Karen Berg, left, with fashion designer Donna Karan whose foundation has… (Randy Brooke / Wire Image…)
Jewish mysticism is the spiritual bedrock of the Kabbalah Centre, but its finances are built on real estate investments, donations and the marketing of religious books, classes and merchandise.
As a tax-exempt religious organization, the center is not required to disclose any aspect of its finances, which are under investigation by the IRS. But public records, lawsuits and a former high-ranking employee's resume all provide glimpses of its balance sheet and business dealings.
An online resume posted by Nelson Boord Jr., a former chief financial officer who left the center in 2009, said it had annual revenue of $60 million, a $60-million investment fund and $200 million in real estate holdings around the world.
Since the early 1990s, Kabbalah Centre entities have spent more than $20 million for dozens of commercial and residential properties in and around Los Angeles, records show, including the organization's headquarters on Robertson Boulevard and three homes in Beverly Hills for spiritual leaders Philip and Karen Berg and their adult sons, Yehuda and Michael.
Kabbalah entities' other U.S. holdings include residential and commercial real estate in Las Vegas, New York and Florida.
The organization was involved in at least one deal that appears to have gone sour. In the mid-2000s, Kabbalah Centre of Florida bought dozens of vacant parcels in Citrus Springs, north of Tampa. The lots sit empty after losing most of their value in the real estate meltdown.
In contrast, a for-profit branch, Kabbalah Enterprises, bought a property in L.A.'s Mid-City neighborhood for $830,000 in 2004 and transferred it to a limited liability corporation whose principals included Karen Berg, public records show. That company converted the property into eight condos, which it sold for a total of nearly $5 million.
Kabbalah Centre also made, and later agreed to give back, a hefty profit from a New York real estate investment that turned out to be a Ponzi scheme, court records show. In February, a trustee in a bankruptcy case sued the center, alleging it had been paid nearly $3 million in "fictitious profits" on a $2.1-million investment.
The center was not accused of wrongdoing and disputed the trustee's numbers, but settled the lawsuit in July for $785,000.
Although the center markets religious books, Kabbalah water and other "spiritual tools," some of the organization's ventures seem far afield from Jewish mysticism: Kabbalah entities have sought trademarks for cosmetics, livestock vaccines and something called Orodyne PHS-91, described as a "liquid chemical compound" for decontaminating nuclear waste.
It is not known how much income any of the center's enterprises have generated. Nor is it known how much the Bergs have received over the years.
Tax filings in the 1990s, before the exemption, indicated that Kabbalah entities supported Philip and other rabbis at the center with meals, lodging and unspecified "subsistence." For at least one year the organization paid Philip a salary of $95,000 and other family members $45,000 each.
Part One: Couple's success spreading kabbalah yields to discord, tax probe
Part Two: Celebrities gave Kabbalah Centre cachet, and spurred its growth
Philip and Karen Berg, founders of the Kabbalah Centre, declined to be interviewed for this report and instead issued this statement:
"The Kabbalah Centre is a nonprofit organization leading the way in making Kabbalah understandable and relevant in everyday life. Our funds are used in the research and development of new methods to make Kabbalah accessible and understandable.
"The Kabbalah Centre has received subpoenas from the government concerning tax-related issues. The Centre intends to work closely with the IRS and the government, and is in the process of providing responsive information to the subpoenas.
"The Centre is disappointed that the recent press regarding the Centre and this investigation is being fueled by rumors spread by a few disgruntled former students and former employees with personal agendas. The Centre is confident that the investigation will show that the Centre has and continues to serve its mission and act in furtherance of the wisdom and teaching of Kabbalah."