Attorney General Ellison sues former charter-school superintendent who lost more than $4M in illegal investment with hedge fund
Civil action seeks return of funds from Christianna Hang
Separately, AG mandates reforms in settlement with Hmong College Prep Academy, alleging board members did not properly oversee Hang
December 5, 2024 (SAINT PAUL) — Minnesota Attorney General Keith Ellison announced today that he has filed a lawsuit against a St. Paul charter school’s former superintendent whose reckless, illegal investment in 2019 with a hedge fund led to the school losing $4.3 million.
Christianna M. Hang, who started Hmong College Prep Academy (“HCPA”) in 2003, committed the school to become a limited partner in Woodstock Capital Partners LP, a hedge fund, against the advice of the school’s legal and accounting advisors, and despite the school’s investment policy and Minnesota law prohibiting charter schools from investing with hedge funds.
The Attorney General’s lawsuit, filed in Ramsey County District Court, asserts that Hang breached the fiduciary duty of care she had to HCPA under Minnesota law governing nonprofit corporations. The Attorney General is seeking the return of the funds, injunctive relief to help guard against similar actions going forward, and civil penalties pursuant to Minnesota Statutes sections 8.31 and 309.57 for each separate violation of the law.
“I am frankly stunned by the recklessness HCPA’s former superintendent displayed when she took millions of dollars meant to educate children and instead wired them into some obscure hedge fund,” Ellison stated. “This illegal use of HCPA’s resources and subsequent loss of over $4 million is an astonishing disservice to students and their families, teachers and administrators, and Minnesota taxpayers. Today, I am suing to recover these funds, protect the educations of young Minnesotans attending HCPA, and hold Ms. Hang accountable.”
Hang subscribed HCPA in the partnership and wired $5 million of the school’s money to Woodstock without the prior knowledge of HCPA’s board of directors, against the advice of HCPA’s attorney and accountants, and without any meaningful degree of research into the hedge fund or its principals. Hang resigned as superintendent in 2021 after details of the failed deal became public and the school was sharply criticized in a report by the Office of the Minnesota State Auditor. The Charities Division of the Attorney General’s Office subsequently initiated an independent civil investigation under the state’s nonprofit corporation, charitable-solicitation, and charitable-trust laws.
Under Minnesota law, nonprofit board members and executives owe fiduciary duties to act in the best interests of the charities that they serve. Information about these fiduciary duties, and other resources to help nonprofit leaders properly serve their organizations, is on the AGO’s website at www.ag.state.mn.us/Charity/InfoNonProfits.asp.
In a separate action, the Attorney General filed an Assurance of Discontinuance with Hmong College Prep Academy that imposes reforms on the school’s governance and investment practices. The Attorney General alleges in the Assurance that HCPA’s board did not properly supervise Hang as required by Minnesota law. The settlement resolves potential claims against the school over the illegal investment and preserves the Attorney General’s ability to bring individual actions, such as the one he filed today against Hang.
The public may submit complaints to the Attorney General about nonprofit directors and officers putting their own interests before a charity’s interests using this online form. The Minnesota Attorney General’s Office can also be reached by calling (651) 296-3353 (Metro area), (800) 657-3787 (Greater Minnesota), or (800) 627-3529 (Minnesota Relay).
