Tag: Keith Ellison

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Attorney General Ellison sues company for posing as charity helping service members, funneling donations to owner

Minnesota Attorney General Keith Ellison today announced that his Office is suing a company calling itself Contributing 2 Combatants and Coast 2 Coast Marketing, and its owner, Jacob Choinski, for violating charitable-solicitation and consumer-protection laws by defrauding Minnesota donors. The lawsuit alleges that the company, formally named PNW C2C Marketing, LLC (“C2C”), went door to door in Minnesota neighborhoods and misrepresented that C2C was a nonprofit soliciting donations to send care packages to servicemembers overseas. The lawsuit further alleges that Choinski spent the funds collected for his personal use — and did not spend a single dollar on care packages since C2C’s inception in July 2018.  

“Choinski enriched himself by using C2C to exploit Minnesotans’ generosity in the name of benefiting military service members who are serving all of us overseas,” Attorney General Ellison said. “This conduct is truly despicable. Our military members serving overseas undertake a tremendous sacrifice from which we all benefit. I will continue to aggressively pursue every company and person that exploits our service members’ sacrifice and preys on Minnesotans’ generosity.” 

C2C is a for-profit Minnesota limited liability company that claims to sell the cost of shipping a care package to service members overseas through door-to-door solicitation. C2C claims to partner with a charity to which it provides funds from its sales. C2C claims that its partner charity then sends the care packages using the money it gives the charity.  

The AGO’s lawsuit alleges that C2C has not given any money to the nonprofit with which it supposedly partners, despite soliciting over $70,000 for Minnesotans since July 2018. Choinski, as C2C’s sole owner, instead used C2C to solicit door to door in Minnesota and keep all the money received for his own purposes.  

The lawsuit also alleges that C2C deceptively represents itself as a nonprofit while soliciting and asks Minnesotans for donations, tells Minnesotans that their donations are tax deductible, and misleads Minnesotans to believe that they can choose the gender of the service member who will receive a care package and the branch of military they wish to support. The lawsuit further alleges that Choinski has been affiliated with other companies that have been accused of the same conduct as C2C in Minnesota, Iowa, and the Dakotas.

C2C has solicited throughout the Minneapolis–Saint Paul metro area, Greater Minnesota, and other states. The lawsuit, filed in Ramsey County District Court, asserts that C2C and Choinski have violated Minnesota’s Charitable Solicitation Act, the Uniform Deceptive Trade Practices Act, and the Consumer Fraud Act. 

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Attorney General Ellison asks court to remove trustees of Otto Bremer Trust

August 12, 2020 (SAINT PAUL) — After a months-long investigation, Minnesota Attorney General Keith Ellison today asked a court to remove the trustees of the Otto Bremer Trust (OBT), Brian Lipschultz, Daniel Reardon, and Charlotte Johnson.    

Two petitions and an associated memorandum of law filed in Ramsey County Probate Court today detail the trustees’ serious breaches of fiduciary duty, their longstanding failure to administer the trust effectively and in accordance with the directives of its founder, and multiple violations of state laws governing charitable trusts — culminating in a reckless hostile takeover attempt of the OBT’s primary asset, Bremer Financial Corporation (BFC), in October 2019.  

The petition does not weigh in on BFC’s or any other party’s claims or conduct. Attorney General Ellison is, however, simultaneously asking the court to stay the lawsuits between the trustees and the BFC-related parties until his petition is decided. 

“Minnesotans care about and for each other: they want each other to be able to afford their lives and live with dignity and respect, just as they want for themselves. Minnesotans trust charitable trusts to play an important role in that goal. Otto Bremer directed that the trust in his name not be used for ‘any purpose’ other than charitable. The trustees’ actions have abused his trust and Minnesotans’ trust,” Attorney General Ellison said. 

“I do not take this action lightly,” Attorney General Ellison continued. “But as the chief law officer of the state and supervisor of charitable trusts in Minnesota, I have the duty to make sure charitable assets are used properly and for the benefit of the public, not the private aims and personal enrichment of the trustees. Because the trustees’ misconduct is particularly serious, it requires particularly serious action by my Office.” 

The mission that Otto Bremer set for the trust, as outlined in the trust instrument, includes to “relieve poverty in the City of St. Paul, Minnesota,” “establish scholarship and assist poor and deserving children in securing education, to “promote citizenship, to “promote the public health, and to “aid persons suffering from catastrophe,” among other aims. 

Attorney General Ellison brings this action today under the power and authority the Legislature has conferred on the Attorney General to supervise and regulate nonprofits, as the chief law officer of the state, and as the representative of public’s interest in charitable trusts, of which the public is the beneficiary. 

The petition details how the trustees acted recklessly in their attempt to sell the trust’s BFC shares to a large number of out-of-state hedge funds, knowing it would trigger, in their words, “a cascade of unfortunate consequences.” Trustees’ attempt to engineer the sale of the bank enriched them significantly, exposed OBT to significant legal risk, and drained the trust of millions of dollars in expenses that should have been available for the charitable purposes of the trust. In the course of attempting to engineer the sale, contrary to the wishes of trust founder Otto Bremer as expressed in the instrument that governs OBT, trustees also withheld important information from the Attorney General’s Office so that the Office would not block their plans. By so doing, they attempted to undermine the legal authority of the Attorney General’s Office to ensure that OBT and all charitable trusts operate in strict accordance with the law. 

The 2019 sale followed a years-long attempt to reframe OBT’s “brand” from a charitable foundation to a finance-focused private-equity firm benefiting their private interests.  Across numerous aspects of the trust, the trustees elevated their own interests above serving its charitable purposes, including by: making self-interested grants to promote their status in the community, including million-dollar grants to charities with which they were personally affiliated; creating a hostile work environment for employees that exposed the trust to liability and created a universal fear of retaliation among employees; misusing charitable assets and self-dealing to run unrelated private businesses out of OBT’s offices; spending excessively on lavish office space and other overhead; paying themselves to redundant and unnecessary fees; significantly raising their own compensation without a corresponding rise in their duties; and creating and not remedying deficiencies in governance and oversight.  

The petition requests that the court remove the trustees and appoint new fiduciaries to investigate the allegations, manage the trust, and rebuild independent oversight over the trust.  It also seeks immediate remedies, including trustees’ immediate suspension or removal, to prevent ongoing harm to the trust like illegal investments, restructuring the trust to shield it from oversight and liability, and incurring tens of millions of dollars in legal fees.  

Attorney General Ellison is proposing that the court appoint Pamela Alexander, Marcia Avner, and Carleen Rhodes as interim trustees. Ms. Alexander is a retired judge of Hennepin County District Court, Ms. Avner is a former public policy director of the Minnesota Council on Nonprofits, and Ms. Rhodes is the former president and CEO of The Saint Paul Foundation and the Minnesota Community Foundation. 

The Court File Number for the case is 62-C9-61-315222.