The Minnesota Court of Appeals has upheld a lower court's decision last year to oust Brian Lipschultz as one of three trustees of Otto Bremer Trust, one of the state's largest philanthropies.
Minnesota Appeals Court upholds removal of trustee of Otto Bremer Trust
Brian Lipschultz was ousted from the trust last year following a suit brought by the Minnesota Attorney General's Office
January 17, 2023 at 6:25PM
In the ruling released Tuesday morning, the Appeals Court affirmed that Lipschultz "engaged in a series of breaches that collectively constitute 'a serious breach of trust' " under Minnesota law.
It also concluded that his "repeated improprieties" demonstrate that his removal is in the best interest of the trust and its beneficiaries.
"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," Minnesota Attorney General Keith Ellison said in a statement.
Lipschultz's attorneys did not immediately respond to a request for comment.
After a nine-month investigation, the Minnesota Attorney General's Office had originally sought to remove all three trustees. It cited a number of issues including allegedly being rushed and reckless in selling their shares of Bremer Financial Corp. in 2019 in an attempt to trigger a sale of the bank, which the trust owns in an unusual arrangement.
It also pointed to other alleged misconduct such as trustees appointing relatives as their successors and paying themselves a separate investment fee that attorneys argued was repetitive with their compensation.
A lengthy evidentiary hearing followed in October 2021 in Ramsey County District Court. It stretched on for weeks with numerous witnesses and exhibits.
In April, Judge Robert Awsumb ruled against many of the attorney general's arguments. But he did agree that Lipschultz, who had pushed hardest and most aggressively for the sale of the bank, should be removed. The other two trustees, he said, could keep their positions.
Awsumb noted that Lipschultz used the trust's resources for personal matters, refused to disclose to the Attorney General's Office who he had designated as a potential successor, and "displayed a crude, vulgar and otherwise offensive brashness that has no place in the charitable world."
Lipschultz's replacement has not yet been selected. The Attorney General's Office and the trust have been in communication with the District Court about picking a third trustee.
In the meantime, a number of other lawsuits between the bank, the trust, shareholders and hedge funds stemming from the attempted sale are beginning to move forward again.
Those suits had been put on hold during the attorney general's case against the trustees.
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