ST. PAUL — Minnesota Attorney General Keith Ellison’s petition to remove and replace three trustees of one of St. Paul’s oldest and largest philanthropies will be heard online through a remote hearing in Ramsey County Probate Court on Thursday, Aug. 27.
The case against Otto Bremer Trust has been assigned to Judge Robert Awsumb, who is reviewing hundreds of pages of interviews conducted by Ellison’s office with current and former trust employees.
The court will determine which of the nearly 300 written exhibits will be kept private for legal reasons, such as containing sensitive financial information.
In addition to his petition to replace the trustees, Ellison has asked that ongoing litigation between the philanthropy and the bank it owns, Bremer Financial, be put on hold pending the outcome of petition proceedings.
Bremer Financial sued the three trustees of Otto Bremer Trust last year to halt a bank sale to 19 out-of-state hedge funds, and the trustees quickly filed counterclaims accusing bank officials of breach of fiduciary duty.
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The bank is partially employee-owned, and bank workers have filed their own class-action suit against the trustees to protect their voting rights, while multiple investment funds have filed suit to allow the bank sale.
Community leaders have also expressed concern about ceding control of the St. Paul-based bank and major farm lender to East Coast investors.
Trustees respond to accusations
In a petition and legal memorandum this month, Ellison accused Bremer Trust trustees Charlotte Johnson, Daniel Reardon and S. Brian Lipschultz of lavish spending, hiking up their own compensation, paying themselves redundant fees and attempting to sell Bremer Bank for personal enrichment.
In its exhibits, the attorney general’s office pointed to the trustees’ $2.5 million office upgrade, which included a $1,090 floor lamp, $5,000 lounge chairs and $60,000 in office artwork.
On Thursday, Aug. 20, attorneys for the three trustees filed a 14-page response to Ellison’s petition, denying each of his claims.
“The attorney general’s petition assails the good character of the trustees and seeks the trust law equivalent of the death penalty — the immediate removal of trustees,” wrote attorneys with the Minneapolis law firm of Ciresi Conlin.
They said that through private stock sales, the trustees saw an opportunity to increase the philanthropy’s charitable assets by over $1 billion, doubling the amount of money on hand for annual grants and charitable investments.
They explained their intent to sell the bank in a sit-down meeting with the state attorney general’s office’s charities division in August 2019.
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A letter in response raised no red flags other than questions about the trustees’ financial compensation, but the two officials they met with are no longer with the attorney general’s office.
The trustees said they received a $2 billion offer for the Bremer Bank shares, but the bank’s management and non-trustee board members refused to sell.
The trustees then decided to sell shares in smaller installments to outside investors, who would then have the authority to replace the bank’s board of directors. They said they disclosed the possibility that might happen to the bank board in January 2019.
German immigrant Otto Bremer, who founded the bank, created the philanthropic trust in 1944 with the intent that it would hold the financial corporation’s shares and reinvest the dividends in the community. The trust owns a 92% stake in the bank, which is otherwise employee-owned.
