Minnesota attorney general sues ex-charter school leader over ‘reckless’ investment

Minnesota Attorney General Keith Ellison has sued the former superintendent of a St. Paul charter school who invested money with a hedge fund and lost $4.3 million of the school’s money.

The suit filed Wednesday in Ramsey County District Court called Christianna M. Hang’s actions “reckless” and “illegal” and seeks repayment of the money, civil penalties and a court order to guard against similar actions in the future.

Hang, founder of Hmong College Prep Academy (HCPA), was its superintendent when in 2019 she allegedly violated state law by wiring $5 million to Woodstock Capital Partners without getting approval from the school’s board of directors and going against advice from the school’s attorney and accountants. Minnesota law also prohibits charter schools from investing with hedge funds, the lawsuit said.

“I am frankly stunned by the recklessness HCPA’s former superintendent displayed when she took millions of dollars meant to educate children and instead wired them into some obscure hedge fund,” Ellison said in a statement announcing the legal action. “This illegal use of HCPA’s resources and subsequent loss of over $4 million is an astonishing disservice to students and their families, teachers and administrators, and Minnesota taxpayers. Today, I am suing to recover these funds, protect the educations of young Minnesotans attending HCPA, and hold Ms. Hang accountable.”

The Star Tribune left a message at HCPA seeking comment and has attempted to reach Hang.

Hang also made the investment “without any meaningful degree of research into the hedge fund or its principals,” which resulted in the money-losing venture, the suit said. She resigned in 2021 after details about the investment became public and HCPA was sharply criticized in a report by the Office of the Minnesota State Auditor.

That sparked an investigation by the Minnesota Attorney General’s Office.

HCPA is a charter school that opened in 2004 and is located just south of the State Fairgrounds. The school serves about 2,400 students in kindergarten through grade 12. Most of its funding comes from the state, the suit said.

As president, Hang also filled the role of chief financial officer, controlling HCPA’s finances and investment decisions, the suit said. The school had an investment policy, but hedge funds were “clearly not among the investment instruments allowed,” the suit said.

Hang learned about Woodstock through an investment company that became a supporter of HCPA. Hang had asked a representative of the investment company if she knew any investors to help plug a $7 million gap for an expansion project and was directed to Woodstock, the suit said.

In September 2019, Hang asked the school’s board of directors to provide an “authorized signature” and said Woodstock would “invest them securely” and comply with HCPA investment policy. Hang did not tell the director Woodstock was a hedge fund, the suit said.

“It’s safe, schools do this,” Hang told the director, the suit said.

By March 2021, the investment balance had dropped to $722,205. The school recovered about $634,000 of that, according to the suit and the auditor’s report.

“Hang’s breach of her duty of care caused damage to HCPA, namely the $4.3 million loss of the school’s investment with Woodstock,” the suit said.

The attorney general also filed an assurance of discontinuance with HCPA, which imposes reforms on the school’s governance and investment practices.

Separately, in September 2023 the Securities and Exchange Commission charged Clark Reiner, the manager of Woodstock Capital, with making misstatements to the charter school. Reiner agreed to a cease-and-desist order without admitting or denying guilt.