St. Cloud refugee nonprofit under scrutiny for not following charity laws

ST. CLOUD – Minnesota Attorney General Keith Ellison is accusing a nonprofit that supports refugee and immigrant communities of falling short of state charity laws and its own bylaws.

Ellison on Friday announced a settlement with the St. Cloud-based Central Minnesota Community Empowerment Organization that requires the nonprofit to come into compliance with several conditions.

Incorporated in 2015, the nonprofit has received more than $1.4 million in contributions and grants as of 2022 to support after-school programming, job training, advocacy, housing support and business development.

An investigation by Ellison’s office uncovered several governance deficiencies at the organization, including conflicts of interest with contractors.

In the settlement, the nonprofit neither admits nor denies the allegations but agrees to follow several voluntary efforts to improve compliance.

“CMCEO was asked to modify or implement certain operating procedures [and] has done so willingly,” a spokesperson for the organization’s board said in a statement Friday. “Independent of the this inquiry, CMCEO retained an outside accounting firm to perform a financial audit, which allowed CMCEO to ensure that we are operating as efficiently and transparently as possible.”

Nonprofit leadership includes Jama Alimad, a Somali elder and community leader who helped found the organization, as well as Shirwa Adan and Mohamed Goni. The chair of the board is Ronald Pagnucco, a retired professor of peace studies at College of St. Benedict-St. John’s University who helped found the nonprofit.

The investigation determined the nonprofit entered into “conflicted transactions with Alimad, Adan and Alimad’s family members without formal board scrutiny or approval of the transactions” and found “several additional deficiencies” in the organization’s governance, including not maintaining records of board meetings, failing to identify a treasurer and not following the organization’s policy that a second signatory is required for checks over $1,000.

The settlement orders the nonprofit to cease paying certain individuals as independent contractors. It also mandates that the nonprofit ensure board approval of all officer and director compensation, as well as any contracts that present a conflict of interest with officers, directors or their family members. The nonprofit must provide a report to Ellison’s office in a year.

“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,” Ellison said in a news release. “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.”