Indicted ex-CEO of Mpls. nonprofit intends to change plea to guilty
A former nonprofit executive indicted on charges he used taxpayer grants on lavish trips, personal purchases and political activity is expected to plead guilty in federal court this week, according to a new filing.
Bill Davis had been due to go on trial next week on 16 federal theft and fraud counts tied to hundreds of thousands of dollars in questionable spending while leading Community Action of Minneapolis. He had pleaded not guilty last fall as did his son, Jordan Davis, who faced several charges.
A court filing says Bill Davis intends to change his plea Thursday. Neither Davis nor his attorney, Susan Gaertner, would comment on the change. A U.S. attorney's office spokesperson offered no additional details pending the upcoming hearing.
Community Action's mission was to provide poor residents with heating and nutrition assistance. But it was shuttered not long after the allegations against Davis became public in a scathing state audit. He had been chief executive officer for 24 years and earned a salary of $180,000 plus bonuses and other allowances.
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Jordan Davis faces charges of accepting $140,000 in payments over four years from an ice cream shop tied to the nonprofit for what authorities deemed a "no-show job." He is a Minneapolis police officer and has pleaded not guilty.
His attorney, Fred Bruno, said that trial should start as planned on Monday. He said the anticipated Bill Davis plea agreement would not alter the son's legal strategy.
"Now instead of two defendants going to trial, it will just be one," Bruno said Wednesday.
The elder Davis has extensive Democratic political connections, and state and federal lawmakers had served on the organization's board.
According to prosecutors, Davis used organization money in connection with trips to the Democratic National Convention in his role as a Democratic National Committee member and to attend President Barack Obama's inauguration.
Federal prosecutors have said Davis deceived the governing board about the extensive spending on golf trips, Caribbean getaways, car upgrades and other purchases he billed to the organization for himself or his girlfriends.
Davis also claimed to have married one woman to get her health insurance through Community Action, court papers say, but there was no evidence they were actually married.
Auditors for the Minnesota Department of Human Services grew concerned over spending patterns and in the summer of 2014 confronted Davis. He met with auditors and disputed wrongdoing, but federal court filings allege that two days later he was back on the road on a trip with his girlfriend that he billed to the organization.
By that fall, the state cut ties with the group and law enforcement closed in. The organization was shut down and then the indictments came down.
The ordeal also raised questions about whether Davis's past ties to Gov. Mark Dayton and Minnesota Commerce Commissioner Mike Rothman slowed the state's response to years of concerns over the organization's spending.
They have denied letting politics get in the way, and Dayton has insisted he never had any role in regulatory decisions surrounding Community Action. Rothman asked Legislative Auditor James Nobles to investigate the questions. Nobles was unable to substantiate any inappropriate actions by Rothman.
Rothman has said there were discussions about political sensitivities, mainly about who would deliver critical services to the city's low-income residents if Community Action went under. Ultimately, the duties were shifted to nonprofits with similar missions.
A court-appointed receiver, which has been trying to recoup hundreds of thousands of misspent dollars from Davis and others, said in a state court filing last Friday that the alleged embezzlement by Davis is likely "in excess of $350,000." There was a possibility an insurance company could be on the hook for some of it, the filing said.
The receiver had been able to recover some money, including from board member and state Sen. Jeff Hayden, DFL-Minneapolis. But the Minnesota attorney general's office is preparing to go to court to pursue additional claims against board members and other former top executives.