U.S. District Judge Sam Haddon rejected the civil lawsuit Monday, dismissing claims that Mortenson, his publisher, his co-author and his charity conspired to make Mortenson into a false hero to sell books and raise money for the charity. Haddon called the claims overly broad, flimsy and speculative.

The ruling is good news for Mortenson and his charity after Montana’s attorney general earlier in April announced a $1 million agreement to settle claims that Mortenson mismanaged the institute and misspent its funds. The agreement removes Mortenson from any financial oversight and overhauls the charity’s structure, but it does not address the books’ contents.

Mortenson, who was traveling to Pakistan and Afghanistan on Monday, declined a telephone interview. He said in his email, his first public statement in more than a year, that the judge’s ruling “upholds and confirms my belief and faith that our American legal and judicial system is honorable and fair.”

The Central Asia Institute, which he co-founded in 1996 to build schools in Central Asia, “is stronger than ever, and we will continue to work hard to serve our mission, uphold transparency and instill good governance,” he said.

The lawsuit by four people who bought Mortenson’s books claimed they bought the books because they were labeled as nonfiction accounts of how Mortenson came to build schools in Central Asia. Their lawsuit alleged fraud, deceit, racketeering and breach of contract against Mortenson, publisher Penguin Group (USA), co-author David Oliver Relin and the Central Asia Institute.

They had asked Haddon to order the defendants account for all the money collected from Mortenson’s book sales, refund readers who come forward and send the rest of the cash to a humanitarian organization to be decided by the plaintiffs.

Plaintiffs’ attorneys in Montana and Chicago did not return messages for comment.

Haddon did not address allegations of fabrications in the book, but wrote that the plaintiffs can’t simply rely on general allegations of lies in making a fraud claim.

Penguin last year had said it would conduct its own investigation into whether “Three Cups of Tea” and the best-selling sequel “Stones Into Schools” contained fabrications, but said Monday that probe has not happened.

“Once the lawsuit was filed it was impossible to conduct our own investigation into the matter as all parties were represented by lawyers,” Penguin spokeswoman Carolyn Coleburn said in statement Monday. “Because of attorney-client privilege and other issues, we had no choice but to let the facts develop within the context of the legal proceeding.”

Jon Krakauer, writing on his blog in Byliner.com, said while judge determined there was no reason to consider the allegations that Mortenson fabricated passages, the lawsuit’s dismissal frees Mortenson to speak for himself.

“Many of us are very much looking forward to hearing what he has to say,” Krakauer wrote.

“Three Cups of Tea,” which has sold about 4 million copies since being published in 2006, was conceived as a way to raise money and tell the story of his institute, founded by Mortenson in 1996.

The book and promotion of the charity by Mortenson, who appeared at more than 500 speaking engagements in four years, resulted in tens of millions of dollars in donations.

The book recounts how Mortenson lost his way after a failed mountaineering expedition and was nursed back to health in a Pakistani village. Based on the villagers’ kindness and the poverty he saw, he resolved to build a school for them.

The lawsuit claimed, as did reporting by Krakauer and “60 Minutes,” that Mortenson fabricated that story and others in the book and in “Stones Into Schools.”

Mortenson has denied any wrongdoing, though he has previously acknowledged some of the events in “Three Cups of Tea” were compressed over different periods of time.

The yearlong state investigation found that Mortenson’s poor record keeping and personnel management resulted in unknown amounts of cash spent overseas or for management costs without receipts or documentation.

CAI promoted Mortenson’s books for free, paid for his charter flights and the organization bought thousands of copies of his books to give away, without seeing any royalties, the state found.

Anne Beyersdorfer, CAI’s interim executive director, has said Mortenson will remain the face of the charity but not as executive director, and that he is barred from being a voting member of the board of directors as long as he draws a paycheck from CAI.

The plaintiffs claimed racketeering, fraud and deceit by Mortenson, co-author David Oliver Relin, Penguin and Central Asia Institute, saying they conspired to build Mortenson into a false hero to raise money.

Haddon wrote in his ruling that their lawsuit fell short because it did not identify the racketeering activity and failed to identify each defendant’s role in the alleged fraud.

“CAI is invigorated with the court’s ruling today. Greg is on his way to Pakistan. Our dual mission continues unabated,” said Anne Beyersdorfer, the charity’s interim executive director.

They had asked Haddon to order Penguin to account for all the money collected from book sales and refund that money to people who bought the books, with the rest going to a humanitarian organization.

The ruling is good news for Mortenson and his charity after the Montana attorney general earlier in April announced a $1 million agreement to settle claims that Mortenson mismanaged the institute and misspent its funds. The agreement removes Mortenson from any financial oversight and overhauls the charity’s structure, but did not address the books’ contents.

That state investigation dealt only with the financial affairs of the charity, and not the contents of Mortenson’s books. The civil lawsuit was filed after “60 Minutes” and author Jon Krakauer reported last year that Mortenson fabricated parts of those books, which recount his efforts to build schools in Central Asia.

“Three Cups of Tea,” which has sold about 4 million copies since being published in 2006, was conceived as a way to raise money and tell the story of his institute, founded by Mortenson in 1996.

The book and promotion of the charity by Mortenson, who appeared at more than 500 speaking engagements in four years, resulted in tens of millions of dollars in donations.

The state is asking the high court to reverse that decision, arguing the new law deals only with commercial activities and stays out of the Hutterites religious affairs.

The Hutterites are Protestants similar to the Amish and Mennonites who live a life centered on their religion, but unlike the others, Hutterites live in German-speaking communes scattered across northern U.S. states and Canada.

They don’t pay wages, don’t vote and don’t enlist in the military. They make their own clothes, produce their own food and construct their own buildings.

“Their core belief is that they have no property. All the property and labor they have, they contribute to the colony,” Ron Nelson, an attorney for the Big Sky Colony, told the Montana Supreme Court.

The Hutterites’ argument that everything they do is tied to their religion cannot exempt them from regulation when they voluntarily enter into an outside commercial activity, assistant Attorney General Stuart Segrest said.

“They’re not allowed to become a law unto themselves,” Segrest said.

The state’s high court did not issue a ruling following Wednesday’s arguments.

The Hutterites are primarily agricultural producers, and the men in their black jackets and the women in their colorful dresses are a common sight at farmers’ markets across Montana. But in recent years they have expanded into construction with success because they can offer lower job bids than many private businesses.

Those businesses backed the 2009 expansion of Montana’s workers’ compensation law. The bill’s sponsor, state Rep. Chuck Hunter, acknowledged then that the change targeted the Hutterites in particular and the need to create “a fair playing field” for other businesses that must pay for insurance.

“It’s just frustrating for a private business that has to pay various taxes and workers’ comp insurance to find themselves undercut competitively by an entity that is not subject to those same requirements,” said Cary Hegreberg, executive director of the Montana Contractors’ Association.

Big Sky Colony, a commune near Cut Bank in northwestern Montana, filed a lawsuit, saying the insurance requirement infringes on their religious freedom and that the colonies already provide comprehensive coverage for its members through the Hutterite Medical Trust.

The real competitive edge is that the colonies don’t pay wages to their workers, not the lack of workers’ compensation insurance premiums, the colony argued.

Nelson called the law “window dressing” to ease political pressure placed on lawmakers by construction lobbyists. The law puts a bulls-eye on Hutterite colonies and tries to drive a wedge between them and their members.

Hutterites don’t need protection against lost wages because they don’t get wages, the colony argues. Colonies don’t need liability protection because they don’t make claims — there has never been a workers’ compensation claim asserted by a Hutterite.

But the Hutterites are an easy target for discrimination because they look, dress, talk and live differently than anyone else in Montana, the colony’s attorneys argued.

“The colonies have suffered persecution and migrated and immigrated and moved for the past 500 years. They’re very protective of their religious beliefs, and they just can’t let that go. They have to assert their religious rights,” Nelson said.

The Hutterites have had a long history of discrimination. They moved to the Montana and Dakota territories in the 1870s after being forced to move from previous homes in Germany, eastern Europe and Russia due to persecution. They then moved into Canada after World War I when members were arrested for not enlisting in the military, returning to the U.S. after laws were passed to protect conscientious objectors.

The biggest concentration of Hutterites is in Canada, where hundreds of colonies are scattered from Manitoba to British Columbia. In the U.S., there are colonies in Montana, South Dakota, North Dakota, Minnesota, Washington and Oregon. There are about 50 colonies in Montana, with an average of about 100 people on each colony, according to a state report from 2010.

Like the Amish and Mennonites, they are Anabaptists who believe a person should be baptized only as an adult, when that person can make the decision independently. But unlike the Amish and Mennonites, they live in communes and have no personal property based in part on a Bible passage that reads, “All the believers were together and had everything in common.”

The result was a lack of financial accountability in which large amounts of cash sent overseas were never accounted for. Itemized expenses listed as program-related were missing supporting receipts and documentation. Employees and family members charged items such as health club dues and gifts to CAI credit cards.

Mortenson himself reaped financial benefits at the expense of the Central Asia Institute, including the free promotion of “Three Cups of Tea” and his later book, “Stones Into Schools,” and the royalties from thousands of copies CAI bought to donate to libraries, schools, churches and military personnel, the report said.

The books came under scrutiny last year when reports by “60 Minutes” and author Jon Krakauer alleged that Mortenson fabricated parts of both and that he benefited financially from the charity. The attorney general’s probe focused only on the charity’s finances and operations, and did not examine the books’ contents.

The yearlong investigation concluded that the Central Asia Institute took in far more donations than it spent, and with $23 million in reserves, it still has a strong financial outlook. But the charity needs better oversight so that too much control is not in one person’s hands, the audit found.

“Mortenson’s pursuits are noble and his achievements are important. However, serious internal problems in the management of CAI surfaced,” Attorney General Steve Bullock said in the report. “Despite the severity of their errors, CAI is worth saving.”

Mortenson and the Bozeman-based charity attached their own statement to the report that said CAI is a small organization that experienced unprecedented growth quickly. The reason the charity is successful and financially viable is because of Mortenson and “Three Cups of Tea,” they said.

“As co-founder, he is the face of CAI’s mission, and he was the key person responsible for the overwhelming success of both the charity’s domestic education and outreach mission and its mission to bring education to remote parts of Central Asia,” the statement said.

The attorney general’s office said Mortenson was permanently removed as CAI’s executive director in November. A settlement agreement signed by Mortenson, CAI and the attorney general’s office said Mortenson will be barred from being a voting member of the board and from holding any position of financial oversight as long as he is employed by the charity. The charity must expand its board from three to at least seven members, and the other two current board members must step down within a year, according to the deal.

Mortenson also must reimburse the charity more than $1 million under the settlement agreement. Nearly half has already been repaid.

The agreement also calls for an overhaul of the charity’s operations and board.

“Three Cups of Tea” details how Mortenson resolved to build schools in Central Asia after he became lost and wandered into a poor Pakistani village, then follows him as he expands his school-building efforts there. The book was originally conceived as a way to raise money and tell the story of the Central Asia Institute, which Mortenson founded in 1996 with a $1 million donation from Dr. Jean Hoerni, a Swiss physicist and mountaineer

After its release in 2006, the book became a best seller and it, along with Mortenson’s tireless promotion that included more than 500 speaking engagements in four years, resulted in tens of millions of dollars in donations to the Central Asia Institute.

Bullock, whose office oversees nonprofit organizations operating in Montana, launched his investigation in April 2011. Investigators signed confidentiality agreements that prevent many details of the probe from being made public.

Bullock’s investigators examined financial statements, audits, meeting minutes and interviewed Mortenson, board members and employees.

They found that CAI spent $3.96 million buying Mortenson’s books to give away, paying full price through online retailers instead of using the publisher’s discount for Mortenson. A 2008 agreement between Mortenson and CAI required Mortenson to donate the equivalent of what he made in royalties from the CAI-purchased books, but he never did.

The investigation also found that CAI spent $4.93 million on advertising and promoting Mortenson’s books, costs that the charity and the author had agreed to split but never did.

CAI paid $2 million in charter flights for Mortenson to keep his rigorous speaking engagement schedule before he started paying for his own travel in 2011. The investigation found that in many cases he was “double-dipping,” where CAI paid for his travel to a speaking engagement and the host of the event also paid him a fee or honorarium for his travel, which Mortenson pocketed.

Mortenson and his family also charged personal items to CAI in 2009-2010 amounting to $75,276 that included “LL Bean clothing, iTunes, luggage, luxurious accommodations and even vacations,” according to the report.

Mortenson has repaid more than $495,000 of the $1.05 million that the attorney general’s office says he owes CAI. He has $560,000 left to repay and will have three years to do so — with interest — because he has “insufficient financial resources” to pay it all at once, the report said.

CAI must hire an accountant to pore over credit card statements from previous years to identify additional personal charges Mortenson made and determine how much more he may owe, the attorney general’s office said.

The CAI board considered the money spent on Mortenson’s books and travel “a worthy and prudent investment,” the investigation found. From 2003-2011 CAI spent a total of $9.5 million on book production costs, book purchases and advertising and promotions, according to the attorney general’s calculations. Over that same period, CAI took in $72 million in donations.

But the investigation found serious holes in CAI’s operations and governance with Mortenson at the helm. The other board members weren’t able to rein in Mortenson or persuade him to document his expenses, despite “requests, cajoling, demands and admonitions,” the report said.

“There was a deliberate effort to put people who are loyal to Mortenson on the board,” the report said. As a result, “the board did not exercise sufficient control and direction over Mortenson.”

CAI and Mortenson said in their response that they disagree with some of Bullock’s analysis. Their business judgment has been validated by the number of completed schools and other projects in Central Asia, the number of people who now know the importance of promoting peace through education and by its own financial stability, the response said.

The charity also must hire a consultant to assist in the search for a new executive director, conduct annual independent audits and implement methods of tracking projects and expenses.

The attorney general’s office plans to monitor the changes by naming an independent observer who attends the CAI board meetings and by receiving the results of the independent audits for three years. CAI also will report on its progress in making the changes every two months starting in June.