LA-based Kabbalah Centre under IRS investigation

The Associated Press, Thursday, May 5, 2011, 8:28pm (PDT)

LOS ANGELES (AP) -- A Los Angeles-based spiritual organization whose followers include Madonna and other celebrities is the focus of a federal tax evasion probe.

The Los Angeles Times reported Thursday that the Internal Revenue Service is investigating whether nonprofit funds from the Kabbalah Centre's $260 million in assets were used as a piggy bank by the family that runs it.

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For more than 40 years, the Berg family has controlled the spiritual group that preaches a little-known strain of Jewish mysticism.

The Bergs and the Kabbalah Centre are named in subpoenas as a subject of a grand jury probe alongside Madonna's Raising Malawi charity. The charities have said they are cooperating with the New York-based investigation.

A call to the Kabbalah Centre in Los Angeles was not immediately returned Thursday night.

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Madonna abandoned plans to build a girls' school in Malawi earlier this year because of logistical problems. Her charity Raising Malawi has also been cooperating in the investigation.

The federal investigation follows several lawsuits about the Kabbalah Centre's finances. One ongoing case alleges the center wrongly cashed in on $2.9 million in a $68-million Ponzi scheme.

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In another suit an heiress accused the Bergs and other Kabbalah Centre associates of bilking her out of $1.3 million.

A former member alleges she was pushed to invest hundreds of thousands of dollars in an Orange County branch and a homeschooling program that never came to fruition. The Kabbalah Centre has called the suits meritless.