Minnesota Attorney General Keith Ellison has announced a settlement with the Minneapolis nonprofit Youth Leadership Academy, operating as Gar Gaar Family Services. The organization is required to dissolve due to violations of state laws related to self-dealing and governance. This settlement does not prevent future claims against individuals involved.
The settlement was filed in Hennepin County District Court. It alleges that Gar Gaar paid over $100,000 to a for-profit company owned by two of its officers. An audit also identified significant deficiencies in the organization's internal controls. Established in 2020 during the COVID-19 pandemic, Gar Gaar agreed to dissolve.
"Charitable nonprofits hold assets in trust for the public, not their directors, and nonprofit board members are obligated to act in the organization’s best interests, not their own," stated Attorney General Ellison. "Gar Gaar’s leaders seemed not to understand either of these crucial facets of Minnesota nonprofit law, so I am shutting them down."
In 2021, Gar Gaar participated in the federal child nutrition program during the summer. However, when it applied for year-round participation during the school year, the Minnesota Department of Education declined its application due to "numerous instances of mismanagement." These included an inability to account for over $2 million in federal funds. Although Gar Gaar appealed this decision, the Minnesota Court of Appeals upheld it in February 2023, citing a lack of financial viability and management.
Following this, the Charities Division of the Attorney General's Office conducted an independent civil investigation under state laws governing nonprofit corporations and charitable activities. The division does not have authority over criminal enforcement.
Under Minnesota law, nonprofit board members and executives must prioritize their organization's interests above personal financial interests. Information on fiduciary duties and resources for nonprofit leaders can be found on the Attorney General's website.
Complaints about nonprofit directors or officers prioritizing personal interests over those of their organizations can be submitted online or by contacting the Attorney General's office through provided phone numbers.