Attorney General Ellison reaches settlement with nonprofit over founder’s misuse of charitable assets
AG’s investigation finds Shannon Steele unlawfully used $156K of Northern Lakes Rescue charitable assets for personal purposes; prohibited from serving nonprofit in any way
October 10, 2024 (SAINT PAUL) – Minnesota Attorney General Keith Ellison announced today that he has reached a settlement with Brainerd-based nonprofit Northern Lakes Rescue (NLR). In an Assurance of Discontinuance filed in Ramsey County, Attorney General Ellison alleges that NLR violated Minnesota charities laws by failing to safeguard its assets and allowing NLR’s founder and former president, Shannon Steele, to divert NLR funds away from the nonprofit’s charitable purpose.
Steele founded NLR in 2017 with the charitable mission to “rescue, rehabilitate and rehome animals in crisis.” An investigation conducted by the Charities Division of Attorney General Ellison’s Office found, however, that Steele unlawfully spent roughly $156,000 of NLR funds on personal items and expenses, including jet ski rental, credit card payments, car insurance payments, and cash withdrawals. The Assurance prohibits NLR from allowing Steele to serve as a director, officer, or employee of the nonprofit, or engaging in any activity that results in Steele managing, administering, and overseeing its financial affairs and operations.
The investigation also found NLR failed to provide proper governance and oversight, which created an environment for the misuse of funds to occur. The Assurance of Discontinuance requires NLR, among other things, to:
- Conduct an internal audit of their finances from at least 2021 to the present, then evaluate NLR's claims and remedies arising out of the audit, including referral to criminal authorities, determine whether it is in the best interest of NLR to pursue any such claims and remedies, and if so, pursue them;
- Maintain detailed, accurate books and records of the nonprofit's finances;
- Ensure that the entire board has visibility into and access to all financial accounts, including regular review of account statements and expenses;
- Ensure that all officers and directors obtain sufficient training of their fiduciary duties under Minnesota law; and
- Promptly turn over all documents, information, and data that the Attorney General’s Office deems reasonably necessary to verify compliance with this Assurance.
“Minnesotans are generous people and expect the hard-earned money they donate to charity will be used for the causes they believe in. It’s disturbing that Northern Lakes Rescue’s founder and former president instead misused charitable assets, and equally disturbing that the board of directors allowed this to happen,” Attorney General Ellison said. “Minnesota law requires a board of directors to oversee charitable spending for exactly this reason. It is vital that Northern Lakes Rescue and all organizations, especially those entrusted with public funds, operate with the highest standards of integrity and accountability and make sure that every penny donated supports a nonprofit’s charitable mission.”
In Minnesota, the Attorney General through the Charities Division has civil enforcement authority over the state’s nonprofit corporation and charitable-solicitation, and charitable-trust laws. Under state law, nonprofit executives owe fiduciary duties to act in the best interests of the charities that they serve, including putting the interests of the nonprofit above any personal financial interests.
The Charities Division does not enforce criminal laws, and this civil settlement does not shield Steele from any potential criminal liability. In 2023, Steele was charged with tax evasion in Crow Wing County.
Minnesotans with concerns about governance or other issues of a nonprofit may submit a complaint on the Attorney General’s website. 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).
