Sect's dark side

FBI and IRS hear accusations of abuse and fraud at Madonna's beloved Kabbalah Centre

The Daily/April 2, 2012

The Kabbalah Centre calls them the chevre, which means "friends" in Hebrew. They surrender everything — depending on the center for their food, clothing and shelter — to draw closer to "the Light," the essence of God.

These most loyal disciples do everything, from preparing the weekly Shabbat feasts — including special "higher-quality" meals for Madonna, the center's most celebrated follower — to teaching newcomers that the desire to receive must be transformed into the desire to give.

But there's a dark side to their devotion. More than a dozen former chevre, staff and students told The Daily that the center exploits the chevre (pronounced hev-rah), depending on them to raise millions, then making them pawns in government scams to keep overhead low.

The sources accused the center and the chevre of engaging in immigration and Medicaid fraud, and its founding family, the Bergs, of using the chevre as personal servants, and claimed they have discussed the abuse with FBI and IRS special agents. For more than a year, the agencies have been reportedly investigating the Kabbalah Centre and the Bergs for income tax evasion and misuse of funds.

Many of The Daily's sources asked not to be named for fear of retaliation by the center, which declined repeated requests for an interview.

"Breaking the law became habit in every possible direction," said Shaul Youdkevitch, who served with his wife, Osnat, as chevre for 28 years before leaving in 2008 after raising concerns about what they claim was widespread corruption. "Everything was for the purpose of making money and power."

The FBI and IRS do not comment on ongoing investigations, so it is unclear how intently they are following these leads. Many sources told The Daily they have not talked to the special agents in months.

One person interviewed by the special agents said the FBI and the IRS had the names of at least 75 people with close ties to the center, roughly half of them chevre.

"They were interested in whether [the Bergs] were using the chevre to support their personal lifestyle," said the source.

To the sources, the Bergs' mistreatment of the chevre seems even more egregious because of the family's lavish lifestyle on the center's dime.

Former insurance salesman Philip Berg, 82, and his wife, Karen, 69, established the Kabbalah Centre out of their modest living room in Queens, N.Y., in the mid-1980s. Karen had the idea of bringing this esoteric school of Jewish mysticism to the mainstream, and Philip was an orthodox rabbi who had the ability to convey complex teachings in simple terms.

Their effort was enormously successful. The center has attracted a bevy of wealthy and famous — such as Madonna, Demi Moore and Mick Jagger — who in turn gave millions. Kabbalah moved its headquarters from New York to Los Angeles; established dozens of additional centers, study groups and subsidiaries worldwide; and developed an endless array of pricey books, CDs and products purported to have spiritual powers, from $26 red strings to $10 bottles of water.

By 2009, according to a former chief financial officer, the center had an estimated $200 million in real estate assets, $60 million in annual revenue and a $60 million investment fund.

Included in the Kabbalah Centre's real estate empire are three Beverly Hills homes that serve as the primary residence for Philip and Karen, and each of their sons, Yehuda and Michael, who are listed as "co-directors."

The stories are many of chevre taking care of the Bergs' grandchildren, of acting as the family's chauffeurs, of being asked — as the sources put it — to pay "special attention" to the center's wealthy and celebrated members.

"They did everything you could possibly imagine for the Bergs: drove Karen Berg around, acted as their personal security guards, acted as their intermediaries between the family and donors," claimed a source who was close to the family. "They're the ones who do everything for the family so the family cannot be implicated."

Tax expert Marcus Owens, a former director of the IRS' exempt organizations division, explained that the Bergs would be legally required to claim the dollar value of any free personal services provided by the chevre as taxable income. If they didn't, Owens said, they could be accused of income tax evasion.

Many of the chevre come from Israel, and at least three have come forward since February to take legal action there, which could culminate in a government investigation similar to the one under way in the U.S., according to their attorney, Chaim Cohen, who is based in Tel Aviv.

One couple told The Daily they worked from 8 a.m. to midnight for the Bergs — the husband cooked and the wife cleaned and sold sets of the Zohar door-to-door to raise money for the center. She said the chevre who couldn't sell a $350 set of the Zohar a day sometimes had to sleep outside until Israeli media exposed the practice.

"This is how the center got its money for the first 25 years," she said.

The other client, Zipora Giladi, 56, filed a $300,000 lawsuit against the center in Tel Aviv District Court, which The Daily translated from Hebrew to English.

Giladi told The Daily the center's teachers convinced her to turn over her inheritance and the proceeds from the sale of her apartment in the late 1990s. She claims her duties included baby-sitting Michael and Yehuda Berg's five children and cleaning their house when she was in the U.S.

Cohen said Giladi was instructed "the money that you give should be all the money you have ... and you should keep it [your donations] a secret."

But Giladi claimed she was thrown out into the street, "penniless and in limbo," about three years ago when she became too old and was not bringing money into the center.

Kabbalah, through spokesman Mark Fabiani, declined to comment.

The Youdkevitches say they too were thrown out, callously and unceremoniously, after they raised concerns in 2008 about the way the center was run.

Shaul Youdkevitch, one of the center's founding teachers in Israel, developed a key recruitment and training program for the chevre and Osnat Youdkevitch designed books, brochures and jewelry, and was largely responsible for the center's recognizable branding, according to a 2008 letter from their attorney written after their departure.

The letter claims the Youdkevitches raised millions while growing outposts in Toronto, Florida and Israel, including for programs promoting peace after the Palestinian uprising that began in 2000.

"Needless to say, these funds, like many others, were never received by the Centre in Israel, for which they had been designated by the donors," read the letter.

In 2005, an Israeli couple sued the center, claiming Shaul Youdkevitch and others at the center told them that the wife — sick with cancer — would be healed if they gave roughly $60,000, and if she drank Kabbalah water. She ultimately died.

The center settled the lawsuit out of court and the Youdkevitches moved to Los Angeles to work on an archiving project. They eventually obtained green cards.

After their return to the U.S., the Youdkevitches saw their relationship with the center unravel. They said they became fed up with the Bergs' increasing obsession with money and "chaos in the decision-making process."

When they left in 2008, their attorney requested $7 million in compensation and threatened to sue, which would force exposure of the center's finances during the discovery process. Instead, the center filed a lawsuit, claiming the Youdkevitches committed copyright infringement by opening a new Kabbalah organization only a few blocks from the center's Los Angeles headquarters.

The Youdkevitches have since moved backed to Israel and the lawsuit was resolved.

"When you make a concern about the way that things are run, and you are thrown out after 28 years of loyalty," Shaul Youdkevitch said. "This is the greatest abuse."

Less than 'friends'

At least two chevre at the Kabbalah Centre have been accused of being abusers themselves.

Baruch Inbar, who had been a student with wife Maya since 2005, told The Daily that on the morning of Shabbat, March 10, long-time Kabbalah teacher kicked them out of the center and "threatened to crash my bones, smash my face, kill me and hang me like Haman on a tree" for teaching Kabbalah and stealing students from the Los Angeles headquarters. The Inbars had started a spiritual arts and educational organization that includes Kabbalah as one of its influences.

"The whole idea of competition in spirituality is ridiculous," he said.

Inbar forwarded The Daily an email response from a center instructor who is also the wife of Michael Berg, son of center founders Philip and Karen Berg.

"I am sorry that you had such an experience and I just wanted you to know that I received your email and will look into what and why this happened," wrote Monica Berg, who, like the teacher, did not respond to The Daily's request for comment.

The center later sent a low-level chevre to meet with him, but "nothing was concluded," Inbar said.

The Inbars decided not to file a complaint with the Los Angeles police.

A check with the New York City Police Department showed at least one ex-member filed a complaint in 2010 claiming a Kabbalah "employee" had made a "threatening telephone call."

– Hebrew translation by Chavie Lieber

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