A Blaine-based nonprofit that staffed workers at several Twin Cities professional and collegiate sports venues must shut down as part of an agreement reached with Minnesota Attorney General Keith Ellison's Office.
Ellison says MN Fundraising Initiative fraudulently claimed to be a charity but instead acted as a staffing agency which paid so-called grants to provide cheap labor.
Charities can’t do an end-run around employment law by abusing their nonprofit status to save on labor costs. Workers who are misclassified do not receive some of the most basic protections under the law, and that loss of protections hurts us all,” Attorney General Ellison said.
The group classified workers as volunteers, even though they worked alongside paid, unionized employees.
MNFI collected more than $1.1 million in grants to benefit former and current board members with one board member collecting more than $237,000 in “grants."
“MNFI was a sham charity that took advantage of parents who wanted to afford their children’s activities by luring them into ‘volunteering’ their labor in exchange for future ‘grants,’ which is a clear violation of Minnesota law," Elllison continues. "MNFI and the for-profit operators it contracted with also suppressed the wages and opportunities of legitimate, unionized employees at the venues they staffed, robbed volunteers of basic worker protections, and passed on those costs to taxpayers. I’m pleased MNFI has discontinued its operations, and I hope that this outcome sends a strong, clear message to any other charities running this kind of scam that it is illegal and my office will not tolerate it.”
Under the terms of the settlement, MNFI must wind up any remaining affairs and dissolve. Until its dissolution, MNFI must also provide the Attorney General's Office with regular updates, including but not limited to updates regarding the status of claims made against the organization for payments owed for work performed at concession stands.
MNFI has voted to file for Chapter 7 bankruptcy.
