Minnesota AG issues new demands in its investigation of Hmong College Prep investment scandal

The Minnesota Attorney General’s Office recently escalated its investigation of Hmong College Preparatory Academy with a new demand for records after the St. Paul charter school lost more than $4 million in a risky hedge fund investment in 2019.

Hmong Prep confirmed with 5 INVESTIGATES that it received what’s known as a Civil Investigative Demand (CID) nearly a year into the Attorney General’s investigation of the school.

In a rare acknowledgement of an ongoing investigation, a spokesperson for Attorney General Keith Ellison confirmed his office is “investigating potential violations of the Minnesota Nonprofit Corporation Act and the Charitable Solicitation Act.”

5 INVESTIGATES first reported that the Attorney General’s Office requested HCPA’s “voluntary cooperation” in November 2021.

“In response to that request, the AGO received most (but not all) of the documents it requested,” a spokesperson for Ellison’s office wrote. “The AGO will review the evidence it obtains as part of its investigation and determine at that time if any laws were violated.”

Hmong Prep declined interview requests and declined to provide a copy of the CID, but said it is “cooperating with the Attorney General’s demand” in a statement to 5 INVESTIGATES.

Last year, the Minnesota State Auditor released an investigative report that found the charter school’s $5 million investment with hedge fund Woodstock Capital broke state law.

The school’s founder and superintendent Christianna Hang subsequently resigned. HCPA says there have been more changes at the top as well.

“HCPA’s current leadership includes a new Chief Academic Officer, Chief Financial Officer and independent Board Chair as well as comprehensive safeguards and protections to help ensure appropriate decision making and fiscal responsibility,” the school said in its statement.

Experts in nonprofit legal matters, such as Jennifer Urban with Legal for Good, say the Attorney General’s decision to issue a CID is rare and significant.

“You’re now compelled by law to respond instead of it being quote, unquote ‘voluntary,'” Urban said. “Risky investments are basically verboten and… patently, on its face, to invest in a risky hedge fund would not be commensurate with the requirements of that law.”

Both HCPA and the Minnesota Department of Education confirmed that the charter school is also in the process of ending its relationship with Bethel University which had been responsible for overseeing operations of the school.

HCPA is finalizing a contract with Novation Education Opportunities which serves as an authorizer for about 30 charter schools in Minnesota.

Urban says the fact that Hmong Prep is making changes now could work in its favor as the Attorney General’s investigation progresses.

“The Attorney General’s Office tries to assist charities to…stay open,” Urban said. “It is not their goal to shut down a charity. It is their goal to create compliance.”