Minnesota AG settles with nonprofit accused of funneling military vets for profit

A west metro nonprofit run by a former Twin Cities CEO allegedly directed military veterans eligible for its grants for pain relief to seek treatment from a for-profit he owned, according to a settlement announced Thursday by the Minnesota Attorney General's Office.

BFW Institute of Education & Research — more commonly known as Pain Free Patriots — was started by Becker Furniture World founder and former CEO Douglas Huseby. According to Attorney General Keith Ellison's office, Pain Free Patriots directed recipients of its grants to get help from Ultimate Wellness Center, which was owned by Huseby — funneling more than $2 million to his related businesses over a four-year span.

The nonprofit neither admitted nor denied allegations that it violated state charitable giving laws, but agreed in the settlement to cut ties with Huseby and install a new board of directors.

Huseby started BFW in 1997, then Becker Furniture World Foundation, to provide furniture to low-income people and later used the nonprofit to offer pain relief to veterans.

"Any nonprofit's money should be used exclusively to further its charitable mission and not to line the pockets of its insiders while doing so," Ellison said in a statement.

Huseby couldn't be reached for comment Thursday, and BFW's attorney, Paul Darsow, declined to comment. The nonprofit is registered in Minnetonka but lists an Eden Prairie address on its website.

From 2016 to 2019, more than 94% of Pain Free Patriots' expenses each year benefited insider-owned entities, according to court records.

According to Ellison's office, BFW became heavily indebted to Huseby, owing $712,000 to him and $1,000 to one of his businesses as of 2020 — all in loans that were not approved by the board, including some that were not disclosed on tax returns as insider loans.

Huseby told the Star Tribune in 2015 that he could offer vets suffering chronic pain better results than the Veterans Affairs Department because he used different approaches to treatment.

"I'm a business guy," he said. "I go in and I've figured out how to fix people."

In the settlement, filed Aug. 25 in Ramsey County District Court, the nonprofit agreed to remove its board of directors, permanently separate from Huseby, elect new board members and make policy changes, such as requiring competitive bidding for services.

In federal tax filings, the nonprofit listed about $200,000 in contributions in 2017, including $22,000 from Huseby. Other donors included Minnesota United CEO Chris Wright, Hubbard Broadcasting CEO Stanley Hubbard, the Hubbard Broadcasting Foundation, WCCO, KARE-TV, the Minnesota Timberwolves and Lynx, and the Richard M. Schulze Family Foundation.

He said Pain Free Patriots had "breached its duties and that public trust by letting conflicts of interest run rampant."

Kelly Smith • 612-673-4141