EOTM Press Room

E! Buzz – Madonna Under Investigation By FBI and IRS

In Breaking News, Celebrity News, EOTM News, EOTM Radio on May 6, 2011 at 6:13 pm

Back in March, Madonna’s Raising Malawi charity scrapped plans to build a school in the country, replaced its board of directors and cut ties with her favorite L.A. hang, the Kabbalah Centre, amid reports of financial improprieties.

At the time Madonna vehemently denied she was under investigation by the FBI and IRS. But now comes word that the Kabbalah Centre itself is being targeted for criminal prosecution.

According to the Los Angeles Times, the Internal Revenue Service is probing the four-decades-old spiritual center for allegedly using nonprofit funds to enrich its founders, the Berg family, close associates of Madonna.

In subpoenas reviewed by the newspaper that were recently issued as part of a grand jury probe of the Bergs and their organization, the government lists a number of for-profit business run by the family that are being investigated, but makes no mention of Madonna.

Her charities are nonetheless caught up in the probe due to the fact that the singer’s Raising Malawi grew out of her association with Spirituality for Kids, an educational nonprofit Madonna championed and founded by Karen Berg, the Kabbalah Centre’s head honcho.

According to the report, Madonna has donated more than $600,000 to the initiative and even served as its chairwoman of the board.

When she founded Raising Malawi, Madonna even tapped Karen’s 37-year-old son, Michael Berg, as CEO, and the two began their highly publicized mission to build a $15 million all-girls academy in Malawi.

hat dream fell apart though in March when it was announced that despite collecting $18 million in donations for the school, the foundation abruptly scrappedits plans after news broke that it had already spent $3.8 million before the first brick was laid.

Following the project’s demise, Madonna’s rep said that Raising Malawi would find other ways to help educate Malawi’s children. After putting a reported $11 million of her own cash into the charity, the entertainer subsequently forced Berg out as CEO. She’s also moved the charity’s offices out of Kabbalah’s headquarters and hired a consulting firm, Global Philanthropy Group, to manage its operations.

Given the latest revelations, we’d say that was a wise decision.

The Times reports that investigators are interviewing a number of people connected to the spiritual group, chief among them former CFO Nicholas Vakkur, who was purportedly fired after alerting higher-ups to possible illegal activity within the organization.

“I recently uncovered instances of income tax fraud at the Kabbalah Centre—instances which could bankrupt several of the directors involved,” he wrote in an email. “I have little choice but to cooperate with the IRS and bring down the entire Kabbalah Centre.”

In a statement regarding the IRS investigation, the spiritual center, which has also attracted stars like Ashton Kutcher and Gwyneth Paltrow, acknowledged that it has “received subpoenas from the government concerning tax-related issues” and is cooperating.

“The Centre and SFK [Spirituality for Kids] intend to work closely with the IRS and the government, and are in the process of providing responsive information to the subpoenas,” read the statement.

Madonna’s publicist was unavailable for comment. But the Times story noted that Raising Malawi has since retained a lawyer separate from the Kabbalah Centre to represent it in the criminal probe.

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