$600,000 clawed back from 'cult' charity

THE ATO found those responsible for the charity, which runs events at a Wollongbar property known as the Hall of Ageless Wisdom, breached "due responsibility".

ALMOST $600,000 was clawed back from the charity founded by a Northern Rivers "cult" leader after the Australia Taxation Office found it was not entitled to receive tax deductible gifts.

Universal Medicine founder Serge Benhayon, who a Supreme Court jury found was "the leader of a socially harmful cult", founded the College of Universal Medicine (CoUM) in August, 2011.

Mr Benhayon started his "esoteric healing" business in 1999 after what he claims was an "energetic impress".

Treatments offered by the group include "esoteric breast massage" and "chakra puncture".

Mr Benhayon tried to sue blogger and former acupuncturist Esther Rockett for defamation, but the jury ruled against him, finding most imputations made against him to be "substantially true".

This included that UM "makes false claims about healing that cause harm to others" and that Mr Benhayon "dishonestly promotes fraudulent ideas of karma for self-gain" and "vilifies people with disabilities".

Mr Benhayon bought a property at Converys Lane in Wollongbar for $2.3 million in April, 2011 before leasing it to his charity, which he formed the same year.

While CoUM is registered to Mr Benhayon's Goonellabah office on the Australian Charities and Not-for-profits Commission (ACNC) register, the small charity runs events at the Wollongbar property, known as the Hall of Ageless Wisdom.

Documents tendered in court as part of the defamation proceedings show that in September, 2013, the Commissioner of Taxation began a "comprehensive review" regarding CoUM's entitlement for deductible gifts for a "school building fund" and in a letter dated February 13, 2015, the ATO advised the charity: "CoUM has not satisfied the conditions of endorsement for the operation of its school building fund".

The ATO found that while a separate bank account was established, its ownership was not under the CoUM School Building Fund.

"It means the public money was flowing to the College rather than to a Public Fund," the ATO said in the letter.

"This finding is an indication that the safeguard of public money is threatened and it is also an indication that the (deductible gift recipient) money for school building purpose is potentially able to be used by CoUM for other purposes.

"Therefore, the responsible persons of CoUM acting for a qualifying body breach due responsibility and obligation as public trustee."

At odds with this letter was a statement on CoUM's website, claiming it "requested that the ATO revoke the College's deductible gift recipient endorsement" months later on October 2, 2015 after "it became clear that the DGR regime was no longer a good fit for the College".

Before the ATO's finding, the charity had accumulated donations totalling $581,781.

A list of 27 donors included a wealthy Queensland businessman who gave them $300,000 and a host of Northern Rivers residents.

Among them were a local psychologist and doctor and numerous donations were in tens of thousands of dollars.

According documents obtained by The Northern Star, bank statements indicated the $581,781 fund, which was being held in four separate bank accounts, "had been preserved and had not been used inappropriately".

In a July 2014 letter to CoUM, the ACNC confirmed there was "no evidence to suggest" the charity was not "operating in compliance with its obligations" under charity laws.

It is still registered as a small charity with the ACNC but donations made to the group are not tax deductible.

Mr Benhayon is no longer listed as a person responsible for the charity although his daughter, Natalie Benhayon, is listed among its group of directors.