Suspended Community Action CEO denies wrongdoing, plans comeback

The former CEO of a controversial nonprofit is defending himself against allegations in a state audit that his organization spent hundreds of thousands of dollars in public money for personal expenses including travel, golf, a car loan and massages at a northern Minnesota resort.

Bill Davis, the suspended CEO of Community Action of Minneapolis said he didn't do anything wrong during his time overseeing the nonprofit, which provided heating assistance and weatherization to low-income residents. He's also hinting that he could resurface, leading CAM or a similar organization in the future.

"I believe that I will be vindicated," Davis said.

It's the first time Davis has spoken publicly since the state of Minnesota shut Community Action of Minneapolis' doors in September. That move came after a state Department of Human Services audit said Community Action owes the government more than $600,000 for its misspending.

Davis contends the allegations of misspending arose from sloppy accounting practices for which he was not responsible. He said he thought his agency will owe the state, at most, $20,000 — not $600,000 — once the accounting is straightened out.

"I certainly think that when the receiver finishes with their work, they'll find out things aren't as disastrous as they were led to believe," Davis said. "I think there was a lot of embellishment."

Davis said previous independent audits never raised any concerns over spending on personal items.

He said his only mistake was to charge a cruise to his corporate credit card instead of his personal credit card. He said he didn't realize the error until auditors raised the issue with him — and said Community Action's chief financial officer, Anthony Spears, should have caught the error. He also blamed Spears for the accounting errors that led the Human Services auditors to believe misspending occurred.

"They were the firewall," Davis said of Spears and the rest of the nonprofit's finance department. "They were responsible for making sure the money was properly accounted for, making sure the money was properly coded."

Spears could not be reached for comment.

A DHS spokesperson released a statement saying, "We've heard this explanation before and we stand by our audit. We don't believe we misinterpreted anything."

A number of other former CAM employees specifically blamed Davis for the problems at the nonprofit and for its shutdown. Davis said most of the former employees mentioned in an earlier report by MPR News were either "terminated with cause" or had an issue with him outside of his management style.

Davis and Community Action of Minneapolis have been heavily scrutinized after the Minneapolis Star Tribune first reported the Human Services audit in September. The agency was shut down, 41 people lost their jobs and Davis was suspended. High-profile Democrats, including U.S. Rep Keith Ellison, state Sen. Jeff Hayden and several Minneapolis City Council members, resigned from the nonprofit's board.

Davis' ties to high-profile Minneapolis Democrats raised some questions about whether he had too much influence over state and federal contracts. Davis, a former Democratic National Committee member, denied using political connections to help his agency.

"It really wasn't necessary," Davis said. "There wasn't anything that I needed to do."

But at least one of Davis' political allies is facing scrutiny as a result of the nonprofit's problems.

Republicans in the Minnesota Senate filed an ethics complaint against Hayden over his role on the board and whether he personally benefitted from spending by Community Action of Minneapolis.

Minnesota Commerce Commissioner Mike Rothman, who served in the DFL Party with Davis, asked the legislative auditor to review his agency after MPR News reported last week that Rothman's department disregarded pleas from career staffers to terminate energy assistance contracts with Community Action of Minneapolis. Those staffers also said that senior Commerce Department staffers discussed the political implications of terminating the contract with Community Action of Minneapolis.

Davis said he was surprised to learn that Rothman and other Commerce Department officials were looking to terminate their contracts with CAM after the scathing audit was released in August. Davis said his agency was asked by Commerce to discuss some of their methods with other Community Action groups at a training conference in August.

"They were directing staff across the state to start replicating other programs that we were offering," he said.

Davis also said the Commerce Department released his agency from its corrective action plan over the summer. An official with the department supplied documents that showed a corrective action plan was still in place as of September of this year.

Rothman said last week that his department took strong and swift action to crack down on CAM after his agency learned that the nonprofit authorized $1.3 million in energy assistance credits to low-income individuals who weren't entitled to the full credits. He also said any discussion of politics focused on ensuring that Minneapolis residents continued to get services.

For his part, Davis suggested that he's looking at ways to return to CAM. He acknowledged that he met with two board members to explore ways to restart the nonprofit after the state investigation is finished.

"We talked about the governance issue, the importance of governance and having a board in place as we emerge from this morass," Davis said. "I just think there's still an opportunity because a lot of need remains in the community."

Davis acknowledged, however, that it may be difficult to come back to Community Action, especially since the agency relied heavily on state and federal contracts. But he said there are other funding sources, like foundations, that could give them money.

"We can rebrand ourselves," Davis suggested. "There are some other options. We'll have to find out what the new year brings in."