Minnesota Court of Appeals rejects bid to reinstate Brian Lipschultz on Otto Bremer Trust

The Minnesota Court of Appeals has rejected an effort by Brian Lipschultz, a former trustee with the embattled Otto Bremer Trust, to regain his seat with one of the state’s oldest philanthropies, a parent company to Bremer Bank.

“Lipschultz’s persistent improprieties support the district court’s determination that his removal serves the best interests of the beneficiaries and the Trust,” reads the decision issued Tuesday by the Minnesota Court of Appeals. “Lipschultz continually breached his duties to the Trust’s beneficiaries.”

A call to his attorney was not immediately returned on Tuesday.

Judge’s decision

Lipschultz last year fought a Ramsey County District Court judge’s decision to unseat him from the St. Paul-based charity following a 20-day probate trial driven by Minnesota Attorney General Keith Ellison’s office, which accused Lipschultz and the two other Otto Bremer Trust trustees of self-dealing.

In particular, Lipschultz made special efforts to recruit activist investors from East Coast hedge funds to use their power as shareholders for a hostile takeover of the Bremer Financial Corporation, which has its own board.

“Lipschultz purposefully sought out investors who were willing to incur the risks associated with a hostile deal,” noted the Court of Appeals in its written opinion affirming the lower court decision to unseat him. “Lipschultz told (his) consultant he wanted smaller activist investor funds who ‘live for this kind of thing,’ because selling to them ‘would signal to the entrenched (Bremer Financial) management … that we aren’t (expletive) around.’”

Trustees

Ellison’s office also accused Lipschultz of using the philanthropy’s resources to staff his own side business, and of repeatedly browbeating a nonprofit leader for hosting a Junior Achievement “Hall of Fame” event that celebrated the chair of Bremer Financial Corporation’s board.

Rather than abide by Lipschultz’s wishes and advocate to the governor’s office for the trustees and against the bank board, Junior Achievement chose to return $1.2 million in funding to the Otto Bremer Trust.

Judge Robert Awsumb chose not to remove trustees Charlotte Johnson and Daniel Reardon in his 103-page legal order last April.

He found, however, that Lipschultz had, in a summary from the Court of Appeals, “breached his duties to the Trust’s beneficiaries … caused the Trust to incur unnecessary expenses, injured the Trust’s charitable reputation, refused to disclose information to the (attorney general’s office), and eliminated a relationship with at least one beneficiary.”

Awsumb, in his order, froze further bank share sales without court approval, but he did not eliminate the possibility of a bank sale down the line. Further litigation on that point is likely. Efforts to appoint a replacement for Lipschultz at the helm of the three-member Otto Bremer Trust board have been delayed by the legal fight over his seat.

Appeal

Lipschultz appealed Awsumb’s decision last year in an effort to get his trustee seat back.

On Monday, the Court of Appeals denied his appeal, noting “the district court did not abuse its discretion when it removed him as a trustee.”

Ellison’s office issued a written statement on Tuesday, noting that “by affirming Lipschultz’s removal, the Court of Appeals made it clear that self-dealing, coercing grantees, and lying to the Attorney General is unacceptable conduct for charitable trustees in Minnesota.”Related Articles

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