No business for amateur philanthropists: Part 2, fraud

November 20, 2012 | Celebrities, Charities, Development, Disaster relief, Haiti, Housing, Nonprofits, Theory, Urban renewal, Wyclef Jean, Yele

[Continued from yesterday”s Part 1.]


By:David A. Smith


Yesterday’s post used a thorough and heartbreaking article in New York Times (October 11, 2012) to introduce Wyclef Jean’s now-defunct charity, Yele, and showed how it was part and parcel of a life story he was weaving in which heroic young Wyclef makes a success for himself in Amerrica, then returns to Haiti as its savior and soon-to-be-President:


Don’t I look trustworthy?


In his memoir, he says his journey from “a hut with a dirt floor” to “a mansion in New Jersey with Grammys on the mantle” motivated him to give back to his homeland.


Did it.  Did it really.


But from the start Yele was lax about accounting and tax filing, blurring the boundaries between its founders’ personal and charitable enterprises.


Narcissists cannot distinguish themselves from the universe. 


L’etat, c’est moi


In this they are unlike adjusted human beings, whose brains evolve around the age of two to encompass this idea.  That distinction is critical, for without an awareness of the Other, the ummet friend, one cannot learn civility, ethics, compassion, or genuine charity.


Entrepreneurs likewise have difficulty keeping their lives apart.  They tend to work ceaselessly [Says the man writing an utterly gratuitous blog post at 38,000 feet coming back from Nigeria – Ed.  Oh, shut up. – Auth.], and to take a vision and make it reality.  With all of themselves in their company, they tend to assume that the company should pay for themselves.


But … that logic stops at a bulkhead door called charity. 


In a charity, one is a fiduciary for one’s donors. 


It’s a pity that so few charities actually think that way.  Somewhere along the line, the care and feeding of the charity’s staff becomes more important than delivering value to customers (meaning either donors or poor people, take your pick), and the actual work is done with what’s left over after all the complacencies in administration have got their pay, their travel allowances, their perks, and their pension. If I spared the time to reflect on them, I’d be ill.


As, evidently, was the New York Attorney General:


The forensic audit examined $3 million of the charity’s 2005 to 2009 expenses and found $256,580 in illegitimate benefits to Mr. Jean and other Yele board and staff members –


If you’re The Man, then you have a posse.  (I was once, in 1986, for one evening part of Bill Walton’s posse.  It was an experience, the reverse of slum tourism, and while I respected the goofy amiability with which Bill loped through his fame, it was beyond manifest how corrosive such a cocoon of sycophancy would be to any proper sense of self-balance.) 


My next-door-neighbor in 1986 … honest.


And unless you’re extremely well centered before you acquire a posse, they will rule you more than you rule them.


– as well as improper or potentially improper transactions.


To quote Bruce Banner, this is all … horrible.


The other guy’s not very quotable


These included $24,000 for Mr. Jean’s chauffeur services and $30,763 for a private jet that transported Lindsay Lohan from New Jersey to a benefit in Chicago that raised only $66,000.


Oh, yes, Lindsay Lohan, that ambassadress of everything noble.



The audit considered it appropriate, though, for the charity to pay Mr. Jean $100,000 to perform at a Yele fund-raiser in Monaco because that was his market rate.


<Pause to pick up metaphoric wreckage of laptop metaphorically hurled across room, springing gears in all directions.>


If it is your charity, sir, you have absolutely no business charging it retail rates. You found a charity to do good, and while your charity must be sustainable in its own right, it may rely upon your personal commitment, so long as you live and breathe.  Anything else is a hobby dressed up in a 501(c)(3) designation.


It also found it acceptable for Yele to spend $125,114 on travel and other matters related to a “60 Minutes” report on “Wyclef’s mission to help the people of Haiti and his personal success story” because it appeared to have heightened awareness of Yele.


Yes, that was fantastic publicity.  But for Yele or for Mr. Jean?  And should Mr. Jean have traveled first class (which, let’s be clear, is a shameless indulgence in which one may delight if one has not paid for it), or ‘slummed it’ in business class?


It was deemed legitimate to have spent $57,927 on private jets to fly Matt Damon and others to Haiti because they gave “substantial contributions” afterward.


Flown in by private jet to disburse food: maybe the flight was worth it?


Mr. Schick said of Mr. Jean, “While most of the audit findings and recommendations do not in any way relate to him, he is nevertheless committed to ensuring that things are made right.”


As Mr. Schick must surely know, his oleaginous temporizing nullity notwithstanding, his client does not get a pass on deniability.  It was his charity, his vision, his brand value, his own blessed term for the charity’s name.  Mr. jean does not have non-recourse liability, legal or especially brand.


Yele was small before the earthquake, with only $37,000 in assets. Immediately afterward, money started pouring in.


Evidence of opportunism, one might say.


Mr. Jean said he raised $1 million in 24 hours when he urged his Twitter followers to text donations.


We have yet figured no business model for Twitter, though if one has a personal brand, one can with barely a tweet move money.  Dumb money, to be sure, and hence the recipient of the dumb money must be smart and wise with it.


His charity also benefited alongside more established organizations like Unicef when he co-hosted MTV’s “Hope for Haiti Now” telethon with George Clooney.


One cannot mock the impulse for charity


When it came to fundraising, Yele had two huge assets: Mr. Jean’s personal fame, and his Haitian heritage, and because of this, it was able to raise vast sums speedily:


In 2010 [the year in which Mr. Jean declared himself a candidate for Haiti’s president – Ed.], Yele spent $9 million and half went to travel, to salaries and consultants’ fees and to expenses related to their offices and warehouse.


Yes, that 50% overhead ratio is as terrible as you think it is – and this time, we even have a good comparable.


In contrast, another celebrity charity, Sean Penn’s J/P Haitian Relief Organization, spent $13 million with only 10% going to those costs.


Unlike Mr. Jean, Mr. Penn keeps going back to Haiti


Though Mr. Penn’s group spent $43,000 on office-related expenses, Yele spent $1.4 million, including $375,000 for “landscaping” and $37,000 for rent to Mr. Jean’s Manhattan recording studio.  Yele spent $470,440 on its own food and beverages.


Evidently Mr. Jean commingled the personal and the charitable indiscriminately, and charged his own charity retail costs for work that the charity, had it been separately managed, might well have thought unnecessary. 


Mr. Penn told The New York Times in 2010, “My impression is that Yele is at the service of Wyclef Jean and his reputation.”


I’m just here to help


For a celebrity, brand is earned at the announcement; actual impact has minimal ongoing value.  For a transient celebrity, brand is all about the adoption, little about the child-rearing.  It’s shallow and cynical and disgusting.


Sharks feed in shallow surroundings


Aside from cupidity, there was massive naivety.


Some of Yele’s programming money went to projects that never came to fruition: temporary homes for which it prepaid $93,000; a medical center to have been housed in geodesic domes for which it paid $146,000 –


Geodesic domes.  Could there be a more foolish structure to build?  Genuinely pro-poor structures use indigenous materials, local labor, low-skill and low-tech. 


– the revitalization of a plaza in the Cite Soleil slum, where supposed improvements that cost $230,000 are nowhere to be seen.


Of course it’s possible that Mr. Jean’s Haitian posse connived with local Haitian to bilk Yele; it’s also possible the local Haitians did the bilking on their own, and that Mr. Jean’s posse were too ignorant to notice. 


You callin’ me unsaintly?


[Continued tomorrow in Part 3.]