EagleTribune.com, North Andover, MA

World/National News

November 14, 2012

Socialite's climb halted by unfolding scandal

(Continued)

Victor said his company flew Kelley to New York, first class, for meetings, and then she flew to Hawaii, allegedly for meetings on the deal.

They discussed her compensation, Victor said. “I said, ‘what do you think a fair fee would be?’” And she emailed me back, 2 percent of the deal,” which he said could have amounted to tens of millions of dollars.

The company decided to work through others on the deal. “We decided that she simply was not a skilled negotiator in these large projects, she’s never been in these large projects and I sort of felt that I wasted my time,” Victor said.

In 2005, the Kelleys established Doctor Kelley Cancer Foundation Inc., with themselves and Khawam as its sole directors, according to the Florida Department of State. Its mission statement says the organization, which was based out of the Kelley home, was created to “conduct research studies into efforts to discover ways to improve the quality of life of terminally-ill adult cancer patients.”

In 2007, the last year for which it filed paperwork, the foundation reported revenues of $157,284 to the Internal Revenue Service, all from direct donations, according to its tax filing. The document lists expenses totaling precisely the same amount, including $43,317 for meals and entertainment, $38,610 for travel, $25,013 in legal fees, $8,067 for supplies and $5,082 in phone bills.

The filing claims $58,417 of its expenses went toward program services, but it’s unclear what those services entailed.

Christopher Pietruszkiewicz, dean of the Stetson University Law School and expert on non-profits and taxation, said the foundation’s filing “raises a lot more questions than it does provide answers.”

“I’m not sure that we can come up with any conclusions about how the money was spent by the organizers of the charitable organization, but it does give us a sense about how $157,000 was spent,” he said. “And I do think it raises some issues that either the Internal Revenue Service or the State of Florida may be interested in looking at.”

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