Hershey Trust Under Investigation for Purchasing Golf Club

Over 100 years ago, Milton S. Hershey, founder of the chocolate company, established a trust to fund the Milton Hershey School, which is the nation’s biggest residential school for impoverished children. The Deed of Trust strictly directs that funds be used for the direct care and education of the Hershey School’s students.

In the summer of 2006, after purchasing three other golf clubs, the trustees bought the money-losing Wren Dale Golf Club for $12 million, which was two or three times its appraised value. Richard H. Lenny, then-CEO of the Hershey candy company and member of the Hershey Trust board that approved the purchase, was an original investor in the Wren Dale Golf Club. The acquisition erased Lenny’s losses and raised suspicions of a conflict of interests.

The Pennsylvania Office of the Attorney General has confirmed its investigation into the purchase of the golf club. If the attorney general finds that the trustees were not prudent, he can remove the trustees, have them reimburse the trust fund, and/or reduce their compensation.

This investigation also creates political tension. Attorney General Tom Corbett, who is the Republican candidate for governor, will be investigating the head of the Hershey Trust, LeRoy Zimmerman, who is a former attorney general and a statewide Republican power broker. Several other prominent Republicans sit on Hershey-related boards as well. Some of these Republicans have even contributed to Tom Corbett’s campaigns in the past.

When asked for his insight, Robert Sitkoff, a Harvard Law School trust law professor, concluded, “[t]he big deal is that this is a federally subsidized fund meant to rescue needy children. The trust could rescue more kids, but it doesn’t. Instead, the trustees are buying golf courses.”

Bob Fernandez, Pa. Attorney General Probes Millions in Land Deals by Hershey School’s Trust, The Philadelphia Inquirer, Oct. 8, 2010.