Kabbalah charities under investigation for 'tax evasion'

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After years selling £20 string bracelets and £15 bottles of "holy" mineral water to their followers, the family behind Kabbalah, a spiritual organisation supported by a slew of Hollywood stars, is the subject of a wide-ranging investigation into alleged tax evasion.

The probe is focused on the Kabbalah Centre in Los Angeles, where relatives of the faith's elderly founder Philip Berg manage an estimated $260m (£158.5m) in assets. Among other things, federal investigators are looking into the finances of two charities with close links to Madonna, its best-known celebrity member.

Documents uncovered by the Los Angeles Times show that the Internal Revenue Service is attempting to establish whether money that was intended for non-profit purposes has been used to personally enrich the Berg family, who are close to Kabbalah's celebrity adherents such as Gwyneth Paltrow, Ashton Kutcher, and Demi Moore.

Kabbalah's tax-exempt status was granted in 1993 on the basis that no members of the Berg family would receive salaries or other financial compensation for their leadership roles in the organisation, which they have controlled for about 40 years.

In the original filing that sought non-profit status for the centre, which endorses a form of Jewish mysticism, Philp Berg's wife Karen wrote that the family would not profit from their roles in Kabbalah but intended instead to "derive their subsistence from the meals and lodging and care provided to them by the organisation's facilities."

It has since emerged that this "subsistence" involves the use of a large home in Beverly Hills. In addition, there have been allegations of financial impropriety regarding charities with links to Kabbalah in which members of the Berg family also have prominent roles.

Last month, Michael Berg, Philip's son, was removed from the chief executive's role at Raising Malawi, a charity Madonna created to help build schools in Malawi. About $4m had been spent on one construction project, with no single building being properly completed. Madonna moved her charity's HQout of the Kabbalah Centre and appointed a new manager to work out what had become of its finances. She withdrew from Spiritually For Kids, another non-profit controlled by Michael Berg and his relatives which is now the subject of a tax probe.

The organisation acknowledged tax authorities were looking into its wider finances, but denied wrongdoing. It would " work closely with the IRS to get to the bottom of what has occurred."