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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).

Thursday, January 23, 2025

Contact: (916) 210-6000, agpressoffice@doj.ca.gov

OAKLAND – California Attorney General Rob Bonta today announced a nearly $1.2 million settlement against the Valley Rock Foundation, formerly, Edward A. Keith Foundation, and its directors Celeste White and Dr. Robert White (Whites). The settlement resolves allegations that the directors engaged in self-dealing transactions, unjust enrichment, and breach of fiduciary duty for improper personal benefits from the Foundation’s charitable assets. The Whites do not admit liability in the settlement agreement.   

“At the California of Justice, we are unwavering in our commitment to safeguarding the integrity of charitable organizations and will hold any individual or entity accountable that misuses charity funds for personal enrichment,” said Attorney General Bonta. “This settlement sends a clear message: Those who abuse their positions and exploit charitable resources for personal gain will be held fully responsible for their wrongdoings.”  

The settlement resolves concerns that the Whites breached their fiduciary obligation to act in the best interest of their charitable organization. An investigation by the Attorney General’s Office revealed that the Whites made improvements to their personal real property (Barn), and to their condominium in Lake Tahoe, Nevada, using charitable assets. The investigation also showed that the defendants allegedly formed Veritas Refuge to acquire and manage the real estate assets of the Foundation. The expenses of the Veritas Refuge, however, do not appear on the Foundation’s IRS Form 990-PFs, resulting in a lack of transparency to our office and the public.

Under the terms of the settlement, the Whites must adhere to the following: 

• The Foundation will be required to dissolve, and any assets left after the payment of fees and expenses will be distributed to Westmont College, the named beneficiary of the Foundation upon dissolution.
• One of the Whites will resign as a director of the Foundation, and the President of Westmont College will be appointed to the board as an independent director. 
• The Foundation will make a set of final grants totaling $10 million towards the opening of a community-use area in Yountville, the rehabilitation and development of two churches in the Napa area, and the renovation of campus facility buildings at Westmont College in Santa Barbara, California. 
• The Foundation will contribute $997,571 to ImpactAssets, Inc. This amount is to resolve flood damage claims related to the Whites’ Lake Tahoe property and fire damage claims at the Barn that led to a loss of use of charitable assets for their intended charitable purpose. The payments are restricted to specifically benefit residents of California. 
• Pay the California Department of Justice $150,000 in attorneys’ fees, investigatory costs, and settlement of claims. 

A copy of the settlement can be found here.  

From 28-30 October, charity regulators from eight nations gathered in the UK for a three-day meeting.

From: The Charity Commission

Published 4 November 2024

Representatives and Heads of Regulators from Australia, Canada, England and Wales, Ireland, Northern Ireland, Scotland, Singapore, in addition to an observing invitee from the United States, met to discuss matters of mutual interest and concern.

Regulators recognised the world is currently dealing with substantial challenges including evolving social environments with changing patterns of volunteering, climate change and more natural disasters, cost of living pressures driving higher demand for services and costs of running organisations, and the need to support populations through conflict not seen for a generation. 

Regulators affirmed that given this current global context, the work of charities and not-for-profit organisations has never been more important. Charities and not-for-profit organisations have a long history of enabling society to adapt, improving the lives of millions globally, and supporting and enabling cohesion where there has been division. Working across sectors to find solutions to the world’s most challenging problems, they are fundamental to world class research, scientific endeavour and policy change that enables health, environmental and animal welfare issues to be advanced.  

Regulators shared examples of how effective, expert regulation plays a fundamental part in allowing charities to thrive and allows the public to have trust and confidence in the work of charities. Our organisations each contribute to supporting and ensuring strong governance in charities, so that they deliver their charitable purpose for the benefit of all. Regulators have been delighted to advance our shared objectives at this meeting through the exchange of knowledge and best practice. 

The meeting covered four key themes: 

Charity registration and charitable status

Registration is the start of the journey for new charities and trustees, and at the core of each of our roles is making efficient, effective decisions to ensure genuine applicants can begin delivering their charitable purpose.  

Regulators: 

• shared improvements to our respective processes for registration, acknowledging the constraints inherent in applying a legal test.  
• gained valuable insights from other jurisdictions approaches to improve the quality of applications from prospective charities 
• shared plans to digitise and improve registration services within jurisdictions 
• shared trends and case studies on those seeking to abuse charity status but were prevented from doing so 
• agreed, subject to national jurisdictions laws and restrictions, to improve data sharing to prevent cross border abuse of charity status via the registration process 
• agreed to explore how to enable simpler but robust registration services for those who work across borders 

Digital, technology and data

Regulators are at different stages in their journeys of delivering new digital technologies, with a particular focus across each jurisdiction on using online services to enhance relationships with charity trustees, ensuring we provide charities with the best guidance and tools, as well as driving regulatory efficiency. Regulators discussed experiences in delivering recent innovations, and how charities in their jurisdiction responded, to inform each of our future plans. 

Regulators: 

• agreed to share digital and technology plans to enable better cross jurisdiction co-operation and experience for charities and the public 
• agreed, subject to national laws and regulations, to share emerging trends, issues, impacts of technology on charities, charity regulation and policies to enable the benefits of technology to be exploited whilst mitigating risks and unintended consequences. 

Communication, education and public trust

Regulators identified many commonalities in our approaches to using social media, events and guidance to secure greater engagement with charities, particularly those who are traditionally harder to reach or might have less knowledge.  

Regulators:

• identified several approaches that have been successfully applied in individual nations and have taken away from the meeting ideas as to how these could potentially be translated into new national initiatives.  
• welcomed the contribution such work programmes make in delivering our core remit to build public trust and confidence in charity, and in our own effectiveness. 

Compliance

Regulators reviewed global trends in charity non-compliance, and how these have been addressed through use of regulatory powers. Discussion of recent domestic cases with international significance, allowed identification of issues in common, that might damage the vast majority of genuine, compliant charities.  

With many charities and voluntary organisations working extensively across international borders, Regulators:  

• affirmed that, subject to national laws and regulations, we will continually share appropriate insight so we can each effectively tackle such risks, acting within our legislative frameworks. 
• affirmed, we each have a central role to play in supporting compliance with The Financial Action Task Force (FATF) standards, to ensure the substantial amount of money that flows across borders to facilitate the vital work of the sector is safe and secure and charities may continue to deliver vital services to the world’s most vulnerable. 

The group will be hosted by a different member when they next reconvene in the spring of 2026. Until then, Regulators will continue their online quarterly meetings to build on these positive discussions to ensure lessons continue to be shared and the international community of charity Regulators remains united. 

Delegate List 

• David Holdsworth – Chief Executive, England & Wales
• Orlando Fraser KC – Chair, England & Wales
• Paul Latham – Director of Communications & Policy, England & Wales
• Sue Woodward AM – Commissioner, Australia
• Natasha Sekulic – Assistant Commissioner – General Counsel, Australia
• Sharmila Khare – Director General, Charities Directorate, Canada
• Madeleine Delaney – Chief Executive, Ireland
• Geraldine McCarthy – Head of Communications, Ireland
• Frances McCandless – Chief Executive, Northern Ireland
• Punam McGookin – Head of Charity Services, Northern Ireland
• Martin Tyson – Head of Regulation and Improvement, Scotland
• Desmond Chin – Commissioner of Charities, Singapore
• Izyana Baharom – Assistant Director, Singapore
• Observer: Beth Short – President of the National Association of State Charity Officials, United States

Joint communique from International Charity Regulator leaders – GOV.UK

FOR IMMEDIATE RELEASE:

Nov 13 2024

The Noble Foundation founder Ophelia Noble must sell and pay proceeds from house and car she purchased with charities’ money

VANCOUVER — A Clark County Superior Court judge has approved a judgment of more than $1.4 million against former directors of three Vancouver-area charities as a result of Attorney General Bob Ferguson’s lawsuit. Founder Ophelia Noble and the former directors of The Noble Foundation misused charitable funds that were meant to serve communities of color and low-income individuals in southwest Washington.

The foundation and its charities almost exclusively raised money from state grants and major philanthropic organizations.

Noble failed to account for more than $1 million of the foundation’s charitable funds in violation of Washington’s Nonprofit Corporation Act. Examples of Noble’s misuse of charitable funds include paying herself hundreds of thousands of dollars, using charity money to buy a vehicle for her personal use, and directing The Noble Foundation to buy her father’s house and reselling it to her at a deep discount. The other directors — Douglas Noble (Noble’s father), Alice Prejean (Noble’s mother), Joann Hampton and Alyce Noble (Noble’s daughter) — violated their own responsibilities to the organization by enabling Noble’s misconduct, approving and at times financially benefiting from it.

The order requires Noble and the other directors to jointly pay $25,000 for misusing the charitable funds. Noble must sell the house and car she unlawfully purchased with the charitable funds and repay the proceeds — a combined value of approximately $400,000. Those resources will cover part of the cost of the Attorney General’s investigation and lawsuit. They will be used toward future enforcement of laws protecting charitable assets.

Noble is also banned for life from operating or managing a charity in Washington. The other directors are banned from charity management in Washington for the next 10 years. The remaining $1 million in civil penalties are suspended as long as Noble and the other directors follow the law and comply with the terms of the judgment. If they do not, they will be required to pay the $1 million, plus interest.

“Ophelia Noble and the charities’ directors failed the communities they were supposed to serve,” Ferguson said. “My office will continue to be a watchdog ensuring that charities follow the law.”

Assistant Attorneys General Rose Duffy, Robby Staley and Joshua Studor; Paralegals Savannah Krug, Kristina Winfield, Lauretta Dunn, Mary Barber and Ashley Totten; Legal Assistants Nathan Pinard and Avery Gault; and Investigators Bau Vang, Michelle Bigos-Taylor and Rebecca Hartsock handled the case for Washington.

Ophelia Noble, family benefited from nearly $1 million in misused funds

Ophelia Noble started The Noble Foundation in 2012 to serve communities of color in Vancouver, Kelso and Longview.

In 2019, the charity expanded rapidly, securing hundreds of thousands of dollars from the Washington State Office of Financial Management as part of a state effort to encourage members of undercounted Black, Indigenous and People of Color (BIPOC) communities to register for the 2020 Census.

The foundation continued to grow when the pandemic hit. Its directors created and managed a second charity, Our Place/Nuestra Casa Multicultural Center. Our Place established community centers and provided emergency rent assistance, vaccine outreach and other pandemic relief services.

With increased attention around racial justice and policing issues, the charities’ directors created a third charity, Southwest Washington Communities United for Change. Southwest purportedly focused on organizing protests and trying to increase participation and political representation for BIPOC communities in Clark and Cowlitz counties. It brought in several hundred thousand dollars from grantors interested in establishing a BIPOC-led political organization serving southwest Washington.

The charities received approximately $1.5 million from major philanthropic foundations, including the Northwest Health Foundation, Social Justice Fund Northwest, the Satterberg Foundation, the Community Foundation for Southwest Washington, Group Health/Inatai Foundation and the Seattle Foundation.

Beginning in 2019, Noble used her position as executive director to misappropriate large sums of donated charitable funds from the charities’ accounts.

The Attorney General’s investigation revealed that Noble and her family received direct, documented payments or benefits of nearly $1 million. Some examples:

• In July 2021, Noble caused the charities to pay her $355,000 in “back pay” for “contract services” purportedly provided between 2015 and 2021. There is no documentation that any lawful contracts existed, any money was owed, or that these payments were approved by the entities’ boards.
• The charities paid Noble’s consulting company $310,000 for unspecified “executive director services” that were never approved by the entities’ boards.
• $200,000 was either withdrawn from the various charities’ bank accounts without explanation or issued to unknown individuals in the form of cashier’s checks. Only Noble and the directors were authorized signers on these accounts.
• In 2020, Noble directed The Noble Foundation to purchase her father’s house for approximately $200,000, but she put her name on the deed as well as the charity’s. The following year, she paid the charity $100,000 for its interest in the home. When the charity transferred title to Noble in 2022, the house was worth at least $324,000, meaning Noble gained $224,000 in equity. There is no evidence the charity’s board appropriately reviewed and approved these transactions, which were clearly a conflict of interest for Noble.
• In 2020, Noble used The Noble Foundation’s money to purchase a 2019 Nissan Armada, which she used as her personal vehicle. She used the charity’s funds to make upgrades to the vehicle and cover maintenance and gas.
• Noble, her family and other directors used the charities’ money to fund over $65,000 in additional purchases that lack a clear connection to the entities’ charitable purposes, including for gift cards, meals, groceries, gas, travel, cellphones and personal clothing.

Other charity lawsuits

The Legislature identified the Attorney General’s Office as the agency tasked with enforcing the Nonprofit Corporation, Charitable Solicitations and Charitable Trust Acts. These laws ensure that nonprofits and entities that solicit charitable donations or manage charitable assets follow the laws adopted by the Legislature. These laws ensure that funds intended for charity are not misused.

The Attorney General’s Office’s Charitable Assets Protection Team specifically focuses on charity cases involving the misuse or misappropriation of funds solicited for a charitable purpose.

Other enforcement actions include:

• A $300,000 judgment against a family that operated a group of sham charities purporting to help cancer patients and vulnerable children but used the donations to enrich themselves.
• A $1 million judgment against charities that claimed to help veterans over what a judge ruled was “deceptive” and “abusive” conduct.
• A million dollars recovered for a veterans’ nonprofit after its leadership failed to pay wages to its veteran employees. The director used charity funds for her own personal expenses, including gambling at casinos. As a result of the Attorney General’s case, the executive director and board members were removed from the nonprofit and barred from working for any Washington nonprofits in the future.
• A $495,000 judgment against two companies that made more than one million robocalls in Washington state for scam charities. The $495,000 payment went to legitimate charities.

Visit ftc.gov/charities for more information on how to avoid charity scams. Consumers who believe they have been affected by a charity’s deceptive conduct may file a complaint with the Attorney General’s Office at https://www.atg.wa.gov/file-complaint.

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Washington’s Attorney General serves the people and the state of Washington. As the state’s largest law firm, the Attorney General’s Office provides legal representation to every state agency, board, and commission in Washington. Additionally, the Office serves the people directly by enforcing consumer protection, civil rights, and environmental protection laws. The Office also prosecutes elder abuse, Medicaid fraud, and handles sexually violent predator cases in 38 of Washington’s 39 counties. Visit www.atg.wa.gov to learn more.

Media Contact:

Brionna Aho, Communications Director, (360) 753-2727; Brionna.aho@atg.wa.gov

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NASCO released its annual report on October 8th, 2024, at the NASCO conference in Baltimore.