Best-selling author Mortenson must pay back $1 million

Greg Mortenson and board members step down as Montana attorney general finds they failed to fulfill their responsibilities to the charity

Last spring, 60 Minutes investigated humanitarian and best-selling author Greg Mortenson for mismanaging and personally benefiting from the funds of his charity, the Central Asia Institute (CAI), which builds schools in remote villages of Afghanistan and Pakistan. The story (below) also questioned the accuracy of some of the most dramatic tales in Mortenson's book, "Three Cups of Tea," which has helped him raise millions for his charity and attain a cult-like status on the lucrative lecture circuit. Just days following the 60 Minutes broadcast, Montana Attorney General Steve Bullock launched an investigation into Mortenson's financial conduct.

The findings of that investigation, released today, conclude that Mortenson had failed to reimburse his organization for more than $1 million in travel and book-related expenses going back several years. The attorney general said that Mortenson "had significant lapses in judgment resulting in money donated to CAI being spent on personal items such as charter flights for family vacations, clothing and internet downloads."

According to the attorney general, Mortenson has resigned as executive director of the charity, and all its board members will step down within a year. Under the terms of a settlement with the Montana attorney general's office, Mortenson is still allowed to remain an employee of the charity, but he is prohibited from holding any positions involving financial oversight.

Greg Mortenson 14:27

Mortenson has also agreed to pay more than $1 million "in restitution" to his charity. He will get credit for $420,000 in checks he wrote to the charity a few days after 60 Minutes correspondent Steve Kroft showed up at one of Mortenson's book-signings asking questions. In a statement to 60 Minutes at the time, CAI had said that "Greg has personally donated hundreds of thousands of dollars to the organization," but Mortenson testified under oath that he had, in fact, written the checks days before the 60 Minutes story aired as "payments for amounts he owed." Prior to that time, the attorney general's report says, Mortenson had not reimbursed the organization for things like the royalties he earned on the $3.96 million in books that his charity had purchased.

"The findings of the attorney general make it clear that there was a significant problem here and that the donors' trust was being betrayed," says 60 Minutes producer Andy Court, whose team conducted over 100 interviews in eight different languages on two continents for their investigation of Mortenson.

The Montana attorney general did not look into another aspect of the 60 Minutes report regarding the accuracy of the stories told in Mortenson's books "Three Cups of Tea" and "Stones Into Schools." Mortenson and his publisher, Penguin Books, are being sued for fraud by people who purchased those titles.

The Montana attorney general's report portrays Mortenson as a "complicated person" whose behavior jeopardized his noble pursuits. According to the report, CAI paid for Mortenson's travel expenses for his paid speaking engagements and the promotion his book "Three Cups of Tea," while he personally pocketed travel reimbursements from event sponsors and speaking fees of up to $30,000 per engagement.

Within a year, CAI will hire a new executive director and install at least seven new board members. Montana Attorney General Steve Bullock says his office will monitor the organization to make sure it complies with the agreement. In his report, Bullock says, "Despite the severity of their errors, CAI is worth saving. Its pursuit remains admirable, and it still has significant assets to advance its cause and fulfill the donors' intent."

At press time, CAI declined to comment to 60 Minutes. But in a statement attached to the attorney general's report, CAI says it had exercised its "best business judgment" and was involved in a good faith effort to address problems that arose as the organization grew exponentially. The attorney general's office report says CAI cooperated fully with the investigation.

Since the 60 Minutes report aired, says producer Andy Court, "we've heard from people in the non-profit world, saying that after this, they started scrutinizing their own practices to make sure they were living up to their donors' trust. And that's how it should be."