Leave Wyclef Jean alone!
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Giving meaning to the old adage, “No good deed goes unpunished” – even when it means putting a chill on a successful drive to raise money to aid suffering Haitians – The Smoking Gun has decided that now is the time to highlight some sloppy – but completely legal – entries on the tax returns of Wyclef Jean’s charity in support of his native country – Yele Haiti.
Here’s the headline that ran on the site on January 15th along with the accusations-
Wyclef Jean Charity’s Funny Money
Haiti earthquake aid pours into group that has enriched singer
As seen on the following pages from the foundation’s 2006 tax return, the group 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.
If you’re going to throw around accusations of personal enrichment, you really want to be sure you’ve got the whole story and that you’ve got it right.
The Smoking Gun failed on both counts.
The rent paid came out to about $2500 a month, well below market rates for rental in the building. The $250,000 pre-payment made to Telemax was, according to the IRS filings, a deal that was well below market value and beneficial to the charity. Reports indicate that the sums paid to the recording studio for the musical performance services of Jean went to covering the costs of the benefit concert and that Jean made nothing beyond getting back his expenses.
According to Marcus Owen, former chief of the IRS unit that oversees non-profit organizations like Yele, “The tax rules do not prohibit related party transactions.”
Owen also noted that the legitimacy of the payments is supported by the fact that the charges were “below market.”
Given the ‘appearance’ of what might have been going on, based on the tax returns, it was not unreasonable for The Smoking Gun to raise the questions. It was, however, completely unreasonable, and shamefully damaging to a very important mission, not to seek more information and advice on how non-profits work before announcing that Jean was being personally enriched by the charitable venture.
Jean went on the offensive today, holding a press conference where he denied any wrongdoing.
Did I ever use Yele money for personal benefits? Absolutely not, Yele’s books are open and transparent, and we have a clean bill of health by an external auditor every year since we started.
Via CNN
It’s a good bet that many will take advantage of the opportunity to review Yele’s books – beginning with the IRS. And when no irregularities are reported, what will The Smoking Gun do then?
It hasn’t helped that Yele did not file tax returns on time. In August of 2009, they filed three year’s worth of returns at once, however that was well before Wyclef Jean could have known that millions were going to be pouring in as a result of the Haitian earthquake. So, its not like he was cleaning up the books to take advantage of ‘the big money.’ And for the years preceding the tax years filed for, there really wasn’t any money flowing in or out of the charity.
While the president of Yele acknowledged that they should have been on top of the filings and failed to do so, it is no secret that many well intentioned non-profits are sloppy when it comes to such accounting methods and that failure to file does not necessarily constitute a red flag that anyone is trying to rip off anyone else.
Tonight, Stacy Palmer, Editor of the Chronicle of Philanthropy, and an expert on charitable foundations, stated on the PBS News Hour,
A lot of experts who were interviewed today said that they (Yele) were a little tardy and not so careful with their books, but no maliciousness or wrongdoing..and I don’t think there was any serious wrongdoing.
Too bad Smoking Gun didn’t bother to speak to some of these experts before trying to take down a charity up to their eyeballs in helping people so badly in need of that help.
Given the crucial nature of what Yele is attempting to accomplish in Haiti, and the success they were having before The Smoking Gun posted its damning piece, is it asking too much of The Smoking Gun to take the time to gather all the facts?
The only smoking gun over at The Smoking Gun is their vile willingness to trade on the misery of Haitians to boost their own visitor numbers.
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Kudos to you Rick for stepping up to the plate on this one.
Appreciate your thoroughness & point-by-point rebuttal of these people. Your conclusion on their ethics seems justified.
Thanks for your investigation.
I thought it’s interesting that about the time the disaster profiteers start coming into the Haiti, all the FUD about Wyclef’s YELE organization hit the press.
Guess those parasites don’t like to share.
The invasion is on…..Red Cross plans to bring 45,000 new democratic voters to florida from haiti
http://www.wftv.com/news/22242754/detail.html
Apparently to counter cuban refugees who are generally republican voters
disgusting comment.
In response to another comment. See in context »Must be hard to close your eyes and go to sleep at night, what with the millions of conspiracies going on in your head.
In response to another comment. See in context »“The return, of course, does not address why Jean needed to be paid to perform at his own charity’s fundraiser.”
Isn’t this really the point that’s being made here, Rick? I’m quite sure all these actions were legal, but does the fact that they’re legal make them somehow less unseemly? This is a fine example of something which has bothered me for years – namely, the fact that those who can most afford to give of their time and/or money, are the first ones to want to be reimbursed somehow for their giving. Doing so when the charity involved is one you run? Well, that’s just pathetic.
Mark-
In response to another comment. See in context »It really isn’t quite that simple.
First of all, there are tax issues involved when entertainers perform for charities. Often, the planning of how payment moves is based on lowering the tax consequences.
In this instance, from all I’ve been able to learn, he wasn’t paid for his services – he was reimbursed the amounts he laid out for the benefits. None of us know the state of another’s finances. We know that Jean has personally paid in a million dollars to this charity.
Let me put it this way – when Bob Hope made his trips overseas to entertain the troops, he did so for no payment. Do you think it would have been appropriate for him to additionally pick up the costs of moving the touring company overseas, housing and feeding everyone in whatever country they were in, etc.? Personally, I think that would have been asking a little too much of him, no matter how wealthy he may have been. Why should Jean have to cover all these expenses if Bob Hope didn’t have to do so in order to fulfill the charitable mission?
It appears clear that Jean did not put a penny in his pocket for doing these benefits. Don’t you think we are being just a bit too judgmental when we say that he also should have picked up all the costs of staging the show? Don’t we begin to count his money for him at that point? Isn’t the fact that he’s clearly willing to put up both his time, money and celebrity to do something positive for his native country enough?
Rick – I hope I don’t seem unappreciative of those who give, I’m really not. If I had more to give, I would. I’d give so much that people would think I was insane.
Nor do I really question the motives of those with money when they donate to charities. I believe Jean’s efforts are especially heartfelt when it comes to Haiti, as they should be. I just think it’s sometimes the ways in which those with means go about charitable giving that, at the very least, appears rather disturbing to me.
Using Jean as an example – Here is a man with big connections. Does he not know anyone in the business who would donate the resources for organizing and setting up a concert? If not, wouldn’t it appear more legit if he paid someone else to do it rather than use his own company?
As to the rent – it sounds a little like he uses some space in the building for his charity’s offices. Does one really need to be reimbursed for such a thing? Did he have big plans for this space? Again, I know it’s all legal, but many things are legal which are, nonetheless, kind of shady. (Are we not suffering the consequences of just this point regarding our financial system?)
Now we get to the heart of the matter – “First of all, there are tax issues involved when entertainers perform for charities. Often, the planning of how payment moves is based on lowering the tax consequences.” This is the part that really pisses me off! In order for those with the most to give, they feel it necessary to plan how the money moves in order to lower their tax consequences. Son-of-a-bitch!
Let’s stay with Jean as an example. Jean has paid in a million dollars to his charity over some period of time. Let’s say this is totally separate from the reduced fees for services he’s given. A million dollars. (Jean is just the example – I certainly realize that there are those whose pockets are much deeper, and who move around much greater sums in the charity shuffle.) How much of the one million dollars donated, from anyone with a million to donate, can be deducted from one’s taxes? Is there a limit? (I’m asking, in all honesty, because I’ve never looked into it.) Why does someone with millions, several or many, feel that they can only give if they get the money back by way of a deduction? Once again; it’s legal, but it sure ain’t pretty.
If you believe, as I do, that one’s tax rate is what one owes to the nation as a whole for living here and taking advantage of what this nation has to offer, then reducing one’s taxes through deductions only makes it harder for all of us to enjoy the same. How much money is lost each year through charitable deductions? What could we do for the nation with that money?
Like I said, I hope I don’t sound like I think people shouldn’t give. Nothing could be more untrue. I give as much as I can – sometimes even when it hurts. I just don’t expect everyone else to pay me back for it.
After all – If I give you 100 dollars, and I tell 100 people that I gave you money and they should each give it back to me by reducing my debt to them by 1 dollar, who gave you the money? It sure as hell wasn’t me.
One last point – Often, many of these wealthy people, especially those on the left, are the same ones I see on TV saying something like, “I wouldn’t mind paying a little higher tax rate if we could get healthcare.” (I’ve heard Bill Maher and some of his guests say this often.) It sure makes me wonder when I hear this shit. Since the biggest complaint by those opposed to reform is the cost, why don’t these wealthy supporters of reform just stop taking any deductions and thus inject more money into the system?
Well, I’m done. Hope I haven’t strayed too far off the point and/or bored you to death. I always enjoy reading your posts and kicking things around with you.
In response to another comment. See in context »I do see your point. I guess I just feel that if someone is doing something good – and I think we agree that that Jean is doing good – then we probably should not judge how he is doing it. I don’t feel like he’s taking anyone’s money under false pretenses or attempting to rip anyone off. His way may not be the way you or I might chose to go about things if we were in the same position, but we aren’t. So, how he chooses to give is his business and I don’t feel comfortable judging how he goes about it.
In response to another comment. See in context »