The abrupt departure of the Minneapolis Regional Chamber's chief executive, Jonathan Weinhagen, followed an internal investigation into the organization's finances and governance.

Now, the regional chamber of commerce told the Star Tribune it is grappling with a $500,000 projected deficit, leading it to lay off five staff members this week.

At the time of Weinhagen's resignation on June 27, the chamber declined to elaborate on the reason for his departure.

On Thursday, it said his resignation came on the heels of an independent review of the chamber's finances.

The chamber's leadership informed the full board of the deficit on Monday and its members on Thursday.

A source told the Star Tribune that law enforcement authorities have been notified.

Financial shortfall

In April, a "special committee" of the chamber's board started investigating "financial and governance controls." The committee hired the high-powered law firm Jones Day to conduct an independent review.

In June, Jones Day presented its findings to the special committee; Weinhagen resigned after the meeting, according to the chamber's communication, which was sent by its chair, Darrel German, and its interim director, John Stanoch.

Stanoch and German declined to comment further.

Weinhagen, who led the chamber since 2016, did not return calls for comment. He previously worked at the St. Paul Area Chamber of Commerce and has been a Mounds View Public Schools board member for 10 years.

The Minneapolis Regional Chamber, which advocates and lobbies for the local business community, has 2,300 members throughout the 13-county Twin Cities area.

In the letter to members, the chamber said reviews of its finances and "controls" were ongoing. It said the $500,000 deficit was being addressed with efforts to generate more revenue and by "closely managing its expenses." The layoffs are a result of the latter.

"This was a difficult decision and driven solely by our immediate need to address the deficit," the letter said.

The chamber had revenues of $3.66 million and expenses of $3.64 million in 2022, according to a filing with the Internal Revenue Service. More recent filings were not publicly available.

The chamber's revenue comes from several sources. In 2022, it received $696,000 in grants and contributions, including $155,687 in government grants, the IRS form said. It took in $1.3 million in dues from its members.

On the expense side, the chamber gave out $155,000 in grants and spent $2.17 million on salaries and wages in 2022.

Weinhagen was paid $260,600 in 2022 and received another $27,489 in "other" compensation from the chamber and related organizations.

Breanna Schafer, a Target executive and chamber board member, is leading the organization's search for a new CEO.

Star Tribune reporters Rochelle Olson and Stephen Montemayor contributed to this report.