‘Have you locked the doors?’ Richter urges details of Hershey charity talks with board member

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The growing feud between Pennsylvania’s richest charity and one of its board members was seen in a Harrisburg courtroom on Tuesday as a judge urged attorneys on both sides to clarify the details of a month-long dispute over internal spending details.

Robert Heist, the board member, says in court records that millions of dollars were missing from Milton Hershey School and that he was denied access to financial records that would explain why.

School attorneys counter that Heist “has an agenda”, “has no authority to investigate” and wastes school resources looking for documents.

»READ MORE: Milton Hershey School promises college but leaves some behind and goes into debt

The suit is the latest in a series of controversies for Milton Hershey School, the country’s richest K-12 school whose board members have been investigated over the past decade for buying a golf course with tuition, lavish travel, and spending millions became dollars examining each other.

In an unusual move for a board member, Heist sued the school earlier this year for financial records. It is now up to Dauphin County Judge John McNally to decide whether to proceed or dismiss the lawsuit.

»READ MORE: America’s richest school serves low-income children. But much of his Hershey-funded fortune is not being spent.

Heist sued the school “reluctantly and only after numerous unsuccessful efforts” to obtain expense details from MHS officials, the court records said. Heist says he’s attempted to access this information since September 2019, including no fewer than five inquiries to current CEO M. Diane Koken, a former Pennsylvania insurance commissioner, in early 2021.

School lawyers say Heist has already received thousands of pages of documents in response to his inquiries.

The dispute is all the more surprising given that Heist – a 1982 graduate of Milton Hershey School – has served on the board since 2011, including several years as chairman of the board. Earlier this year, Heist withdrew his vote on the school’s annual budget on the grounds that he did not have all of the necessary information, his attorney said.

Charity directors usually have access to financial documents. “A director of a Pennsylvania not-for-profit corporation is generally authorized to inspect the organization’s books and records to determine whether funds are being properly spent,” said Don Kramer, chairman of the not-for-profit practice for the Montgomery McCracken law firm in Philadelphia, last year.

Milton Hershey School attorneys argued that Heist was never denied access to the files; his lawyer Eileen Ficaro countered that the school had still not given him access. Heist did not attend the hearing.

During the hearing, McNally expressed skepticism about some of Ficaro’s arguments and urged them to see if the school’s response to Heist was indeed a denial.

“Did you lock the doors? Did you move the documents from place to place so that he couldn’t access them? ”He asked. And he urged her several times whether Heist had requested the papers again since the lawsuit was filed.

Founded and taught by candy tycoon Milton S. Hershey in 1909, the school has approximately 2,100 low-income students for free. Critics have argued for years that the school, which is funded with $ 17 billion in endowment capital, including a controlling stake in snack giant Hershey Co., should be spending far more than it is doing.

Under pressure from the attorney general’s office, the school announced last year that it would use a portion of its accumulated $ 1 billion in unspent revenue to build and operate six preschool centers across the state. In five years’ time, the centers will help around 900 impoverished children – a significant expansion of the school’s mission.

Heist is looking for thousands of pages of documents related to MHS legal expenses and legal expenses insurance coverage; One of his concerns, as court records show, is that the school spent money on legal fees that insurance should have covered. Legal and insurance costs rose 74% between 2017 and 2019, according to the charity’s IRS filings.

During that time, the charity defended itself against two federal lawsuits. In one, a former student claimed he was expelled after attempting suicide. In the other, the parents of a former student claimed that their daughter was banned from campus after being hospitalized for depression. Two weeks later she committed suicide. Both cases were dismissed.

The school is also defending itself and its board members, including Heist, against a lawsuit in New York filed by an activist and alum, attorney F. Frederic Fouad, who claims the charity molested him.

Among the records Heist was looking for were documents with his signature authorizing the legal fees, Thomas Leonard, a Milton Hershey School attorney, told the judge. “He’s trying to find out what he signed and what he didn’t,” said Leonard.

The hearing ended with both parties agreeing to send the judge a letter dated 24 on transparency and openness.

The attorney general oversees charities and Mark Pacella, who heads the charities division, attended the hearing. “We have been watching the case and are very interested in the outcome,” he said.


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