Mont. AG settles with charity co-founder

Bryan Cohen Apr. 5, 2012, 1:22pm


HELENA, Mont. (Legal Newsline) - Montana Attorney General Steve Bullock announced a settlement on Thursday with the Central Asia Institute and its co-founder resolving allegations of mismanagement of assets.

Greg Mortenson -- the co-founder, executive director and a board member of the CAI -- allegedly failed to fulfill some of his responsibilities as executive director and as a director and officer of the organization. The board of directors of the CAI also allegedly failed to fulfill its responsibilities as non-profit charity board members.

"Greg Mortenson's pursuits are noble, and his achievements are important," Bullock said. "However, serious internal problems in the management of CAI surfaced.

"As attorney general, I'm tasked with overseeing nonprofit charities operating in Montana. Through our investigation, the Montana Department of Justice sought to determine whether Mortenson and the leadership of his organization had violated the law governing nonprofit corporations."

Under the terms of the settlement, Mortenson agreed to repay more than $1 million to the charity, including credit for some payments already made, for speaking and travel fees, promotional costs, book royalties and allegedly inappropriate personal charges. Mortenson, who resigned from the position of executive director in November, will stay as an employee of the organization.

As part of the settlement, Mortenson has agreed to no longer serve as a voting member of the board of directors or to oversee financial aspects of the charity as long as he is an employee. The charity will hire a new executive director.

In addition, the remaining two board members have agreed to step down after a 12-month transitional period. A new board consisting of no fewer than seven members will be appointed during the year-long transition. The charity will implement more financial and organizational controls to restore the public's trust in giving the charity donations. Bullock's office will monitor the charity for three years to ensure compliance.

"CAI's mission is worthwhile and important. Its accomplishments, driven by the vision and dedication of Mortenson, are significant - as even their harshest critics acknowledge," Bullock said.

The CAI is headquartered in Bozeman and is incorporated in Delaware. The organization's mission is to empower central Asian communities through education and literacy, especially for girls, and to promote peace through education in the United States and abroad. Mortenson had co-authored the books "Stones into Schools" and "Three Cups of Tea," which told the story of how the CAI was formed and of its accomplishments in Afghanistan and Pakistan.

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