Profiting from Non-Profits!
How To Pluck a Non-Profit!
Sightings from The Catbird Seat
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This is a simple, self-help course in how to enrich yourself by becoming a trustee or director of a tax-exempt, non-profit organization:
STEP 1 – Sell your soul to the DEVIL. (You won’t be able to accomplish your goal if you have any bit of conscience left.)
STEP 2 – You will need to rent or buy the following: a big-five accounting firm, an international insurance broker, an off-shore bank and/or insurance company, a high-profile law firm, a well-connected lobbyist or two, several government regulators, a few judges, a large assortment of politicians, and some plain, brown paper bags. (Don’t worry about the money for these ingredients; this will come from the Trust’s own cash reserves, from selling off trust assets at bargain prices to your cronies, and from US taxpayers in the form of grants and tax credits.)
STEP 3 – Select the trust you want to head and inform those whom you bought in STEP 2 that you wanna be a Trustee!
After you are appointed a Trustee (or a director), then you will have no trouble finding hundreds of ways of feathering YOUR nest with trust funds and finders fees (a.k.a. “kickbacks”) – in addition to whatever ample salary and fees you are paid.
That’s it!
To see how it all works, just take a look at the following examples:
EXAMPLE #1
John D. MacArthur (1897-1978) was one of the three wealthiest men in America at the time of his death, and was sole owner of the nation’s largest privately held insurance company. One of seven children, he was born in an impoverished coal-producing area of eastern Pennsylvania. His three brothers who survived childhood all achieved success in their fields: Alfred in insurance; Telfer in publishing; and Charles MacArthur as a notable newsman, playwright, Hollywood screen writer, husband of Helen Hayes and father of Hawaii 5-0’s “Danno,” James MacArthur.
In 1935, John D. MacArthur borrowed $2,500 to acquire the financially impaired Bankers Life and Casualty Company of Chicago. Five years later, Bankers had more than $1 million of assets. At his death, MacArthur’s insurance companies had more than 3 million policyholders, with $5.5 billion of insurance in force.
In the 1960’s, MacArthur’s attention turned to real estate and development. At one time or another, MacArthur’s holdings included 100,000 acres of land in Florida, primarily in the Palm Beach and Sarasota areas; several development companies and shopping centers; paper and pulp companies; 19 commercial, office, and apartment buildings in New York City; several publishing enterprises; hotels; radio and television stations; banks and 12 insurance companies.
According to its website, the John D. and Catherine T. MacArthur Foundation is a private, independent grantmaking institution dedicated to helping groups and individuals foster lasting improvement in the human condition. When the John D. and Catherine T. MacArthur Foundation began operations after the death of Mr. MacArthur in 1978, it inherited almost 100,000 acres of undeveloped land, mostly in Florida.
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Journal Inquirer, 6/29/00, by Don Michak:
Key Players in Silvester Case
Have Escaped Attention
The Paul Silvester scandal is in many respects about “crony capitalism,” or who knew whom well enough to profit from the hundreds of millions of dollars in public pension fund investments authorized by the now-disgraced former state treasurer.
The focus has been on the lobbyists, lawyers, and politicians from both parties who covertly collected “finder’s fees” for lining up deals with Silvester, but a few key players have managed to escape attention.
These are the well-connected people who routinely have private meetings in public offices, after board meetings of philanthropic institutions, inside downtown restaurants, and at secluded golf courses. The contracts that for years have guaranteed them a small but lucrative percentage of nearly every state pension investment have been, until recently, none of your business.
The continuing federal and state investigations of Silvester’s admitted racketeering and money laundering have changed that, Treasury officials say they expect several “private-sector” individuals to face indictments, and the probes at the very least could tarnish the sterling reputations of some of these elites.
The founder of one investment partnership Silvester backed, Lawrence L. Landry, already stands publicly accused by the president of another, his protégé, Brad K. Heppner, of relaying an extortionate demand by Silvester.
Landry’s firm, moreover, has acknowledged being “one of many subjects” of a State Ethics Commission probe of finder’s fees, like the $1.09 million it says Silvester directed him to pay to a mysterious New Yorker, Andrew F. Moses.
Landry, 57, is the former chief financial officer and chief investment officer of the rich and powerful John D. and Catherine T. MacArthur Foundation.
He left the Chicago-based foundation two years ago to run a real estate partnership in Florida after Silvester invested $100 million in the venture.
The partnership, Westport Senior Living Fund, develops and buys retirement communities, comprising a mix of apartments, assisted living suites, and skilled nursing beds. . . .
Landry spent nine years at the MacArthur Foundation, which is perhaps best known for its awarding of generous fellowships some call “genius grants.”
The $4 billion foundation is named after a couple that made a fortune in insurance and real estate and spent most of their lives in south Florida, where until recently it was the largest owner of undeveloped land in Palm Beach County.
Landry not only oversaw the sale of those assets but also launched the foundation on an ambitious, aggressive investment strategy aimed at achieving bigger-than-usual returns.
His plan involved selling off hundreds of millions of dollars worth of foundation holdings in New York City real estate and putting the proceeds into private equities and debt, investments that carry bigger-than-usual risks but can sometimes pay off in what Wall Streeters call “excess returns.”
Landry started by moving $83 million in MacArthur money into private investments . . .
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NOW, HERE’S A CLOSER LOOK AT
SOME OF THE BIRDS THAT FLOCK AROUND
THE MacARTHUR FOUNDATION
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Adele Smith Simmons – Director of Marsh & McLennan Companies since 1978. President of the John D. and Catherine T. MacArthur Foundation from 1989 to 1999. She is also a director of the Synergos Institute and the Union of Concerned Scientists and a member of the Council on Foreign Relations.
Simmons presided over the MacArthur Foundation’s billions during the period when most of the foundation’s Florida real estate was sold off — the last of which was sold to WCI Communities at the same time Ms. Simmons announced her decision to resign as president of the foundation.
Alfred Hoffman, Jr. – Chair, Watermark Communities, Inc. Hoffman heads Watermark Communities (WCI), a $550 million-a-year company that builds golfing-centered retirement communities. One of Florida’s largest developers, he is also one of the state’s largest owners of undeveloped land. Hoffman paid $550 million for Westinghouse’s real estate arm in ’96.
He also paid $32 million in ’97 for a Coral Gables yacht club that had been hammered by Hurricane Andrew; he bought the land from Gov. Jeb Bush’s ex-partner Armando Codina, a leader of the right-wing Cuban American National Foundation.
Hoffman was Jeb Bush’s state finance chair and headed his inaugural committee.
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From The WCI website: . . . The Man Behind the Westinghouse Deal –
It’s been almost a year since Al Hoffman, Jr. sat down for a half hour with Westinghouse executives and negotiated a $550 million deal for WCI Communities Inc., holders of a real estate portfolio estimated at $1.1 billion.
It was a deal that caught just about everyone by surprise and has generated a great deal of interest . . .[Hoffman], between WCI and Sun City Center-based Florida Design Communities, controls more than 75,000 prime acres of both coasts of the Sunshine State. . . .
Hoffman founded FDC in the early 1980s . . . Well-known for buying struggling real estate assets from major corporations and revitalizing them, he has acquired projects from American Cyanamide and Beatrice Foods, purchased Sun City Center from First Chicago Bank in 1987, and bought Ft. Myers’ Gulf Harbour Yacht & Country Club from the FDIC in 1993. . . .
Andrew Ferdinand Moses – “a mysterious New York investment banker.”
From Journal Inquirer, 11/22/00, by Don Michak: . . . A former top official with one of the nation’s wealthiest foundations denied Tuesday that he was able to start his own investment partnership with $100 million in Connecticut pension money because he agreed to go along with an extortionate demand by former state Treasurer Paul J. Silvester.
But Lawrence L. Landry, who until two years ago was chief financial officer at the Chicago-based MacArthur Foundation, confirmed that he paid at least $1.09 million in “finders fees” to a mysterious New York investment banker, Andrew Ferdinand Moses, only after Silvester suggested that Moses was the man to help him get the state’s backing.
Landry said the corrupt former treasurer also had arranged for Moses to meet him and his associates in the Palm Beach Florida-based Westport Senior Living Investment Fund, which buys and develops retirement communities. . . .
State treasury records show Moses received a $437,500 fee in connection with one other investment authorized by Silvester.
Landry and Magee said Westport signed a contract with Moses’ company, New York Capital Partners, which also was supposed to find investors in other states for the partnership.
Moses met with little success, however, and Westport, which was seeking $400 million for investors, ended up with a total of $160 million– with $100 million put up by Silvester.
During his half hour presentation to the IAC, Landry revealed that the biggest backer of Westport Advisers Ltd., the general partner in Westport Senior Living Investment Fund is Kamehameha Schools/Bishop Estate, a $10 billion Hawaiian education trust that owns 69.2% of Westport.
Similarly, Landry disclosed that Bishop Estate is also the second-biggest investor in the Westport Senior Living Fund itself, having put up $25 million. . . .
Crossroads Group – In 1996, Hawaii’s Bishop Estate loaned approximately $1 million of the trust’s funds to Charles Harmon, Jr., an investment banker and former general partner of Goldman Sachs.
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From The Hartford Courant, 10/29/99, by Mike McIntire and Jon Lender: . . .The Texas-based managers of an investment fund with a solid track record handling state pension money say they lost a $100 million investment deal in 1998 because they refused a directive from then-Treasurer, Paul Silvester, to pay a finder’s fee to someone of his choosing. . . .
Silvester had been negotiating a possible $100 million investment in the Crossroads Constitution Fund. The state already had $300 million invested in Crossroads dating back to 1987, when, during an era in pension deal-making, the Hartford-based Crossroads had a contract to pay millions in fees to a partnership involving Democratic power broker Peter G. Kelly. …
By the time Silvester began talking to Crossroads in 1998, the fund’s assets had been acquired by a group of Texas investors, who were not interested in forking over the kind of fees Crossroads had paid Kelly and his associates. So when Silvester told Crossroads representative Larry Landry that a fee would need to be paid, the new management at Crossroads said no.
Last summer, Landry, a former chief investment officer of the philanthropic MacArthur Foundation, left Crossroads to set up the Westport Fund . . .
Silvester has alleged that he had arrangements with others to whom he steered fees, whereby they would kick back some of the money…
Lawrence Landry – From Journal Inquirer, 11/22/00, by Don Michak: . . . A former top official with one of the nation’s wealthiest foundations denied Tues that he was able to start his own investment partnership with $100 million in Connecticut pension money because he agreed to go along with an extortionate demand by former state Treasurer Paul J. Silvester.
But Lawrence L. Landry, who until two years ago was chief financial officer at the Chicago-based MacArthur Foundation, confirmed that he paid at least $1.09 million in “finder’s fees” to a mysterious New York investment banker, Andrew Ferdinand Moses, only after Silvester suggested that Moses was the man to help him get the state’s backing.
Landry said the corrupt former treasurer also had arranged for Moses to meet him and his associates in the Palm Beach, Fla-based Westport Senior Living Investment Fund, which buys and develops retirement communities. . . .
A protégé and longtime business partner of Landry’s, Brad K. Heppner, heads another partnership that has received several state pension fund investments since 1987: The Crossroads Group of Dallas, Texas.
Landry was one of the owners of Crossroads until he left to start Westport, which he said was originally intended to be operated as a unit of Crossroads.
Heppner said that while he wanted Silvester to invest another $100 million with Crossroads, Landry told him Silvester wouldn’t do a deal unless the Texas company paid a further finder’s fee to someone whom Silvester would designate.
Heppner said he … refused to accept Silvester’s condition. That, he added, led Landry to sell his interest in Crossroads and start Westport, which ended up with the money from Silvester.
Landry, after a presentation before the state’s Investment Advisory Council, a state panel that oversees pension plan deals … denied Heppner’s allegation. . . .
Silvester was convicted last year on federal racketeering and money-laundering charges, and investigators are continuing to examine how he funneled bribes, and kick-backs through his or others’ political campaigns.
Landry and an investment banker associated with Westport, John Magee, meanwhile said they had no reason to suspect that Moses may have kicked back part or all of his finder’s fee to Silvester . . .
State treasury records show Moses received a $437,500 fee in connection with one other investment authorized by Silvester.
Landry and Magee said Westport signed a contract with Moses’ company, New York Capital Partners, which also was supposed to find investors in other states for the partnership. . . .
During his half hour presentation to the IAC, Landry revealed that the biggest backer of Westport Advisors, Ltd., the general partner in Westport Senior Living Investment Fund, is Kamehameha Schools/Bishop Estate, a $10 billion Hawaiian education trust that owns 69.2% of Westport.
Similarly, Landry disclosed that Bishop Estate is also the second-biggest investor in the Westport Senior Living Fund itself, having put up $25 million.
Bishop Estate, said to be the nation’s wealthiest charitable trust, has been wracked by a scandal involving the former trustees, whom the Internal Revenue Service ordered removed after accusations that they mismanaged estate finances, took kickbacks, and paid themselves annual fees averaging around $900,000 each.
Its critics, like University of Hawaii professor Randall W. Roth, also say the trust was for years operated “as a multibillion-dollar candy store for the state’s political establishment.”
Landry, who has been quoted in the Hawaiian press as defending the estate’s treasurer, protested Tuesday that the controversy surrounding Bishop Estate has nothing to do with him or Westport.
The fact that he, Westport, and Bishop Estate now also have a connection to the Silvester scandal, he added, is purely coincidental. . . .
WCI Communities, Inc. – Luxury homebuilders based in Florida.
March 12, 2002
WCI launches IPO, stock climbs
By Darcie Lunsford
WCI Communities has done what has been expected since it stormed into Palm Beach County in 1999 to pull off a $230 million land grab.
The Bonita Springs-based luxury homebuilder launched an initial public offering on Tuesday.
Trading as WCI on the New York Stock Exchange, the builder offered 16 percent of the company through the sale of 6.9 million shares. The $19-a-share offering price had jumped to $22.84 by mid-day.
Tapping the public markets has been a long-time objective, CFO Jim Dietz said.
“The timing was right from the standpoint that the markets have recovered from Sept. 11,” he said.
WCI also is coming off a profitable year with its net income jumping nearly 25 percent in 2001 to $102.2 million on revenues of $1.1 billion, according to its most recent earnings report. In 2000, the builder’s net income was $81.9 million on revenues of $882.2 million.
The cash raised through the IPO will be used to pay off about $50 million in construction loans on its condo towers, including the pricey One Watermark Place of the Palm Beaches in West Palm Beach. Construction of the 15-story building overlooking the Intracoastal Waterway is expected to be completed later this year.
The balance of the sale proceeds are earmarked to pay down an existing $450 million credit line with Fleet National Bank and other lenders, Dietz said.
The builder intends to use this boosted borrowing capacity to bankroll a wave of new developments. Chief among them is the 1,000-home Evergrene development and the Old Palm Golf Club, both in Palm Beach Gardens.
The two communities are slated to go on land WCI bought from the John D. and Catherine T. MacArthur Foundation in 1999.
The $230 million deal, arguably South Florida’s largest in recent history, encompassed nearly 15,000 acres, spanning Palm Beach, Martin and St. Lucie counties. WCI has since sold all but 2,500 acres, generating $132 million.
It carries no lingering debt from the transaction, Dietz said.
– Copyright 2002 American City Business Journals Inc.
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From Multex Investor:
WCI Communities, Inc. (NYSE)
As of March 12, 2002
DIRECTORS & OFFICERS
Ackerman, Don E., (68) Chairman of the Board, Executive Vice President
Don E. Ackerman is the Chairman of the Board of Directors and Executive Vice President of WCI. From July 24, 1995 until the date of the merger, Mr. Ackerman served as Chairman of the Board of Directors and Executive Vice President of WCI Communities Limited Partnership. From 1985 until the date of the merger, Mr. Ackerman also served as a Director of Florida Design Communities. He is also a Director of First Fidelity Title, Inc., Financial Resources Group, Inc., Florida Lifestyle Management Company, Courtyards at Sun City Center, Inc., Sun City Center Office Plaza, Inc., Sun City Center Land Company and Aston Care Systems, Inc. From 1967 until 1991, Mr. Ackerman was a partner at J.H. Whitney & Co., a venture capital firm. Mr. Ackerman is President of Chandelle Ventures, Inc., his private investment company, and serves as Chairman of the Board of Walden University, Inc. Mr. Ackerman is a Director of Schlumberger Limited.
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Hoffman, Jr., Alfred, (67) Chief Executive Officer, Director
Alfred Hoffman, Jr. is the Chief Executive Officer and a Director of WCI. From July 24, 1995 until the date of the merger of WCI Communities Limited Partnership and Florida Design Communities, Mr. Hoffman served as Chief Executive Officer of WCI Communities Limited Partnership, and from July 1998 until the date of the merger, he also served as a Director of WCI Communities Limited Partnership. From 1985 until the date of the merger, Mr. Hoffman also served as Chief Executive Officer and Chairman of the Board of Directors of Florida Design Communities. He also served as President of Florida Design Communities from 1985 to 1989 and 1993 to 1994. Mr. Hoffman is Chief Executive Officer and Chairman of the Board of Directors of First Fidelity Title, Inc., Financial Resources Group, Inc., Florida Lifestyle Management Company, Courtyards at Sun City Center, Inc. and Sun City Center Office Plaza, Inc. He also is Chief Executive Officer and a Director of Sun City Center Land Company and is a Director of Aston Care Systems, Inc. Prior to establishing Florida Design Communities, Mr. Hoffman founded Tekton Corporation, a homebuilder which he sold to Union Camp Corporation in 1970, and from 1970 to 1975, he served as head of Union Camp Corporation’s real estate homebuilding subsidiary. From 1975 to 1985, Mr. Hoffman was a private developer in the Tampa Bay area.
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Starkey, Jerry L., (42) President, Chief Operating Officer, Director
Jerry L. Starkey is the President and Chief Operating Officer and a Director of WCI. From 1998 until the date of the merger, Mr. Starkey was the President and Chief Operating Officer of WCI Communities Limited Partnership. From 1994 until the date of the merger, he also served as President and Secretary of Florida Design Communities. Since joining Florida Design Communities in 1988, Mr. Starkey has also held the office of Chief Operating Officer. Mr. Starkey is President of First Fidelity Title, Inc., Financial Resources Group, Inc., Courtyards at Sun City Center, Inc., Sun City Center Land Company and Sun City Center Office Plaza, Inc. Prior to joining the predecessor to Florida Design Communities, Mr. Starkey was Executive Vice President of George Thomas Homes, a production homebuilder with operations in Texas and Florida. Mr. Starkey is a member of the State Bar of Texas. In addition, Mr. Starkey was President and Secretary of Aston Care Systems, Inc. from 1996 to 1998.
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Dietz, James P., (37) Chief Financial Officer, Senior Vice President
James P. Dietz is a Senior Vice President and Chief Financial Officer of WCI. From October 1996 until the date of the merger, Mr. Dietz was the Chief Financial Officer and Treasurer of Florida Design Communities. Since joining Florida Design Communities in 1995, Mr. Dietz has also held the position of Corporate Controller. In addition, from 1996 until 1998, Mr. Dietz served as Chief Financial Officer of Aston Care Systems, Inc. Prior to joining Florida Design Communities, Mr. Dietz was Manager of Business Development at GTE Leasing Corporation, an affiliate of GTE. From 1986 until 1993, Mr. Dietz held various professional positions, including audit manager, at Arthur Andersen & Co.
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Hastings, Vivien N., (50) Senior Vice President, General Counsel
Vivien N. Hastings is the Senior Vice President and General Counsel of WCI. From 1995 until the date of the merger, Ms. Hastings was Senior Vice President and General Counsel of WCI Communities Limited Partnership. Prior to serving as General Counsel, Ms. Hastings held various positions in WCI Communities Limited Partnership’s legal department. Prior to joining WCI Communities Limited Partnership, from 1982 to 1989, Ms. Hastings was Vice President and Co-General Counsel of Merrill Lynch Hubbard, Inc., a real estate division of Merrill Lynch & Co. From 1977 until 1982 Ms. Hastings was an associate with the Chicago law firm of Winston & Strawn. . . .
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Landry, Lawrence L. , (58) Director
Lawrence L. Landry has been a Director of WCI since May 1999. From July 24, 1995 until August 1998, Mr. Landry served as a Director of WCI Communities Limited Partnership. From January 1996 until March 1999, Mr. Landry served as a Director of Florida Design Communities. Mr. Landry is the President and Chief Executive Officer of Westport Advisors, Ltd., which is the general partner of Westport Senior Living Investment Fund L.P. From February 1989 until June 1998, Mr. Landry was the chief finance and investment officer of the John D. and Catherine T. MacArthur Foundation. The MacArthur Foundation has been a stockholder of WCI since 1995. Mr. Landry is a member of the Board of Trustees of Clark University and also serves on the Board of Directors of Greystone Communities, Inc.
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McWilliams, Thomas F., (58) Director
Thomas F. McWilliams has been a Director of WCI since March 1999. Mr. McWilliams has been employed by Citicorp Venture Capital, Ltd. since 1983 and has been a member of its investment committee since 1984. Mr. McWilliams serves on the boards of Chase Industries, MMI Products, Polar Corporation, Ergo Science Corporation, Pursell Industries, Strategic Industries and Royster-Clark Group Inc.
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Mintz, Joshua J., (46) Director
Joshua J. Mintz has been a Director of WCI since October 2000. Mr. Mintz is the Vice President and General Counsel of the John D. and Catherine T. MacArthur Foundation. Prior to joining the foundation in 1994, Mr. Mintz was with the law firm Sidley & Austin for thirteen years, specializing in commercial litigation and business reorganization, the last five of which he was a partner.
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Sugarman, Jay, (39) Director
Jay Sugarman has been a Director of WCI since 1995. Mr. Sugarman is Chairman of the Board and Chief Executive Officer of iStar Financial, Inc., a publicly traded finance company focused on the real estate industry. From 1996 to 1997, he was Senior Managing Director of Starwood Capital Group, LLC and from 1993 to 1996, was President of Starwood Mezzanine Investors, L.P. . . .
For more, GO TO > > > Vultures in the WCI Communities
Westport Advisers, Ltd. – The Hartford Courant, 10/29/99, by Mike McIntire and Jon Lender: . . .
The Texas-based managers of an investment fund … say they lost a $100 million investment deal in 1998 because they refused a directive from then-Treasurer (Conn.), Paul Silvester, to pay a finder’s fee to someone of his choosing. . . .
Silvester had been negotiating a possible $100 million investment in the Crossroads Constitution Fund. . . .
By the time Silvester began talking to Crossroads in 1998, the fund’s assets had been acquired by a group of Texas investors, who were not interested in forking over the kind of fees Crossroads had paid Kelly and his associates. So when Silvester told Crossroads representative Larry Landry that a fee would need to be paid, the new management at Crossroads said no. . .
Last summer, Landry, a former chief investment officer of the philanthropic MacArthur Foundation, left Crossroads to set up the Westport Fund. . . .
Silvester has alleged that he had arrangements with others to whom he steered fees, whereby they would kick back some of the money . . .
EXAMPLE #2
THE KAMEHAMEHA SCHOOLS
January 11, 2002
Trust may sell land under golf club
By Rick Daysog, Honolulu Star-Bulletin
The Kamehameha Schools is exploring the sale of land under the exclusive Robert Trent Jones Golf Club in northern Virginia as it looks to unload several of its underperforming mainland assets.
The $6 billion charitable trust has held preliminary talks with the club’s members, who would like to acquire the fee interest in the 18-hole course, considered one of most prestigious golf facilities in the Washington, D.C., area.
The club — whose members include former President George Bush, U.S. Supreme Court Justice Sandra Day O’Connor, ex-AT&T Corp. Chairman Robert Allen and Washington power broker Vernon Jordan — operates under a 40-year lease with the trust, but members hold an option to acquire the fee.
A Kamehameha Schools spokesman had no immediate comment. Jordan, the club’s president, did not return calls.
The proposed sale was detailed in a recent internal memo listing the trust’s underperforming assets.
The memo noted that the trust officials have had early discussions with the club and planned to follow up. It also noted that the trust’s initial $45 million investment in the club is now worth about $35 million.
The move comes as the estate is looking to sell off many of its money-losing mainland ventures, which were initiated by the estate’s previous trustees during the late 1980s and early 1990s. The sell-off is part of a series of reforms of the trust’s investment policies initiated by the estate’s current board and Chief Executive Officer Hamilton McCubbin in response to investigations from the Attorney General’s Office, the estate’s court-appointed masters and the Internal Revenue Service.
The estate recently sold 608 acres of industrial land near Atlanta to a mainland investor, Genoa Realty Services, for about $13 million. The parcel is part of the 1,200-acre Gwinnett Progress Center project, which the estate and its partners launched in the late 1980s.
The trust’s board also has approved the sale of its assets in its Treyburn LLC subsidiary. Treyburn is the developer of master-planned residential communities in the Research Triangle area in North Carolina. The estate invested $59.5 million in the various Treyburn projects, but the properties are now worth about $14 million.
For the estate, the Robert Trent Jones Golf Course has not lacked controversy. The club — the site of the President’s Cup international golf tourney in 1994, 1996 and 2000 — was completed in 1991 by a partnership that included the estate and Durham, N.C., developer Clay Hamner. It was designed by legendary golf course builder Robert Trent Jones. But the club ran into financial problems in 1994, prompting the partners to sell the leasehold interest in the club and its two-story, 40,000-square-foot clubhouse to members. The estate retained the fee interest.
That deal was largely engineered by former Kamehameha Schools trustee Henry Peters, who also served as a trustee of the golf club.
That relationship prompted two club members — Benjamin Stone and Robert Basham, president of the Outback Steakhouse restaurant chain — to sue Peters and other partners*, saying the fee price was too high and that Peters had a conflict since he served as a trustee of both institutions.
Peters denied the conflict, saying he recused himself from taking part in the transaction as a Kamehameha Schools trustee.
The suit was settled after club members were given a favorable, 40-year lease and an option to buy the fee interest….
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March 13, 2002
Hawai’i trust sees WCI stock boom
Advertiser Staff and News Services
Kamehameha Schools’ investment in Florida development company WCI Communities Inc. paid big dividends this week when WCI raised more than $130 million in an initial public stock offering.
WCI Communities Inc.’s shares rose 19 percent after the stock sale for the builder of residential communities and luxury condominium towers in Florida. Shares of WCI rose $3.67 to $22.67 in New York trading.
The offering raised the value of the 7.1 million shares owned by Kamehameha Activities Association, a subsidiary of Kamehameha Schools, to $160 million. Kamehameha, the largest single shareholder, with more than 16 percent of WCI shares, invested in the Bonita Springs, Fla., company in 1995. Kamehameha Schools’ initial investment in WCI was worth about $37 million, trust officials said.
The Kamehameha Schools trust and its subsidiaries have about $3 billion invested in stocks, bonds and other securities. The value of its WCI investment now makes up about 5 percent of that portfolio, which is the main asset base for the $4.4 billion non-profit network of private schools serving Hawaiians.
The trust has not decided what to do with its stock after the expiration of a six-month “lock-out” period, after which initial investors in WCI can sell shares, said Wally Chin, president of Kamehameha Activities Association. . . .
WCI originally filed with the Securities and Exchange Commission to go public Sept. 7, a plan that was delayed by the terrorist attacks four days later.
The shares sold represent a 16 percent stake. The IPO values WCI at $822 million.
The company, which traces its roots back to 1946, was once a unit of Westinghouse Electric Corp. The company is now headed by chief executive officer Alfred Hoffman, 67, who was the national co-chairman of finance for George W. Bush’s presidential campaign.
Citigroup Inc.‘s venture capital unit, the John D. and Catherine T. MacArthur Foundation and Kamehameha Activities Association own about 43 percent of the shares.
A Bloomberg News story was used in this report.
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WCI built from an eclectic mix of investors
By DICK HOGAN, news-press.com
Some might wonder what a long-dead Hawaiian princess has to do with the biggest luxury homebuilder in Southwest Florida.
And yet the death of Bernice Pauahi Bishop in 1884 eventually led to a foundation in her name, which took the biggest ownership stake in WCI Communities Inc.
The public face of WCI is CEO and nationally known Republican fund-raiser Al Hoffman. But behind the scenes is an unlikely mix of two charities, a secretive investment fund and two businessmen with strong ties to Florida.
How they came together is a tale of immense wealth and entrepreneurial risk-taking that eventually led to WCI’s becoming one of the biggest publicly owned companies in the state. The association hasn’t been too shabby for the two charitable foundations either, one of which is known more for preserving wildlife rather than plowing over thousands of acres to make room for luxury homes.
Bishop’s wealth stretches across 118 years and 4,700 miles to help build luxury towers along the Lee Island Coast and well-heeled retirement communities such as Sun City Center Fort Myers.
Her estate funded the Kamehameha Activities Association, a huge Hawaiian charity that owns a whopping 16 percent of Bonita Springs-based WCI. On March 12, WCI became Lee County’s newest and biggest publicly held corporation when it sold 16 percent of the company to investors.
Kamehameha (pronounced ka-may-ah-MAY-ah) is now the most powerful in a cast of five major players that have dominated the luxury home builder since 1995. That’s when one of WCI’s predecessors sprang into being with the purchase for $600 million of Westinghouse Electric’s real estate division.
Although its investments can be far from home, Kamehameha’s real business is in Hawaii: It provides financial support to a statewide system of schools that give preference to those of native Hawaiian ancestry.
Hoffman, WCI’s executive vice president Don Ackerman, Citicorp Venture Capital Ltd., the John D. and Catherine T. MacArthur Foundation and Kamehameha “came together to consummate the Westinghouse purchase,” WCI spokesman Ken Plonski said.
The Westinghouse assets were first called WCI Communities Limited Partnership, which in 1999 merged with Florida Design Communities to form WCI Communities Inc.
Hoffman and Ackerman had long been involved in the early days of Westinghouse and later with Florida Design, which they helped found.
Now in the publicly held company, the five original WCI investors remain the five biggest shareholders.
“I think our relationship was really with the MacArthur Foundation,” Kamehameha president Wally Chin said. “I believe we had prior investment partnerships with MacArthur. That’s kind of how we were involved with this investment.”
Being in a partnership with another nonprofit was nothing new for Kamehameha, which had been in similar deals with Duke University going back into the early 1990s, Chin said.
But the association doesn’t get heavily involved in the companies in which it invests, he said. “We’re basically passive investors. Because of our nonprofit status, we cannot get involved in an active traded business enterprise.”
At most, he said, Kamehameha may exercise its option to have a member on the board of directors. “We’re still trying to address what that means to us after the IPO.”
Another of the players, MacArthur, had a much closer business relationship with WCI. In 1998, the foundation sold 15,000 acres of undeveloped land in Palm Beach County to WCI for $260 million.
That property was the last of the vast acreage in the estate of John MacArthur, who made a fortune primarily in insurance but also invested in “a whole array of businesses and real estate,” said Ray Boyer, the foundation’s associate vice president for public affairs.
“John MacArthur owned about a hundred-thousand acres of undeveloped land,” he said. “At one time, it was a third of our investments.” …
Directors include Joshua Mintz, vice president and general counsel of the foundation, and Lawrence Landry, who from 1989 to 1998 was chief finance and investment officer of the foundation.
Another director is Thomas McWilliams, a member of the investment committee of Citicorp Venture, described by Red Herring magazine as “the renowned but secretive private equity arm of Citicorp.” …
WCI’s IPO raised $131 million. Its plans were announced in September but postponed because of the terrorist attacks….
Profile of WCI
Major shareholders and percentage ownership:
Citicorp Venture Capital, 13.6
John D. and Catherine T. MacArthur Foundation, 13.1
Kamehameha Activities Association, 16.4
Al Hoffman (chief executive officer), 11.7
Don Ackerman (executive vice president), 10.9
Donald Basta (investor with no corporate ties to WCI), 6
Board of directors
Al Hoffman (chief executive officer and director)
Don Ackerman (chairman of the board and executive vice president)
Jerry Starkey (president and chief operating officer)
James Dietz (senior vice president and chief financial officer)
Steven Adelman (senior vice president and treasurer)
R. Michael Curtin (senior vice president, marketing and sales)
Milton Flinn (senior vice president, real estate services division)
David Fry (senior vice president, amenities division)
Michael Greenberg (senior vice president, home-building division)
Vivien Hastings (senior vice president, general counsel)
S. Charles Mattoff (senior vice president, human resources)
George Page (senior vice president, tower division)
F. Philip Handy (chief executive officer of Strategic Industries and chairman and president of Winter Park Capital Co., a private investment firm that he founded)
Lawrence Landry (president and chief executive officer of Westport Advisors Ltd. He is former chief finance and investment officer of the John D. and Catherine T. MacArthur Foundation)
Thomas McWilliams (managing director of Citicorp Venture Capital Ltd.)
Joshua Mintz (vice president and general counsel of the John D. and Catherine T. MacArthur Foundation)
Jay Sugarman (chairman of the board and chief executive officer of iStar Financial Inc., a publicly traded finance company focused on the real estate industry)
Stewart Turley (former chairman of the board and chief executive officer of Eckerd Corp. before retiring in 1997. He also serves on the boards of Sprint Corp. and MarineMax Inc.)
KAMEHAMEHA HISTORY
Bernice Pauahi Bishop, great-granddaughter and last royal descendant of Hawaiian king Kamehameha the Great, died in 1884 —- having watched the islands’ nativee people decline from 400,000 to about 45,000 since 1778 when they were discovered by British explorer James Cook.
Believing that education could help counter the decline of her people, she devoted the bulk of her estate “to erect and maintain in the Hawaiian Islands two schools, each for boarding and day scholars, one for boys and one for girls, to be known as, and called, the Kamehameha Schools.”
Now, more than a hundred years later, her bequest funds a statewide system of schools that give preference to people of Hawaiian extraction.
The Kamehameha Activities Association with $2.5 billion in assets exists solely to provide revenue to support the schools. One of the association’s investments is a 16.4 percent interest in WCI Communities Inc., a Bonita Springs-based luxury home builder that went public March 12.
WCI’s ticker symbol is WCI, and it is listed on the New York Stock Exchange.
* * *
Press Release:
Kamehameha Schools in Hawaii on the appointment of three senior educational leaders. . . .
D. Rodney Chamberlain, D.Ed., has been appointed the Headmaster of the Maui Campus. Dr. Chamberlain, the Head of University Lake School in Hartland, Wisconsin, worked for many years at Milton Hershey School in Hershey, Pennsylvania, where he served variously as Dean of Scholastic Affairs, Assistant to the President, Curriculum Coordinator, and faculty member.
For much more on Kamehameha Schools, GO TO > > > Broken Trust: The Book; Dirty Money, Dirty Politics & Bishop Estate, Part VII – The Princess Weeps… ; Lost Generations
EXAMPLE #3
THE MILTON HERSHEY SCHOOL
Milton Hershey, the Chocolate King, used his fortune to endow, among other things, a school for orphans – then gave the school controlling interest in the Hershey Chocolate Co.
~ ~ ~
February 15, 2007
HERSHEY TO CUT 1,500 JOBS
Yahoo! News
(Reuters) – Hershey Co. on Thursday said it would cut about 1,500 jobs and reduce the number of production lines it operates by more than a third as it tries to streamline manufacturing to improve profits.
The company also said it will build a new, cost-effective manufacturing plant in Monterrey, Mexico.
~ ~ ~
January 17, 2001
MHS Controversy Hits
PEOPLE Magazine
The SUN
The controversy between the officers and members of the Milton Hershey School Alumni Association and the present Board of Managers and administration of the Milton Hershey School took on a national character this week, as the January 22, 2001 issue of PEOPLE Magazine contains a three page article outlining the problem.
The PEOPLE article focus is on the life of John Halbleib, a successful Chicago lawyer who is also president of the Milton Hershey School Alumni Association and one of the leaders in the fight to curb the activities of the present Board of Managers and administration.
Halbleib and PEOPLE Magazine focus in on the changes which have been brought about at the school which have seen it go from a semi-agricultural environment which Halbleib and other prominent alumni feel had taught them life messages and led to their later success.
The article also outlines alumni concerns of what they feel is a move away from serving young people who would be housed in a real orphanage or accepting the most at-risk, impoverished or needy kids.
The alumni, which PEOPLE calls the “Orphan Army”, also have concerns regarding the vast building program which goes on while the school serves less students than in years past.
They also have concerns for the selling off of school-owned lands and leasing of property through the Hershey Trust to other Hershey owned properties, such as Hershey Foods and Hershey Entertainment and Resort Company.
Coming in for heavy criticism in the article is Hershey Trust and Board of Managers member William H. Alexander, who Halbleib and the Alumni Association claim has profited in the millions through his connection with the school, both in land purchase and construction projects for the school.
Halbleib and the Alumni Association have little good to say about the recent investigation conducted by former Governor Richard Thornburgh’s firm, which they feel looked only at the legality of their actions and not at the underlying problems. The article states this is why the Alumni Association and Halbleib have returned to Pennsylvania Attorney, General Mike Fisher for redress.
Also quoted in the article are Milton Hershey School President Dr. William Lepley and Director of Communications Linda Miller, both of whom emphatically defend the direction the school is taking and policies in place.
* * *
May 29, 2002
Hershey Strike Signals Changing Times
A chocolate workers strike at Hershey Foods has been a bitter reminder to many people here that despite the giant Hershey’s Kisses on the lampposts, the streets named Chocolate and Cocoa avenues, and the cries of delight from the amusement park, Hershey is not Candy Land, and business is business.
About 2,700 members of Chocolate Workers Local 464 walked out at two candy factories April 26 in what is now the longest strike in the company’s 97-year history. The dispute centers on a demand that employees contribute more toward their health care coverage as part of a move by Hershey to control costs and boost profits.
The walkout is the fifth strike in Hershey history. But some say the dispute represents a new bottom-line mentality at Hershey that is at odds with the ideals of its founder, Milton S. Hershey, a philanthropist who died in 1945.
“In the corporate world, this is nothing new,” said Ron Mowry, the 52-year-old manager of a trucking company. But “in the eyes of the town, it’s a sign of the times.”
The worst thing to many retirees, employees and Hershey residents is that the man behind the cost-cutting is the company’s first-ever chief executive to be hired from outside the company….
For a century, the works of Milton Hershey and his Hershey Trust Co. have been landmarks in this town of nearly 13,000 people – the majestic Hershey Theater, the Milton Hershey School for disadvantaged children, the twin smokestacks on the original chocolate factory.
Many of Milton Hershey’s projects, like the Hershey Theater, the Hotel Hershey and the Hersheypark Arena ice rink, were built during the Depression, giving jobs to area residents who might otherwise have been unemployed.
Hershey’s amusement park is a major tourist attraction. And on some days, visitors can savor the smell of chocolate drifting from the plants.
“Hershey chocolate is Hershey Foods is Hershey, Pa.,” Mowry said.
But now, Bob Brown, who runs a barber shop in town with an antique chair in which the chocolate baron himself used to sit, said Milton Hershey is doing more than turning over in his grave: “The man’s on a rotisserie.” . . .
And Hershey’s new chief executive, Richard H. Lenny, said at a recent annual meeting: “I’m here to do what the shareholders want me to do, which is to increase shareholder value.” . . .
But workers are asking why they should sacrifice when Hershey’s sales and profits are on the rise and the new CEO, hired last year from Nabisco, made $4.6 million in stock options, bonuses and salary in 2001.
“Most people are against Lenny because he’s from out of town,” said Rose Resanovich, 75, a retired Hershey Foods forklift driver whose father and husband also worked for the Hershey empire and whose two daughters are now on strike.
“He’s trying to change everything.”
* * *
July 25, 2002
Chocolate icon up for sale
BCC on line
Hershey, the confectionery firm behind iconic American brands such as Hershey’s Kisses and Reese’s Peanut Butter Cups, has effectively put itself up for sale.
The Milton Hershey School Trust, a charitable foundation which owns one-third of Hershey shares but controls three-quarters of votes, wishes to sell its stake with the aim of diversifying its holdings.
The news sent Hershey shares soaring 21% on the New York Stock Exchange, valuing the firm at $10bn.
Now, analysts say multinational food firms such as Nestle, Cadbury Schweppes and Kraft could bid as much as $13bn for the company, which has an unrivalled profile on the US market.
Difficult decision
The Milton Hershey School Trust, which provides free residential education to about 1,200 disadvantaged children in Pennsylvania, said it had made the sale decision “with reluctance”.
But the sale was “the best way to accomplish the trust’s diversification objectives and maximise value,” the trust said.
In May, Hershey said it planned sell some of its non-chocolate confectionery brands, including the Wunderbeans and Chuckles product lines.
The disposals formed part of a wider shake-up which triggered a six-week strike involving 3,000 workers at two plants.
End of an era
A sale of Hershey would bring to a close 125 years of history, since Milton Hershey founded his first candy shop.
“As much as I’m an advocate of food industry consolidation, Milton Hershey must be rolling in his grave,” said Prudential Securities analyst John McMillin.
The decision comes amid a wave of consolidation in the food industry, which has seen the disappearance of a swathe of once-legendary industry names.
* * *
July 25, 2002
Possible Hershey sale
shakes company town
By Cris Foehlinger
HERSHEY, Pa., July 25 (Reuters) – When Pennsylvania chocolate tycoon Milton Snavely Hershey built a model town to house and support the workers at his plant a century ago, he probably did not imagine a Nestle Park or a Kraft School in his community.
And while the names of the school, park and other locales are not likely to change in the wake of news that candy maker Hershey Foods Co. (HSY) has been put up for sale, residents of Hershey were shocked by the news.
“We all carried the perspective that it wasn’t conceivable that the school trust would consider selling off Hershey Company,” Pamela Whitenack, a historian at the Hershey Archives, said. “By selling off the company, you totally undo what Hershey had created.”
Potential suitors for Hershey mentioned by securities analysts include food giants like Kraft Foods Inc. (KFT), Nestle SA and Cadbury Schweppes Plc. . A deal could be worth as much as $12 billion, they said.
The Milton Hershey School Trust, a charitable foundation that owns about a third of Hershey’s stock and controls 77 percent of the voting power, said on Thursday it was forcing a sale to diversify its holdings.
With uncertainty in the stock market and high-profile bankruptcies like Enron Corp. and WorldCom Group (WCOEQ), a trust that relies on the fortunes of one company seems a dicey proposition.
But diversification has been a goal of the trustees for a while. In the 1980s, more than 80 percent of the trust’s assets were in Hershey stock. That is now down to 52 percent of the trust’s $5.4 billion in assets, said Robert Vowler, chief executive of Hershey Trust Co., the trustee of the Milton Hershey School Trust.
Vowler said the trust was concerned about preserving the relationship between the company and the community in looking for a buyer.
“We would finally want to be convinced that (they) are going to take care of this community the way good corporate citizens do,” Vowler said in an interview.
But people in Hershey, an unincorporated town in Derry Township, southeastern Pennsylvania, were skeptical.
“Once it’s bought, they may try to follow through in the beginning, but I think that will be lost along the way,” said Kathleen Lewis, 70, a lifelong resident of Hershey and president of the Derry Township Historical Society.
The trust is the sole benefactor of the Milton Hershey School, which was founded by Milton Hershey and his wife, Catharine, after they discovered that they could not have children of their own.
The school was created to educate poor orphaned boys. In 1918, after Catharine died, Milton Hershey donated his entire fortune of Hershey stock, worth $60 million, to the trust to endow the school.
In the mid-1960s, trust officials, worried that the trust had so much cash it might raise tax issues, received legal permission to donate $50 million to Pennsylvania State University to build a teaching hospital.
In the late 1990s, the school, which now admits both boys and girls, underwent a physical makeover that included moving to a 1,500-acre campus.
That decision irked some alumni who thought the school was getting away from its agrarian roots. Part of the original grant from Milton Hershey for the school included farmland and livestock, and students lived in groups in barns around the area.
David Reagle, who makes Hershey syrup at the main plant on Chocolate Avenue, said he did know if a sale would be good or bad, but said he didn’t think there would be the same closeness between the town and the community.
But Rob, a worker in the molding department who declined to give his last name, did not think a sale would mean major changes for the workers.
“It’s a profitable company — No. 1 in sales — so no one is going to come in and make wholesale changes,” he said.
Some analysts said the move to sell the stock would not have pleased Milton Hershey, who founded not just a chocolate company and a school but also a park for his workers and built homes for them as well.
“Milton Hershey must be rolling over in his grave,” John McMillin, food analyst at Prudential Securities, said. . . .
(Additional reporting by Brad Dorfman and Deborah Cohen in Chicago) REUTERS
* * *
July 26, 2002
Hershey Foods considers sale
By Martha Raffaele, Associated Press
HARRISBURG, Pa. — Hershey Foods Corp. and the charitable trust that controls the nation’s largest candy maker said Thursday that the trust is exploring a possible sale of the company.
The Wall Street Journal first reported Thursday that the Milton Hershey School Trust, which owns 77 percent of the company’s voting stock, has been considering selling the company in a deal that could fetch more than $10 billion.
The trust is seeking to diversify its assets, said Robert C. Vowler, chief executive officer of Hershey Trust Co., which manages the Milton Hershey School’s $5 billion endowment. Hershey Foods stock represents about 50 percent of their value.
“Clearly, the board of directors of the company would have preferred to keep Hershey Foods as an independent company. However, the trust concluded that exploring a possible sale of the company was the most prudent action consistent with its diversification objectives and its fiduciary duties to the Milton Hershey School,” Vowler said.
The news pushed Hershey Foods shares higher 25.3 percent, or $15.80, to close Thursday at $78.30 on the New York Stock Exchange.
The trust initially informed the company in March that it wanted to explore ways of diversifying its holdings, Hershey Foods spokesman John Long said. “It’s too early to predict the outcome . . . An ultimate decision won’t be made until any bidding process is complete,” he said.
The trust’s sole beneficiary is the Milton Hershey School, established by the company’s founder and his wife, Catherine, in 1909 to serve orphaned and needy children.
William Leach, an analyst with Banc of America Securities, said Kraft and Nestle are potential buyers.
Copyright 2002 Associated Press
* * *
July 27, 2002
Cadbury to enter Hershey auction
LONDON, July 27 (Reuters) – British confectionery and beverages group Cadbury Schweppes Plc will enter the bidding war for U.S. chocolate giant Hershey Foods Co (HSY), the Mail on Sunday newspaper reported, without citing sources.
The newspaper added, however, that Cadbury would probably have to settle for just a few of Hershey’s brands, as Swiss confectionery giant Nestle and Kraft Foods, owned by U.S. tobacco conglomerate Philip Morris (MO), were more likely winners of the seven billion pound ($11 billion) auction.
Nestle or Kraft might be forced to sell some of Hershey’s brands, which include Kisses and Jolly Rancher Fruit Chews, by anti-trust regulators, the Mail on Sunday said.
The Milton Hershey School Trust, a charitable foundation which controls 77 percent of voting power at Hershey, put the business up for sale on July 25 to diversify its holdings.
© 2002 Reuters
* * *
June 9, 2002
From the Hershey Trust Company Website:
Gayla M. Bush
Admired by her peers for her unmatched attention to detail, Gayla Bush brings an exceptional financial analytical ability to her position at Hershey Trust Company.
As Vice President of Finance, Gayla serves as corporate controller and head of operations. In this role, she implements and supervises internal controls and procedures to ensure that transactions are processed and maintained quickly, efficiently and in accordance with both internal and regulatory policies. She also oversees the financial records and budgets of Hershey Trust Company, Milton Hershey School Trust and the M.S. Hershey Foundation.
Before joining Hershey Trust Company in 1993, Gayla held positions at the MacArthur Foundation and Arthur Andersen, LLP. Her experience in public accounting for bank, insurance, investment and not-for-profit organizations enabled her to develop the necessary skills for her role at Hershey Trust Company….
* * *
From Hershey’s Form 10-K for the year ended December 31, 2001:
ACCOUNTING POLICIES AND MARKET RISKS ASSOCIATED WITH DERIVATIVE INSTRUMENTS
The Corporation utilizes certain derivative instruments, from time to time, including interest rate swaps, foreign currency forward exchange contracts and commodities futures contracts, to manage interest rate, currency exchange rate and commodity market price risk exposures….
Special accounting for qualifying hedges allows a derivative’s gains and losses to offset related results on the hedged item in the income statement, to the extent effective, and requires that a company must formally document, designate and assess the effectiveness of transactions that receive hedge accounting….
~ ~ ~
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our reports dated January 22, 2002, included or incorporated by reference in this Form 10-K for the year ended December 31, 2001, into the Corporation’s previously filed Registration Statements on Forms S-8 and S-3 . . . .
New York, New York
March 15, 2002
~ ~ ~
For more on Arthur Anderson LLP, GO TO > > > P-s-s-t, wanna buy a good audit?
* * *
EXECUTION COPY
U.S. $200,000,000
AMENDED AND RESTATED 364-DAY CREDIT AGREEMENT
Dated as of November 27, 2001
Among
HERSHEY FOODS CORPORATION, as Borrower,
and
THE INITIAL LENDERS NAMED HEREIN, as Initial Lenders,
and
CITIBANK, N.A., as Administrative Agent,
and
BANK OF AMERICA, N.A., as Syndication Agent,
and
SALOMON SMITH BARNEY INC.,
and
BANC AMERICA SECURITIES LLC,
as Joint Lead Arrangers and Joint Book Managers,
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.
HERSHEY FOODS CORPORATION
By /s/ Frank Cerminara
Title: Senior Vice President, Chief Financial Officer
By /s/ R. M. Garrabrant
Title: Vice President and Treasurer
CITIBANK, N.A., as Administrative Agent
By /s/ Carolyn A. Kee
Title: Vice President
BANK OF AMERICA, N.A., as Syndication Agent
By /s/ William F. Sweeney
Title: Managing Director
SALOMON SMITH BARNEY, INC., as Arranger
By /s/ Carolyn A. Kee
Title: Attorney-in-Fact
BANC AMERICA SECURITIES, LLC, as Arranger
By /s/ Thomas M. Brown
Title: Managing Director
~ ~ ~
Commitment / Initial Lenders
$37,500,000 CITIBANK, N.A.
$37,500,000 BANK OF AMERICA, N.A.
$25,000,000 UBS AG, STAMFORD BRANCH
$25,000,000 MELLON BANK, N.A.
$25,000,000 PNC BANK, NATIONAL ASSOCIATION
$10,000,000 DEUTSCHE BANK AG
$10,000,000 CIBC, INC.
$10,000,000 WACHOVIA BANK, N.A.
$10,000,000 BANCO POPULAR DE PUERTO RICO
$10,000,000 SUMITOMO MITSUI
$200,000,000 Total of the Commitments
* * *
May 3, 2001
J. Robert Hillier Elected to
Hershey Foods Board of Directors
Hershey, Pa. – J. Robert Hillier was elected to the Hershey Foods Board of Directors at the Annual Stockholders Meeting held April 24, 2001. A successful entrepreneur, he founded and built The Hillier Group into one of the leading architectural firms in the United States. Hillier also serves on the boards of the Hershey Trust Company and Milton Hershey School and is Chair of the Milton Hershey School Trust’s Investment Committee.
Hillier replaces William H. Alexander, a director since 1995, in accordance with the policies of Hershey Trust Company and Milton Hershey School regarding the five-year term limit of service on the Hershey Foods Board of Directors. Alexander will continue to serve on the boards of the Hershey Trust Company and Milton Hershey School.
* * *
February 28, 2002
The Hershey Chronicle
Milton Hershey School alum
weighs in on story
Dear Editor
The flattering profile of the MHS Board of Managers featured on the front page of last week’s Hershey Chronicle does not address WHY, with all of their so-called credentials and expertise, the MHS Board of Managers continue to tolerate children in their care being raped and beaten in multi-age homes, and then casting them away like garbage in a process called “transitioning out” when the school fails to protect them.
It also does not address WHY they keep Lepley and his administration employed after several years of reports and scandals proving their ineptitude. Also, this flattering profile does not address WHY, with all of their so-called credentials and expertise, they need to spend MILLIONS of dollars hiring consultants and pollsters to educate them on residential childcare, and to “identify” poor children, only to ignore the advice of these consultants.
This flattering profile also does not address WHY, with all of their so-called credentials and expertise, they have not condemned the multi-age housing experiments at MHS when just about EVERYBODY who cares about child safety has called for it to end, including alumni, houseparents, psychologists, law enforcement officials, and most recently, their own “blue ribbon task force.”
I think BOM Chairman, Jack Gabig, pretty well tells us why the school is in such internal meltdown when he shares HIS true feelings as he describes the BOM’s “philosophy” (text quote) — Their purpose is not to manage the school’s administration, Gabig believes, but “the board is there to establish good policy, to have foresight and to make decisions.”
WHAT DID GABIG SAY? — It’s NOT the purpose of the Managers to “manage” the school’s administration? U-N-B-E-L-I-E-V-A-B-L-E!!! – That is their PRIMARY duty, as detailed in the DEED OF TRUST. Can you believe this guy is the CHAIRMAN of the BOM, and a LAWYER no less?
If they are NOT supposed to “manage” the school and it’s administration, then why are they called the Milton Hershey School Board of “MANAGERS?” — Beam me up Scotty!
Joseph W. Berning
MHS Class of ’73
Harrisburg
* * *
What the HELL happened to Catherine Hall?
Printed from: MHSAA Forum
Topic URL: http://www.mhsaa.org/4rum/forum/link.asp?TOPIC_ID=193
Topic author: Aesyman2
Subject: What the HELL happened to Catherine Hall?
Posted on: Mar 17 2002 02:09:22
Message:
Myself and Stoner showed Andy the campus today seeing that he was never been to Hershey nor exposed to MHS it was fun and interesting exposing him to our old places and haunts (and waving at the folks on the Trolley – and – a visit w/ Derry Townships finest). . . .
The thing that made me the most upset was looking at the Grand Dame Catherine Hall and seeing the hatchet job they did with the building made me upset.
They removed an entire section of building. Killed those beautiful front steps -did a bad job at patching up the front of the building. I mean…talk about bad plastic surgery. I’d sue for malpractice.
It’s a shame to see the campus in the state that it is.
Lewis
* * *
Replies:
Topic author: F. Frederic Fouad
Replied on: Mar 17 2002 18:13:59
Message:
I’m glad that people are starting to get it; i.e., just because they spent $300 million doesn’t mean that they improved our school’s facilities.
In fact, it’s just the opposite: they’ve disfigured what had been a magnificent and child-friendly set of communities — one primary school, one junior high, and one high school, with all three laid out differently, to be age-appropriate for each respective group, and in a manner that put children’s needs above all else. Then they grafted building extension upon building extension, all so that they could jam the students into the tiniest possible area, and thereby free up land for HERCO and other development, particularly in the north campus and around Senior Hall. At present, they seek to jam 1,500 students into this small area.
What must always be remembered about our previously existing facilities is that they were already the finest possible configuration for children, with the age groups separated, and with a different model for each school. . . .
That this was all tossed away will someday be counted among the most disgraceful charitable trust misdeeds of all time, and will be spoken of in the same breath as Bishops Estate, if not Enron. (By the way, coming soon, the comparison we’ve all been waiting for: Enron and the Orphans’ Trust — including the abuse of political influence.)...
To really appreciate the debacle that is the centralized compound, you need to go and visit, and see how decidedly clumsy and stupid the entire layout is — to say nothing of how ugly. Just finding your way around the athletic facilities requires a Sherpa guide and three days’ supplies, in case you get too badly lost.
Also, go count how many ball fields, soccer fields, basketball courts, and simple open grass spaces have disappeared, in order to congregate the students as densely as possible.
Then remember that the entire history of children’s homes has been one of seeking to de-congregate and decentralize. The reason for this was an effort to provide children with as much open play space as possible — to give them room to just be children, and to have as much as they can the feeling of being in a real home, just as we all had, and just as Mr. Hershey instructed.
In other words, those who made the “decision” to centralize stood one hundred years of children’s home development on its head. (Quotes around “decision,” because there wasn’t one. Instead, there was a gross act of manipulation by an inner circle bent on their own agenda — but that’s another long story.)
It is just outrageous that the centralization “decision” was ever taken, and what remains essential is identifying those responsible — and then holding them accountable.
How dare they have ever permitted this in the first place; and would only that our graduates had been more vigilant when this misconduct was initially commenced, i.e., before we had the $300 million albatross draped around our necks, and with everyone involved now confronted with the dilemma of what to do with this expensive, ugly, child-unfriendly Frankenstein monster. (And who but our graduates, by the way, have stood up for the Deed, and at what extraordinary cost to all of those who have fought this battle for the last decade?)
Ah yes, the Orphans’ Trust: Five decades of giving to children the bare minimum, so as to evade closer public scrutiny, and all while lavishing resources on individuals, construction companies, law firms, other vendors, and the community generally — as though Mr. & Mrs. Hershey’s Deed of Trust meant nothing.
Someday, the conduct of each and every PA Attorney General who permitted these misdeeds will be held up to closer scrutiny, and history will judge them and condemn them — as it should (though we hope that the present one will be the exception). This scrutiny will include a decade by decade examination of what PA and this country’s dependent children were suffering, while the Orphans’ Trust was being turned at best into a resource for non-child charitable uses (such as medical education), and at worst into a cash cow for lawyers, developers, self-promoters, and other profiteers. The shame and disgrace of it all is overwhelming — because children have died for it.
Nor is this polemic. While examples of this abound, here is one that has been part of my personal inspiration for decades: Since 1982, I have carried in my wallet a picture of Vincent Omar Lovejoy, a Philadelphia boy with a beatific smile that cried out “hug me!”
This boy was beaten to death by an abusive parent, whose conduct had been ignored by PA childcare authorities — while Thornburgh was being wined and dined in Founders Hall. I cried when I read the article about this boy, and promised myself that someday I would do something about the childcare institutions that permitted this. Part of why I am fighting the present battle is to keep that promise.
Imagine if all the Orphans’ Trust money that has been wasted or used for non-child purposes had gone to build other schools like ours. How many more children could have been saved but who instead were left in circumstances that led to their deaths, or to radically diminished lives? How many?!!!
THESE are the practical consequences of all the folly and imbecility that has marked the misuse of Orphans’ Trust assets — like their centralized compound: $300 million to produce shockingly inferior facilities, as though price tag alone can make us ignore the deficiencies.
Closing Senior Hall because it was “antiquated and dangerous”? So what are they doing educating the primary school children there now, while their “new” primary school building is being “repaired,” at a cost that is about the same as the “new” school’s entire initial construction budget?
You would think that I was making this up if the facts were not out there to be verified. It’s just unbelievable — but then again, that’s what they said about Enron as things there started to unravel.
Ric Fouad
HIS/MHS Class of 1980
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Topic author: Aesyman2
Replied on: Mar 19 2002 14:50:11
Message:
Very interesting article and analysis of both plans – begs a question – what’s the Bishop’s Estate School – have heard about this but not that clear.
Lewis
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Topic author: F. Frederic Fouad
Replied on: Mar 21 2002 07:20:26
Message:
An additional note: Someone pointed out to me that schools such as MHS are not strictly subject to the 5% rule. My response was that the rule still provides a sound guideline for what the Orphans’ Trust should be doing.
Lewis: The Bishops Estate Trust is a large charitable trust funding a school system in Hawaii, the Kamehameha schools. After decades of manager misconduct there, a grassroots movement something like ours led to a Hawaii Attorney General investigation, and then to the removal of managers.
We sometimes have contact with the activists in the Bishops Estate matter, and they have offered us much encouragement and support. Recently, they have told us to make sure that we press for complete victory because — according to their experience — it is easy to lose momentum and to not have the problems fully resolved just because intervention by the authorities has occurred.
While the malfeasance in the Bishops Estate matter was different than what has been occurring in our matter, parallels exist, and with our matter being the far more scandalous of the two, in my opinion. (60 Minutes did a hard-hitting piece on Bishops Estate, by the way, that was far different than their treatment of our matter.)
Ric Fouad
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Topic author: Rick Turner 75
Replied on: Mar 30 2002 22:07:09
Message:
Ric,
What a powerful, impassioned set of writing. I can only hope you speak that eloquently in person. A testament to the education with which MHS empowered you.
I can speak only for myself, but MHS was a godsend to both myself and my late Mother. Those of us who are parents can barely comprehend both the dread and the pride for sending our children to MHS only to know later that all the concerns were both unjustified and at the same time well-served by the generosity of our Founder.
In truth, my Mother could have supported both myself and my Sister, but it would not have been a life for me of any quality. As I had lost a Father, that figure was missing, and thanks to Charlie Bofinger I was enrolled. Certainly I had to pass a test, but there were none of the restrictions the current administration requires.
In one week I shall take part in the March of Dimes walkathon. I don’t solicit actively for contributions, though I should. In my heart, and in my own way a nod to our Founder, I do it for the children. To save them. To help keep them from a life of despair and despondency. And I will participate in this walk regardless of any support, because I support the children. This Milton Hershey taught me, and I shan’t ever let that sentiment fade.
Sorry for the soapbox treatment, but I must ask, what are we if not for the children? And further, what are we if we allow our Home, with nearly unconscionable resources disallow those who are most in need? The very thought of children sleeping in the streets should give pause to us all, especially Dr. Lepley and his staff. WHERE IS THE SHAME?
Milton Hershey provided me with an education, a way of life based on individual responsibility and pride. People comment to me why I wear this ring, as it is unique. I tell him them the basics, but most of all I tell them it is something I have earned. And I shall NEVER remove it until MHS is restored to its rightful standing as a Home for those, like me, who needed help, understanding and a direction my Mother could never presume but only wish to hope.
I daresay no parent on that graduation day in 1975 could have felt more proud than my Mother. She never looked more beautiful. She knew all too well what my life was like at MHS, but she also knew too well how it would round me into a man. What can we say about the situation now? Are the children feeling the same sentiments? Doubtful at best and regretful at most.
After graduation I did two things: I hugged my family and shook Mr. Hershey’s hand in the rotunda. The former I could do frequently, but the latter could only be done with meaning once.
It is all about the children. We must save them from a life of strife and regret. We must give them a direction and purpose. Most of all, we must give them some self-worth. MHS has the potential to do these things, and to allow the widespread literal rape of our Founder’s intent is insulting to us all.
Damn it, the issue is the CHILDREN.
Rick
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