Nonprofit picks up the pieces after Community Action of Minneapolis falls to scandal

Almost three years after Community Action of Minneapolis shut down in the wake of a scandal involving CEO Bill Davis, a neighboring nonprofit has taken over its work and rebranded it as a charity serving needy residents across both cities and suburbs.

This month, Community Action Partnership of Suburban Hennepin County dropped the suburban from its name and announced its "relaunch."

The nonprofit's fresh start comes just as Davis is about to be sentenced in federal court for theft and fraud convictions, for which he may do prison time.

Executive Director Scott Zemke will remain in charge of the newly named Community Action Partnership of Hennepin County (CAP-HC), which uses mostly federal grants to offer energy assistance and other services to low-income families.

Zemke, who has worked for the nonprofit in various roles for nearly two decades, said he will focus on expanding services and good governance.

"Everyone is very concerned we are doing this right and clients are served," he said.

CAP-HC, based in St. Louis Park, has seven Minneapolis representatives on its expanded 21-member board of directors and three Minneapolis service locations. With more than 50 full-time staffers and a $6 million annual budget, it helped 63,000 people last year.

"Board meetings are longer now. We spent a lot of time reviewing our financials," he said.

Zemke, 43, said that even though the suburban nonprofit had no formal ties or financial relationship with Community Action of Minneapolis, it is making extra efforts to be transparent, accountable and responsive to community needs.

CAP-HC hired Wilder Research to complete a community needs assessment and started a strategic planning process. A series of forums this June will help it connect with clients and other stakeholders.

"We are definitely a more engaged board than they were, which serves us well and serves the agency well," said board Chairwoman and Edina City Council Member Mary Brindle.

CAP-HC's biggest program helps people keep the heat on in the winter, but it also offers financial literacy workshops, foreclosure prevention services, home buyer counseling, homelessness programs and a vehicle repair program.

Shannon Haynes of Minneapolis gets help from CAP-HC paying her utility bills. She said the extra $300 to $400 annually makes a noticeable difference to her and her children.

Aware that he is under the microscope, Zemke is also transparent about his own finances. He earns $106,600 a year in salary and is CAP-HC's highest-paid employee. He uses his personal vehicle and is reimbursed for mileage, and his health care and retirement benefits are the same as the rest of the staff. No one in his family works at CAP-HC.

"Sensitivities are heightened," Zemke said. "It really is a cautionary tale and a sad story for everyone involved."

The fall of Davis and Community Action of Minneapolis made waves that reached some of the highest offices in the state. At the time of the investigation, U.S. Rep. Keith Ellison, state Sen. Jeff Hayden, Minneapolis City Council President Barb Johnson and former Council Member Robert Lilligren served on the board through proxies.

Davis, who led the agency for 24 years, admitted to using charity money to pay for lavish trips with girlfriends to locales including the Bahamas; Las Vegas; Key West, Fla., and Niagara Falls, N.Y. He also bought a luxury sedan with charity money for personal use, and paid his son a $140,000 salary for a no-show job at an ice cream shop.

A state audit found that the nonprofit misspent at least $800,000 between 2011 and 2013.

"Davis exploited that trust and treated his agency's bank account as his personal piggy bank," federal prosecutors wrote.

Davis pleaded guilty to 16 counts in U.S. District Court last June. His son, former Minneapolis police officer Jordan Davis, was found guilty by a jury and received a two-year prison sentence for his role in the fraud.

In a January court filing, federal prosecutors first sought a prison sentence for Bill Davis of nearly six years, partly to serve as a deterrent "to other heads of nonprofit organizations who might be inclined to use their positions to enrich themselves at the expense of those they purport to serve."

Davis' attorneys are seeking a sentence of one year and one day and are urging the court "to consider the positive impact he has made, and will continue to make, in our society despite his transgressions."

Federal sentencing guidelines prescribe a sentence of approximately three to four years.

Shannon Prather • 612-673-4804