Wyclef Jean has raised big money in aid relief for Haiti, in wake of the earthquake that rocked the country earlier this week. However, his non-profit, Yele Haiti Foundation, is coming under fiscal scrutiny when past tax returns surfaced showing odd spenditures.
The organization has been raking up $5-a-pop instant donations to Yele Haiti via text messages, and has reportedly earned nearly $2 million since the tragedy on Tuesday (January 12).
But, according to documents released by TSG (The Smoking Gun) on Friday (January 15), the organization seems to have a "lackluster history of accounting for its finances."
Browsing the charity's tax returns raises questions about how it has spent money in the past. For example, the site alleged that it paid Wyclef and his business partner around $410,000 for "rent, production services, and Jean's appearance at a benefit concert."
These allegations are based off of Yéle Haiti's federal tax returns for 2005-07.
"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," Dean Zerbe, national managing director of Alliant Group (a tax services company), told the Washington Post.
According to the tax documents, the non-profit brought in around $1 million in revenue in 2006, and then $1.9 million in 2008. The following are some of the questionable money issues, reported by TSG:
[Yele Haiti] paid $31,200 in rent to Platinum Sound, a Manhattan recording studio owned by Jean and Jerry Duplessis, who, like Jean, 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 Jean 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 Jean and Duplessis 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.
Wyclef responded to the accusations, via a YouTube video on Saturday (January 16), explaining that the money in question went toward production for shows that benefited the foundation. "I never and would ever take money for my personal pocket when it comes to Yele," he said. "So not only do I denounce all that, I'm disgusted by that."
Hugh Locke, President of Yéle Haiti, further explained that the charity goes above and beyond, doing things other charities can't due to Wyclef's access throughout Haiti's slums. And, says they hope to commit 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," he told The Post.
Outside of its immediate earthquake relief efforts, Yele Haiti has been helping in the country since its inception in 12 years ago. It provides scholarships, funds a soccer team, takes students on environmental-education camping trips, and various other community activities. Following a 2008 storm, it helped a food program distribute emergency rations to 6,000 families without violence, which they did by organizing the community to distribute the food rather than sending in aid workers with armed guards.
Albert "Albe" Angel, CEO of Give on the Go, a Miami-based mobile company coordinating the charity's Haiti donations via text messages, is also in Wyclef's corner, saying he's been mis-judging him.
Angel said TSG has been "fairly harsh" toward Jean, without knowing details of how his foundation operates. "From a standpoint of awareness, Wyclef has been in the spotlight for a long time," he told the Miami Herald. "I don't think he would damage his reputation by taking advantage of a catastrophe for his own personal benefit."
Locke gave AllHipHop.com a rundown of some financial facts about the Yele Haiti organization below:
Fact: Yéle Haiti, originally called the Wyclef Jean Foundation, filed a tax return in 2000 and then suspended activities until 2005 and so was not required by law to file a tax return until it resumed operation.
Fact: Yéle Haiti received a clean bill of health in independent external audits conducted in 2005, 2006, 2007 and 2008 by the firm of Tempesta & Farrell, P.C..
Fact: Yéle Haiti was guided by the firm of Grant Thornton LLP to ensure that all transactions involving board members Wyclef Jean and Jerry Duplessis were conducted to fully comply with both the spirit and letter of the law governing such matters.
Fact: Yéle Haiti offices are located in Platinum Sound, the recording studio owned by Wyclef and Jerry Duplessis in order to save money. The organization pays only $2,600 a month for the space and a shared reception service, instead of considerably more for the same arrangement in midtown Manhattan.
Fact: Wyclef Jean was paid $100,000 in connection with a benefit concert in Monte Carlo in 2006, which was organized by a for-profit organization. The vast majority of that amount went towards costs related to the performance, including the hiring of backing musicians and other costs related to the production.
Fact: Yéle Haiti purchased $250,000 of airtime on the commercial television station Telemax in Haiti that is owned by Wyclef and Jerry. We have documentation allocating the hundreds of hours of Yéle programming, over several years, that addressed a wide range of development and social issues in Haiti.
