Settlement Reached Over Misuse of Charitable Assets by Brainerd Nonprofit Founder

Minnesota Attorney General Keith Ellison announced a settlement with Northern Lakes Rescue, a Brainerd-based nonprofit, following allegations of misuse of charitable assets by its founder, Shannon Steele. The settlement comes after an investigation revealed that Steele diverted approximately $156,000 from the organization for personal expenses, violating state charity laws.

Key Takeaways

Settlement Details: The Assurance of Discontinuance prohibits Steele from any future involvement with the nonprofit.
Financial Mismanagement: Steele misused funds for personal items, including Jet Ski rentals and credit card payments.
Future Oversight: Northern Lakes Rescue must implement stricter financial governance and conduct an internal audit.

Background of Northern Lakes Rescue

Founded in 2017, Northern Lakes Rescue aimed to rescue, rehabilitate, and rehome animals in crisis. However, the organization faced serious allegations when Steele, the founder and former president, was found to have mismanaged its funds.

Investigation Findings

The investigation by the Charities Division of the Minnesota Attorney General’s Office uncovered several key issues:

Misuse of Funds: Steele spent nonprofit funds on personal expenses, including:
- Jet Ski rentals
- Credit card payments
- Car insurance
- Cash withdrawals
Lack of Oversight: The board of directors failed to provide adequate governance, allowing Steele to misuse funds without accountability.

Settlement Terms

The Assurance of Discontinuance includes several requirements for Northern Lakes Rescue:

Conduct an internal audit of finances from 2021 to present.
Maintain accurate financial records and ensure board visibility into all accounts.
Provide training for all officers and directors on their fiduciary duties.
Comply with requests from the Attorney General’s Office for documentation.

Legal Implications for Steele

While the settlement addresses civil violations, it does not shield Steele from potential criminal charges. In 2023, Steele was charged with tax evasion, facing multiple felony counts for filing false tax returns and failing to pay income tax. The allegations state that she withdrew thousands from the nonprofit for personal use, failing to report this income.

Previous Legal Issues

Steele has a history of financial misconduct, including:

2017 Charges: Faced felony charges for theft and fraud while working as a bookkeeper at a private business, resulting in a guilty plea and probation.
Current Charges: A jury trial for tax evasion is scheduled for January 28, 2024.

Conclusion

The settlement with Northern Lakes Rescue highlights the importance of accountability and oversight in nonprofit organizations. Attorney General Ellison emphasized that donors expect their contributions to be used for charitable purposes, and the misuse of funds undermines public trust. Moving forward, Northern Lakes Rescue must adhere to stricter governance to restore its integrity and mission.