The $12 billion Hershey Trust for impoverished children has placed its chief compliance officer and top in-house lawyer, Marc A. Woolley, on administrative leave as the state Attorney General's Office seeks removal of three of the trust's board members.
Woolley vividly described the trust board's infighting in a memo last September that was circulated to board members and later leaked along with other documents to the Office of the Attorney General, leading to a new state investigation of the trust.
Mark Pacella, the chief deputy attorney general who oversees nonprofits, in February requested the removal of the trust's chairwoman, Velma Redmond; former chairman Robert Cavanaugh; and vice chairman Joseph Senser.
Pacella and the trust have continued to negotiate over the attorney general's demands. Redmond, Cavanaugh, and Senser continue in their board positions.
Hershey Trust spokesman Kent Jarrell confirmed on Thursday that Woolley was on leave "while a determination is made about his continued employment." He declined further comment.
David Smith, Woolley's lawyer and chairman of the Schnader Harrison Segal & Lewis law firm in Philadelphia, said Thursday that "Marc's position is that he is deeply committed to the mission of the Hershey Trust and he is disappointed that he has been told to take leave."
The leave took effect last Friday. Smith would not say whether Woolley is being paid while on leave. Woolley, who also served as board secretary, was compensated $453,457 for the tax year ending July 31, 2014, according to the trust's IRS tax records.
The scandal-plagued Hershey Trust pays for and administers the 2,000-student Hershey School for at-risk children.
In the Sept. 30 memo, Woolley transcribed a 47-minute conversation he had with Cavanaugh, who was chairman at the time.
Woolley wrote that Cavanaugh told him he was looking for information that would let him release a "suicide parachute" and "take out" board enemies who had "run a smear campaign against him."
In previous months, Cavanaugh faced a conflict-of-interest investigation over his son's paid summer internship with one of the trust's money managers. Cavanaugh had helped arrange the internship. The Weil Gotshal law firm concluded that Cavanaugh had not violated governance rules and charged the trust $650,000 for the internal probe.
Cavanaugh also claimed to Woolley that two other board members may have engaged in insider trading in Hershey Co. stock, Woolley wrote in the memo. Two outside law firms later concluded that the two board members had not engaged in insider trading. One of those firms spent at least $3 million probing the claims in Woolley's memo.
Woolley was not alone in describing the trust board's dysfunction. On Sept. 23, four board members wrote a letter to then-vice chairman Richard Zilmer, saying that rancor had "paralyzed us as a board."
Zilmer later resigned his board position, as did one of the letter's signers, Drexel University president John Fry.