Attorney General Ellison prevails at Minnesota Supreme Court on Otto Bremer trustee removal case

Supreme Court upholds district court and court of appeals decisions to remove former trustee, stating he “repeatedly placed his own priorities before those of the Trust”

Decision resolves litigation the Charities Division of the Attorney General’s Office first brought in 2020, affirms Office’s authority to protect charitable trusts

February 7, 2024 (SAINT PAUL) — Minnesota Attorney General Keith Ellison prevailed today in an opinion of the Minnesota Supreme Court that upheld decisions of lower courts supporting the removal of former Otto Bremer Trust trustee Brian Lipschultz. Attorney General Ellison first sued the Otto Bremer Trust in 2020, alleging the trustees of the Otto Bremer Trust, including Lipschultz, had engaged in a pattern of serious breaches of fiduciary duty, including self-dealing, excessive compensation and spending, creating a hostile work environment, and shifting the focus of the Trust from charitable to financial purposes.

In today’s precedential decision, the Minnesota Supreme Court affirmed that Lipschultz “failed to meet [the] standard” expected “of a trustee of a well-respected charitable trust” because, among other things, he used “his position of power to intimidate a grantee on matters unrelated to any charitable purpose,” “affirmatively lied” to the Attorney General “about having a named successor” trustee, and “repeatedly placed his own priorities before those of the Trust” by using trust property for his own benefit and furthering his own interests when selling the Trust’s shares in Bremer Financial Corporation. The Court also affirmed that the Attorney General is “the representative of the community” that benefits from charitable trusts and is “empowered” to litigate on the community’s behalf to ensure their purposes are accomplished.

“The Minnesota Supreme Court got it right today when it affirmed that Brian Lipschultz was properly removed from Otto Bremer Trust,” Attorney General Ellison said today. “The Supreme Court’s decision properly protects Otto Bremer’s legacy from a trustee who put his own interests before the public that is supposed to benefit from the trust.  By affirming Lipschultz’s removal, the Supreme Court made it clear that self-dealing, coercing grantees, and lying to the Attorney General in investigations has no place in the administration of Minnesota charitable trusts.

“I’m proud of the work the Charities Division of my office has done over several years to see this complex litigation to a successful resolution. They are diligent enforcers of Minnesota’s nonprofit and charities laws and work hard to ensure all charities, nonprofits, and charitable trusts comply with the laws that protect them and all Minnesotans,” Attorney General Ellison concluded.

History of Otto Bremer Trust litigation

On August 12, 2020, the Charities Division of Attorney General Ellison’s office brought a petition to remove Brian Lipschultz and the other Otto Bremer Trust trustees. Following a weeks-long evidentiary hearing in October 2021, Ramsey County District Court Judge Robert Awsumb removed Brian Lipschultz in an April 29, 2022 order. The district court found that Lipschultz engaged in “egregious” misconduct and a “pattern of improper behavior,” including “repeatedly” misusing trust resources for his personal benefit, acting with “hostile” and “coercive” conduct toward grantees, and misrepresenting key facts to the Attorney General.

Lipschultz appealed the order to the Minnesota Court of Appeals, which affirmed the district court’s decision on January 17, 2023. Lipschultz appealed the decision on February 17, 2023 to the Minnesota Supreme Court, which granted review on April 18, 2023 and heard oral arguments on September 6, 2023. The Minnesota Council of Nonprofits filed an amicus brief in support of Lipschultz’s removal, emphasizing that a contrary ruling would “open nonprofit community organizations, and the wider public that benefits from their work, to abuse by charitable trustees.”

Attorney General’s civil enforcement authority over charities, nonprofits, and charitable trusts

In Minnesota, the Attorney General through the Charities Division has civil enforcement authority over the state’s charitable trusts, nonprofit corporations, and soliciting charitable organizations. The Charities Division does not enforce criminal laws. Under state law, charitable trustees have fiduciary duties to act in the best interests of the charitable beneficiaries of the trust. The Attorney General’s Office provides additional information about fiduciary duties and provides additional resources on its Charities homepage.

The public may submit complaints to the Attorney General about potential misconduct or other concerns. Complaints may be submitted either by using a form on the Attorney General’s website, or by calling (651) 296-3353 (Metro area), (800) 657-3787 (Greater Minnesota), or (800) 627-3529 (Minnesota Relay).