Attorney General Ellison reaches settlement with immigration charity to address governance deficiencies

January 10, 2025 (SAINT PAUL) — Minnesota Attorney General Keith Ellison today announced a settlement with Central Minnesota Community Empowerment Organization (“CMCEO”), an immigrant and refugee charity in St. Cloud, Minnesota incorporated in 2015.  In the settlement, also known as an Assurance of Discontinuance, Attorney General Ellison alleges that the charity’s governance fell short of Minnesota charities laws and its bylaws, and requires the nonprofit to continue improving its compliance.

CMCEO is a Minnesota nonprofit corporation and tax-exempt charity that received more than $1.4 million in contributions and grants as of 2022.  It supports refugee and immigrant communities through activities including after-school programming, job training, advocacy, housing support, and business development. An investigation by the Attorney General’s Office (“AGO”) uncovered several governance deficiencies within CMCEO, including conflicted transactions with the nonprofit’s leaders and their family members as independent contractors without the formal approval of their board of directors.

The AGO determined that several aspects of CMCEO’s governance required compliance improvements, including its contractor designations, financial controls, board procedures, and registration with the AGO.  The Assurance of Discontinuance acknowledges CMCEO’s cooperation with the AGO’s investigation and voluntary efforts to improve compliance.

The Assurance requires CMCEO to continue to strengthen its governance by taking numerous important actions, some of which are spelled out below. A full list can be found in the Assurance of Discontinuance itself. Per the terms of the Assurance, CMCEO must, in part:

• Cease paying certain individuals as independent contractors, including those who meet the definition of a disqualified person according to Section 4958(f)(1) of the Internal Revenue Code;
• Clearly define officers that will fulfill the roles of president and treasurer as required under Minnesota law, and evaluate whether to restrict or terminate financial responsibilities and access currently assigned to other contractors, employees, and officers;
• Ensure board review and approval of all officer and director compensation as well as any contract or transaction presenting a conflict of interest with officers, directors, their family members, or their material financial interests as required by CMCEO’s bylaws and Minnesota law;
• Ensure that the entire board has transparency into the accounting and assets of CMCEO so that the entire board can participate knowledgably in managing CMCEO’s financial matters;
• Ensure all directors and officers obtain sufficient training to apprise them of their duties under Minnesota and federal law;
• One year after the Court approves the Assurance, provide a report to the AGO of CMCEO’s compliance with the terms of this Assurance; and
• Upon the written request of the AGO, promptly provide accurate, true and complete information, documents, and data that are reasonably necessary to verify continuing compliance with this Assurance.

“It is important that all charities follow Minnesota laws intended to protect charitable assets and promote public trust, especially when those charities serve marginalized communities,” Attorney General Ellison said. “CMCEO fell short of these obligations, leaving its assets vulnerable and preventing public and regulator transparency. I hope that today’s settlement will lead to the correction of these governance issues and a renewed focus on CMCEO’s mission of serving refugees in Minnesota.”

The Attorney General’s Office’s settlement with CMCEO does not preclude any future claims against individuals. In Minnesota, the Attorney General through the Charities Division has civil, not criminal, enforcement authority over the state’s nonprofit corporation and charitable trust laws. The Charities Division investigated CMCEO under Minnesota’s civil nonprofit corporation and charitable trust laws, which require nonprofit directors and those who hold charitable assets to adhere to strict governance standards and fiduciary duties.

The Minnesota Attorney General’s Office makes available a number of publications and pamphlets providing information about charitable organizations, charitable trusts, professional fundraisers, and nonprofit organizations generally:

• “A Guide to Minnesota’s Charities Laws” discusses key laws including the Minnesota Nonprofit Corporation Act, the Charitable Solicitation Act, and the Supervision of Charitable Trusts and Trustees Act, among other laws that require certain organizations to register with and provide notice to the Minnesota Attorney General’s Office.
• “Guide for Board Members” covers fiduciary duties of directors of nonprofit corporations and is meant to assist board members with the important responsibilities they assume when elected to a charity’s board of directors.
• “Nonprofit Organization Resources” contains a listing of resources covering charitable solicitation, professional fundraiser, and charitable trust registration, government agency contacts, and training and technical assistance providers.

Minnesotans with concerns about governance or other issues at a nonprofit may submit a complaint on the Attorney General’s website using this link. Minnesota consumers may also contact the Attorney General’s Office by calling (651) 296-3353 (Metro area), (800) 657-3787 (Greater Minnesota), or (800) 627-3529 (Minnesota Relay).