Democratic Insiders Snooker AG Kane: MHS Trust Debacle Explained
For immediate release: "Milton Hershey School Trust Oversight Debacle Backstory: Democratic Insiders Snooker AG Kane - Asset Misuse and Poor Child Welfare Policies Continue." Watchdog Group Decries Kane Reneging on Hershey Advisory Council Meeting. Hershey, PA. May 29, 2013.
Protect The Hersheys' Children, Inc. (PHC), a nonpartisan watchdog group seeking reform of the $10.5 billion Milton Hershey School (MHS) Trust, released an open letter today addressed to Pennsylvania Attorney General Kathleen Kane. The letter discloses events leading to Kane's recently-announced decision not to act on MHS charitable trust abuses. Included is a charge that Democratic insiders persuaded Kane to renege on commitments to hear independent advice on Hershey before she closed a nearly three-year investigation of the troubled charity. According to the letter, the lack of credible guidance caused Kane to commit her recent Hershey blunder.
PHC last week issued a detailed analysis of what Kane says are MHS reforms, in a document entitled "Three Strikes & You're Out." PHC's analysis shows that Kane's "reforms" allow MHS board members to pay themselves $1,000 per hour in "fees," more than $100,000 annually, and otherwise preserve the existing MHS structure. Kane's measures also allow board members to continue charging the child welfare charity for spa treatments, lavish dining, and luxury golf, including for spouses and children -the first-term AG drew the line at grandchildren, cousins, and same-sex partners.
PHC argued that this hardly constitutes the "standard-setting" reforms that Kane says she promulgated.
PHC especially decried Kane's failure to end "multi-age housing;" i.e., the practice of placing older MHS students in the same group homes as younger and more vulnerable children. Kane endorsed the practice despite a barrel of evidence that it creates extremely dangerous circumstances for younger children.
According to PHC, Kane took the only existing age-related safety measure and weakened it. "Children will, without doubt, continue being abused in multi-age settings as a direct result of AG Kane's refusal to reinstate child safety promises," says PHC spokesperson Ken Brady, an MHS alumnus.
PHC's letter drops a bombshell in revealing that former MHS board member Robert Reese told the group he had been misled by Kane, who called him on the morning of her Hershey announcement to solicit a statement of support. Mr. Reese was persuaded by Kane's personal plea to issue the statement, but apparently was misled about the content of Kane's Hershey agreement.
PHC's letter to Kane states, "Mr. Reese's failing vision prevented him from reading the agreement himself. When we went over it with him, paragraph-by-paragraph, he expressed outrage at the manner in which he said you had mischaracterized everything from board compensation to child welfare expertise requirements -he insists you said nothing about $4,500 per half-day meeting 'fees,' $5,000 committee chair 'fees,' a $10,000 board chair 'fee,' or any other 'add-ons.'"
The letter continues, "If Mr. Reese does not issue a public statement saying so, we surmise it is because he has reached a point of complete disgust with Pennsylvania public officials. [His] disappointment was captured by his quoting the following [George Orwell] passage...upon hearing how your agreement addresses spa treatments, luxury golf, and three-per-day meal 'limitations' for board members and their families: 'There are spectacles before which even satire herself stands mute.' We couldn't agree more."
The letter details how Kane reportedly reneged on post-election promises to hear what a panel of independent advisors would suggest in the area of Hershey reforms and better child welfare practices.
This panel, styled "The Hershey Advisory Council," was comprised of six of the nation's leading child welfare and charitable trust experts. PHC had assembled the group in consultation with Kane's campaign, in the belief that the Hershey charity's problems would prove intractable without sound outside guidance. Of particular concern were political influences pressuring Kane to resist change.
Kane was poised to meet with the experts, according to PHC, but suddenly changed her mind. This was apparently after being advised against it by those who sought to preserve the Hershey status quo.
Says PHC board member and MHS Alumnus of the Year Award recipient George Cave, "The idea was to provide General Kane with expert and independent guidance, so she could leverage the investigation she inherited and make Hershey improvements. When she abruptly walked away from the process, we knew MHS kids were in trouble again."
Among the panel's experts were retired Johns Hopkins professor Matthew Crenson, one of the nation's most respected orphanage history scholars. Also included was Harvard Law's Robert Sitkoff, an authority on Hershey governance problems and a leading figure in charitable trust law. Charitable trust scholars Randy Roth, from Hawaii, and Penn Law's Jonathan Klick, were also part of the group. Roth co-authored, together with the late Samuel King, the esteemed jurist, "Broken Trust," the definitive study of the Bishops Estate turmoil, a matter with uncanny parallels to Hershey. Klick is Pennsylvania's leading voice on Hershey corporate governance problems.
The stellar list, described by PHC as a "child welfare and charitable trust Dream Team," also included Dr. Ron Thompson, of Boys Town, and Dr. Arthur Levine, of the Woodrow Wilson National Fellowship Foundation.
Says Dr. Charles Hill, a PHC board member, MHS grad, and retired College of New Jersey professor, "Drs. Thompson and Levine are two of the nation's leading voices on residential care best practices and educating poor children. We had been led to believe the AG would at least hear what these distinguished individuals had to say about reforming MHS, and we were quite disappointed that it never happened. We all revere the mission of Milton & Catherine Hershey; but you would have to be pretty misguided if you don't recognize that MHS needs to retool and improve programs. Shocking attrition alone shows this."
MHS is losing, on average, more than one child every school day, according to data collected by PHC. The school has also witnessed disturbing housing experimentation, including the 20-child bedrooms of "Springboard Academy," a project that flopped after $40 million was spent on it. "Multi-age" housing has also led to numerous incidents of sexual abuse, with the MHS board failing to end the practice, a reflection of its lack of requisite expertise, says PHC. The school also embarrassed itself nationally by rejecting the enrollment of a boy merely because he was HIV-positive, a matter that led to Department of Justice intervention.
But according to PHC, Kane's reforms will not require the board to add child welfare experts. Instead, the board is merely required to make "best efforts" to interview such "experts," under a definition that PHC calls "meaningless."
PHC's open letter also describes the historic context within which Kane made her decision, lamenting what it says have been decades of Attorney General oversight failures. According to PHC, these have caused a stark imbalance between MHS asset growth and increased enrollment.
For instance, while MHS added $10.4 billion to its asset base since 1970, the school increased enrollment by only 200 students over the same 43-year period. PHC argues that this asset deployment failure is due to the lack of child welfare expertise on the MHS Board and money being wasted on board member non-child agendas.
Among the letter's harsher sections is a passage addressing the Hershey Links golf course matter and Kane's determination that no actionable wrongdoing was committed.
Hershey Links involved $25 million of spending by the MHS Board on the purchase, renovation, and operation of an insolvent luxury golf course frequented by several board members.
After detailing what PHC describes as a "mountain of evidence" that could have been "leveraged to secure meaningful reforms," PHC's letter concludes, "The golf course controversy was a litmus test of your resolve, and you failed it."
PHC's letter asserts that Kane was persuaded to avoid even hearing what independent experts had to say because their advice would run counter to the goals of powerful Democrats, who are resistant to MHS change.
According to PHC's letter, Kane's Chief of Staff, Adrian King, is the brother-in-law of Hershey Trust Company vice-president John Estey. The latter served as Chief of Staff under former Pennsylvania Democratic Governor Ed Rendell.
Estey was hired by the MHS Trust last year, in a move that PHC describes as puzzling. Rendell, King, and Estey are also former partners of the same law firm, creating what PHC says is but another layer of conflict. Rendell has reportedly had designs on an MHS board seat himself, according to PHC's letter. The letter also discloses that in 2007, Rendell received a $10,000 contribution from a PAC associated with HERCO, an MHS Trust wholly-owned entity.
"Given all this," the letter states, "it bears noting that the greatest threat to MHS reform today no longer derives from Republicans who have openly profiteered from the Hershey charity. Rather, it derives from prominent Keystone State Democrats who have been replacing Republicans throughout the MHS Trust, several of whom are bound by the lynchpin of a Philadelphia law firm also connected to your Chief of Staff, Mr. King."
PHC argues that Kane preserved an MHS board structure that disfavors child welfare professionals but is welcoming to insiders seeking lucrative MHS appointments. PHC charges Kane with failing to end the high-pay nature of MHS positions simply because powerful Democrats are now in line for these positions.
Says PHC board member Robert Chalmers, also an alumnus of the Hershey school, "I never voted for a Democrat in my life before this. I thought Kane would be different but she sure fooled me. Instead of child welfare professionals replacing Republicans, you'll just see Democrats. This isn't what Republicans who gave Kane a chance expected."
PHC president Ric Fouad expressed disappointment at the sequence of events. "Looking at General Kane's conduct," says Fouad, "it is clear the AG put her hands over her ears when it came to hearing unbiased experts. Ultimately, everything she did is what insiders wanted, the opposite of what child welfare and charitable trust experts would advise."
"With the nation's best minds lined up to offer a new AG sterling guidance," continued Fouad, "there is simply no excuse for her actions. She has thoughtlessly squandered an unprecedented opportunity for achieving Hershey reforms. If the Democratic leadership wonder why progressives distrust the party, they need look no further than Kane's betrayal here of needy children and poor families, just so connected Democrats could make an easy buck. That we citizens tolerate this from both parties is not on them, it's on us."
Fouad also took issue with Kane's treatment of the Hershey Links golf course spending. Says Fouad, "If the board of the Kane Family Trust ever dared to spend $25 million on luxury golf instead of on the Kane children, I'm sure the AG would have had no difficulty holding them accountable. But I guess that when it's poor, often minority children whose assets are raided by the rich and the powerful, different standards apply."
PHC's letter summarizes Kane's decisions in a sobering manner: "To say that you have rearranged the deck chairs on the MHS child welfare Titanic is far too generous: you have not done even that. For you are allowing the worst offenders to remain in charge, permitting the same profiteering, endorsing the elimination of basic child safety protections, and otherwise propping up the status quo, lock, stock, and barrel. [The] path that you chose constitutes a grave setback for at-risk kids, needy families, and the Commonwealth itself. Rather than exploring how $10.5 billion could have been unleashed to aid these kids and lift related taxpayer burdens, your decision preserves a system that lines insiders' pockets, is manipulated by self-serving politicians, squanders child welfare funds, and hurts needy kids."
PHC's letter concludes, "Make no mistake, this is not the end of our MHS reform activism. Our group will simply redouble our efforts, though we will no longer dignify the fiction that the Pennsylvania [Attorney General] is in any way a reliable protector of powerless children. Your conduct definitively ended that notion."
PHC's full analysis can be accessed at: AG Kane Open Letter - May 29, 2013
PHC's full analysis of Three Strikes And You're Out Analysis can be accessed at: HERE