Minnesota Second Judicial District Judge Robert Awsumb ordered the removal of one Otto Bremer Trust trustee late last month over allegations he misused his position, but indicated that trustees are not acting improperly as they look to sell the trust’s 92-percent stake in Bremer Bank.
Awsumb’s 103-page ruling came after a years-long court battle sparked by the 2019 decision by Otto Bremer Trust trustees Daniel Reardon, Charlotte Johnson and Brian Lipschultz to sell the trust’s share in the St. Paul-based Bremer Financial Corp., in October 2019. In response to the decision, Bremer Bank’s 16 employee-shareholders filed a complaint against them, arguing the trustees’ efforts were unlawful and contrary to Otto Bremer’s vision of the bank to serve and give back to its local communities. The Attorney General’s Office had sought to remove all three trustees, alleging they had not managed the Trust in accordance with the law.
In January 2020, Bremer Financial Corp. reportedly wrote to the Attorney General’s Office encouraging suit and more investigation into allegations that the trustees directed charitable dollars to “favored causes in exchange for personal recognition,” court documents state. Minnesota Attorney General Keith Ellison announced the same month that he was investigating the circumstances of OBT’s proposed sale of the then-$12 billion bank, whether the trustee’s motivations were self-interested, and whether the sale is consistent with Otto Bremer’s intent that the trust’s bank shares would only be sold due to “unforeseen circumstances,” as they claimed in their response to Bremer’s initial lawsuit against them in December 2019.
Awsumb indicated that the trustees were not acting in their self-interest in pursuing the sale. “The evidence does not support the argument that trustees pursued their strategy to increase their compensation or otherwise enrich themselves,” he wrote. To Awsumb, “there are many valid reasons” for Otto Bremer Trust to continue exploring the sale, including the regulation and investment restrictions the Trust faces as a bank holding company. He said the designation hampers the trust’s ability to operate similarly to other charitable organizations.
Lipschultz out
In ordering Lipschultz’s removal as a trustee, Awsumb said he “misused his grantmaking power by making multiple hostile or coercive statements” to the president and CEO of a local nonprofit because he believed they were not being sufficiently supportive of the Trust during the litigation. Court documents state Lipschultz had also improperly used Trust assets for personal purposes, including using staff time, computer resources and mailing, since he started in 2012.
In a statement April 29, Minnesota Attorney General Keith Ellison said he was pleased that Awsumb “saw that removing Trustee Lipschultz was the right thing to do for the Trust and its beneficiaries. This is a victory for the integrity of Minnesota’s charitable sector and the people of Minnesota.”
Editor’s note: An earlier version of this story misstated a timeline for the possible replacement of Lipschultz as a trustee.