04/30/2011 12:55 pm ET Updated Jun 30, 2011

'Three Cups Of Tea' Author Greg Mortenson Still Being Burned By Fraud Scandal

"Three Cups Of Tea" author Greg Mortenson continues to face charges that his story was fabricated and the financial statements for his foundation, Central Asia Institute (CAI), are faulty.

As fallout from the controversy continues, contributors are questioning their support for Mortenson and the organization he founded. The Athens Banner-Herald reports that the University of Georgia, which was poised to award Mortenson with the Delta Prize for Global Understanding this year, has decided to wait for more information to surface.

The University of Louisville, who awarded Mortenson the 2011 Grawemeyer Award, is considering rescinding the education prize of $100,000. Executive director of the awards, Allan Dittmer, told Time Magazine that the Louisville is also waiting to find out more.

"A bazillion questions are surfacing, and I'm guessing those will be looked into very carefully," Dittmer told TIME. "We'll wait to see if he's vindicated, and if not we may have to make a tough decision."

The Wall Street Journal has also reported that Fontbonne University in St. Louis will no longer grant Mortenson an honorary degree due to the allegations.

Mortenson, who was scheduled to give the University's commencement address this year, refused to discuss the charges with Fontbonne, which resulted in the cancellation.

These universities are not alone, as many passionate patrons have begun to question the veracity of Mortenson's story.

Jon Krakauer, whose online book Three Cups of Deceit sparked CBS to investigate CAI and Mortenson on "60 Minutes," had previously contributed $75,000 of his own money to CAI.

One of Krakauer's sources in the book, which has risen to number one on the Kindle's Singles bestseller list has, however, risen to defend Mortenson by retracting his statement.

Scott Darsey, Mortenson's climbing partner who was cited in "Three Cups of Deceit" to indicate that Mortenson fabricated the dramatic beginning to his story, sent an email to Outside Magazine stating his support for his friend and fellow climber.

"If Jon Krakauer and some of Greg's detractors had taken the time to have three or more cups of tea with Greg and others -- instead of one cup of tea with a select few who would discredit him -- they would have found some minor problems and transgressions. But to the extent to call it all 'lies' and 'fraud'? No way."

Still, critics aren't convinced. "Financial statements tell a story -- a more realistic story" said Daniel Borochoff, president of The American Institute of Philanthropy about the issue. "There is a disconnect between what he says he is doing and how he is spending the money," he explained.

The American Institute of Philanthropy (AIP) is the charity watchdog organization that was first to call attention to the discrepancies in CAI's financial statements, that they found were wrought with conflicts of interest.

Mortenson, who refused to speak to major news outlets immediately after "60 Minutes" aired, defended himself in an interview with Outside Magazine, and attempted to refute the accusations by sharing the blame with his co-writer:

"What happens then is, when you re-create the scenes, you have my recollections, the different memories of those involved, you have his writing, and sometimes things come out different."

The accusations have prompted Montana Attorney General, Steve Bullock, to launch an inquiry. Though he refused to speak publicly about the matter, he released this statement on April 20:

"As Montana's Attorney General, I have the authority to oversee non-profit corporations on behalf of the public. In recent days, concerns have been raised about the management and financial affairs of the Central Asia Institute. I've been in contact with attorneys for the Institute and they have pledged their full cooperation in addressing our concerns. While looking into this issue, my office will not jump to any conclusions - but we have a responsibility to make sure charitable assets are used for their intended purposes."

As Huffpost reports, CAI has agreed to work with officials to establish full transparency.

Though the issue currently remains in local jurisdiction, it could become a federal issue if accusations are verified.

Krakauer, who cites a confidential internal memo released in January of this year, reports Mortenson was advised by an attorney that he may appear to have violated Section 4859 of the Internal Revenue Service Code.

"Mr. Mortenson could owe CAI up to $7,263,458.13 for excessive benefits received during fiscal years 2007, 2008, and 2009....[I]f Mr. Mortenson fails to timely pay the correction amount, he could face a total liability ranging from $7,868, $23,606,238.62."

Borochoff insists that the issue lies in how closely intertwined Mortenson is with his organization. "My worry is the decisions that are being made are based on whatever Greg Mortenson can receive the most from," he explains. Borochoff emphasized that the cause for concern stems from how closely aligned Mortenson is with CAI financially and advised the organization that it must disconnect from its president if it hopes to survive this controversy.

Mortenson told Outside Magazine that both he and CAI are working to eradicate these problems. For example, in January he began paying for his own travel expenses and he plans to hire administrators who will make funding and marketing decisions to limit conflicts of interest.

"We've been working very hard to bring changes to the way we work. I've also said I am not a good manager, and I ask people to remember that the first chapter in 'Three Cups of Tea' is called 'Failure,' which I believe one must do many times in order to succeed."

Mortenson's failure as a manager is well known by those who have worked with him and for him. Though he uses it as an explanation for the inaccuracies, in Three Cups of Deceit Krakauer casts Mortenson more as a prevaricator.

"'Greg had no sense of what it takes to run a business,' says Jennifer Wilson (former board member) ... 'We kept trying to persuade Greg to hire an administrator who would do all the stuff he wasn't good at, but he refused.... At the time, I didn't understand. Now that I know about the things he was hiding, I realize he didn't want anyone looking over his shoulder.'"

Meanwhile, CAI's mission may be threatened by the controversy. In a statement released by the CAI board to refute accusations, it emphasized the need for supporters to remain open-minded.

"It would be truly tragic if the sensationalized allegations against him were to harm the future of this crucial work."

New York Times columnist Nicholas D. Kristof, in an op-ed titled 'Three Cups Of Tea' Spilled highlights the positive contribution Mortenson has made, regardless of what may come to light about his business practices.

"He was right about the need for American outreach in the Muslim world. He was right that building schools tends to promote stability more than dropping bombs. He was right about the transformative power of education, especially girls' education. He was right about the need to listen to local people - yes, over cup after cup of tea - rather than just issue instructions."

Another supporter of Mortenson's, Trudy Rubin, wrote in the Philadelphia Inquirer Wednesday, that he will continue to believe the work Mortenson has done and the amount of people he has inspired, but he agrees that the truth needs to be uncovered.

"Whatever the real story, Greg owes it to those who believed in him to give an explanation. Otherwise, the '60 Minutes' exposé will sap the idealism his work has inspired among so many Americans -- including children."

Ted Callahan, an anthropologist who used to be on staff at CAI comments in Krakauer's booklet that the fervor that resulted and inspired so many is a result of America's yearning to believe in their own role to save Afghanistan and Pakistan.

"'The way I've always understood Greg,' Callahan reflects, 'is that he's a symptom of Afghanistan. Things are so bad that everybody's desperate for even one good-news story...Everything else might be completely fucked up over there, but here's a guy who's persuaded the world that he's making a difference and doing things right.' Mortenson's tale 'functioned as a palliative,' Callahan suggests. It soothed the national conscience. Greg may have used smoke and mirrors to generate the hope he offered, but the illusion made people feel good about themselves, so nobody was in a hurry to look behind the curtain."

Borochoff insists, however, that the public should not lose hope and should not use this, and stories like it, to discontinue supporting charitable efforts. "I hope the public doesn't become disenchanted," he says, but adds that "people shouldn't give up healthy skepticism."

The Chronicle of Philanthropy has published an article focusing, indirectly, on the positive, by using the scandal to illustrate important lessons other nonprofits should learn.

As millions of inspired Americans await the outcome, Mortenson and his staff insist they will continue to positively affect the lives of those in need in Afghanistan and Pakistan. Mortenson, who will make no further statements until treated for a heart condition, assured his supporters on the CAI website that their fight is far from over.

"Our mission will affect generations. And as I have shared with our supporters many times: When it is darkest you can see the stars."