Schwan brothers wants answers on why father’s foundation has lost millions
PIERRE, S.D. -- South Dakota’s Supreme Court will hear a case today over a dispute between the Marvin Schwan religious charitable foundation and the giant food company founder’s two sons who are questioning millions of dollars in losses since its founding in 1992.
The hearing is set for 10 a.m. before the justices.
Marvin Schwan, who set up the foundation a year before he died at age 64, called for the organization to provide funding to mostly Lutheran church organizations.
He founded the Schwan’s business in 1952 and it grew into a multibillion company known for its home delivery to rural residents. The company, based in Marshall in southwest Minnesota, now operates in 14 states and has 14,000 employees.
The case brought by Marvin’s sons, Mark and Paul, ask that the foundation’s trustees disclose more information on why it has lost as much as $600 million since its founding.
According to the online Nonprofit Quarterly, a review of the foundation’s tax filings show a “baffling mix of conflicts of interest, overseas real estate investments in resort properties by the foundation and the use of a trustee succession committee designed to review the performance of the trustees on which the two sons serve.”
However, apparently the two sons on the review committee can’t seem to get any answers about the heavy losses.
So the Schwan brothers want want to compel the trustees release more details.
The Nonprofit Quarterly online website said that in 2002 the Schwan Foundation held $886 million in assets and gave $44 million in grants. A report online shows that by 2012, assets dropped to $445 million and grants totaled $14 million.
In 2011 alone, the foundation’s assets dropped by more than $240 million in that single year, said the Nonprofit Quarterly, which added that about a third of the foundation’s assets are invested directly in various real estate projects in the Caribbean and through offshore corporations, including in the British Virgin Islands.
Calls to the foundation, headed by the Rev. Keith Boheim of Earth City, Mo., were not returned. Also not returned were calls to the Schwan brothers’ lawyer.
Others listed on the Supreme Court docket to speak today are lawyers for beneficiaries of the foundation’s funds including Bethany Lutheran College in Mankato, Minn., Wisconsin Lutheran College in Milwaukee, Wisconsin Evangelical Lutheran Church, the Evangelical Lutheran Synod and Wels Kingdom Workers mission outreach in Wauwatosa, Wis.
Most of the lawyers representing those beneficiaries, the Schwans and the foundation trustees are from Sioux Falls.
Also participating in the hearing is the South Dakota Attorney General’s Office.
Attorney General Marty Jackley, who said in an interview that he couldn’t comment on the case because court documents have been sealed, noted that the reason they are involved is because South Dakota law calls for the attorney general to protect beneficiaries of charitable trusts that aid communities in the state.
“That’s why we are stepping in,” he said.
Jackley appointed “two seasoned prosecutors” to handle the case, assistant attorney generals Jeffrey Hallem and Philip Carlson.
