Three Cups of Tea disputed

By GWEN FLORIO of the Missoulian | Posted: Thursday, March 8, 2012 11:00 pm

The Montana Attorney General’s Office will release the results of its investigation into the charity run by “Three Cups of Tea” author and mountaineer Greg Mortenson by the end of the month.

“No matter what happens in the next few weeks, we will definitely have an answer,” said spokesman John Doran.

That probe into whether Mortenson benefited from donations to his Central Asia Institute – which builds girls’ schools in Afghanistan and Pakistan – is winding down amid new filings in an unrelated lawsuit that names CAI, Mortenson and his MC Consulting firm, “Three Cups” co-author David Oliver Relin and publisher Penguin Group.

The class-action suit alleges Mortenson made up parts of the best-selling autobiography that recounts his getting lost during an excursion to K2 and spending time in a remote Pakistani village whose people inspired him to build a school. And it accuses him of “hatching a scheme” to use the books to raise money for CAI, and then spending some of that money on himself.

The suit seeks reimbursement for the estimated 4 million people who bought “Three Cups of Tea” and its sequel, “Stones Into Schools.”........

Montana Attorney General announces settlement with Greg Mortenson, Central Asia Institute

Montana Attorney General Steve Bullock on Thursday announced a settlement agreement with Greg Mortenson and the Central Asia Institute, concluding a yearlong investigation into allegations of mismanagement of assets by Mortenson and the charity.

“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.”

The Attorney General launched the parallel investigations into Mortenson, co-founder, executive director and board member, and the Bozeman-based charity on April 19, 2011. Based on the results of the investigation, the Attorney General has concluded that CAI’s board of directors failed to fulfill some of their responsibilities as board members of a nonprofit charity. Further, Mortenson failed to fulfill some of his responsibilities as executive director and as an officer and director of the organization.

Through the settlement, Mortenson agreed to repay in excess of $1 million to the charity, including credit for some payments already made, for book royalties, speaking and travel fees, promotional costs and inappropriate personal charges. Mortenson, who resigned as executive director in November, will remain as an employee of the organization. However, through the settlement, he agrees to no longer oversee financial aspects of the charity or serve as a voting member of the board of directors so long as he remains an employee. A new executive director will be hired.

The remaining two board members agreed to step down after a transitional period of 12 months while, in the meantime, a new board consisting of no less than seven members is appointed. More organizational and financial controls have also been implemented in the organization to restore the donating public’s trust. The Attorney General’s Office will monitor the charity for a period of three years to ensure compliance.

Arab virgins while our boy was putting down the bubbly on the concord

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. The issue was repeatedly raised through the years. Board members testified that despite requests, cajoling, demands and admonitions, they were unsuccessful in getting Mortenson to submit proper documentation to support the charges he was making to the charity...

The more significant issue was not simply compliance with expense reimbursement and documentation policies, but the nature and magnitude of charges for which inadequate documentation exists. Through the years, Mortenson charged substantial personal expenses to CAI. These include expenses for such things as LL Bean clothing, iTunes, luggage, luxurious accommodations, and even vacations...

The board’s history and testimony from certain members, however, supports a conclusion that there was a deliberate effort to put people who are loyal to Mortenson on the board. The three board members who resigned in 2002 were effectively ousted, based on tensions and conflict that had developed with Mortenson. Meeting minutes show Hornbein, the board chair, and Wiltsie, the board treasurer, repeatedly asked for documentation to prove that CAI was getting a positive return on the money Mortenson was spending. Hornbein in particular requested itemized lists of Mortenson’s travel expenses, of the money coming in, and of contacts being made. He also advocated for phasing out Mortenson’s role in overseeing daily operations. In short, the board members who resigned were essentially trying to perform the kinds of oversight functions expected of boards of directors for organizations such as CAI.

"The case has been pending for almost a year. The Complaint before the Court is the fifth pleading filed. Plaintiffs have been accorded every opportunity to adequately plead a case, if one exists. Moreover, the imprecise, in part flimsy, and speculative nature of the claims and theories advanced underscore the necessary conclusion that further amendment would be futile. This case will be dismissed with prejudice."