in income-tax benefits for the couple." At the beginning of the week, the Karfunkels shares were worth a bit more than $6 million.
"These issues are within the scope of the broad independent review being conducted by outside legal counsel and overseen by a special committee of the board," a Kodak spokesperson said.
What do we know about Congregation Chemdas Yisroel? It was founded in 2018 and just received its tax-exempt status in September 2019. The non-profit filings list George Karfunkel as the president and chief financial officer. The two other officers of the charity are "Henry Reinhold, a former executive of a Karfunkel company who is listed as the accountant for the Karfunkels’ family foundation in federal tax filings" and Abraham Roth, an accountant whose office is listed as the congregation's mailing address.
The Wall Street Journal reports that the congregation "appears to have a small space attached to a three-story apartment building" in Brooklyn. The only evidence of the congregation's presence is a "small nameplate on the building’s exterior."
Karfunkel has a history of trouble with the SEC. Karfunkel "was suspended from working for broker-dealers for six months" in the 1970s as part of a settlement after being charged with stock fraud. The charges related to Karfunkel's involvement in "a wide-ranging pump and dump scam." Karfunkel also co-founded AmTrust Financial Services Inc., which agreed to pay the SEC $10.3 million earlier this year to settle allegations of wrongdoing.
Betsy DeVos' actions speak louder than her words
As the pandemic rages, Education Secretary Betsy DeVos is aggressively pressuring schools to fully reopen in the fall. "Kids need to be in school. They need to be learning, they need to be moving ahead. And we can't -- we cannot be paralyzed and not allow that or not be intent on that happening," DeVos said last month.
But, as she argues that it is safe for students and teachers to resume normal activities, DeVos is not showing up to the office. Instead, DeVos is "working remotely from Michigan, where she owns a sprawling waterfront estate with around-the-clock security detail paid for by taxpayers." NBC News has the details:
Rather than actively offer guidelines to public schools as they struggle with the immense financial and logistical challenges of reopening, DeVos told the Washington Examiner in June that she was working mostly remotely from Michigan, her home state — where she owns the 22,000-square-foot estate on Lake Macatawa — with a public schedule that has been mostly empty for the past several weeks, including no events on her public schedule for this week.
Education Department spokeswoman Angela Morabito said DeVos has been dividing her time among Michigan, Washington and road trips.
On July 29, DeVos and Vice President Mike Pence visited Thales Academy, "a network of private nonsectarian community schools in North Carolina." DeVos said Thales Academy is a model for the nation. "Thales is a great example more schools could emulate. You didn't wait for guidance from the Department of Education. You didn't ask for permission," she said. "We're here today because to open up America, we've got to open up America's schools and Thales Academy is literally in the forefront," Pence added.
Less than a week later, a class of Thales Academy 4th graders was "asked to quarantine for 14 days after a student there tested positive for COVID-19."
Under pressure from the DeVos and others in the Trump administration, the CDC had radically altered its tone on school reopening. In June, the CDC said that schools in states with "substantial transmission of COVID-19 within the community" should respond with "extended school dismissals." But in July, that message was deemphasized. In its place was new guidance, which stressed the "importance of reopening of schools this fall." The CDC now highlighted "the harms attributed to closed schools on the social, emotional, and behavioral health, economic well-being, and academic achievement of children, in both the short- and long-term."
Keeping kids out of school for an extended period of time does harm children. But opening schools when community transmission is widespread does not solve the problem. If COVID-19 infections begin spreading in the schools, it will not help the social and emotional well-being of students — and the schools will not remain open for long.
When Israel reopened all its schools in late-May, outbreaks "forced hundreds of schools to close," and "tens of thousands of students and teachers were quarantined." In late May, Israel "had fewer than 100 new infections a day." The United States is currently averaging over 50,000 cases per day.
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