Since it was revealed that Madonna's Raising Malawi charity is in financial ruin, rumors have been circulating that the I.R.S. is looking into the Kabbalah Centre. Now we have confirmation. The semi-religous, semi-cultlike organization, which counts Gwyneth Paltrow, Ashton Kutcher, and Demi Moore among its followers, is the focus of a federal tax evasion investigation.
We heard this from Showbiz 411's anonymous sources in March, but now the Los Angeles Times has the official story. In addition to two charities connected to the Centre and Madonna, Raising Malawi and Spirituality for Kids, I.R.S. officials are trying to determine if non-profit funds were used to fund the lavish lifestyle of the Bergs, who founded the Kabbalah Centre. (That's what Newsweek suggested in a recent exposé.)
Representatives for the Centre and the two charities say they've received subpoenas and are the subject of the grand jury probe. Supposedly they're "actively cooperating in every way we can." The investigation is taking place both in New York, where the Centre has a large brand and some pricy real estate, and L.A., where it's headquartered.
Most of the Kabbalah Centre's sordid business dealings were already catalogued by Newsweek. The investigation is particularly complicated because there are more than a dozen separate nonprofits and businesses connected to the Bergs. Since the Centre has had tax-exempt status as a church since the '90s, it's not required to make its tax filings public, but a former CFO says it has $60 million in annual revenue, a $200 million real estate portfolio, and a $60 million investment fund.
The juiciest detail from the new report comes from another former CFO. A source says investigators have reviewed an August 2010 email in which Nicholas Vakkur claimed he was fired for pointing out problems with the Centre's finances. The email reads in part:
"I recently uncovered instances of income tax fraud at the Kabbalah Centre - instances which could bankrupt several of the directors involved … this is very serious business ... I have little choice but to cooperate with the IRS and bring down the entire Kabbalah Centre."
Madonna isn't being investigated personally, but since she's the most well-known face of Kabbalah and has donated millions to the Centre, she still has plenty to be worried about.