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Wednesday, October 27, 2021

According to CEO testimony, Junior Achievement of the Upper Midwest returned a $1.2 million grant to the Otto Bremer Trust

Taking the stand of a witness in Ramsey County District Court on Wednesday, a nonprofit leader had tears in her eyes as she described how a major donor attempted to put a heavy hand on day-to-day operations.

When Sarah Dzuk, chief executive of Junior Achievement of the Upper Midwest, called Brian Lipschultz last month, she recalled that she was openly furious—though she held off on asking for $1.2 million back in grant money.

The Otto Bremer Trust was a long-funded St. Paul-based non-profit and a major part of its work with students and future entrepreneurs. The Otto Bremer trustee, Lipschultz, made it clear that he was unhappy that Junior Achievement had not approached the governor’s office to advocate for philanthropy, which has been intense since being sued by Bremer Bank officials in late 2019. The state is under investigation.

Dziuk said Lipschultz was “very angry and very disappointed” that Junior Achievement planned to honor Bremer Financial Corp board chairman Ron James during its virtual “Hall of Fame” event on September 30.

The trustee of the Otto Bremer Trust, S. Brian Lipschultz testifies during a hearing at Ramsey County District Court on Wednesday, October 6, 2021 in St. The office of Minnesota Attorney General Keith Ellison is seeking the removal and replacement of three trustees. of the Otto Bremer Trust, saying he is guilty of “self-treating” and should be removed from his positions at the helm of one of the state’s oldest charitable foundations. The St. Paul-based foundation disburses more than $50 million in grants and charitable loans annually. (John Otte / Pioneer Press)

The award was determined despite the fact that the board of Bremer Financial filed legal action against the trust, the bank’s parent company, after the trustees decided to sell bank shares controlling 11 East Coast banks and 19 hedge funds. had tried.

Honoring James felt like a betrayal, and the effect was “devastating,” Dzuk recalled, telling Lipschultz. She paused to wipe away tears before telling how she had never been bullied to such an extent by a donor before. “He spoke to my ignorance in the process.”

‘Losing our foundation support’

The encounter, Dzuk said, mirrors a similar phone call with Lipschultz in November 2020, in which she reminded him that “trustees will be in power for a very long time” and that Junior Achievement should use his Hall of Fame event. . Raising them as a partner. “

The phone calls led to discussions between Dziuk and the Junior Achievement Executive Committee, as well as Bremer Bank President Gene Crane.

“I share the risk of losing my foundation support,” said Dzuk, who arrived in court Wednesday, represented by former Minnesota Attorney General Mike Hatch as his personal attorney.

According to CEO testimony, Junior Achievement of the Upper Midwest returned a $1.2 million grant to the Otto Bremer Trust
s. Brian Lipschultz, a trustee for the Otto Bremer Trust, testifies during a hearing in front of Ramsey County District Court, Judge Robert Ausumb, at Ramsey County District Court on Wednesday, October 6, 2021 in St. Minnesota Attorney General Keith Ellison’s office is seeking to remove and replace three trustees of the Otto Bremer Trust, saying they were guilty of “self-treating” and placed them at the helm of one of the state’s oldest charitable foundations. posts should be removed. The St. Paul-based foundation disburses more than $50 million in grants and charitable loans annually. (John Otte / Pioneer Press)

Based on Crain’s input, the nonprofit decided to turn the tables.

On September 21, following a 30–1 board vote, Junior Achievement officials sent a letter to the Otto Bremer Trust indicating that it had decided to return a $1.2 million student entrepreneurship grant to philanthropy, because ” We do not believe that an ongoing relationship aligns with the expectations of any organization.”

Harsh tone but no danger?

Dziuk’s testimony represents the latest entry in a list of evidence submitted by the office of Minnesota Attorney General Keith Ellison, as evidence that three of the Otto Bremer Trust trustees are guilty of “self-dealing” and that they are being treated as one. At the top should be removed from their positions. One of the oldest charitable foundations in the state.

During Dzuk’s own cross-examination, however, trust attorney Mike Siresi noted that his talks with Lipschultz — and his refusal to contact the governor’s office on behalf of the trust in 2020 — would cost the nonprofit its $1.2 million. The grant, or any previous grant, never had a cost. or loan. Nor did Lipschultz explicitly ask the nonprofit to rescind its Hall of Fame honors for James, who was chairman of the Bremer Financial Board.

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“You would agree in this August 25 call Mr. Lipschultz never threatened you or Junior Achievement, right?” Cersei said. “He didn’t ask for the money back. He didn’t say anything about funding on August 25, did he? Zippo. Nothing. … That’s all he said: ‘Fix the situation.’ “

The 77-year-old trust was founded by philanthropist Otto Bremer in the aftermath of the Great Depression, with the aim of distributing dividends from his prime assets in Minnesota, Wisconsin, North Dakota and Montana – the Bremer Bank – to charitable causes. The St. Paul-based foundation disburses more than $50 million in grants and charitable loans annually.

Trustees defend attempts to sell Bremer Bank

The three trustees – all descendants of Bremer’s closest advisors and his hand-picked heirs – have defended their efforts to sell the Bremer Bank, which they say would allow the philanthropy to increase its charitable giving.

He says a non-binding buyout offer raised the bank’s market value from $1 billion to $1.8 billion, requiring the philanthropy to distribute more of its assets to beneficiaries under Internal Revenue Service rules. This could, in theory, chew through Bremer Bank’s liquid assets.

He has also accused the bank board of working selfishly to save his job. A potential bank sale drew interest in 2019 from Huntington Bank, BMO Harris Bank and Old National Bank.

Even some of the trustees’ critics acknowledged that a bank sale would align the foundation with other philanthropists across the country, such as Ford and Kellogg’s, which have long had to liquidate the private companies that they owned. made famous.

Wednesday marked the eighth day of probate testimony before Ramsey County District Judge Robert Ausumb, after some eight months of investigation by the attorney general’s office and a year of statements and legal motions. The trial of the evidence, which has not yet started calling witnesses for the defence, will resume on Monday.

Lipschultz took the stand for about an hour at the end of the day, fielding questions from Carol Washington, director of the attorney general’s charity division, about the work she did during trust hours for her side venture, private equity firm Eagle Street Partners. questioned. and using trust resources.

Lipschultz paid back $1,800 to the trust for use of office space and his administrative assistant’s time since 2017, but he admitted on the witness stand that he had been involved with Eagle Street since the trust began in 2012. He did not pay the trust back for his working hours, as he did not track how many hours per day were spent on trust activities.

“I’m a 24/7 trustee,” he said. “I don’t think there’s a time when I’m not a trustee.”

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