Monday, October 31, 2011

Kabbalah Centre Under IRS Scrutiny

The Los Angeles-based Kabbalah Centre, a school bringing Jewish mysticism to a celebrity-studded following – is now under criminal investigation by the Internal Revenue Service, reports the Los Angeles Times in Celebrities Gave Kabbalah Centre Cachet, and Spurred Its Growth (the second of a two-part article series).  Founded by Philip and Karen Berg and originally conducted from the Berg’s living room in Jerusalem and later in Queens, “the Kabbalah Centre had become an empire with branches in major cities, a publishing arm and scores of passionate young volunteers,” says the story.   An empire indeed, as the story continues:

The center's assets grew from $20 million in 1998, the year after Madonna went public with her ties to kabbalah, to more than $260 million by 2009, according to the resume of a former chief financial officer and tax returns the center and affiliated organizations filed before becoming exempt.

The center's revenue sources include fees for classes and sales of merchandise such as candles, red-string bracelets that the center says will ward off evil, and bottled water long touted as having healing powers.

Soliciting donations remained a focus of the Bergs and other ranking leaders. Major donors to the center or its affiliated nonprofits include Madonna, whose foundation has reported giving more than $10 million, and fashion designer Donna Karan, whose foundation has reported giving at least $2 million.

The Times states that the criminal division of the IRS is now investigating “whether the Bergs enriched themselves with members' donations,” and that “prosecutors subpoenaed financial records from the center and two affiliated charities with links to Madonna.”   The Bergs declined an interview with the Times, but issued a statement that the center would respond to the subpoenas.  Their statement concludes as follows:

The Centre is disappointed that the recent press regarding the Centre and this investigation is being fueled by rumors spread by a few disgruntled former students and former employees with personal agendas. The Centre is confident that the investigation will show that the Centre has and continues to serve its mission and act in furtherance of the wisdom and teaching of Kabbalah.

 JRB

http://lawprofessors.typepad.com/nonprofit/2011/10/kabbalah-centre-under-irs-scrutiny.html

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