Embattled north Minneapolis landlord charged with five counts of tax evasion

Embattled north Minneapolis landlord Steven Meldahl is charged with five felony counts of tax evasion in Hennepin County District Court.

Charges filed Thursday accuse Meldahl, 73, of evading an estimated $29,700 in sales tax at Menards, Home Depot and Best Buy by claiming that his business was a nonprofit. It's the latest legal action taken against Meldahl since last year, when he was ordered to pay more than $1 million in legal fees associated with a lawsuit filed by the Minnesota Attorney General for violating tenants' rights.

Meldahl's first court appearance is Aug. 29. An attorney is not listed for him, and Meldahl did not immediately return calls seeking comment Thursday, nor did his former attorney.

He is charged with three counts of failing to pay sales tax and two counts of filing fraudulent sales tax exemption certificates.

According to the criminal complaint, Meldahl claimed his S.M.J. Properties Inc. was either a "low income/sober home provider," a "non-profit organization" or "charitable organization" on certificates he signed with the three big box stores in order to be exempt from paying sales tax on some items.

Nonprofit organizations may receive special sales tax exemptions on some purchased items if they apply and are approved, according to the Minnesota Department of Revenue (MDOR). Once approved, the person receives a card to present at checkout for the cashier to scan so items will ring up as tax-exempt.

The Attorney General's office found that, as long ago as 2009, Meldahl presented false sales tax exemption certifications. A tax specialist at MDOR subpoenaed transaction records and found that, from August 2015 to December 2020, Meldahl evaded an estimated $29,647 in sales tax at the three stores, including 634 transactions at Menards, 291 transactions at Home Depot and 75 at Best Buy.

Meldahl registered the similarly named SMJ Properties as a nonprofit in 2008 with the same address as his for-profit business and named himself president. The nonprofit involuntarily dissolved in February 2013 and was not reinstated until April 2021.

He applied for the 501(c)(3) status with the IRS a few weeks prior to trial and hadn't been granted the exemption status.

"Although the business was organized as a nonprofit corporation ... it was not registered as a nonprofit or charity with the Internal Revenue Service, the Minnesota Department of Revenue, or the Minnesota Attorney General's Office," charges say.

"He acknowledged that he had sold several of his properties in 2017 and 2018 and kept the proceeds for himself; he did not donate them to charity."

In a deposition in August 2020, Meldahl indicated that he believed SJM Properties was "a charitable organization to a certain extent" because it was "serving the underdeveloped areas of Minneapolis" and had low- to moderate-income tenants.

The city of Minneapolis has cited Meldahl for more than 1,300 housing code violations at his rental properties since 2009, including for mice, cockroaches, junked cars, uncut grass, lead hazards and other neglected repairs.

In 2021, a Hennepin County district judge fined Meldahl $133,500 for what he called "horrific" conditions in his rental properties of "biblical plague proportions."

Judge Patrick Robben ruled Meldahl operated in bad faith by telling tenants that they were not allowed to contact city inspectors, violating the rental rights of 267 families.

The case was brought by Minnesota Attorney General Keith Ellison, who filed suit in 2019, and tenants testified during an eight-day trial. The state petitioned Meldahl to recover legal costs and in March 2022 Robben ordered Meldahl to pay a total of $1,072,818.

The money will be deposited into the state's general fund.