FRAUD

04.05.12

Greg Mortenson To Repay Charity $1 Million for ‘Three Cups of Tea’ Fraud

The author of the hugely popular but now discredited memoir settled with the Montana attorney general and must pay his former charity $1 million. Things could have been worse, writes Josh Dzieza. 


Greg Mortenson’s career is in tatters, his reputation as a memoirist and humanitarian destroyed by the one-two punch of a 60 Minutes expose and author Jon Krakauer’s investigation. He’s resigned from the charity he founded, and has multiple lawsuits against him. Still, things could’ve been worse. The most significant legal action facing Mortenson, an investigation by the Montana attorney general into his charity, the Central Asia Institute, ended in a settlement announced at a press conference Thursday afternoon. 

Mortenson will have to pay “restitution” to CAI of at least $1 million—though it will likely end up being more than that. He’s already resigned from the charity’s board, and the two other members will have to resign within a year, to be replaced by a new board of seven members. As part of the settlement, neither Mortenson nor CAI have to admit wrongdoing or pay restitution to donors.

Krakauer, who attended the press conference in Helena, expressed disappointment in the settlement, asking the attorney general, Steve Bullock, why the investigation didn’t address how CAI spent donors’ money overseas. Both he and 60 Minutes have said that as many as half the schools CAI claimed to have built in Pakistan and Afghanistan now stand empty.

“My investigation shows there’s a lot of embezzling going on by the overseas staff,” Krakauer said. “What can you do other than taking CAI at their word that they’ve mended their ways?” 

Bullock said that CAI’s overseas accounting was so poor that it was difficult to assess, and that it wasn’t feasible for his office to conduct an on-the-ground investigation. Bullock said that they’d put checks in place, including oversight by his office, to ensure that CAI accounted better for overseas expenditures in the future. 

Mortenson’s downfall began when CBS and Krakauer simultaneously poked a series of major holes in Mortenson’s memoir, Three Cups of Tea. Mortenson wrote that he stumbled upon the small village of Korphe after a failed attempt at climbing K2, that the villagers nursed him back to health with multiple cups of tea, and that he returned the favor by building a school for the village. In a further dramatic detail, he claimed he was captured and held for eight days by the Taliban.

 But evidence that Krakauer and CBS uncovered suggested that Mortenson’s descent from K2 went smoothly, that he didn’t visit Korphe until a year after his expedition, and that his “Taliban captors” were actually his hosts and protectors. 



While the attorney general’s investigation was triggered largely by the revelation of these falsehoods, which prompted public outrage and a media firestorm, Bullock on Thursday made clear that he was concerned solely with another part of the Mortenson story: the management of his charity.

“We were not reviewing truthfulness of claims made by Mortensen in his books,” Bullock said while describing the year-long investigation. Mortenson lives in Montana and the charity is based there.

According to the attorney general’s report, which confirmed the reporting of Krakauer and CBS, CAI spent about $2.98 million buying copies of Three Cups of Tea for libraries, schools, and other organizations, and the royalties went back to Mortenson. CAI also spent about $4.93 million advertising Mortenson’s books.

As Mortenson’s books grew in popularity, he grew in popularity as a speaker, flying around the world for increasingly lucrative speaking engagements. CAI footed the bill for these trips, which might not have been a problem except that the places Mortenson was speaking were often footing the bill as well. Mortenson also charged CAI for things such as clothing, iTunes purchases, and personal vacations. 



‘At the end of the day I don’t think a million dollars is a slap on the wrist. It’s real money.’

Mortenson will repay CAI for all of these expenses, although CAI’s messy accounting makes it hard to say exactly how much it’s all worth. Furthermore, CAI argues that some of the expenditures were in fact justified because they helped promote CAI’s mission. The Attorney General and CAI settled on restitution of $980,000, plus an amount to be determined after audits of the organization from 2006 to 2009 are complete. Mortenson has already voluntarily repaid CAI $420,000. 



Asked by a reporter how he would respond to critics who say the settlement is too light, Bullock said his office did what they thought was best for the charity, which he said “can still do good,” and for the public. “And at the end of the day I don’t think a million dollars is a slap on the wrist. It’s real money.”