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April 20, 2016

Heirs Press Suit on Family Foundation's $600 Million Loss

The Supreme Court of South Dakota is set to hear arguments next week in a case brought by the sons of a late frozen-food magnate against the board of their father's foundation over its massive losses on offshore property investments, reports the Argus Leader of Sioux Falls.

Mark and Paul Schwan sued for greater access to the Marvin M. Schwan Charitable Foundation's financial records after learning in 2013 that the organization had lost up to $600 million backing resort developments in the Caribbean and Latin America that "failed in spectacular fashion," according to court papers. The brothers say foundation trustees set up an elaborate network of holding companies and other business entities to make the investments.

The foundation and the board acknowledge the losses but oppose the disclosure demands, saying they provided detailed information about the failed deals, including audited financial statements, to an oversight committee on which the Schwan brothers served. Marvin Schwan built a billion-dollar fortune on sales of ice cream and frozen pizza and left much of it to the foundation when he died in 1993.