Politically-Connected Davis Sentenced in Corruption Case
The politically-connected former head of non-profit Community Action of Minneapolis will be doing hard time in federal prison. DFL-insider Bill Davis was sentenced today to 4 years in the penitentiary for misappropriating hundreds of thousands of dollars meant to go to poor people for energy and heating assistance programs. Instead, Davis pocketed it to prop up a lifestyle of “lavish trips, cars and other personal items” ticked off by the Star Tribune.
The U.S. attorney’s office said in court filings that Davis had treated the “agency’s bank account as his personal piggy bank.” Between 2009 and 2014, he racked up an average of $4,000 to $6,000 a month on the organization’s credit card. He paid for vacations for himself “and five different girlfriends to locations like Las Vegas, Niagara Falls, the Bahamas, Phoenix and Key West,” court documents said.
He admitted to using the nonprofit’s money on a trip to the Bahamas with his fiancée, Patricia Banks, in January 2012. Davis claimed that the trip was connected with a Ben & Jerry’s ice cream shop run near the University of Minnesota run by Community Action, though the shop had closed in 2010. Davis also admitted buying a car for personal use with Community Action funds and seeking authorization from his board afterward.
Gone but not entirely forgotten in the corruption case were Cong. Keith Ellison (D-Minn.), state Sen. Jeff Hayden (DFL-Minneapolis) and other well-known DFLers. When Davis got busted, they resigned their positions on the board of the non-profit that went under on their watch.
Davis was charged after a Department of Human Services audit found that the nonprofit organization had spent at least $800,000 between 2011 and 2013 for a variety of unauthorized purchases and activities, including a car loan for Davis, travel and golf outings. After the Star Tribune reported the audit in 2014, the state raided the organization’s offices, confiscated documents and then shut it down.
Warnings surfaced long before investigators raided the non-profit. Minnesota Department of Commerce staff raised their concerns to Commerce Commissioner Mike Rothman, according to a hard-hitting 2014 MPR News report. But for political reasons, MPR said Rothman continued business as usual with state energy grants to Community Action.
Commerce analysts had grown increasingly alarmed that money meant to aid the poor was going to people who were not eligible to receive it. Those staffers, who requested anonymity because they aren’t authorized to speak, say the red flags raised in 2011 were the first alerting Rothman that Davis, his DFL political ally, was mismanaging money from the energy assistance fund run by Commerce.
The warnings, they say, were repeated over the years but went nowhere. Rothman would not sever ties with Community Action. Several in the department say they were told the contracts would continue because “the political ramifications are greater than staff would understand,” a characterization Rothman does not dispute.
Even after the highly critical state DHS audit, Rothman moved forward with another contract for Community Action of Minneapolis.
That’s when career staff within the Commerce Department’s Energy Assistance Program protested. They wrote to their director, John Harvanko, urging him to not renew the contract. Their memo said continuing to send taxpayer money to Community Action of Minneapolis “would not only be a disservice to the citizens of Minnesota, but would also be unethical for us as public servants.”
Ten days later, Harvanko notified Davis that the state was moving forward with a contract for the next fiscal year.
Rothman denies that he and other senior Commerce staff ignored the DHS audit.
The contract letter to Community Action was “standard process” as they looked for another non-profit to step in and do the work, he said. “That contract with Minneapolis was never executed and finalized. It may have gone out but it was never exercised or finalized because while we were looking at all of this we had made arrangements to have another Community Action program come in and take over.”
More recently, Rothman’s M.O. in other cases has come under criticism from a federal judge, administrative law judge and key state legislators.
Republican lawmakers have urged Gov. Dayton to crack down on the Commerce Department for an “unconstitutional attack on Minnesota consumers and businesses.” They say Rothman should be fired.
“The rulings show that certain unelected officials at the Department of Commerce view some laws as mere suggestions rather than appropriate limits on their power,” said Fenton, Vice Chair of the House Commerce and Regulatory Reform Committee that oversees the department. “Agencies cannot engage in abusive and anti-consumer behavior without consequence.”