"Three Cups of Tea" Author's Charity Owed $1.2 Million

Insurance company to pay in settlement

Mortenson's book about education in Pakistan and Afghanistan, Three Cups of Tea, has sold 4 million copies since it came out in 2006.     Photo: Viking/AP Images

The Central Asia Institute—a charity co-founded by Greg Mortenson, author of Three Cups of Tea (Penguin Books, 2006)—will receive $1.2 million from the Philadelphia Indemnity Insurance Company in a settlement over the costs of a lawsuit and an investigation into the Institute, attorneys told The Associated Press.

Mortenson and his charity faced legal troubles two years ago, when 60 Minutes and author Jon Krakauer published reports that Mortenson had mismanaged his non-profit and lied in his best-selling books, which recount his experiences building schools in Pakistan and Afghanistan and include the Three Cups sequel, Stones into Schools (Penguin Books, 2010).

Four readers filed a lawsuit claiming that Mortenson had lied to inflate sales, but it was tossed out by the district court, a ruling upheld by the appeals court. Still, Mortenson and his charity sustained $1.8 million in legal fees.

The Institute, whose mission is to promote education in Pakistan and Afghanistan, sued the insurance company on the basis that all defense costs should have been covered.

The $1.2 million settlement, finalized Wednesday, is awaiting approval by U.S. District Court. The parties have until December 6 to file dismissal papers.

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