Is Wyclef's Charity a Sham? IRS Records Reveal Questionable Practices

In the wake of the disastrous earthquake that shook Haiti and have claimed so many lives, Wycelf Jean -- a native of Haiti -- has been urging fans and others to donate to his charity, the Yele Haiti Foundation, which has already raised $1.5 million. But, according to the folks over at the Smoking Gun, who got their hands on Yele Haiti's tax records, you may want to donate elsewhere.

Yele Haiti's corporate status has been been involuntarily dissolved four times in the past five years by the Florida Division of Corporations because the foundation failed to file required state disclosure reports. Yele Haiti's most recent dissolution occurred in Sept. 2009 -- but was reinstated in October after its disclosure report was filed. (The longest involuntarily dissolution lasted 26 months, ending in November 2008 when Jean's organization provided Florida officials with overdue annual reports disclosing the identities of the group's officers and directors, its registered agent, and office address.)

According to the report, Yele Haiti first filed taxes in 2009 -- even though it was incorporated 12 years ago. (The charity was incorporated in Florida in 1998 as the Wyclef Jean Foundation, but formally changed its name two months ago.) In August 2009, Yele Haiti sent the IRS returns covering calendar years 2005, 2006, and 2007.

In 2006, Yele Haiti received $1 million in donations, the bulk of which came from People magazine in exchange for the first photos of a pregnant Angelina Jolie (the actress reportedly directed that the publication's payment go to Yele Haiti, not her personally).

Also:

"[Yele Haiti] paid $31,200 in rent to Platinum Sound, a Manhattan recording studio owned by Wyclef and Jerry Duplessis, who, like Wyclef, is a foundation board member. A $31,200 rent payment was also made in 2007 to Platinum Sound. The rent, tax returns assure, "is priced below market value." The recording studio also was paid $100,000 in 2006 for the "musical performance services of Wyclef Jean at a benefit concert." That six-figure payout, the tax return noted, "was substantially less than market value." The return, of course, does not address why Wyclef needed to be paid to perform at his own charity's fundraiser. But the largest 2006 payout--a whopping $250,000--went to Telemax, S.A., a for-profit Haiti company in which Wycelf and Jerry were said to "own a controlling interest." The money covered "pre-purchased...TV airtime and production services" that were part of the foundation's "outreach efforts" in Haiti. No further description of these services was offered, though the return claimed that "the fees paid are below market" and that the use of Telemax was the "most efficient way of providing these services." The group's tax returns also report "consultant" payments totaling $300,000 between 2005-2007, while the 2006 return reported nearly $225,000 in "promotion and PR" costs. These expenses are not itemized further in the IRS returns."

Really, Wyclef? You charged your own charity $25,000 to perform at its fundraiser? Tsk. Tsk.

He needs to talk to his friend Bill Clinton to find out the proper way to run a charitable foundation.

PS: See the tax filings after the jump.





Update: Wyclef responds.

In a statement posted on his Web site last weekend, Wyclef says: "I have been committed to helping the people of Haiti throughout my life, and that commitment will continue until the day I die." He also posted a video message saying he's "disgusted" by accusations of having taken money from Yele Haiti for personal profit and that he himself has donated $1M to the charity. What he doesn't say, however, is more deafening. Like why so much of the foundation's money were paid to businesses with ties to its directors. We guess those questions will be answered in his upcoming videos.

Watch his video response here.



source