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Attorney General Ellison reaches settlement with sham nonprofit and its founder over violations of the Minnesota Nonprofit Corporation Act
Previously, Attorney General Ellison sued nonprofit founder and landlord Steven Meldahl for living conditions at his properties that a judge compared to a “biblical plague”
January 28, 2025 (SAINT PAUL) – Minnesota Attorney General Keith Ellison announced today that he has reached a settlement with Minnesota nonprofit SJM Properties (“SJM”) and its founder and President, Steven Meldahl, alleging Meldahl ran a sham nonprofit and violated numerous other governance requirements under Minnesota charities laws. The settlement, also known as an Assurance of Discontinuance, requires that SJM be formally dissolved and prohibits Meldahl from serving as a director, officer or employee of a nonprofit and engaging in any activity that results in Meldahl having control or responsibility over any property held for a charitable purpose.
“The evidence surrounding this investigation—including my prior action against Meldahl as a landlord, his criminal prosecution, and my independent investigation—all prove that SJM is a complete sham created to further Meldahl’s private gain,” Attorney General Ellison said. “Shutting it down is the right thing to do. My Office will continue working to hold people accountable when they break the law and use charities or charitable assets to enrich themselves.”
SJM was founded in in 2008 by Meldahl with the charitable mission to “provide clean, safe, remodeled and affordable housing for low to moderate income families” and “prevent community deterioration by purchasing and remodeling substandard housing in inner city areas of Minnesota.”
On August 20, 2023, Meldahl was charged with several counts of tax evasion and fraud in Hennepin County, which alleged that Meldahl used SJM’s sales tax exemption certificates to avoid paying sales tax at several retail stores. The Charities Division launched an independent investigation under Minnesota’s civil nonprofit corporation laws. The investigation revealed grounds to dissolve the organization as a sham. Further, in his May 2024 plea agreement, Meldahl admitted to using SJM as a ruse to avoid paying state sales tax for his rental property business. As part of his plea agreement, Meldahl agreed to cooperate with the AGO in the formal dissolution of SJM.
Attorney General Ellison had previously sued Meldahl in October 2019 for violating tenants’ rights. In that lawsuit, the court ruled that Meldahl knowingly and in bad faith violated the rights of 267 low-income families who rented from him. Specifically, Meldahl charged tenants more than 8% in late fees and prevented them from having their homes inspected by the City of Minneapolis. The court found that Meldahl engaged in “brazen and deplorable illegal business conduct harming a vulnerable part of Minnesota’s population” and that issues with the living conditions in some of his properties were of “biblical plague proportions.” Meldahl was also ordered to reimburse the AGO $1 million in legal fees.
In Minnesota, the Attorney General through the Charities Division has civil enforcement authority over the state’s nonprofit corporation and charitable-solicitation, and charitable-trust laws. The Charities Division does not enforce criminal laws. Under state law, nonprofit executives owe fiduciary duties to act in the best interests of the charities that they serve, including putting the interests of the nonprofit above any personal financial interests.
Minnesotans with concerns about governance or other issues of a nonprofit may submit a complaint on the Attorney General’s website. Minnesota consumers may also contact the Attorney General’s Office by calling (651) 296-3353 (Metro area), (800) 657-3787 (Greater Minnesota), or (800) 627-3529 (Minnesota Relay).