Wyclef’s Charity Records Show Possible Funny Stuff In Past Financials

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Categories: For Your Information, News, Put on Blast

After leading the charge to help victims of the earthquake in Haiti, Wyclef is now in the hot seat about some of the past ways his charity has used its funds. Pop the hood for a closer look.

By Friday morning, just days after the earthquake hit, Wyclef Jean’s Yele Haiti Foundation had raised more than $1.5 million.

Undoubtedly, Jean’s celebrity helped draw in donors: He’s an internationally known musician from Haiti who won a Grammy with the Fugees and went on to a hugely successful solo career. But an analysis of the charity’s tax returns raises questions about how it has spent money in the past, with administrative expenses that appear to be higher than comparable charities and payments to businesses owned by the musician and a board member, including $100,000 for a performance by Jean at a 2006 benefit concert.

“It seems clear that a significant amount of the monies that this charity raises go for costs other than providing benefits to Haitians in need,” said Dean Zerbe, national managing director of Alliant Group, a tax services company, and the former tax counsel to the Senate Finance Committee, which oversees charities.

“It brings real caution for donors that want to help in Haiti that they might want to take a harder look at this organization but also consider the significant number of charities that have been doing good work in Haiti that don’t have these question marks,” Zerbe said.

Hugh Locke, president of Yele Haiti, said the charity does what others can’t, because Jean gives it unusual access to the country’s slums. He said the group hopes to spend a higher percentage of its budget on services as it gains experience. “I think people should be very comfortable that any money given to Yele Haiti is going 100 percent to emergency relief.”

The earthquake prompted so much donor interest in Yele Haiti that its Web site crashed Thursday. Yele Haiti also is getting much publicity at events, including a fundraiser Monday at the 9:30 Club and a telethon next Friday hosted by actor George Clooney. It is collecting supplies Sunday in Miami and airlifting them to Port-au-Prince next week, Locke said.

The charity provides scholarships, funds a soccer team, takes students on environmental-education camping trips and employs women to cook for schools, according to Yele Haiti. After a 2008 storm, it helped a food program distribute emergency rations to 6,000 families without violence, Locke said, organizing the community to distribute the food rather than sending in aid workers with armed guards.

But its financial records raise questions, experts say. In 2006, Yele Haiti had about $1 million in revenue, according to tax documents. More than a third of the money went to payments to related parties, said lawyer James Joseph, who specializes in nonprofit issues.

“It might be completely legitimate. But it’s certainly something I would want to look into more carefully,” Joseph said.

For instance, the charity recorded a payment of $250,000 to Telemax, a TV station and production company in Haiti in which Jean and Jerry Duplessis, both members of Yele Haiti’s board of directors, had a controlling interest. The charity paid about $31,000 in rent to Platinum Sound, a Manhattan recording studio owned by Jean and Duplessis. And it spent an additional $100,000 for Jean’s performance at a benefit concert in Monaco. Locke said that Jean and Duplessis were unavailable for comment Friday.

The Telemax money was used for “everything from public-service announcements to educational programming,” said Jesse Derris of the public relations firm Sunshine, Sachs and Associates, which is representing Yele Haiti. They used their own company “because it was a way to buy time at a significant discount.”

The rent included office space and shared receptionist services for the charity and is “severely reduced” below market rate, Derris said. All the proceeds of the benefit concert went directly to Yele Haiti, he said. Locke said the $100,000 included expenses, such as payments to backup musicians and production costs.

Yele Haiti reported nearly $1.9 million in income on its 2008 tax return.

We knew Wyclef had some spending issues but now that the whole world is watching he better do the right thing when it comes to that charity money!!!

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