Bremer Foundation hearing: Executive assistant testifies she was directed to ship products for a trustee's side business
Frederick Melo, Pioneer Press, St. Paul, Minn.
5 min read
Sep. 30—An executive assistant at the Otto Bremer Trust recalled routinely faxing, filing and shipping packages for Eagle Street Partners, a side business run by trust principal Brian Lipschultz, using her own credit card to pay for costs.
When she raised concerns with the foundation's financial controller that Lipschultz had told her to seek reimbursement from the trust for expenses incurred by his companies, the trustee offered a solution. From then on, she could use his own credit card.
"Problem solved," wrote Lipschultz, in a Sept. 16, 2019 email to executive assistant Marissa Schon, controller Tony Thompson and two fellow Trustees.
That wasn't the only time staffers became aware of apparent "self-dealing," the crux of allegations raised against the trustees of the St. Paul-based Otto Bremer Trust by the Minnesota Attorney General's office, which regulates charities.
THIRD DAY OF TESTIMONY
Trustee Charlotte Johnson was called to the witness stand on Wednesday, during the third day of testimony in a probate hearing that could determine whether the three trustees are allowed to keep their posts at the $1 billion philanthropy.
That decision could have far-reaching implications for the philanthropy's major asset — St. Paul-based Bremer Bank, a $15.7 billion institution and major Midwest farm lender, which was also founded in the 1940s. The three trustees have sought to sell controlling shares in the Bremer Financial Corporation to East Coast hedge funds, the first step toward a likely bank sale.
In 2019 and again in 2020, after the death of George Floyd in Minneapolis and during the early months of the pandemic, the trustees made "strategic" and emergency grants to nonprofits and charitable causes throughout the Midwest without the intimate involvement of program staff. Several of the causes struck some staff members as questionable.
Program officer Tessa Wetjen contacted the Minnesota Attorney General's office to express concern about grants to Abria Pregnancy Resources in St. Paul, which provides anti-abortion counseling, and had closed its doors at the time. Another $85,000 went to Fluence Media, a public relations firm run by Blois Olson, to fund the "MN Good" newsletter on philanthropy, which Wetjen described in writing as a "contract with a PR firm masquerading as a grant."
Funds went to Christian organizations such as Metro Hope Ministries, Next Chapter Ministries, Special K Ranch, Minnesota Teen Challenge and the Hope Manor Foundation. That seemed to fly in the face of the trust's founding documents which did not allow for religious grants beyond church music and church construction.
"It didn't feel like a place with a lot of integrity," said Wetjen, from the witness stand. "I felt there were grants that were inappropriate."
GRANT RECIPIENTS AT ISSUE
During cross-examination, an attorney for the trustees questioned whether Wetjen was aware that some of those faith-based organizations provided affordable and emergency housing. The grants might well be in keeping with Otto Bremer's goals, crafted in the war years following the Great Depression, of providing emergency assistance during disasters and public health crises.
Among the recipients was Rachel's Light, a nonprofit based in Owatonna, Minn. "Are you aware that this organization provides emergency shelter for women who are victims of domestic violence?" said the attorney.
Wetjen, who resigned her position, was among staffers who testified grants became a concern before the pandemic.
In 2018, a $500,000 grant went to the Friends of St. Paul College, where Johnson's husband had served on the board, though the trust had a tradition of not funding schools. In 2014, the Como Friends group received $1 million toward the Como Zoo's seal exhibit, though trustee Daniel Reardon was a Como Friends board member and the trust did not fund animal causes. The Ordway Center for the Performing Arts received another $1 million, even though the trust did not fund the arts.
Those grants were as much as 20 times larger than the trust's average $50,000 grants, attorneys for the attorney general's office noted in their questioning.
The attorney general's office quizzed Johnson about concerns she herself had raised about the trustees' financial compensation. Over the course of a decade, the trustees' pay, including investment fees, went from roughly $50,000 apiece to more than $300,000 for Johnson and more than $500,000 for Reardon and Lipschultz.
In 2014, the trustees fired executive director Randi Roth, who was not shy about raising concerns, and the two men chose to pay themselves "investment advisory fees" — a percentage of the trust's investment pay-outs. Johnson declined the extra fees.
At the same time, however, the trustees hired the Tealwood Investment Fund to serve as investment adviser, Johnson confirmed. Tealwood was staffed by her husband, Ward Johnson. The contract ended less than a year ago, after the attorney general began its inquiry.
OTTO BREMER TRUST:
Based in St. Paul. 46 employees.
Founded in 1944 by philanthropist Otto Bremer.
Issues more than $50 million annually in charitable grants and loans across Minnesota, Wisconsin, North Dakota and Montana.
Owns 92 percent of Bremer Bank.
Overall assets of $1 billion to $2 billion.
Led by Trustees S. Brian Lipschultz, Charlotte Johnson and Daniel Reardon.
BREMER BANK:
Based in St. Paul. 83 branch locations. 2,000 employees.
Third-largest bank in Minnesota by assets ($15.7 billion).
Earned net income of $155 million in 2020, and distributed $73.4 million to the Otto Bremer Trust that year.
