May 21, 2011

Kabbalah Centre to close U.S. branch of children's charity

Harriet Ryan
Los Angeles Times
May 21, 2011

Success for Kids, in which Madonna was a board member and donor, will close at school year's end due to cost of translating lessons into nondenominational curriculum. Foreign branches will continue.

The Kabbalah Centre, a Westside spiritual organization that is the focus of a tax evasion investigation, is shutting down the U.S. operations of a global children's charity that has raised millions from celebrity followers and more recently drawn the scrutiny of IRS investigators.

SFK or Success for Kids, a 10-year-old nonprofit based at the center, will close its programs in American public schools at the end of the academic year, the charity's president, Michal Berg, announced in a letter Wednesday to supporters. Berg wrote that the decision was prompted by larger than expected overhead costs associated with translating the religious organization's lessons into a nondenominational curriculum.

"The reality is that the current public school expansion strategy is not cost-effective and it is difficult to scale the program to impact more children," she wrote.

The letter made no mention of a federal grand jury in New York that has issued subpoenas seeking information about the center, the charity and the Berg family, which controls the center. A spokesman for the center said there was no connection.

"It was completely unrelated," the spokesman, Mark Fabiani, said.

SFK, formerly known as Spirituality for Kids, ran classes in about 40 schools in the U.S., including several in the Los Angeles Unified School District. The programs had been criticized by some officials and parents, who said they were quasi-religious. In her letter, Berg, the daughter-in-law of Kabbalah Centre founder Philip Berg, said that as an alternative to the classes, SFK was planning to present its curriculum on a free website.

The charity, which listed assets of $7.5 million in its 2008 tax filings, the most recent available, will continue running programs in Brazil, Costa Rica, England, Panama and Malawi, but about 20 staffers have been laid off.

The nonprofit began as a kabbalah-focused private grade school next to the center's Robertson Boulevard headquarters, but soon grew to include other programs, including an initiative for African children that became a separate charity led by Madonna, the center's most famous adherent. The finances of that charity, Raising Malawi, are also being examined by agents of the IRS' criminal division.

Madonna headed SFK's board and has been a major donor, as have several other celebrities, including Barbra Streisand and fashion designer Donna Karan, who gave $2 million in recent years.

Kabbalah, the study of mystical Jewish texts said to hold the secrets of the universe, was little known outside of Orthodox Jewish circles until about 15 years ago, when Madonna began studying at the center. Other high-profile entertainers, including Ashton Kutcher and Demi Moore, followed and the center experienced enormous growth.

May 12, 2011

IRS Stirs The Kabbalah Pot

Singer Madonna AIDS Project Los Angeles (APLA) benefit, Los Angeles. (Photo credit: Wikipedia)
Robert W. Wood
MAY 12, 2011

I focus on taxes and litigation.

Opinions expressed by Forbes Contributors are their own.

Kabbalah is not a new way to make risotto, a new Gordon Ramsey restaurant, or a gourd-like vessel for carrying water across the desert. It is a new-old religion, popularized by Madonna and other A-list celebs who include Ashton Kutcher and the now singing Gwyneth Paltrow. I can't claim to be religious and don't emulate celebrities.

Yet as a tax lawyer for 30 years, I've seen IRS scrutiny on churches wax and wane, especially with Scientology. For years the IRS denied it was a church, but after multiple years of litigation and administrative harangues, the IRS abruptly ruled Scientology was a church after all in 1993. The New York Times claimed the IRS reversed 30 years of precedent to grant Scientology Section 501(c)(3) status when Scientology dropped numerous lawsuits against the IRS.

Now the IRS has leveled its sights on Los Angeles' Kabbalah Centre. Significantly, though, the current query is apparently not whether Kabbalah is a legitimate church entitled to that IRS tax status. Rather, this is a criminal investigation into tax evasion. So says the LA Times.

Kabbalah is a Jewish movement tracing its roots to the Zohar, a holy book allegedly 2,000 years old. Evidently begun in Jerusalem in 1922, Kabbalah claims 4,000 regular participants around the world. Many criticize it for not requiring followers to leave other faiths.

Private Inurement? Although the scope of the IRS questions is not yet clear, the LA Times suggests the IRS is querying whether funds inured to the Berg family, which has controlled the Kabbalah Centre for over 40 years. Tax lawyers know this issue as "private inurement," something that can spell disqualification of church tax benefits. In fact, private inurement can disqualify any charitable organization.

Questions are being asked on both coasts, since the Kabbalah Centre has holdings in New York too. A federal grand jury in Manhattan is gathering evidence, while in Los Angeles, IRS agents are interviewing people connected to the organization. One of Madonna's charities, Raising Malawi, is cooperating with the IRS.

Former Kabbalah Centre Chief Financial Officer Nicholas Vakkur has raised accusations about tax fraud. Vakkur implicates the Centre's Chief Executive Karen Berg, whose husband was appointed head rabbi in 1969. Since his 2004 stroke, Mrs. Berg runs the Kabbalah Centre with two sons, Michael and Yehuda.

Another former CFO, Nicholas Boord Jr., has suggested the Centre had annual revenue of $60 million, a $200-million real estate portfolio and a $60-million investment fund. But as a tax qualified church, the Kabbalah Centre doesn't make public tax filings. Churches and nonprofits usually don't have complex corporate structures.

Yet here the IRS confronts over a dozen nonprofit and business entities leading to the Bergs. A 1993 filing seeking tax-exempt status for the Centre claimed the Bergs don't receive salaries, although they apparently live in Beverly Hills in homes owned by the Kabbalah Centre.

Lawsuits have plagued the Kabbalah Centre and the Berg family. Some of the filings flatly accuse the Bergs of running the organization primarily for their own benefit, something that in the tax-exempt-church world is clearly a no-no.

Robert W. Wood practices law with Wood & Porter, in San Francisco. The author of more than 30 books, including Taxation of Damage Awards & Settlement Payments (4th Ed. 2009, Tax Institute), he can be reached at This discussion is not intended as legal advice, and cannot be relied upon for any purpose without the services of a qualified professional.

May 10, 2011

Spiritual girl: Madonna's shifting beliefs

Michael De Groote
Deseret News
May 10, 2011

Madonna's love/hate relationship with the Roman Catholic Church took a new twist in April when she spent more than an hour at an Opus Dei center  a Catholic organization cast as the villain in "The DaVinci Code."

This recent flirting with her childhood faith is somewhat ironic, considering how the "Material Girl" has never been shy to criticize or intentionally shock Catholic sensibilities. For example, the Daily Mail reported in 2006 that her concert tour that put her in a mock crucifixion complete with a crown of thorns had upset the Vatican. "Cardinal Ersilio Tonino, speaking with the approval of Pope Benedict XVI said: 'This time the limits have really been pushed too far. This concert is a blasphemous challenge to the faith and a profanation of the cross. She should be excommunicated.'"

That same Daily Mail article recounted how Madonna was also called blasphemous for her 1989 video "Like a Prayer," which included statues crying tears of blood.

Back in 1991, the Deseret News' own Chris Hicks reviewed her "Truth or Dare" video as "an amazing example of self-worship."

Her worship habits, however, took another turn when, as Newsweek reports , "she turned to Kabbalah in 1996 when she was pregnant, exhausted from Evita, and looking for an anchor. Since then she has reportedly donated at least $18 million of her personal fortune to the Kabbalah Centre."

The Los Angeles Times explains that the Kabbalah Centre is a "Los Angeles-based spiritual organization that mingles ancient Jewish mysticism with the glamour of its celebrity devotees." The Times said the center "is far and away the most well-known proponent of kabbalah, an esoteric Jewish movement that traces its roots to the Zohar, a holy book followers believe was written by a rabbi 2,000 years ago to explain the mysteries of the universe."

A Deseret News story in June 2004 covered an ABC "20/20" interview in which Madonna bristled at suggestions that her interest in Kabbalah was just a trend: "I'm a little bit irritated that people think that it's like some celebrity band wagon that I've jumped on, or that, say, somebody like Demi (Moore) has jumped on," she said on "20/20." "We don't take it lightly."

But even in her newfound faith  or expanded faith, Madonna still clung on to Christianity to some extent. New York magazine noted that while celebrating Jewish High Holidays and the Shabbat with her Kabbalah friends, "she presents a confusing tableau: Still a Catholic, she often appears with a gigantic cross hanging from her neck, the size of the one in her Desperately Seeking Susan days, and carries her adopted -Malawian son, on whom she's usually placed a yarmulke."

Madonna's connections to Malawi, one of the poorest nations in Africa, set the stage for her alleged disaffection with Kabbalah.

In April 2010, Madonna laid the first brick for a girl's school in Malawi. The $15 million Raising Malawi Academy for Girls was to help approximately 500 orphans and was supposed to open this year.

It won't.

As The Guardian reports "it has turned into a legal quagmire." Construction never began and eight workers are "suing her for unfair dismissal and non-payment of benefits."

But this is just one of the many problems Madonna's charity Raising Malawi is having according to the Newsweek article . Newsweek recounted a multiplicity of alleged unaccounted funds, possible mismanagement and more related to the charity's partner, the Kabbalah Centre.

The Daily Mirror reported most of the money meant to fund the charity "was allegedly spent on the Kabbalah Centre's offices in LA. Madonna has now removed directors of Raising Malawi. Among the axed board members is Michael Berg, a co-director of the Kabbalah Centre. Two other ditched board members, John Larkin and Rachel Almog, also had links to Kabbalah. There is no suggestion of any wrongdoing from any board members."

The Daily Mirror quotes an unnamed source as saying, "She has invested so much into Kabbalah so she was devastated by these damning accusations."

As FoxNews said , "So what's a former pop queen to do? Flirt with another religion, of course."

In April, Madonna spent about 90 minutes at the Opus Dei center in Orme Court in Britain, according the Daily Mail. Her spokesman had nothing to say, but the Mail's unnamed source said she "has always been intrigued by Opus Dei."

Opus Dei is not, however, a different religion from Catholicism. According to its own website, it is a Catholic institution that teaches that people can grow closer to God through everyday life. Its profile has been raised again recently by another movie, this one featuring its founder, Saint Josemar�a Escriv�. The film, "There Be Dragons," unlike " The Da Vinci Code," is a more positive about the organization that Dan Brown's conspiratorial fantasy.

Madonna also seems to be positive about the Catholic organization. But it isn't that clear that meeting with Opus Dei means that she has indeed abandoned Kabbalah. She has, however, abandoned or been abandoned by her most recent boyfriend over matters of faith.

The Daily Mail reported May 9 that 24-year-old Brahim Zaibat, a Muslim, has split with the 52-year-old Madonna, supposedly over her devotion to Kabbalah. "Brahim's family had told him they did not want him going to Kabbalah meetings and wanted him to stick to his Muslim beliefs, which caused some rows," a source told the Daily Mail.

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