Leave Wyclef Jean alone!

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.

Via The Smoking Gun

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.