A county drops a reentry nonprofit after a state self-dealing finding

Commissioners in Becker County, Minnesota, voted unanimously on Tuesday, October 6, to end the county's contract with the F5 Project, a nonprofit that started in North Dakota and gives peer support to people coming home from prison or jail, the Forum reported. The county gave formal notice that the $156,000 contract will end in 30 days, as the contract requires.

The vote followed an investigation by the North Dakota Attorney General's Office. Attorney General Drew Wrigley announced the results at a news conference at the Cass County Courthouse on Wednesday, September 23, the Forum reported. He said his office's probe had substantiated allegations of conflict of interest, self-dealing, improper loans and misuse of nonprofit funds, according to Valley News Live.

What the state found

Wrigley said personal loans that Chief Executive Officer Adam Martin and Chief Development Officer Scott College took from F5 Project funds were "substantiated to be self-dealing loans in violation of North Dakota law," according to the Forum. The zero-interest loans had been disclosed in the nonprofit's 2024 tax filings. A review of real estate deals between F5 and a property company owned by Martin and College also raised conflict-of-interest and self-dealing concerns that the investigation substantiated, Wrigley said. Valley News Live identified the company as Marcoll Properties.

"The troubling allegations about F5 have been substantiated through our investigation. The F5 board and its officers are on notice," Wrigley said, as quoted by the Forum.

F5 did not admit or deny the allegations but agreed to an Assurance of Voluntary Compliance filed in Cass County, which puts the group under five years of increased scrutiny, oversight and monitoring by the attorney general's office, the Forum reported. F5's board said in a statement that its programs continue. "The Board takes its oversight responsibilities seriously," the statement said, according to Valley News Live.

A split inside the county

Wade Erickson, a program director with the Minnesota Department of Corrections, told commissioners the peer-support program works well and that probation wants to keep the model in some form, the Forum reported. "Our team is disappointed. This isn’t a situation we wanted to have transpire," Erickson said.

Becker County Human Services Director Denise Warren disagreed with ending the contract, which sits with her department rather than probation. The contract was the largest share of the county's most recent $228,000 Opioid Settlement Fund disbursement, and the Forum said it was not clear where that money will go now. "We’re concerned about what is going to happen to some of these 60-some clients who are currently being helped by these peer-support people," Warren said.

Board Chair Erica Jepson said the county was not concerned about fraud in its own dealings with F5. "It’s a reimbursement grant; they have to prove they did the work before they get reimbursed, which is not what was happening in North Dakota," she said.

What other boards can take from it

In our view, the case is a reminder that a program can earn praise from the people it serves and still lose public contracts over how its leaders handle money. Three habits help a board stay clear of that.

1. Put insider deals to a vote. Any loan, lease or property deal involving an officer or a company an officer owns should go before board members with no stake in it, with the vote recorded in the minutes.
2. Read your own filings. The F5 loans were disclosed in its tax filings. Funders and reporters read the Form 990, and the board should read it first.
3. Plan for the people served. A public contract can end on 30 days' notice. Know in advance who would pick up your clients if it did, the question Becker County is now working through for its 60-some clients.