'Three Cups of Tea' author must pay $1 million

AP

By James Eng, msnbc.com

Award-winning ?Three Cups of Tea? author Greg Mortenson has agreed to pay $1 million to a nonprofit he co-founded to settle allegations that he misspent charity money on personal items such as plane flights for family vacations and iTunes downloads, the Montana attorney general said Thursday.

In a 44-page report, Attorney General Steve Bullock said a yearlong investigation by his office concluded that Mortenson mismanaged his nonprofit, the Bozeman-Mont.-based Central Asia Institute, and personally profited from it.

?Mortenson?s pursuits are noble and his achievements are important. However, serious internal problems in the management of CAI surfaced,? Bullock said in the report.

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Mortenson didn?t immediately respond to a request for comment through the Central Asia Institute. Interim director Anne Beyersdorfer told The Associated Press that the author will continue to be a paid employee, promoting CAI and building relationships overseas, but will no longer be on the board of directors.

?While we respectfully disagree with some of the analysis and conclusions in the OAG?s report, we look forward to moving ahead as an even stronger organization, focusing on CAI?s vital mission,? Beyersdorfer said in a separate statement on the CAI website.

?CAI has always been a small group of dynamic, mission-centric individuals doing extraordinary work. Mistakes were made during a rapid period of growth, and we have corrected or are in the process of correcting them.?

Mortenson became a huge name in philanthropy ? and quite wealthy ? after his 2006 book, ?Three Cups of Tea: One Man?s Mission to Promote Peace ? One School at a Time,? became a No. 1 New York Times bestseller. He followed up with another bestseller, ?Stones into Schools,? in 2009.

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In ?Three Cups,? Mortenson tells of how his failed 1993 attempt to climb K2, the world?s second-tallest mountain, resulted in?a series of happenstance encounters that led him to establish schools for impoverished children in the remote villages of Afghanistan and Pakistan.

But his reputation as an international philanthropist and globetrotting do-gooder?became tarnished after an April 2011 ?60 Minutes? report in which author and fellow climber Jon Krakauer cited witness accounts that contradicted essential parts of Mortenson?s version of his?experiences in South-Central Asia. The report also raised questions about the way his charity?s funds were being managed and spent.

Read the full AG's report

The report led to an investigation by the Montana attorney general?s office, which reviewed thousands of pages of documents and took sworn statements from Mortenson and others.

Bullock noted the investigation did not focus on whether Mortenson?lied in his books, and it didn?t turn up evidence of conduct that could lead to criminal prosecution. Instead, it looked into CAI?s arrangements with Mortenson concerning his books and speaking engagements, as well as the financial affairs of the charity.

The probe found that the Central Asia Institute had spent about $3.96 million since 2006 to buy copies of "Three Cups of Tea," which were then distributed to libraries, schools, the military and others. Mortenson was supposed to provide a contribution to CAI equal to the amount of royalty payments he received from the book purchases, but failed to do so, investigators concluded.

The report also noted that Mortenson made hundreds of public appearances and speaking engagements to promote the book and CAI, often receiving sizable speaking fees. At the same time that the CAI was paying for his travel costs, many event sponsors were paying for similar costs. ?Thus, Mortenson was ?double dipping,?" the report said.

In one of the most damning passages, the report said:

?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 board went so far as to provide Mortenson with a personal assistant while traveling. This, however, also failed, as the personal assistant, himself, did not adequately comply with expense reimbursement requirements, nor did he cure the problems relating to Mortenson?s expenses.

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."

Under the settlement agreement, Mortenson must reimburse the charity more than $1 million.?Nearly half has already been repaid.

Mortenson underwent surgery in June 2011 to repair a hole in his heart, and he later stepped down as executive director of the organization.

Beyersdorfer said the fallout from the investigation won't detract from the Central Asia Institute's mission of helping children in fofgotten places.

"News fatigue about Pakistan and Afghanistan is evident everywhere we look these days. But the children and their parents, village elders, and teachers with whom we work cannot look away; this is about their futures," she said in a statement. "Greg and our overseas managers have dedicated their lives to helping fulfill countless dreams and aspirations and we are honored to continue our life-changing work together."

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