Mortenson To Pay $1 Million In Restitution To Charity

April 5, 2012       Patrick Sullivan      

A yearlong investigation by the office of Montana Attorney General Steve Bullock into author and mountaineer Greg Mortenson’s charity, Central Asia Institute (CAI), found that both Mortenson and CAI’s board had been negligent in their management of the nonprofit. As a result of a settlement between Mortenson, CAI and the office of the attorney general, Mortenson must pay CAI back at least $1 million for personal expenditures such as charter flights and clothing. Bullock distributed his office’s investigative report in a press conference today.

“We concluded that the board of directors failed to fulfill some of its important responsibilities in governing the nonprofit charity,” said Bullock. “Further, Mortenson failed to fulfill his responsibilities as executive director and as a member of the board.”

Mortenson resigned as executive director of CAI, the Boezeman, Mont.-based charity he co-founded which supports literacy and education in central Asia, in November, and the other two board members—Karen McCown and Abdul Jabbar—will step down in the next 12 months. As part of the agreement, the Montana attorney general’s office will have direct oversight of the board for the next three years, and the number of board members will increase from three to seven. Mortenson, McCown and Jabbar will be permitted to remain part of CAI, but in a “non-voting, advisory capacity,” according to the report.

“The board failed to fulfill its obligations,” said Bullock. “It was too close to Mr. Mortenson and it failed to exercise the oversight required of it.”

According to the attorney general’s office, Mortenson owes $980,000 in restitution to CAI, but that figure will increase after audits for 2006 through 2009, as well as an audit for 2011, are completed. Mortenson has already repaid nearly half a million dollars.

The investigation found that “Mortenson, in particular, consistently failed to comply with either commonly accepted business practices or CAI’s policy manual with respect to documenting expenses charged on CAI’s accounts.” Some of those charges included clothing, iTunes downloads, luggage, charter flights to speaking engagements and family vacations.

Mortenson, the author of the bestsellers “Three Cups of Tea” and “Stones Into Schools,” which detailed his work building schools in Afghanistan and Pakistan, first came under fire in April of 2011 from CBS News “60 Minutes” and author Jon Krakauer, both of whom alleged Mortenson mismanaged CAI’s finances and fabricated key details of his books.

An unrelated civil suit alleging fraud has been brought against Mortenson, CAI, “Three Cups of Tea” co-author David Oliver Relin, Penguin Publishing and Mortenson’s consulting firm, MC Consulting, by purchasers of Mortenson’s books.

Bullock noted that Mortenson and CAI were “fully cooperative” throughout the investigation, and said that had his office found evidence of any criminality, which it did not, it would have turned the case over to county attorneys for prosecution. Further, he said that he believes CAI’s mission to be admirable and that the charity is “worth saving.”

“Our goal was to fix problems…so that this worthwhile international nonprofit can move forward,” said Bullock. “We reached the conclusion that there are still good things to be done (by CAI), and that this settlement is fair and in the best interest of the charity, the donating public and the mission of the charity.”