The trustees of Otto Bremer Trust, fighting the state attorney general to keep leading one of Minnesota’s largest charities, on Thursday called his effort to throw them out illegal and unprecedented.
In a court response to the petition Attorney General Keith Ellison filed last week for their removal, the trustees called for a jury to hear their case, which centers on a dispute over the future of Bremer Bank, the state’s fourth-largest by assets.
“The attorney general’s attempt to summarily remove the trustees, on a secret record of his own making, violates any conceivable notion of fairness and justice,” the trust said, in a filing signed by its outside attorney, Michael Ciresi of Minneapolis.
The trust owns the bank but does not control its board or day-to-day management, the only example of a bank owned by a charity in the United States. Trustees and bank management clashed last year over a prospective sale of the bank, which is based in St. Paul and operates in Minnesota, North Dakota and Wisconsin.
The trust’s giving is chiefly funded with profits from the bank, which it distributes to charities in the three states at the rate of about $50 million annually.
In seeking the removal of the trustees, Ellison effectively sided with key arguments of the bank’s management that the trustees were not acting in the best interests of the charity or the bank.
In Thursday’s response, the trustees said that Ellison was seeking “the trust law equivalent of the death penalty” and denying them an opportunity for a fair trial to confront him.
“This transparent political ploy would be unprecedented in the history of Minnesota, and is clearly at odds with the best interest of the public,” the trustees said.
The Attorney General’s Office has oversight of charitable trusts in the state, reviewing operations to make sure they are in compliance with regulations, including those allowing them to be free of taxes.
In their filing, the Bremer trustees said the office “does not have unbridled authority” and could not contradict the trust’s governing document or overlook the trustees’ “many accomplishments in managing the trust.”
The governing document created by Otto Bremer, who started the bank during World War II and then created the trust to own it after his death, says the bank “may only be sold if, in the opinion of the Trustee, it is necessary or proper to do so owing to unforseen [sic] circumstances.”
In previous court filings, the trustees noted that banking has been reshaped by technology, industry consolidation, the ultralow interest-rate environment and changes in consumer habits. Selling the bank would free the trust from the ups and downs of the industry and allow it to grow its assets through a broader range of investments, the trustees argue.
Banking-industry deals swelled nationwide in 2018 and 2019, but they have fallen off substantially since the coronavirus outbreak early this year threw the country into recession.