Update on Previous Post about Barry Kaye Article

In all fairness to Mr. Kaye and my readers, I have some new information that clarifies that story. When I met with Mr. Kaye a few years ago, he gave me the impression that he would put prospective "insurees" on the board of his private foundation and then the private foundation would borrow money to take out a life insurance policy on its new board member. This scenario raises a bunch of legal issues which I was stilling wondering about all this time.

Today, I had a conversation with the writer of the story in the Palm Beach Post and finally I have a better understanding about what Mr. Kaye was doing. Mr. Kaye did say he put our board member his foundation board, he just didn't say which foundation. It just happens that Mr. Kaye also owned/controlled the Wealth Creation Foundation. Not a foundation in the sense we normally think because it was a for-profit company (mentioned in the Palm Beach Post article that it closed).

Now I got it. Mr. Kaye put the prospective insuree on his for profit "foundation" board, it borrowed money and took out a policy our board member's life, sold the policy after two years for a significant profit (in this case because the insuree almost didn't make it), and then donated the net profits from the deal to his private foundation (to be granted out to charities of Mr. Kaye's and the insuree's choice).

This answers a big question for me since from my own conversation with Mr. Kaye. I was under the impression that everything was done through his private foundation. I was taking notes during our meeting and I think I would have picked up on the for-profit entity if he revealed it or maybe he was spinning a confusing web which I just didn't get.

So, I have to give Mr. Kaye credit, his plan was more legal than I thought even though his glossing over facts definitely gave me some false impressions.