New Gentle Barn IRS Form 990 filings respond to probe by California Attorney General

From ANIMAL PEOPLE,  July-August 2013:

SANTA CLARITA,  California––Newly accessible IRS Form 990 filings for 2010 and 2011 from The Gentle Barn Foundation hint at a history of financial irregularities,  some of which were also alleged in three lawsuits filed in 2012 by five former staff.  The lawsuits were recently settled in mediation on undisclosed terms.

Founded in 1999 by Yael Laks Callahan,  also known as Ellie R. Laks,  the Gentle Barn Foundation describes itself as “a safe haven and place of recovery for abused farm animals and children.”  Laks, her partner Jay Weiner, and their three children live on the original six-acre Gentle Barn property in Santa Clarita,  California.  The sanctuary is open to visitors on Sundays.

Gentle Barn recently opened a second facility called the Sun Chlorella Healing Center in Agua Dulce, California.

Claiming more than a dozen celebrity supporters,  including television talk show host Ellen DeGeneres, Gentle Barn increased revenues from $21,543 in 1999 to $428,460 in 2008.   Gentle Barn income spiked to $2.3 million in 2009,  then remained between $1.1 million and $1.3 million in 2010 and 2011,  according to Form 990 filings.

Gentle Barn received a burst of favorable publicity in early 2012 after taking in 14 cattle,  32 sheep and goats, a horse,  and four turkeys from illegal butcher Roberto Celedon.  Weiner told media that Gentle Barn had been “monitoring and rescuing animals” from Celedon for four years.

Exposed in April 2012 by undercover video released by Mercy for Animals,  Celedon in June 2012 “pleaded no contest to felony animal cruelty charges,  and a misdemeanor for selling illegal meat to the public,”  said a prepared statement distributed by Gentle Barn publicist Adri Palmieri.

Celedon was sentenced to serve 90 days in jail,  followed by five years on probation,   was assessed $4,000 restitution,  and was ordered “to complete 48 animal cruelty classes,”  Palmieri added.  In addition,  Celedon was prohibited from keeping animals,  from working in the meat industry,  and from attending  auctions where animals are sold. But in this time of triumph,  the Gentle Barn financial affairs were under investigation by the Office of California Attorney General.

According to Schedule O of the Gentle Barn IRS Form 990 filings for 2010 and 2011,  filed in December 2012, “The prior year revenue,  expenses,  and balance sheet were adjusted to reject the activities of the organization through 2009.  A new independent board was assigned this year and are working with the California Attorney General.  The organization engaged an outside forensic accounting firm to update the accounting records of the organization,  including those relating to transactions involving loans from officers,  rent due and accrued,  and deferred compensation to the officers in which considerable judgement was used to determine expense categories for payments.”

Some of those payments involved “incomplete or missing records lost in a fire but predominantly replaced by banking institutions,  credit card companies,  records kept by independent employees,  etc.,”  says the Schedule O note.

A second note under Schedule O states that “While Jay Weiner and Yael Laks received no salaries during the period 2004 to 2011,  the organization paid certain personal expenses on their behalf and provided them with cash advances.  Such payments have been deemed to be compensation and,  in some cases,  replayments of officer loans…The organization is treating these amounts as compensation and will file the appropriate forms with the government.  The independent board has not made any decision at this time as to whether these amounts were approved or reasonable.  An investigation regarding this issue is ongoing.”

A third note under Schedule O adds that,  “During the course of the organization’s internal investigation,  the independent board members have determined that the originally filed Forms 990 understated the authorized loans made by officer/director Yael Laks to the organization from 2003 to 2010.  Given the currently available evidence, the 2012 independent board members have determined that cumulative officer loans to the organization through 2009 were $257,552 and that all such loans were repaid as of December 31,  2009 by virtue of either cash payments or payments to third parties on behalf of Ms. Laks…Ms. Laks disputes the loan amount determined by the independent board members.  An investigation regarding this issue in ongoing.”

Founder disputes amounts

Adds the “Part XIV:  Supplemental Information” section on the 2010 Gentle Barn filing of IRS Form 990:

“Based on the work done by the forensic accountants hired by the organization and the currently available information,  the independent board members have determined that the organization overpaid rent owed to Ms. Laks in 2010…Some of the rent was paid in the year incurred in the form of mortgage payments on behalf of Ms. Laks and some rent was accrued.  At the end of 2009,  the organization owed Ms. Laks accrued and unpaid rent in the amount of $19,639.  During 2010,  the organization paid Ms. Laks $60,805.

The excess rent paid in 2010 in the amount of $11,910 was treated as compensation to Ms. Laks.  This increased her total compensation in 2010 to $72,477.  Ms. Laks believes additional rents are due her and made loans to the organization between 2004-2009.  An investigation is still pending as to how much is owed to Ms. Laks.”

The Gentle Barn filing of Form 990 for 2011 includes the same language,  except that the amount of excess rent paid in 2011 was declared to be $31,052.  When restated as compensation to Laks,  this increased her total compensation to $59,902.

Weiner was compensated each year in the same amounts,  and his compensation was retroactively adjusted in the same amounts,  according to the Form 990 statements. Much of the same information is restated elsewhere in the 2010 and 2011 Form 990 filings,  chiefly in “Part IV: Business Transactions Involving Interested Persons.”

The last note under Schedule O of the Gentle Barn filings of IRS 990 for 2010 and 2011 states that,  “In early 2012,  the organization become aware that certain independent contractors should have been treated as employees for the past three to four years.” This appears to have been central to the three lawsuits filed against Gentle Barn by former staff.

Alexandra Caswell filed the first of the lawsuits from former staff in October 2012,  alleging violations of seven sections of California labor law.  Karen Snook and Krystina Saavedra filed a similar case in November 2012,  alleging violations of 11 sections of California labor law.  The third case,  alleging 12 violations of California labor law,  was filed by Darshan Sergi and Jessica Knorzer in December 2012.

All three cases were represented by Patricia A. Kinaga and Drew L. Alexis,  of Los Angeles.

ANIMAL PEOPLE learned in June 2013 that all three cases had been settled in mediation,  with nondisclosure agreements that prohibit the release of the terms.

ANIMAL PEOPLE earlier received copies of an “Affidavit of Truth” and “Notice and Warning,” dated December 24,  2012,   said to have been distributed by Yael Laks Callahan.  The “Affidavit of Truth” asserted that the plaintiffs’ allegations as listed in the Snook/Saavedra case were “all lies.”

Addressing possible plaintiffs in lawsuits which had not yet been filed,  the “Notice and Warning” concluded that “filing any suit absent evidence/proof or Affidavit sworn to under penalty of perjury by an eye witness,  you will be assessed Fifty Million ($50,000,000.00) Dollars for the above regarding and intentional injuries.”

The signatures on the “Affidavit of Truth” and “Notice and Warning” resembled but did not match Laks Callahan’s signature on the Gentle Barn filings of IRS Form 990 from 2000 and 2001.  She did not sign later filings.