- Associated Press - Friday, March 6, 2015

ST. PAUL, Minn. (AP) - The FBI and the IRS are investigating a social services group that was shut down last fall after a state audit found its CEO spent hundreds of thousands of dollars of taxpayer money on trips and other perks.

Minnesota Public Radio News reported Friday (http://bit.ly/1ExxudC ) that the federal investigation into Community Action of Minneapolis was revealed in documents filed in Ramsey County District Court. The documents were filed by court-appointed receiver Michael Knight, who is going through Community Action’s books.

“There are ongoing investigations by the FBI, the IRS and the DOC (Minnesota Department of Commerce) that are draining time and resources from what’s left of CAM (Community Action of Minneapolis),” Knight wrote.

The scope of the federal investigation wasn’t clear in the documents.

Community Action’s former chief executive, Bill Davis, told MPR he wasn’t aware of an investigation and he did nothing wrong. According to Knight’s report, Davis is planning to seek “deferred compensation” and possibly vacation pay he believes he’s owed.

“The receiver does not expect to recommend payment of said claim,” the report said.

The court documents obtained by MPR show Knight met with an FBI investigator, and a bill from the Minneapolis-based law firm Winthrop & Weinstine, which Knight hired to represent him as he conducts his review, noted the firm was “reviewing e-mails regarding FBI warrant.”

The state shut down Community Action of Minneapolis, which had provided energy assistance and career counseling to low-income people, in September after finding Davis spent hundreds of thousands of dollars in taxpayer money on trips to the Bahamas and Palm Beach, spa treatments and other perks. The Department of Human Services audit found $226,679 in “unallowable” expenses.

The audit also found Community Action overcharged state and federal grant programs for more than $600,000 of administrative costs.

Knight wrote that former employees and board members have raised other allegations that “are deemed worth of additional investigation.”

Among them, Community Action allegedly paid the personal credit card bills of friends of senior managers, close friends of senior managers were paid as contractors without substantiating their work, and senior management used nonprofit funds to pay medical bills and personal expenses of friends who weren’t Community Action employees.


Information from: Minnesota Public Radio News, http://www.mprnews.org



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