Montana Department of Justice
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April 5, 2012

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.

“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. “It has substantial assets which, if properly managed, can be used to pursue the charity’s mission and, in the process, improve the lives of people in a very challenging and complex region of the world.

“This settlement is a fair and appropriate approach to resolving the deficiencies and securing a brighter future for this organization and the central Asian children it seeks to educate,” Bullock added.

CAI is a nonprofit organization incorporated in Delaware and headquartered in Bozeman, Montana. The charity’s mission is to empower communities of central Asia through literacy and education, particularly for girls, and to promote peace through education in the U.S. and abroad. Mortenson co-authored the books “Three Cups of Tea” and “Stones into Schools,” which collectively told the story of how CAI came to be and of its accomplishments in Pakistan and Afghanistan.

A copy of the settlement agreement is available here.