Insurance com­pany to pay $1.2M in ‘Cups of Tea’ set­tle­ment

Morten­son ac­cused of fab­ri­cat­ing book

The Washington Times Daily - - Life - BY MATT VOLZ

HE­LENA, MONT. An insurance com­pany will pay $1.2 mil­lion to a char­ity co-founded by “Three Cups of Tea” au­thor Greg Morten­son in a set­tle­ment over the le­gal costs of a law­suit and an in­ves­ti­ga­tion into Mr. Morten­son and the Cen­tral Asia In­sti­tute, at­tor­neys in­volved in the set­tle­ment said.

The set­tle­ment, if ap­proved, will mark an end to more than two years of le­gal trou­bles for Mr. Morten­son af­ter “60 Min­utes” and au­thor Jon Krakauer pub­lished re­ports that al­leged Mr. Morten­son fab­ri­cated parts of his best-sell­ing books and mis­man­aged the Cen­tral Asia In­sti­tute.

Af­ter those re­ports, then- Mon­tana At­tor­ney Gen­eral Steve Bul­lock launched an in­ves­ti­ga­tion into the char­ity. A set­tle­ment re­quired Mr. Morten­son to re­pay $1 mil­lion and made fun­da­men­tal changes to the in­sti­tute’s struc­ture.

Four read­ers then filed a law­suit that claimed Mr. Morten­son, co-au­thor David Oliver Relin, publisher Pen­guin and the Cen­tral Asia In­sti­tute were in­volved in a fraud con­spir­acy by Mr. Morten­son ly­ing in his best-sell­ing “Three Cups of Tea” to boost sales and do­na­tions to the char­ity.

“Three Cups of Tea” and the se­quel, “Stones Into Schools,” re­count how Mr. Morten­son started build­ing schools in Pak­istan and Afghanistan.

“Three Cups of Tea” has sold about 4 mil­lion copies since be­ing pub­lished in 2006.

A dis­trict judge threw out the law­suit, and the 9th U.S. Cir­cuit Court of Ap­peals up­held the rul­ing.

Along the way, Mr. Morten­son and the Cen­tral Asia In­sti­tute racked up ap­prox­i­mately $1.8 mil­lion in le­gal fees de­fend­ing them­selves in the in­ves­ti­ga­tion and the law­suit.

The char­ity sued Philadel­phia In­dem­nity Insurance Co., say­ing the in­surer was ob­li­gated to pay for all of its de­fense costs, but had of­fered to re­im­burse the in­sti­tute only 35 per­cent and Mr. Morten­son 25 per­cent of their de­fense fees in the law­suit.

The in­surer of­fered to re­im­burse 20 per­cent of Mr. Morten­son’s costs and all of the Cen­tral Asia In­sti­tute’s costs for the state in­ves­ti­ga­tion, ac­cord­ing to the com­plaint.

The insurance com­pany said in court fil­ings that cer­tain al­le­ga­tions against Mr. Morten­son don’t fall within the pol­icy, in­clud­ing the pub­li­ca­tion of ma­te­rial that the in­sured per­son or com­pany knows is false.

The $1.2 mil­lion set­tle­ment was reached in a pri­vate me­di­a­tion con­fer­ence held Wed­nes­day be­fore U.S. Mag­is­trate Judge Jeremiah Lynch in Mis­soula, said at­tor­neys John Mor­ri­son of He­lena and Carey E. Ma­tovich of Billings.

Ms. Ma­tovich rep­re­sented the Cen­tral Asia In­sti­tute, and Mr. Mor­ri­son rep­re­sented a law firm that de­fended Mr. Morten­son in the in­ves­ti­ga­tion and in the law­suit.

The set­tle­ment still must be ap­proved by U.S. Dis­trict Judge Dana Chris­tensen. The judge has given the sides un­til Dec. 6 to file dis­missal pa­pers.

Philadel­phia In­dem­nity Insurance at­tor­ney Brian Har­ri­son de­clined to com­ment Fri­day, say­ing the set­tle­ment was con­fi­den­tial.

Mr. Morten­son de­clined com­ment.

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