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Friday, November 26, 2021

Government auditor sent Hmong school hedge fund investment report to prosecutor’s office

The Office of State Auditor’s Office on Monday released an investigation report that said the $ 5 million investment in the hedge fund by St. Paul’s Charter School violated state law and the school’s own investment policy.

Hmong College Preparatory Academy lost $ 4.3 million between September 2019 and March 2021 before withdrawing the remainder of its investments from UK hedge fund Woodstock Capital.

The investment was supposed to help the school pay for a new high school.

“Given the high level of risk associated with the Partnership, this is not an investment consistent with the Charter School’s principal retention policy and is not an appropriate investment for public funds,” the government auditor said in a report.

The school is suing Woodstock in hopes of recovering lost funds, alleging that the hedge fund failed to comply with a “cover letter” directing it to invest in safer, more liquid vehicles. Woodstock denies the existence of such an agreement.

The auditor’s report, which notes that the subscription agreement included prohibited investments such as European government bonds and “interest-bearing products,” said the outcome of the lawsuit “is unlikely to affect our findings in this report.”

The auditor sent the report to the Ramsey County attorney’s office for review, citing the law on the use of public funds.

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“If such a report reveals malfeasance, misconduct, or dereliction of duty, the public auditor must file such a copy with the district attorney for the district in which the political division’s administrative offices are located, and the district attorney must initiate such proceedings as the law and the public interest require.” , – the report says with reference to the statute.

A representative of the prosecutor’s office did not immediately respond to a request for comment.

Bethel University, empowered to prepare for Hmong College, has instructed the school to follow a corrective action plan that includes creating a separate CFO position instead of letting the superintendent do the job. The board of directors has begun implementing this plan, the recommendations of which are described in the audit report as “reasonable and appropriate”.

Bethel also called on the school board to fire Superintendent Christiane Hang, who invested the money.

The school board hired an attorney to look into the circumstances of the investment – a possible step towards firing Hang for good reason – but most board members so far have indicated they want her to remain as superintendent.

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