Lawsuit: Hershey Children's Home Trust Used to Benefit Insiders, BOD - Pennsylvania

Posted: Feb 15, 2011

Lawsuit Filed Against Hershey Trust + Milton Hershey School Boards in Dauphin County Orphan's Court. Feb 10, 2011.Former Hershey Trust Company president Robert Reese accused unnamed members of the Trust + Milton Hershey School boards of "self-dealing" in a laundry list of abuses of the Derry Township charity. Reese names names in an amendment filed Feb 12, to his original petition. Reese lists "LeRoy Zimmerman, Robert Cavanaugh, Robert Vowler, Anthony Colistra, Richard Lenny, James Nevels, James Mead, Velma Redmond, Raymond Gover, Joseph Senser, Hiliary Pennington, + Joan Lipsitz" as the "co-trustees, Directors and Managers whose acts or omissions occurred during the relevant periods ...." The big fish is LeRoy Zimmerman, Chairman of the Milton Hershey School Board of Managers and Chairman of the Hershey Trust Company Board of Directors. Zimmerman was the Attorney General of Pennsylvania from 1981 - 1989 and is widely recognized as the most powerful figure in the Hershey "entities." Other notables: - Richard Lenny is the former boss of Hershey Foods (now "The Hershey Company"). Lenny has been tied to the controversy over the purchase of the Wren Dale (now "Hershey Links") golf course. - Anthony Colistra was a member of the School + Trust boards during the controversy over the sale of Hershey Foods in 2002. Colistra is now President of Milton Hershey School. - Ray Gover is the former president and publisher of the Hampden Township (then Harrisburg Patriot-News) 'Knowing, Wilful Violation' - The amendment from Reese also provides some explanation of the abrupt departure of former Trust President Robert Vowler in 2008. The amendment contains a portion of a "letter of termination" which discusses "the placement of IRAs and certain revocable trusts in the Company's common trust funds ..." and says, "Recommending and approving the inclusion of these investments into the common funds was a knowing, willful violation of your duties as an officer and director of the Company." The first Reese petition was a bombshell, a litany of substantial allegations by a top official of the Hershey entities. By itself, it threatened to force action by the state Attorney General's office (oversight of the School and Trust) and the Dauphin County Orphans' Court (ultimate authority over the School and Trust). The Reese amendment raises the stakes even further. By naming names, it cracks the fa├žade of unity. However, with the exception of the Vowler case, the amendment does not attach individual names to individual acts. That could be the next move. In this story: - The Grand Payback - Excess Benefits: Compensation a form of self-dealing: Compensation since 2002 has nearly tripled. Average hours worked per week by Board members reported in the most recent Form 990 filed w the IRS is approximately 5 (Petitioner's are 55). Under IRS rules, compensation paid above services rendered considered "private inurnment" or "excess benefits", which would correlate to the principles of self-dealing under PA law - receiving a personal benefit well in excess of consideration rendered. - Highpoint Fundraiser: Hershey's Highpoint Mansion was used for the controversial 2007 political fundraiser to honor GOP operative Karl Rove: Not only did the political party not pay for the use of Mr. Hershey's home as a fundraiser, but submitted an invoice to the Charity with the notation "per [trustee's] request, please find an invoice for the fundraiser hosted by [trustee] on behalf of the [political party] State Committee on [date] at High Point Mansion". Instead of the political party or an individual paying for use of the Charity's facility, the political party invoiced the Charity; this invoice was paid to the state political party by the 100% owned subsidiary or its political action fund, which depleted the fund - Hundreds of Free Passes - Reese Out - Criminal Charges: The petition contains a reference to an indictment by the PA Attorney General's Office... payment by the Charity directly or through wholly-owned affiliates of the Charity to a gov't relations consulting company, one of whose principals is the son-in-law of a trustee. - Your Private Bank - Zimmerman Leaving Hershey Board Former Pres of Hershey Trust Co claims widespread financial irregularities, incl excessive compensation for board members in court filing. 02/10/2011 Petition Amended Petition Hershey Orphanage Scandal 2, Trust Fortune Spent to Benefit Insiders Politicians - Pennsylvania Hershey Orphanage Trust Abuses: GOP Fundraisers PennState Golf HERCO Child Servants