Montana AG opens inquiry into 'Three Cups' charity

[April 20, 2011]  HELENA, Mont. (AP) -- Montana's attorney general is scrutinizing the charity run by "Three Cups of Tea" co-author Greg Mortenson after reports questioned whether Mortenson benefited from money donated to build schools in Pakistan and Afghanistan.

Attorney General Steve Bullock's announcement Tuesday follows investigations by "60 Minutes" and author Jon Krakauer into inaccuracies in the book and spending by the Bozeman, Mont.-based Central Asia Institute.

Bullock oversees nonprofit corporations operating in the state. He has been in contact with attorneys for the agency, and they have pledged their full cooperation, he said in a statement to The Associated Press.

"While looking into this issue, my office will not jump to any conclusions -- but we have a responsibility to make sure charitable assets are used for their intended purposes," he said in the statement.

"Three Cups of Tea" was released in 2006 and sold more than 3 million copies. That notoriety helped Mortenson grow the Central Asia Institute by generating more than $50 million in donations, Krakauer said.

According to the charity's website, it has "successfully established over 170 schools" and helped educate over 68,000 students, with an emphasis on girls' education.

Krakauer, author of "Into the Wild," cast doubt on Mortenson's story of being lost in 1993 while mountain climbing in rural Pakistan and stumbling upon the village of Korphe, where the residents helped him recuperate and he promised to build a school. Krakauer called it a "myth."

"Mortenson has lied about the noble deeds he has done, the risks he has taken, the people he has met, the number of schools he has built," Krakauer wrote in the recently published "Three Cups of Deceit."

Krakauer reported that millions of dollars donated to the Central Asia Institute were spent on chartered jets, equipment and advertising for Mortenson's books, even though the charity doesn't receive any royalties for them. One former board member told Krakauer that Mortenson "regards CAI as his personal ATM."

Mortenson and officials with the charity did not return calls and emails for comment from the AP. Charity officials told the Bozeman Daily Chronicle on Tuesday that Mortenson was being treated at a Bozeman hospital for a heart ailment.

Anne Beyersdorfer, who was named temporary director of the Central Asia Institute, told the newspaper that doctors will repair a hole in Mortenson's aortic ventricular wall next week. She says he has low oxygen levels in his blood and has canceled appearances for two weeks.

Beyersdorfer, who described herself as a family friend, said Mortenson plans to set the record straight.

Bullock spokesman Kevin O'Brien said the attorney general's inquiry has not reached the level of a full-scale investigation and it was not immediately clear exactly what Bullock was seeking.

"Those are the things that are going to have to come out in the coming days," O'Brien said.

Tax information filed with the Internal Revenue Service for the fiscal year ending Sept. 30, 2009, the most recent available, put the charity's expenses at $9.7 million. Of that, $3.9 million -- about 41 percent -- was spent on building materials, teacher salaries, scholarships and other expenses related to school building.

A larger amount, $4.6 million, was spent on what was described in the tax documents as "domestic outreach and education" and "lectures and guest appearances across the United States." Mortenson, who is the Central Asia Institute's executive director and a board member, received $180,747 in compensation that year.

More than $1.5 million of the charity's expenses went to advertising and marketing Mortenson's books.

In a recent interview with Outside magazine, Mortenson said he had done nothing wrong and that much of that money goes toward educating people in the U.S. about the need for the schools.

"Our education mission includes both educating young people in Pakistan and Afghanistan -- especially girls -- and educating the American public about how promoting education in these countries contributes to peace," he told the magazine.

But, Mortenson added, the Central Asia Institute's law firm produced an internal memo that he might be found in violation of IRS regulations regarding excess benefits if the Central Asia Institute were audited.

Mortenson hired an outside law firm in January to conduct an independent analysis of the charity. The firm concluded he had done nothing wrong, but recommended there be specific changes to separate Mortenson in some respects from the charity, he said.

Mortenson said he has been paying for all of his own travel since January, and the charter flights allowed him to pack more speaking engagements in.

[Associated Press; By MATT VOLZ]

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