Weighing in on an acrimonious power struggle, Minnesota Attorney General Keith Ellison is asking a court to oust three trustees of the Otto Bremer Trust over their attempt last fall to engineer a sale of the Bremer Financial Corp., the trust’s primary asset.
In documents filed Wednesday in Ramsey County Court, Ellison alleges that the trustees “acted recklessly in their attempt to sell the trust’s BFC shares to a large number of out-of-state hedge funds” in an effort to “enrich themselves significantly” at the expense of the trust’s “charitable purposes.”
The trustees are identified as Brian Lipschultz, Daniel Reardon, and Charlotte Johnson.
In a statement, the Otto Bremer Trust blasted Ellison’s decision to get involved in the case and denied any wrongdoing.
“Today’s filing by the Attorney General’s office is an unprecedented example of putting politics over people,” the statement reads. “The trustees are guided by one principle: Do what is in the best interests of the trust and maximize its capacity for charitable giving. In that effort, they have been extraordinarily successful; in 2019, charitable giving by the trust exceeded $56 million and millions more in emergency relief to those most in need in response to the pandemic and the resulting economic dislocation.
“For the past year the trustees have explored a sale of Bremer Financial Corporation that would have increased the trust’s assets by more than a billion dollars,” the statement continues. “This effort – which is true to the intent and direction of Otto Bremer – has met with opposition by BFC’s management and directors who are more concerned about maintaining their positions rather than increasing the value of the trust’s assets.”
Bremer Financial Corp. said in a statement that it “appreciates Attorney General Ellison’s thorough investigation into this matter. We are in complete support of the attorney general’s filing and believe these actions are necessary to fulfill Otto Bremer’s vision for the trust. We look forward to working with the attorney general’s office as we move forward.”
The dispute dates to last fall, when the Bremer Financial Corp. and seven of its directors sued three other directors — who are also trustees of the Otto Bremer Trust — to stop a planned sale of the bank.
Otto Bremer Trust owns more than 90% of the bank’s economic shares, but it controls only three of the 10 board seats and 20% of the voting shares. Bremer employees and directors own the remaining voting shares.
In the lawsuit, the seven directors claimed among other things that the sale would violate terms of the trust’s founding documents, which required the trust to hold Bremer shares “in perpetuity” except in the case of “unforeseen circumstances.”
Ellison alleges in the court documents that the trustees’ attempted sale runs counter to the wishes of Otto Bremer, the trust’s founder. Bremer established the trust to “relieve poverty,” establish scholarships, promote public health, and assist “poor and deserving children in securing education,” among other charitable goals, Ellison said.
The trustees’ attempt to sell the bank “enriched them significantly, exposed [Otto Bremer Trust] to significant legal risk, and drained the trust of millions of dollars in expenses that should have been available for the charitable purposes of the trust,” Ellison said.
Ellison is proposing that the court appoint Pamela Alexander, Marcia Avner, and Carleen Rhodes as interim trustees. Alexander is a retired judge of Hennepin County District Court. Avner is a former public policy director of the Minnesota Council on Nonprofits, and Rhodes is the former president and CEO of The Saint Paul Foundation and the Minnesota Community Foundation.
Ellison is also asking the court to stay the lawsuits between the trustees and the BFC-related parties until his petition is decided, according to the press release.