Goldman pleaded guilty to the scheme and made recent proffers to cooperate with the government.
A bankruptcy trustee has sued the Centre to recover the .9 million in funds that his complaint says were “wrongfully conveyed” to the Centre. There have also been several civil suits filed recently alleging that the Kabbalah Centre had exploited the trust of wealthy followers in order to pillage their bank accounts.
Illustration by Guekit: Nina Berman / Sipa (Philip Berg); Mike Hutchings / Reuters-Landov (Madonna); East News-Polaris (Karen Berg); Amos Gumulira / AFP-Getty Images (Michael Berg); Michelly Rall / Getty Images (sign)One year ago, Madonna squatted in the rust-colored dirt of a sprawling empty lot outside Lilongwe, the capital of Malawi, one of the poorest countries in the world.
With curious villagers and invited photographers crowding around, she laid the ceremonial first brick for a planned million girls’ academy, a noble mission in a nation where only 27 percent of girls attend secondary school.
To the question of whether “any funds or property of the organization” were to be used by any minister or officer “for his or her own personal needs and convenience,” the center answered that members of the religious order (including the Bergs) “have taken a vow of poverty” and look to the center “for their meals, lodging and other subsistence.” Paradoxically, while the center takes full advantage of tax laws benefiting religious organizations, its website states that “Kabbalah is not a religion.”Nelson Boord, the center’s CFO until 2009, has written that its six nonprofit and three for-profit entities collectively earn annual revenues of million, own a 0 million real-estate portfolio, and manage a million investment fund. Boord says the center warehouses a million inventory of Berg-blessed items, including candles, astrology sets, and .99 Divine Sex CDs.
For .95 you can also buy the Rav’s book Immortality, which explores “the origins of death and the spiritual tools necessary for its final disappearance from the world.”A recently filed bankruptcy lawsuit has alleged that the Kabbalah Centre was a beneficiary of a million Ponzi scheme perpetrated by Goldan, LLC, that ended with the criminal prosecution and conviction of Mark Goldman, a Goldan principal.
The Bergs’ lavish lifestyle, one executive says, is “100 percent subsidized.”Kabbalah Centre tax attorney Shane Hamilton contends that the Bergs include ordained rabbis who are “treated as ministers of the Gospel” and are thus entitled to “a parsonage as part of their compensation.” Hamilton says some household services are provided by chevre, center members who take a vow of service and are supplied with basic necessities in exchange for 12-hour days of labor.In a blog post on the website of her Raising Malawi foundation, she wrote that the brick, inscribed with the words “Dare to Dream,” was “not just the bedrock to a school—it is a foundation for our shared future.”Last week it was announced that the future would not be built.Despite the fundraising success of Raising Malawi, which collected a reported million in donations and spent .8 million on the planned academy, the girls’ school has been abandoned and the Raising Malawi foundation has imploded.Two of these revolve around Don Nay, a two-time convicted felon.According to one complaint, filed in California superior court, Nay ran a study group affiliated with the Kabbalah Centre and also owned a local real-estate firm that granted the center a 10 percent equity position at no cost.Karen and Philip’s house, the third the center has provided for them in the past decade, boasts a ,000 swimming pool.The center routinely pays the expenses accumulated on Karen’s credit cards, which include a personal Am Ex card with a ,000 limit and, in the past few years, three Bank of America cards with a combined ,000 limit.A higher-up at the center allegedly advised a wealthy Kabbalist, Courtenay Geddes, to liquidate an 5,692 trust portfolio and invest it in Nay’s company.The real-estate firm then failed to file a tax return, indicating it was a dissolved corporation and wiping out Geddes’s investment.Spirituality for Kids was Madonna’s pet project before Raising Malawi, and she served as its chairman of the board. Spirituality for Kids has also raised at least million for Malawi.According to its filings, it had an offshore account in the Cayman Islands, a tax haven that seems an odd place for an entity that runs children’s programs in L. In 2005 the center was hit with a torrent of bad press about marketing such items as Kabbalah miracle water and a set of Kabbalah shot glasses.