Judge rules against bank in trust battle (WI)

A judge has ruled a local nonprofit may take control of a scholarship fund from Wells Fargo Bank.

On Thursday, Sauk County Circuit Judge Patrick Taggart terminated the bank as trustee of the Chester Bible scholarship trust, handing control to the Baraboo Community Scholarship Corporation.

For more than a year, BCSC and Wells Fargo have tangled over administration of the trust, which since 1991 has provided substantial scholarships to Baraboo High School graduates. In recent years, Wells Fargo has raised its fees for administering the fund while decreasing scholarship awards.

Taggart wrote in his ruling that “it is no longer economic to continue the trust by Wells Fargo because it failed to administer the trust effectively.”

The judge agreed with BCSC’s contention that it, as a nonprofit operated by volunteers who would administer the trust for free, would better serve future scholarship recipients. Due in part to the legal battle, Wells Fargo charged nearly $27,000 in legal and accounting fees to the trust in 2013. About $12,000 in scholarships was awarded last year.

“The decision to terminate the trust means that in the future, all of the money set aside by Mr. Bible for local scholarships will in fact be used for scholarships, rather than for trustee fees and charges,” said Wayne Maffei, attorney for BCSC.

The judge denied Wells Fargo’s request to have its attorneys’ fees paid by BCSC.

Taggart also chastised the bank for refusing to cooperate with the nonprofit organization. BCSC had complained that Wells Fargo made coordinating annual scholarship awards difficult, as the company was slow to communicate but quick to put up roadblocks. “The purpose of the trust is not effectively served because Wells Fargo in the past has failed to cooperate with BCSC,” Taggart wrote.

Tensions between the bank and BCSC arose once decision-making regarding the scholarship trust moved from the local Wells Fargo branch to a corporate office in North Carolina. That’s when scholarship amounts started slipping and fees started rising. BCSC attorneys said the donor’s wishes weren’t being honored, as scholarship awards dropped from $29,000 in 2008 to $12,000 last year. Meanwhile, fees rose from $6,200 to $7,400 in that time span, plus money charged against the trust fund to pay for Wells Fargo’s lawyers.

Taggart wrote that a fit trustee puts the interests of beneficiaries first. In this case, that would mean giving out the largest scholarships possible, not raising administrative fees.

Wells Fargo’s attorneys couldn’t be reached Friday. In an April 17 court filing, attorney Caitlyn Sikorski argued that exhibits submitted by BCSC’s attorneys were misleading. Rather than compare scholarship awards to fees charged, the court should compare fees to the value of the trust, a ratio that remained steady until the recent legal wrangling. The trust’s value is about $440,000.

“We hope that Wells Fargo will now accept the decision and end this litigation,” Maffei said.

The trust also provides scholarships to graduates of Weston High School in Cazenovia. Wells Fargo will continue to administer that half of the trust, which has not been challenged and is unaffected by Thursday’s ruling.


Judge rules against bank in trust battle
Ben Bromley
July 19, 2014
Baraboo News Republic