A Little Reported Donation of Kodak Shares, Congregation Chemdas Yisroel, Insider Trading and President Trump

As if the Outrageous Kodak Pivot to Pharma Wasn’t Absurd Enough… We Could Jokingly Commented: “All We Need is a Tax Deductible Donation to a Synagogue”

Kodak came up in an article we wrote in 2018 which is, we believe, relevant to the utter insanity of the recent Kodak transaction. Whomever concocted this folly deserves a prize for one of most creative ways to manipulate the financial markets amidst a pandemic. The greatest victims are Kodak shareholders and those unsavy investors who thought buying Kodak was a good idea. It wasn’t, unless you caught it JUST IN TIME. To do that, you had to be an Insider (with few exceptions).

Yesterday (7/28/20), President Trump surprised a LOT of people announcing that via the Defense Production Act (DPA) the US government is going to give Kodak (NYSE:KODK) $765 million to make pharmaceuticals. The tie to current COVID-19 pandemic issues, for which the Act was invoked, is at best tenuous. Somehow the announcement seems to be more about moving pharma production back to the USA. Which is why it left me, and a lot of others, asking, “why would you pick Kodak?” Seeking Alpha

Will Kodak Successfully Pivot Into Pharmaceuticals? I Doubt It

Trump’s ties to the Orthodox Jewish community is no surprise to those of us researching these topics. He did, after all, commute the sentence of Shalom Rubashkin, heavily tied to both the Chabad and the Satmar communities. This was undoubtedly a favor returned for the bloc vote, and likely other personal and professional benefits for friends and family.

Trump’s daughter and son-in-law have deep, heavily leveraged and big money ties to the Jewish community, most particularly as it connects to Chabad. Ivanka’s former business partner has millions in taxes forgiven by the Internal Revenue Service with many of us left to shake our heads. He was then accused of duping diamond dealers. It should be noted that Ivanka’s former partner denied he owed taxes. But then there’s the odd arson claim involving the same partner.

Jared Kushner’s ties to the power brokers within the religious real-estate mogulcommunity is heavily documented in numerous (questionable) transactions. He has lobbied for his personal success and his wishes have indeed been granted.

So, the only thing missing from the absurdity of the Kodak transaction was the

connection to a synagogue. Consider this, Kodak’s sudden pivot into pharma is essentially a transaction involving a photography company suddenly expected to switch gears and become a Covid-19 pharma company. In and of itself, that raises questions. Add to that the benefit of millions in government loans, and shareholders who became wildly rich within mere months and the only thing missing is a huge tax deductible donation to a synagogue.

Please understand, the insiders did not only make money on public shares. The company’s executive chairman held other equity instruments (debentures, convertible bonds, debt and warrants), all of which when taken together amounted to a  windfall. The debtholders were able to convert bonds into stock.

[Kodak Debtholders Are Converting Bonds Into Stock. Here’s What That Means.] Barrons, August 3, 2020

It plays out like a movie. Truth is often stranger than fiction.

There can be no question that the parties were engaged in negotiations for the Kodak transaction for months months. The executives and insiders at Kodak theoretically should have been held to a blackout period. Filings should have been completed. And they should have been precluded from engaging in any trading of shares of stock, including exercising options and converting debt to equity.

But the insiders were trading in stock mere months earlier. Material changes were being made to the operational structure of Kodak, a multi-million dollar government contract was inevitably going to increase share prices. The fact that principals within Kodak were heavily trading in shares is, in our opinion, insider trading. We would also argue that there were more shenanigans going on behind the scenes.

This donation to an unknown (and likely non-functioning) synagogue, initially incorporated in Delaware and moved to New York) is just another questionable transaction among a long litany of cagey transactions.

One can draw their own conclusions. Ours should be rather obvious. We will provide excerpts to follow.


The White House–Kodak Controversy Has a New Angle: A Billionaire’s Huge Stock Gift to a Synagogue


In late July, a wild chain of events occurred when the Trump administration decided to give Eastman Kodak, the film giant that went bankrupt in 2012, an unprecedented $765 million government loan through the Defense Production Act. Under this deal, which President Trump touted, the company would manufacture ingredients for an assortment of drugs, including hydroxychloroquine, the antimalarial drug Trump has repeatedly promoted—without scientific support—as a treatment for COVID-19. The agreement was officially announced on July 28, but the previous day, the price of Kodak’s stock began to surge, following local media leaks about the loan in Rochester, New York (the home of Kodak). This buying frenzy continued for a couple of days. During that time, billionaire investor George Karfunkel, a member of Kodak’s board of directors, made an unusual transaction: He donated 3 million Kodak shares—worth up to $180 million at the time—to a relatively new Jewish congregation that has almost no public profile. 

The out-of-the-ordinary loan for Kodak came from a new and little-known government agency: the US International Development Finance Corporation. This outfit was created to provide foreign aid—not domestic assistance—and it is headed by Adam Boehler, a former roommate of Jared Kushner. In March, Kushner tapped Boehler to be part of his shadow coronavirus task force.


The turbulent trading began on July 27, as news of the loan seeped out. Kodak’s stock opened at $2.13 and closed at $2.62, with 1,645,700 shares traded—more than 20 times the volume of previous days. On July 28, with the word now out officially, the stock opened at $9.63, hit a high of $11.80, and then dropped to $7.94, which was an almost four-fold gain from the start of the previous day, with a whopping 284,666,800 shares traded. The next day, July 29, was crazier. Kodak shares started at $18.43, and at one point reached an eye-popping peak of $60. Its low that day was $17.50, and it closed at $33.20, with 276,020,100 shares in play. But then investors realized that Kodak’s agreement was not yet a done deal, and over the next few days, the stock declined and stabilized in the $15 region. 

In the middle of this spree, Karfunkel, a major investor in Kodak, and his wife, Renee, donated those 3 million shares to an entity called Congregation Chemdas Yisroel, according to an SEC filing. They did so on July 29, the day the stock price hit $60, so those shares could have been worth as much as $180 million at the time of the gift. If the donation was executed at the end of the trading day, its value would have been $99.6 million. Given that Congregation Chemdas Yisroel is registered as a tax-exempt religious organization, the Karfunkels will be able to claim this donation as a tax deduction. That means they could pocket a deduction between $52.5 million and $180 million for a bloc of stocks that two days earlier was worth $6.39 million. (The donation also lowered the Karfunkels’ holdings in Kodak to 4.4 percent—which is below the 5 percent threshold that requires investors in a publicly traded company to report their stock transactions.)


Chemdas Yisroel was registered as a Delaware corporation in December 2018.  Two weeks later, Chemdas Yisroel was registered with the New York Department of State as a Brooklyn-based entity. A search of Delaware corporation records for groups with the word “congregation” in their names yielded only 19 entities of which 10 appeared to be Jewish organizations. The New York State division of corporations lists hundreds of organizations that have “congregation” in their names and that appear to be Jewish.

The New York corporate registration for Congregation Chemdas Yisroel listed its address as that of an accounting firm in Brooklyn, Roth & Co., and Abraham Roth, the co-managing partner of the firm, was cited as a point of contact. Roth did not respond to multiple requests seeking comment about Chemdas Yisroel and Karfunkel’s massive donation.

Karfunkel presides over at least two long-standing foundations that have supported Orthodox Jewish groups. The Karfunkel Family Foundation, of which he is a trustee, had $19 million in assets in 2018, and it donated $1 million total to six Orthodox Jewish organizations that year, according to its most recent available tax filings. This included a $150,000 donation to the Congregation Chemdas Yisroel. His Chesed Foundation of America—Karfunkel is its president—had $196 million in assets in 2018 and donated $2.4 million to “schools and synagogues.” The foundation’s tax filing that year did not list the individual recipients.


Even with this long history of philanthropy, George Karfunkel’s gift of Kodak stock to Chemdas Yisroel stands out as much greater—by a factor of 15 to 50—than the grants on the most recent tax filings of the Karfunkel Family Foundation and the Chesed Foundation of America. When Mother Jones called Henry Reinhold, the accountant listed on the tax returns for these two foundations and an officer of each one, the man who answered the phone would not identify himself but demanded to know the subject of the inquiry. When told it was about the Karfunkel Family Foundation, he hung up. A subsequent call went to voicemail, where there was a recorded greeting from a person who referred to himself as Henry Reinhold in a voice similar to that of the man who moments earlier had refused to provide his name.


To read the article in its entirety, click here.

11 thoughts on “A Little Reported Donation of Kodak Shares, Congregation Chemdas Yisroel, Insider Trading and President Trump

  1. Most people don’t understand the intricacies of tax law and NFP entities.

    I’m sure the Karfunkels do and have counsel and opinion behind them.




    • Gil, trading on Kodak the day those shares were “donated” was halted almost 15 times, if recollection serves. The really interesting question is if you can donate shares while trading is halted and get the value of those halted shares when they would not be permissibly traded. Moreover, this is not the first donation of its kind but we are stuck wondering about the “could have been wealthy” yeshiva which received a donation worth millions now worth bubkis. The problem is with your first sentence, quite cleverly worded: “the intricacies of tax law and NFP entities.” You are absolutely correct. Most people don’t know them. The IRS Agents tasked with reviewing them probably don’t know them either. And that should not be the case. It would pave the way for anyone to open an NFP with some “Philanthropic” premise, fill out all of the paperwork, and then donate crazy amounts to their own NFP (which is actually not owned because its an NFP) thereby double or even triple-dipping. These schemes are mind-numbingly creative.


      • Same reason Trump won’t release his taxes.

        I’m positive his accountants at Mazars have taken similar positions that they laymen just wouldn’t even begin to comprehend.


          • It might not be popular but that doesn’t make it wrong.

            Dr Einstein said “What is right is not always popular”

            Legal loopholes are Legal. While you may not like it and advocate to change them they are legal. Also it makes good reading.


    • Perhaps you should google Karfunkel SEC violations.

      If you understand how wall street works, you’ll know he’s not your friend. (He’s actually been accused of stealing from his partners!!).


  2. They know all the tricks on how to make a buck or better
    yet millions. Maybe they can give us a good tip on winning the lottery.
    The pillars of society. The good guys of the community.


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