Commerce Department defends agency's handling of Community Action of Minneapolis

Embattled Commerce Department Commissioner Mike Rothman said Friday that his agency's response to allegations of overspending by a Minneapolis nonprofit charged with helping low-income residents was adequate.

MPR News reported Thursday that Rothman failed to curb problematic spending by Community Action of Minneapolis despite years of warning signs. That news caused some Republicans — including the incoming House speaker — to say that, if the allegations are true, Rothman should resign his post.

The nonprofit agency operated until August, when the Star Tribune made public a separate investigation by the Department of Human Services that found Community Action had misspent more than $800,000 in taxpayer money. Some of that was spent on celebrity cruises, alcohol and a personal loan for its chief executive, Bill Davis.

Rothman did acknowledge that department officials had considered the political ramifications of suspending or severing ties with Community Action because of Davis' powerful political ties with DFL lawmakers and because of his prominent standing within the African-American community.

Community Action, Rothman said, "had been a longtime institution in Minneapolis delivering low-income services to Minneapolis residents. … It did have public members on its board and in all that we did in looking at our steps, and looking what to do with [CAM], we took all of those things into consideration. Those were the things that were on my mind when we were looking at these things from the beginning." Among those on the board were U.S. Rep. Keith Ellison and state Sen. Jeff Hayden. All three have resigned in the wake of the scandal.

In a Friday interview, Rothman defended his agency by saying that it immediately imposed a corrective action plan on Community Action after a 2012 audit found the nonprofit had doled out excess state dollars for its energy-assistance program.

"They were giving too many dollars to residents," Rothman said. "We stopped that spending immediately. We recovered funds. We also worked out an arrangement for Community Action of Minneapolis to pay back what they could of the overspent dollars."

The Commerce Department did not suspend or terminate the contract because it wanted to avoid disrupting critical services to low-income residents, a spokeswoman for the agency said.

On Thursday Rothman said he was requesting that Legislative Auditor James Nobles do a comprehensive review of energy and weatherization-assistance programs that would include an examination of the program's administration and management. Nobles said in October that he planned to conduct an audit of all Community Action agencies, and the handling of the agencies by the state Commerce and Human Services departments.

Gov. Mark Dayton said he supports an independent audit.

Dayton said in a statement Friday that "Commissioner Rothman's work thus far has been commendable. He followed the correct procedure to request an independent and professional audit to look into the allegations that have been made. I am withholding judgment until the facts have been determined and disclosed."

Some lawmakers are considering calling a hearing to further investigate the matter.

Incoming House Speaker Kurt Daudt, R-Crown, said of Rothman that "if the allegations are true … he should step down."

Ricardo Lopez • 651-925-5044