The Minnesota Attorney General’s Office is asking for a delay in the lawsuit St. Paul-based Bremer Bank filed against its philanthropic parent — the Otto Bremer Trust — while it conducts its own investigation.
In a letter filed in Ramsey County District Court this past week, Assistant Attorney General Carol Washington indicated that her office has a “pending investigation regarding central issues in the lawsuit” and asked that the court delay continuation of the suit until the investigation concludes.
On Oct. 28, 2019, the Trust’s three trustees transferred approximately 37 percent of Bremer Financial’s voting stock to 19 out-of-state hedge funds, with the goal of replacing the Bremer Financial board of directors and exploring whether to put the bank up for sale.
The Attorney General’s investigation will look at the circumstances around Trust’s leaders’ sale of bank stock and whether their motivations are self-interested or whether they honor Trust-founder Otto Bremer’s intent that the shares only be sold due to “unforeseen circumstances,” according to the Attorney General’s office.
“My office is using the broad authority we have under the law to make sure that charitable trust assets are used for the public good,” Attorney General Keith Ellison said in a prepared statement. “This includes by representing the public in making sure that trustees fulfill their fiduciary duties and remain faithful to the charitable purpose of the trust.”
HOW WE GOT HERE
The bank sued the three trustees who oversee the charitable trust — which has a 92 percent financial stake in the otherwise employee-owned bank — this past fall in order to halt efforts by three trustees to sell bank shares to the group of hedge funds and outside investors. The bank is 80 percent employee-controlled.
Viewed as the first step toward a potential bank sale, the suit alleges that the trustees lied to the bank’s board of directors and violated a structure set up decades ago, in an effort to enrich themselves, court documents say.
In its counter-suit, the trust called the claims false and without merit.
Founded in 1943, the $13 billion Bremer Bank is Minnesota’s fourth-largest banking institution and the 11th largest farm and agricultural lender in the country.
WHY ATTORNEY GENERAL’S OFFICE
Under state statute, the attorney general’s office is responsible for the “supervision, administration and enforcement of charitable trusts,” according to the office’s letter, which did not otherwise specify the nature of the investigation.
The court document was filed as the parties are preparing to meet for a scheduling conference on the matter Wednesday.
The letter indicates the attorney general’s office has contacted both sides about its aim to stay proceedings until the completion of its investigation and noted that the parties are open to the “general concept.”
WHAT TRUST SAYS
A spokesman for the trust issued the following statement Monday morning:
“We appreciate the Attorney General’s thorough review of the current situation and particularly for clarifying the role his office plays in terms of oversight and as the only party with standing to represent the beneficial interests of OBT. We’ve been working closely with the Attorney General’s office for 75 years and welcome its active involvement in this matter to ensure the best outcome for OBT’s beneficiaries,” the statement read.
WHAT BANK SAYS
A spokeswoman for the bank issued the following statement:
“We welcome the attorney general’s involvement and the opportunity to cooperate in the office’s investigation. We remain focused on serving our customers, employees and communities with the same heartfelt determination that Otto Bremer instilled in our company when he established it in 1943.”