On April 2, 2021, the MHS Board immediate past chair, Bob Heist, filed a Petition in the Dauphin County Orphans' Court seeking access to information he alleged had been improperly withheld. The information relates to payment of legal fees, insurance matters, concerns that third-party vendors are unduly influencing MHS decisions, potential use of funds for an educational institute outside Derry Township, how MHS is reporting all this, and other matters.

Mr. Heist's concerns touch on grave issues — and anytime that the former Board chair of a $17 billion charity with a history of scandal and dysfunction feels compelled to file a lawsuit seeking basic information, alarm bells should sound.

Nonetheless, the Office of Attorney General (OAG) took a curious approach: on every substantive item raised in the Heist Petition — from concerns about misspending to alleged withholding of information — the OAG told the court that it had "insufficient information" on which to take a position.

We believe that constitutes an abdication of OAG responsibility: the OAG, too, and not just Mr. Heist, is obligated to investigate the issues raised in the Petition. "Our office does not know" is an unacceptable response: it is the OAG's job to know.

More troubling, the OAG added a request that the court sanction Mr. Heist if it found the Petition "frivolous."

In other words, Attorney General Josh Shapiro's official position is that he has not investigated the concerns raised by Mr. Heist, but he wants Mr. Heist potentially punished for raising them at all.

That startling posture from the state's highest judicial officer sends a chilling message to any other MHS Board members — and to other concerned nonprofit directors — about the risks of speaking out.

PHC would have expected, at a minimum, OAG neutrality here. But we did not expect the OAG to suggest that the court penalize a director for raising concerns: the Orphans' Court would already have been prepared to impose sanctions in the event of any frivolous finding — it needed no OAG prompting on this.

In response to the Heist Petition, MHS filed a motion for summary judgment, which the Orphans' Court granted, dismissing the Petition.

But rather than imposing the sanctions suggested by the OAG, the court stated that Mr. Heist could inspect the information on site at MHS upon reasonable notice.

The court also noted that if MHS denies Mr. Heist access to properly requested information, Mr. Heist could return to the court and file a new action.

Now that Mr. Heist presumably has been given access to the information sought, the question is whether his concerns were warranted. If so, will he take follow-up legal action? Or is this the end of the matter?

Ten years ago, MHS Board member Bob Reese filed an action alleging MHS financial irregularity: could Bob Heist do the same now?

In any case, PHC must ask why the OAG has not informed the public about the merits of Mr. Heist's assertions?

Why has the OAG not definitively stated, for example, that MHS funds are not being used to operate another "educational institute outside Derry Township" or that there are no "undue influences" on MHS decisions by vendors?

These are serious questions that Attorney General Shapiro should address, rather than forcing the public to guess at the answers.

PHC explores these matters in more detail in the following comprehensive update.

As always, we thank you for your continued support.

Sincerely,

Protect The Hersheys' Children, Inc.

P.S. You can help support PHC with a generous donation, by liking our Facebook page, or sharing this email (or the related Facebook post) with others you know. Thank you!

As many now know, MHS Board member Bob Heist petitioned the Dauphin County Orphans’ Court on April, 2, 2021. The Petition sought an order that MHS provide Mr. Heist with information that he alleged was being improperly withheld. The information concerns MHS spending, accounting, decision-making, and other matters.

On July 1, 2021, MHS filed a motion for summary judgment. MHS alleged that Mr. Heist had an "undisclosed agenda," that MHS had provided all information reasonably requested, and that Mr. Heist did not make his information demands properly.

Mr. Heist responded on July 23rd reiterating that he was entitled to the information and asserting that MHS's arguments were in part ad hominem.

The "mounting feud" between the parties was "on full display" during an August 31, 2021, Orphans' Court oral argument in the matter.

The court's opinion reasoned that MHS was only required to make the information available for inspection but that MHS was not required to deliver physical files to Mr. Heist.

(1) Questions concerning the use of millions of MHS child welfare dollars to pay legal expenses, whether the payments came from an insurer, and how MHS has been reporting this (to oversight and tax officials, internally, or otherwise). (“Mr. Heist explained on multiple occasions that he demanded access to the corporate information to better understand how millions of dollars could not be budgeted or accounted for annually while relating to ‘school operations.’ This included a concern that MHS was incurring legal expenses relating to matters for which there was applicable insurance coverage.”)

(2) Potential misuse of MHS funds for non-MHS purposes. (“…use of trust assets for MHS and non-MHS purposes…”)

(3) Whether Petitioner Heist and other MHS Board members were provided “independent counsel in a separate and unrelated lawsuit in which MHS and numerous directors, including Mr. Heist, were named as defendants…”

(4) “…books and records related to MHS operations and millions of dollars of unbudgeted and unaccounted for expenses.”

Again, the public should not have to guess what is described here for a charity with MHS's history of dubious spending.

(5) Efforts by MHS to secure a confidentiality agreement from Mr. Heist — beyond his ordinary confidentiality duties — as a condition of providing the information sought. (“…no board member has ever been asked to sign a confidentiality agreement in response to a demand for access to corporate information… The Confidentiality Agreement proposed by MHS attempted to impose obligations on Mr. Heist greater than those imposed on him as a Board member under Pennsylvania law.”)

(6) Limitation of information provided to MHS Board members and potential inconsistencies in the information that was provided. (“…Mr. Heist received only limited access to the corporate information, deficient in several respects, including but not limited to the fact that Mr. Heist continues to be denied access to the source documents necessary to reconcile the inconsistencies in the limited information to which Mr. Heist has been provided access to date.”)

(7) Potential exercise of “undue influence” over MHS decisions by MHS vendors who benefit from those decisions. (“To determine whether any third-party consultant and/or recipient of funds allocated to School operations exerted undue influence in order to receive funds…”)

This concern should sound alarm bells at a charity that spends hundreds of millions annually, abjectly under-performs, has squandered money frivolously, and now has questions raised about whether a third-party is benefiting from decisions that it may have unduly influenced.

The public has a right to know the answers to these questions: the MHS filings accused Mr. Heist of breaching his confidentiality duties merely by filing his Petition. (“Whatever his intentions, the resulting legal action generates adverse publicity, which damages the goodwill and interests of MHS. That Petitioner has invoked his fiduciary duty to justify violating his fiduciary duty of loyalty is ironic and contrary to law.”)

MHS is concerned about "adverse publicity" but the public is concerned about the substance of Mr. Heist's assertions: a $17 billion charity should be able to explain why Mr. Heist's concerns are meritless, not simply decry the "bad publicity" attendant to his filing.

(8) Potential use of MHS assets to operate another educational institution other than MHS. (“To determine whether any funds allocated to School operations have been paid to any non-MHS educational institution located outside of Derry Township, Pennsylvania…”)

This also is potentially explosive: have MHS officials been directing funds to another educational facility without Orphans’ Court authorization?

Here as well, keeping the public in the dark is unacceptable: every citizen in the Commonwealth of Pennsylvania — and everyone concerned with our nation's 400,000 foster care children — is entitled to know whether MHS funds have been improperly diverted from the MHS residential child care mission without authorization.

That is simply unacceptable for any charity of this size but especially for the Hershey Trust, with its history of misuse of child welfare resources, appearance of politically connected individuals who then greatly profit, and Board and senior leadership turmoil.

Needless to add, if access to the information were not provided, Mr. Heist could bring that to the court's attention, just as the Orphans' Court decision invited Mr. Heist to do in the decision's first footnote.

Specifically, in 2011, former Board member Bob Reese filed an action in the Dauphin County Orphans’ Court alleging financial irregularity.

That activity followed publicity that pushed AG Tom Corbett to launch an investigation of an MHS Board that included his political ally, former Republican Attorney General LeRoy Zimmerman. (PHC is nonpartisan.)

The Corbett-initiated (and Reese lawsuit-intensified) "investigation" led to more reform promises but no improvement in MHS operations. In some ways, dysfunction worsened.

The Board members went on to spend millions of MHS child welfare funds "investigating" themselves and pointing fingers at each other in an ugly internal dispute.

Questionable program and leadership conduct also continued.

In short, it was business as usual at the Hershey Trust — and senior leadership with questionable past behavior remained in place and still guide the Hershey charity today.

Shortly thereafter, AG Kane went to prison for obstruction of justice: sad to say, needy children have been forced all too often to rely in Hershey on feckless oversight officials, a decades-long problem.

Although knowledgeable commentators called on AG Shapiro to follow through with Hershey reform and put an end to decades of dysfunction, the new AG instead followed his predecessors — from both parties — in turning a blind eye.

Whether it is ousted Board members, a wasteful golf course purchase, reckless housing experiments, questionable senior leadership behavior, startling Board compensation, indefensible program decisions, discrimination against children with disabilities, callous treatment of children facing depression, nasty internal disputes, or any of the troubling developments that we have seen over the years, the only consistency in Hershey is utter dysfunction.

Instead, AG Shapiro abdicated all responsibility by submitting a mere two-page filing that evinced scant concern and virtually no effort to determine if Mr. Heist’s allegations were warranted.

Rather than addressing any of the Petition's substantive issues, the OAG's two-page filing repeatedly intoned that it “is without sufficient information to form a belief as to the truth of [Mr. Heist’s] averments…”

For instance, MHS either is or is not using assets to “fund a non-MHS educational institute” outside Derry Township. The OAG could have determined the answer to that question with one phone call. Why did it not do so?

In other words, in overseeing a $17 billion child welfare charity burdened by a 20-year history of waste, mismanagement, program dysfunction, improper spending, and a host of other problems — and where the immediate past Board chair has taken the trouble and personal expense to file a lawsuit alleging MHS refusal to provide him with information concerning potential impropriety — AG Shapiro shows no concern whatsoever about possible mismanagement or misuse of millions of child welfare dollars.

The Attorney General also says nothing about potential use of MHS funds to operate an educational institute outside Hershey (in disregard of the Deed of Trust) — other than claiming that he “made a reasonable investigation” but is "without sufficient information" to know the answer — a preposterous assertion given how easy this is to verify.

AG Shapiro also voices no opinion on the alleged withholding of information from Board members: how can the OAG have not verified this? It is a basic fact that should be ascertainable and remedied, if necessary.

Again, how can the AG not inquire further about this? His core responsibilities as concerns any Pennsylvania charity are implicated here: "I did not bother to inquire" is not an acceptable answer.

Instead, we are told absolutely nothing by the state's top charitable oversight official about a matter that is on its face alarming: the former Board chair of the world's largest (and historically mismanaged) child welfare charity has brought an action demanding access to information. But AG Shapiro has nothing to say about it.

Here, even long-term Hershey observers have seen something new: an OAG whistling in the dark and declaring "Nothing to see here!" even while an ugly court drama plays out publicly.

That OAG posture leaves the public guessing about the persistence of MHS Trust problems just as AG Shapiro was warned would happen if he took the path that he chose.

Worse still, the only thing of any substance that the Attorney General is on record as saying — in his two-page "filing" where claims not to know the facts (though he supposedly "investigated") — is that Mr. Heist should be penalized in the event the Petition is deemed frivolous.

More troubling, PHC would have liked to believe that the OAG would show concern about the substance of Mr. Heist’s allegations, instead of expressing concern only about the fact that Mr. Heist "dared" to seek Orphans' Court help.

By way of reminder, a mere year ago, AG Shapiro represented that MHS's charitable purpose had "failed," that it could not serve more of Pennsylvania’s 13,000 foster care children, and that the Orphans’ Court should allow MHS to cease expanding the number of children it serves in residential care (as required under the Deed) and instead spend $350,000,000 on “early learning centers” (with $250,000,000 going to construction companies).

Here is what AG Shapiro said in open court last fall, during the cy pres hearing, having had the proceedings interrupted and making everyone wait so that he could give this public statement:

In sum, one year ago, AG Shapiro represented that he had "thoroughly vetted" MHS operations — spending two years doing so. But now he claims "insufficient knowledge" to address the elementary operational and spending issues raised by the Heist Petition.

His claims strain credulity: the Attorney General's past and present positions are inconsistent.

For the Attorney General to make his only involvement in this matter a request that the court potentially punish the sole MHS Board member asking questions is unacceptable. That places the OAG squarely on the side of raising the stakes for potential whistleblowers and other truth-tellers: AG Shapiro is saying, on the one hand, that he did not investigate what the Heist Petition alleges — but on the other hand that he wants Mr. Heist potentially punished.

That is what we expect of the OAG — we do not expect a step in the direction of intimidating a potential whistleblower by raising the stakes for coming forward, least of all at a charity with MHS's history.

Rather than making a gratuitous (and borderline silly) request that the Orphans’ Court punish what may be a potential whistleblower, the OAG should have told the court that if any wrongdoing were revealed, those responsible should be made to answer for it.

Instead, he made a decision that intimidated someone for asking questions, chilling such activity, by requesting that the court raise the stakes for that person alone — and with no reciprocity in the event that wrongdoing by MHS or its decision-makers were revealed.

It is hard not to conclude that AG Shapiro has signaled that he will not proceed against the MHS Board or senior leadership. In fact, he appears now incapable of taking such action, since he is publicly on record (concerning the $350,000,000 cy pres) as fully endorsing them.

Nonetheless, this being the Hershey Trust — a place where "nonprofit" Board members amass millions, an insolvent golf course becomes the personal playground of the charity's stewards, and a luxury hotel is treated like a "palace" for a former Attorney General and his fellow Board members — virtually anything is theoretically possible.

To be clear, PHC is no way endorsing any "side" in this matter (if the word "side" even applies). Nor is PHC taking factual positions, one way or the other. We simply want the truth.

AG Corbett launched a purported "investigation" of the MHS Board's spending though he was reluctant to do so. AG Shapiro is not even going through the motions — does he think that no one has read the news reports or that Pennsylvanians don't care about Hershey governance matters?

PHC also remains of the view that the Board has been improperly constructed; that the Board should be reconstituted along child welfare lines; that there should be no compensation paid to Board members; that Board members and MHS leaders should not be selected for improper reasons; that the Board should act with greater transparency; that the Board should not be a pathway for Pennsylvania insiders from either party to amass wealth; and that MHS remains in need of governance overhaul.

For instance, MHS has boasted about its "partnership" with the Neighborhood Academy, a private day school in the Pittsburgh area.

PHC also has raised questions about MHS’s startling legal fees and related conduct. But AG Shapiro chose to ignore those concerns as well. He appears instead to have been fixated solely on the $350,000,000 cy pres grant last fall and the six learning centers that it will build across the state.

The learning center initiative was announced, of course, just before AG Shapiro entered a governor's race where this naturally will boost his state-wide profile. That includes pumping $250,000,000 into construction projects across Pennsylvania: everybody wins — except the 13,000 Pennsylvania foster care children and 400,000 more across America who will be denied life-altering MHS care as a result.

P.S. As noted above, you can help support PHC with a generous donation, by liking our Facebook page, or by sharing this email (or the related Facebook post) with others you know. We are a tiny nonprofit but we punch above our weight. With your generous financial and moral support, we continue to press for MHS reform in the face of daunting odds. Thank you!