Me’Lea Connelly, who founded a credit union to invest in black businesses, led a discussion regarding black economic resistance to a group at the United Theological Seminary, Wednesday, April 24, 2019 in St. Paul, MN. ] ELIZABETH FLORES • liz.flores@startribune.com (The Minnesota Star Tribune)

Two key leaders of a proposed north Minneapolis credit union have been terminated amid allegations of fraud and mismanagement — casting doubt on whether a financial institution dedicated to economic justice will meet a deadline tied to a half-million dollars of public money.

Me'Lea Connelly and Joe Riemann, respectively the executive director and CFO for nonprofit Association for Black Economic Power (ABEP), both played integral roles in the proposed Village Financial Cooperative before being removed in August. In separate interviews Monday, they denied wrongdoing.

Connelly served as the public face for Village Financial, which was intended to promote economic empowerment in the black community. In March, she stood before Minneapolis City Council members to report they were moving through the process to become certified and nearly ready to launch.

The city pledged $500,000 to help Village Financial open, $410,000 of which is in the form of forgivable loan, if it met certain benchmarks, including opening a brick-and-mortar location by the end of this year.

Mayor Jacob Frey also announced intentions to give the organization another $500,000 in his 2020 budget proposal. That's in addition to $50,000 of city money granted in 2018 and other philanthropic donations.

"I'm going to say, at the moment, it will be very difficult" to open by the end of the year, Malcolm Wells, a board member for ABEP, said Monday.

In a statement, ABEP's board of directors said that Connelly was "terminated as a result of the Board's concerns around organizational mismanagement, misconduct in regard to the organization's finances and Credit Union application process, along with failure to meet day-to-day organizational expectations."

Those concerns also included "misrepresentations made to stakeholders, potential fraudulent activity and theft."

The statement does not mention Riemann, but Wells said both were removed due to "mismanagement of funds, overall negligence and management of the organization and staff."

"Any further details would be difficult for me to go into right now" because ABEP has filed a police report related to the allegations, Wells said.

Connelly said in an interview Monday that "there isn't any meat on it, there isn't any evidence" of what she's being accused of. She said she "drank, ate, slept and cried" for the organization "and did everything I possibly could" out of her passion for the work. She said no one in the organization came to her with these accusations.

"It's laughable at this point the desperation that this organization feels that they have to take these actions to defame me in order to legitimize what they have done," Connelly said. "This is shameful for the community, shameful for the work they have on their shoulders and shameful for the transition of leadership."

Riemann also denied the allegations in an interview.

"In my time working for the association there was no mismanagement, there was no fraudulent activity and there was no theft whatsoever," Riemann said. "All of these allegations are false and none of which have ever been brought to my attention."

The push to open Village Financial has been hailed by city leaders and community members as way to foster ownership and prosperity and reverse the effects of decades of racial disparities in the Twin Cities.

In a statement Monday, Frey said his office was continuing to meet with Village Financial during the "transition period." "As with any contract, there are agreed-upon terms that must be met before the 2019 and 2020 funding can be allocated," he said.

The Jay and Rose Phillips Family Foundation of Minnesota gave ABEP a two-year, $430,000 grant to launch Village Financial, said Patrick Troska, the foundation president who has also served on the ABEP board.

Troska said it's "yet to be determined" if any of that money was misspent, but the foundation continues to support the work. "This potentially is one bump in the road and we'll hold the people accountable that need to be held accountable and move forward," he said.

The association said that it will host a community forum Oct. 18. The association said the time and place will be announced later.