AmTrust – Barry Zyskind’s High Stakes Three Card Monte Game by Roddy Boyd, SIRF

A tiny footnote buried in a pair of corporate filings suggests AmTrust Financial Services’ chief executive officer has a great deal of explaining to do about who owns almost seven percent of the company’s shares.

Barry Zyskind, according to an early January Securities and Exchange Commission Form 4 filing, transferred 12,020,000 million shares of AmTrust–then worth more than $378.2 million–to a “charitable organization” called Gevurah from Teferes, a tax-exempt personal foundation he set up in 2006. (The number of shares reflects a February 15 2-for-1 stock split.) According to the filing, he serves as a trustee and officer for the entity, with voting and investment authority. The company’s proxy, filed on March 29, also mentions this transfer.

Oddly, those two footnotes are the only mentions of Gevurah seemingly anywhere.

The Southern Investigative Reporting Foundation called American Stock Transfer & Trust, the transfer agent for AmTrust shareholders–the Karfunkel Brothers founded it in 1971 and sold it in 2008 for about $1 billion–on May 12 to ask if Barry Zyskind had made a share transfer to Gevurah. A company representative told us there was no record for Gevurah in their computer system. (A transfer agent maintains shareholder records and balances for its corporate clients.)

There is no listing of a Zyskind-linked Gevurah foundation in the official record of tax-exempt organizations, the Internal Revenue Service’s Exempt Organization Business master file. Nor was there any success with the Canadian, United Kingdom or Israeli equivalents (Zyskind, the son-in-law of the recently deceased AmTrust chairman and co-founder Michael Karfunkel, is a supporter of Haredi educational and religious institutions in Brooklyn; many of these institutions have links to Israel.)

Gevurah is similarly absent from the CitizenAudit.org or the OpenCorporates databases; in contrast, Zyskind’s Teferes foundation, his former father-in-law Michael Karfunkel’s Hod Foundation and AmTrust’s other co-founder, Michael’s younger brother George’s Chesed Foundation for America, all show up in both. Foundation Source, a business that provides advisory and administrative services to private foundations, maintains a comprehensive database of public charities called GrantSafe but Gevurah isn’t in it.

To reiterate: Gevurah might exist in some form somewhere on earth but as of this writing, it’s not one with a charitable registration in the United States, at least with that name and connected to Barry Zyskind. We even tried inputting various spellings of its name or searching for a filing made by Zyskind’s family, such as his wife Esther, in each of the named databases above. Finally, none of the Zyskind or Karfunkel private foundations have any alternate names, often referred to as “DBA’s,” that they are doing business under, attached to their registrations.

Regardless of whether it’s an “organization” or foundation, Gevurah needs to be registered somewhere to receive a grant from another public charity, as Teferes’ own registration stipulates.

Earning a fortune is assuredly hard but giving (some) of it away is not, at least if you choose to set up a personal foundation. Getting a non-profit like Gevurah entered onto the New York State’s books (where Zyskind registered Teferes) is simply a matter of completing a Certificate of Incorporation form and filing some standard bylaws. After applying for and receiving an Employee Identification Number, the foundation can operate without restrictions for up to 27 months as the IRS considers its application for tax-exemption. Assuming no mistakes, within about four weeks of filing most charitable organizations are registered.

All of the above costs about $530: $80 for the state and $450 for the IRS.

Possibly the only scenario in which Gevurah could have been granted the shares without potential legal headaches is if it’s considered a place of worship, but virtually all synagogues and churches register so donations to them can be tax-deductible. From a practical perspective, a congregation launching with an endowment of this size would be unprecedented.

Zyskind’s Gevurah problems emerge as the SEC has put renewed emphasis on compliance with Section 16 of the Securities and Exchange Act of 1934, a series of rules that mandate company insiders disclose material changes in holdings in a timely and accurate manner. One large law firm called this the “broken windows” theory of securities enforcement, (SEC chairwoman Mary Jo White used the phrase in a 2013 speech.) Notably, in September 2014 the SEC’s Enforcement unit filed suit against 28 corporate directors and officers, as well as six companies, for such violations.


The ongoing saga of the Karfunkels brothers, Barry Zyskind and their private foundations are a familiar topic to Southern Investigative Reporting Foundation readers.

Per our reporting, the Karfunkel-Zyskind foundations have so much AmTrust stock that they have run afoul of an IRS rule known as excess business holdings that addresses how much of a single company a private foundation can own.

Excess business holdings is the IRS’ framework of rules developed as a response to the practice of some 1960s-era donors who made tax-exempt donations of their shares to private foundations, albeit with a great deal of string attached. Instead of selling the stock and using the proceeds to make grants, these foundations held onto the stock, allowing the donors to maintain control of the company.

To prevent this, IRS rule permits private foundations to hold up to 2 percent of a company’s shares outstanding and levies sharp fines and penalties for non-compliance.

In order to meet the IRS’s rules, the Teferes, Gevurah and Chesed Foundation for America, which currently own 26.6 million shares between them, would be permitted to own 2 percent of the 175,356,577 shares outstanding, or a little more than 3.5 million shares. This means that they would potentially have to sell over 23.1 million shares, a prospective dilution of 13.1 percent. They could do this via direct sales or through unencumbered grants to unaffiliated charities like Habitat for Humanity or United Way, which would likely sell the stock quickly upon receipt.

Being forced to massively reduce their AmTrust holdings–and thus sharply diminishing their voting power–might not be the only migraine in store for George Karfunkel and Barry Zyskind: IRS rule 4943 levies a 10 percent excise tax based on the value of their “peak holdings” within a given tax year. In light of this, based on the Southern Investigative Reporting Foundation’s analysis of Gevurah, Teferes and Chesed Foundation for America’s excess business holdings of AmTrust shares, their prospective liability would appear to be just under $209 million.

AmTrust Financial Services

AmTrust Financial Services

(All figures taken from 990-PF filings via CitizenAudit.org; historical prices taken from NASDAQ)


For over a month, starting on April 13, the Southern Investigative Reporting Foundation repeatedly emailed and called Elizabeth Malone, AmTrust’s investor relations executive. She consistently stated that she “would check” with management about our Gevurah questions but never called back.

The emails to Malone went unanswered.

Calls to Stephen Ungar, AmTrust’s general counsel, and Harold Schlacter, the treasurer, were not returned.