Documents: Wyclef Jean Launched His Personal Charity with Other People's Money
Wyclef Jean has defended the financial irregularities of his foundation Yele Haiti by arguing he started it with his own money. However internal documents obtained by Gawker reveal that the former Fugee made no contribution during its first year.
In defending his foundation at a press conference earlier this week against accusations that it has a history of mismanaging funds, Jean said, "I started the charity with my own funds." Earlier, in a YouTube video, Jean claimed, "I myself have put $1 million inside my own foundation."
Jean has aggressively raised funds for Yele Haiti since the earthquake last week, urging people to give to the organization through a texting campaign in television appearances—including a visit to Oprah today. Yele is one of five nonprofits that will split the proceeds of a telethon organized by George Clooney to be broadcast on Friday. While Yele hasn't released its fundraising totals since the earthquake, its president has stated a target of $1 million a day from texts. Together with the proceeds of the telethon, it stands to potentially raise tens of millions of dollars.
The documents, which include internal emails and detailed financial statements for 2005 — the year Yele was founded — show the internal chaos that has afflicted the organization since its founding. Its first executive director, Sanjay Rawal, resigned in October 2005 because, his resignation letter stated, "the sense of entitlement" and "lack of financial commitment from the board"—which consisted at the time of Jean, his cousin Jerry Duplessis, and SAC Capital Advisers trader Seth Kanegis—were "suffocating" Yele Haiti. Another e-mail obtained by Gawker, written by Yele's current executive director Hugh Locke in 2007, announced that both Locke and his deputy were resigning due to a ethical and business concerns that had caused a "crisis" at Yele Haiti.
We asked Locke last night in an interview if he could provide details on precisely when, and in what increments, Jean made his $1 million in donations. He replied, "I honestly don't know how to break that out, and I'm not interested in doing so." But Locke insisted that Yele was founded with Jean's money, and that Jean has indeed put more than $1 million in Yele's operations broadly speaking, even if the donations aren't channeled officially through the charity—"sometimes he'll buy a kid in the slums a scooter, and that's a Yele contribution," Lock said.
But according to Rawal's resignation e-mail and the detailed financial statements, Jean made no contribution whatsoever to Yele Haiti from its founding in January 2005 through November of that year. The financial statements show that Yele received a total of $680,409.24 to its U.S. bank account from December 2004 to November 2005. Among the donations are $10,000 from Russell Simmons, $2,000 from Ed Bradley, and $1,000 from Paul Simon. But while the records show that Duplessis made one $2,000 donation and Kanegis loaned Yele $26,000, they don't show a single contribution from Jean. They do, however, show payments totaling $18,696 to Refugee Camp Entertainment, a record label co-owned by Jean, for "band salary and expenses" related to performances at two fundraisers. They also show a payment of $22,750 to Jean's production company, Platinum Sounds, as reimbursement for fees Platinum fronted for a fundraiser.
In his October 2005 resignation letter, Rawal, who had co-founded Yele with Jean, was painfully blunt in accusing Jean and his fellow board members of failing to contribute to the charity while using it to pay their own expenses, benefiting from the PR Yele Haiti generated for them, and directing "hundreds of thousands of dollars to business needs" at the expense of the foundation:
The board has never invested into Yele. True, the board has given to Haiti, but why continue giving to Haiti in such a haphazard manner when one's own foundation is suffering from lack of funds?
With three wealthy directors, Yéle's entire operating expenses could be funded by a one time annual commitment from each Director. With that $150,000, the entire amount raised from outside sources could have been funneled to projects. Again, donations are TAX DEDUCTIBLE!!!!!
Does anyone realize that if the Board had invested into Yele we never would have had to do any fundraisers? We could have, but only to raise funds for projects. Staff would have been paid AND the music studio would have been built for the children!
Some board members may consider their business contributions to Haiti as part of their giving, which is fine. This only hurt me personally as I saw hundreds of thousands of dollars going to business needs and nothing going to the charity, when it seemed that part of Wyclef's new PR strategy focuses on his charitable endeavors. I felt Yéle was being suffocated.
I feel it is an excellent time for the board members of Yele to shed their sense of entitlement. Stop thinking that Yele will pay you back for the money you put into Haiti. You must ask yourself why you are doing all of this. To be paid back? I do not think that is why you are doing any of this.
In addition to decrying Jean, Duplessis, and Kanegis' failure to pony up for Yele Haiti, Rawal took them to task for drawing away much-needed funds by billing their expenses to the charity:
When a person runs a foundation, people need to leave their sense of entitlement at the door. When Bill Gates goes to a charity event, he does not bill his hotel to his charity. Having the charity pick up the tab for a wife being picked up at the airport is appalling.
And Rawal noted that Yele Haiti's successful PR campaign had been a boon to Jean's career and commercial enterprises:
It has also been clear that the foundation is very valuable to Wyclef's image and hence if leveraged very profitable to his career. Through the foundation's activities, he has received coverage in publications from which he has been absent for years, including People Magazine, US Weekly, InTouch, Celebrity Living and Star. True, he is in urban gossip rags but his last mention in People was from early 2004.
We called Rawal to ask him if he was specifically addressing Jean in his letter, which you can read in full here. "I was the executive director, and I was talking about the leadership of Yele," he said. "It's implied that I was talking about the board, and Jean is on the board. Wyclef has a big heart, and he regularly gave money to Haitians that he met, to pay for things like funeral expenses or what have you. But at that early stage, Yele hadn't become the conduit for his personal giving. It wasn't the case when I was there."
Yele Haiti has two branches—an American charity and a Haitian arm. The American operation, which must make its tax returns publicly available, exists largely to raise funds and send them to the Haitian arm, about which no financial information has been made public. Multiple sources familiar with Yele's operations say that while Jean, as Rawal stated in his letter, did spend money directly in Haiti on Yele's programs, it was haphazard and didn't constitute Yele's start-up capital. That came in the form of an $800,000 donation in 2005, sources say, from Comcel, a Haitian cell phone company. The Comcel donation, earmarked for primary school scholarships, went directly to Yele's Haitian operation, bypassing the American charity altogether. That fact is confirmed by the detailed financial statements, which show no expenditures whatsoever on programs. In other words, while Yele Haiti's Haitian branch was operational and spent money in Haiti in 2005, it was funded directly by Comcel, and none of the $680,000 Yele Haiti's American operation received in 2005 went to Haiti. In fact, the statements show that a total of $108,168 was wired on three separate occasions that year from Yele Haiti's Haitian operation to the American charity's account. The Haitian charity was subsidizing the American one.
But Yele Haiti's 2005 American tax return tells drastically different story: It claims more than $320,000 spent on "Program Service Expenses" in Haiti, including food distribution, trash clean-up, and scholarships. Rawal, who was Yele's executive director during that time, says the 2005 return—which was filed last August, four years late—appears to be in error. "I'm not an accountant," he says, "but those funds didn't come out of New York. To my recollection, all of the money for those programs came from Haiti and was kept in Haiti." Asked directly if Yele Haiti's American operation sent $320,000 to Haiti in 2005 for trash clean-up, scholarships, and food distribution as the return claims, Rawal said, "No."
The apparent chaos at Yele Haiti didn't end in 2005. According to a March 2007 e-mail written by Hugh Locke, the foundation's current executive director, Yele was in a "crisis" in 2007 that caused Locke and his deputy Cinthia Thebaud to resign on the same day (Locke has obviously since returned to the organization). According to the e-mail, which is marked "CONFIDENTIAL" and can be read in full here, Thebaud resigned because of unspecified ethical concerns about Yele's Haitian operation:
Cinthia stated that her reason for resigning as deputy executive director (but not her Board position) was that in "trying to structure Yele Haiti's administration in Haiti I had to face internal barriers which go against my professional ethics."
Locke resigned, the letter says, because he had "reached the limits of the personal, financial and business sacrifices that both I and my wife April are able to make on behalf of Yele Haiti — all of which were brought into sharp relief by Cinthia's resignation." The letter, which was e-mailed to a group of Yele Haiti staffers, announced an emergency meeting in New York to resolve the crisis—to which Jean had offered to fly all the participants on a private jet—and urged the staffers to keep up appearances:
There are certain things that need to proceed on an interem basis in Haiti without signalling to those beyond those receiving this e-mail that we are in this situation.
Multiple sources familiar with Yele's operations have told Gawker that Locke has repeatedly fronted expenses for Yele fundraising events and concerts and was at one point owed $120,000, which likely explains the "personal, financial and business sacrifices" that caused him to resign. In an interview last night, conducted before we obtained Locke's e-mail, we asked Locke about those debts and whether he'd ever resigned over them. "I don't know," he said. "I'd have to look it up. I've fronted a lot of money for a lot of things, and been repaid for every expense. I've never threatened to quit."
We contacted Yele Haiti's publicist for detailed comment, and haven't received a reponse. Reached on his cell phone, Locke said, "I'm happy to chat, but only if you go through our publicist."