AG shuts down Minneapolis landlord’s ‘sham’ nonprofit used to dodge sales taxes

A Minneapolis landlord notorious for owning a swath of substandard housing and mistreating tenants has dissolved a nonprofit organization authorities say he used to avoid roughly $30,000 in taxes.

Steven Meldahl, 74, reached a settlement last week with Minnesota Attorney General Keith Ellison that closes the book on SJM Properties as a nonprofit entity.

In the past several years, Meldahl has been the subject of a series of civil actions and investigations from the state concerning dozens of properties he owned in Minneapolis, primarily on the north end. The landlord at one point was one of the most prolific in the city, having owned more than 80 investment properties valued at $3.3 million as of 2014. He was also the single biggest challenger of assessments for nuisance violations, according to a Star Tribune analysis of city records in 2014.

In a statement Tuesday, Ellison said Meldahl broke Minnesota charity laws, saying SJM violated its stated purpose of providing “clean, safe, remodeled and affordable housing” for lower-income families and preventing deterioration of inner-city neighborhoods.

The latest development came after Hennepin County District Court convicted Meldahl in 2022 of a felony and ordered him to pay civil judgments, including more than $1 million in court costs and fines.

“The evidence surrounding this investigation — including my prior action against Meldahl as a landlord, his criminal prosecution and my independent investigation — all prove that SJM is a complete sham created to further Meldahl’s private gain,” Ellison said. “Shutting it down is the right thing to do.”

Reached by phone Wednesday morning, Meldahl acknowledged failure to file proper paperwork but maintained the expenses amounted to what he considered a legitimate charitable purpose. He said some expenses were from when he “dolled up” a handful of homes intended for sober living.

“If you’re out of your business area, definitely have a lawyer or an accountant take a look so you don’t screw up,” Meldahl said.

He also said he believes the state has treated him unfairly in recent years through legal actions the Attorney General’s Office spearheaded, and the allegations about the conditions at his properties are overblown.

In 2023, Meldahl incurred five felony charges stemming from his use of SJM Properties as a nonprofit. An Attorney General’s Office investigation found receipts dating to 2009 that allegedly showed Meldahl had filed fraudulent sales tax exemption certificates tied to the charity, which was similar in name to his business, S.J.M. Properties Inc.

Meldahl pleaded guilty last year to one felony count of failure to pay taxes.

According to documents filed in the criminal case filed in Hennepin County, Meldahl misrepresented the purpose behind purchases at big-box stores — Menards, Home Depot and Best Buy — to the tune of about $29,700 in claiming those were eligible for exemption.

In July, District Judge Peter A. Cahill handed Meldahl a stayed sentence of 80 days in the Hennepin County workhouse. Meldahl’s term of supervised probation was three years.

The judge also ordered Meldahl to pay $29,647.14 in restitution.

Another condition of the order required Meldahl to work with the Attorney General’s Office toward administratively dissolving SJM Properties “as soon as possible.”

Meldahl’s long-running saga with the Attorney General’s Office centered at first on his management of properties on the northern end of Minneapolis. In 2021, a Hennepin County judge found his action of telling tenants they couldn’t contact city inspectors amounted to operating in bad faith.

The judge, who referred to conditions at the rental properties as “horrific” and of “biblical plague proportions,” determined Meldahl violated the rights of 267 families who rented from him. The judge then leveled a $500 fine for each family, coming out to $133,500.

According to Ellison’s office, Meldahl also testified in court that a majority of proceeds from the approximate $1 million sale of his rental properties went toward building a house in Florida.

Today, Meldahl said his stock of properties has shrunk from almost 100 to only a few scattered between north and south Minneapolis. Three are currently rented, he said, all well below market value.

“At my age, I’m trying to slowly sell things off and quietly go away,” Meldahl said, adding he “lost all [his] retirement money” to legal expenses, and housing listers refuse to do business with him. “I’ll be working until the day I die.”