Minnesota AG announces shutdown of ‘sham’ housing nonprofit

The Minnesota Attorney General’s Office has announced a settlement with a Minneapolis landlord who ran what officials call a sham nonprofit. Per the settlement, the nonprofit SJM Properties will be formally dissolved and the landlord, Steven Meldahl, cannot serve as a director, officer, or employee of a nonprofit.

“SJM has never engaged in any activities that legally qualify as fulfilling the stated charitable mission of providing affordable housing to low-income residents,” states the Assurance of Discontinuance.

Founded by Meldahl in 2008, SJM had a stated mission of providing “clean, safe, remodeled and affordable housing for low to moderate income families” by purchasing and remodeling substandard housing in Minnesota’s inner-city areas.

Attorney General Keith Ellison sued Meldahl in 2019 for violation of tenants’ rights. The court found that the living conditions in some of the properties were of “biblical plague proportions.” The court concluded that Meldahl knowingly and in bad faith violated rights of 267 low-income families who rented from him, charging tenants over 8% in late fees and denied inspection of the homes by the city of Minneapolis, finding that Meldahl engaged in “brazen and deplorable illegal business conduct harming a vulnerable part of Minnesota’s population.” He was ordered to pay $1 million in legal fees.

Meldahl also was charged with several counts of tax evasion and fraud in 2023, and faced allegations that Meldahl used SJM’s sales tax exemption certificates in order to avoid paying sales tax at retail stores. Under Minnesota’s civil nonprofit laws, the Charities Division launched an independent investigation which revealed grounds to dissolve the organization as a sham. Meldahl admitted that he used SJM as a ruse to avoid paying state sales tax for the rental property business. He pleaded guilty to one count of tax evasion in 2024.

SJM was involuntarily dissolved in 2023, and has not been reinstated. Under the settlement, the nonprofit will be formally dissolved.

“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,” said Ellison in a statement. “Shutting it down is the right thing to do. My Office will continue working to hold people accountable when they break the law and use charities or charitable assets to enrich themselves.”

Besides being unable to serve as director, officer, or employee of a nonprofit, Meldahl also is prohibited from engaging in any activity resulting in him having control of responsibility over a property that is held for a charitable purpose.