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Attorney general’s office wants Hershey School board changes

May 3, 2016

HERSHEY, Pa. (AP) — The state attorney general’s office is seeking the resignation of three board members at the Milton Hershey School for disadvantaged children over concerns the board may be violating terms of a 2013 settlement.

The resignations would amount to an overhaul of the 10-member board that runs one of the nation’s richest charities, the Philadelphia Inquirer reported Tuesday.

According to a Feb. 8 letter obtained by the newspaper, the attorney general’s office asked the Hershey Trust to reduce board compensation and wants members to pay for a conflict-of-interest investigation.

On Friday, John Estey, a top official at the Hershey Trust Co., which manages the charity’s finances, agreed to plead guilty to wire fraud for pocketing thousands of dollars from a fake company set up by the FBI to investigate public corruption in Pennsylvania.

The Hershey Trust board fired Estey. His charges were unrelated to the charity.

Chuck Ardo, spokesman for the attorney general’s office, said the letter pertains to a 2013 settlement agreement over an investigation into the costly purchase of a golf course to serve as a buffer zone for the private boarding school.

The trust paid an inflated price of $12 million for the money-losing Wren Dale Golf Club in 2006. Several dozen local investors, including The Hershey’s Co.’s then-CEO, Richard Lenny, profited from the sale.

After an inquiry, the Hershey charity agreed to a laundry list of changes, including limiting compensation to a base pay of $30,000 a year.

The letter says the attorney general’s office seeks a “reduction in board compensation to the parameters set forth in the 2013 agreement” and the “reimbursement of all excess compensation.”

The most recent pay has not been disclosed in tax filings with the IRS.

The attorney general’s office also wants board members who have served more than 10 years to resign by July 31. The office did not identify the members, but the charity’s website lists three who have served more than 10 years: Velma Redmond, Joseph Senser and Robert Cavanaugh.

Hershey Trust spokesman Kent Jarrell said the group’s boards “have a long history of voluntarily and constructively working with” the attorney general and “are fully cooperating.”

The Hershey School is the sole beneficiary of the trust’s $12 billion in assets. The charity owns HersheyPark and a controlling interest in the Hershey chocolate-manufacturing company.

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Information from: The Philadelphia Inquirer, http://www.inquirer.com

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