Trustees of Otto Bremer Trust can keep their jobs for now but with new restrictions, a judge ruled Monday, as they continue to face other lawsuits over their attempt to sell the trust's biggest investment, Bremer Financial Corp.
The Minnesota Attorney General's Office this summer asked a court in St. Paul to put new people in charge of the Bremer Trust, one of the state's largest philanthropies, alleging that the current trustees have not acted in the best interests of the trust and engaged in self-dealing. The trust owns but doesn't manage the firm best known as Bremer Bank, Minnesota's fourth-largest bank.
In the ruling Monday, Ramsey County Judge Robert Awsumb declined to remove the three trustees on an emergency basis, saying a full hearing would be needed to vet the merits.
He ordered both the trust and the state to meet and discuss scheduling future proceedings, including potential mediation. In the meantime, Awsumb ordered restrictions that he said would protect the trust's assets and ensure the trustees operate transparently.
He ordered the trustees' compensation reverted to a level last approved by the court in 2017. He prohibited them from selling any more stock of Bremer Financial without his approval and told them to complete a course on the fiduciary duties of trustees of charitable trusts.
"By this order, the Court seeks to implement interim measures which protect the assets of the Trust, compel full transparency of the Trustee's administration, and ensure the continued philanthropic activities of the Trust in this time when its charity is perhaps more needed than at any time in recent decades," Awsumb wrote in a memo accompanying the ruling.
"With these safeguards in place, the issue of the potential removal of the Trustees is best addressed following a full evidentiary hearing and after careful consideration of all of the evidence received at that hearing."
A lawyer for the trustees declined to comment.
Attorney General Keith Ellison said in a statement that his office is evaluating the order and possible next steps.
"The court has understood our serious concerns with the trustees' unacceptable conduct in the operation of the Otto Bremer Trust," he said. "While the solution we have offered is to remove the trustees, I'm glad the court has ordered some solutions to protect the trust and the assets it holds on behalf of the public."
In addition, Awsumb has suspended the annual fee paid to trustees for non-Bremer Bank holdings, ordered them not to make new investments in private equity funds or hedge funds without getting court approval, and barred them from using their office space, equipment and staff time for non-trust purposes. He also ordered the trustees to consult with a human resources professional to give them advice and training.
Those provisions are in response to multiple concerns raised in the lawsuit by the attorney general's office. The trust had offered to make some of those moves on its own during the course of the case, such as not selling any more of the bank's shares and not making any new investments in private equity or hedge funds while the case was still pending.
Multiple other lawsuits involving the trust's attempted sale of the bank last year have taken a back seat during the attorney's general's case.
Bremer is the only bank in the nation owned by a charitable trust. Trustees last year, at a time of high valuations for banks and an accelerating pace of mergers in the banking industry, sought to sell the bank and said that proceeds from a sale would allow the trust to increase its charitable giving.
Bank executives and employees, however, have tried to stop them, alleging that trustees were motivated by enriching themselves and that the sale wasn't in the best interest of the bank.