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HomeMy WebLinkAbout1448 PROPSTIn Re: Kenneth Propst, Respondent File Docket: X -ref: Date Decided: Date Mailed: Before: Louis W. Fryman, Chair John J. Bolger, Vice Chair Donald M. McCurdy Paul M. Henry Raquel K. Bergen Nicholas A. Colafella Reverend Scott Pilarz 06 -068 Order No. 1448 10/23/07 11/7/07 This is a final adjudication of the State Ethics Commission. Procedurally, the Investigative Division of the State Ethics Commission conducted an investigation regarding a possible violation of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq., by the above -named Respondent. At the commencement of its investigation, the Investigative Division served upon Respondent written notice of the specific allegations. Upon completion of its investigation, the Investigative Division issued and served upon Respondent a Findings Report identified as an "Investigative Complaint." An Answer was not filed and a hearing was waived. A Stipulation of Findings and a Consent Agreement were subsequently submitted by the parties to the Commission for consideration. The Stipulation of Findings is quoted as the Findings in this Order. The Consent Agreement has been approved. This adjudication of the State Ethics Commission is issued under the Ethics Act and will be made available as a public document thirty days after the mailing date noted above. However, reconsideration may be requested. Any reconsideration request must be received at this Commission within thirty days of the mailing date and must include a detailed explanation of the reasons as to why reconsideration should be granted in conformity with 51 Pa. Code § 21.29(b). A request for reconsideration will not affect the finality of this adjudication but will defer its public release pending action on the request by the Commission. The files in this case will remain confidential in accordance with the Ethics Act. Any person who violates such confidentiality commits a misdemeanor and, upon conviction, may be subject to a fine of not more than $1,000 or imprisonment for not more than one year. Confidentiality does not preclude discussing this case with an attorney at law. Propst, 06 -068 Page 2 I. ALLEGATIONS: That Kenneth Propst, a public official /public employee in his capacity as a Mayor of Archbald Borough, Lackawanna County, violated Sections 1103(a), 1104(a) and 1105(b)(5) and 1105(b)(9) of the State Ethics Act (Act 93 of 1998), 65 Pa.C.S. § §1103(a), 1104(a), 1105(b)(5) and 1105(b)(9) when he used the authority of his office for a private pecuniary gain, including but not limited to, participating in actions of the borough resulting in his authorization to participate in a pension plan funded, in part, with borough funds; when he failed to file Statements of Financial Interests for the 2002 calendar year by May 1, 2003; and when he failed to disclose his ownership interest and income in excess of $1,300 from Propst Buy Rite on Statements of Financial Interests filed for the 2003, 2004 and 2005 calendar years. II. FINDINGS: 1. Kenneth Propst served as Mayor of the Borough of Archbald from January 1998 to December 2005. 2. As Mayor, Propst, in part, performed the following duties: a. Attended council meetings on a regular basis. b. Provided input, reviewed and signed ordinances and resolutions into law. c. Reviewed the borough's annual budget. d. Oversaw the operations of the borough's police department. 3. Borough Code (53 Pa. C.S. §46025) provides that the salary of a borough mayor shall be set by ordinance and shall not exceed, in boroughs with a population of more than five thousand but less than ten thousand, a maximum of $5,000.00 a year. a. According to the US Census Bureau's 2000 Census, Archbald Borough has a total population of 6,220. b. Propst['s] salary as Mayor for calendar years 2001 through 2005 was $5,000.00 annually. 4. The Borough Code outlines the specific powers of a borough and provides for the establishment of a pension plan exclusively for employees of a borough. a. "OTHER INSURANCE...to contract with any such company, granting annuities or pensions, for the pensioning of borough employes, or any class, or classes thereof, and to agree to pay part of all of the premiums or charges for carrying such contracts, and to appropriate moneys from the borough treasury for such purposes." (53 P.S. § 46202 (37)). 5. Per the Borough Code, council members and other elected officials of a borough with a population that exceeds 3,000 cannot serve as an employee of that borough. a. The Borough Code (53 P.S. § 46104) reads as follows: No elected borough official of a borough with a population of 3,000 or more may serve as an employe of [that] borough." Propst, 06 -068 Page 3 b. As outlined in finding 11(a) *, the Borough of Archbald's population is 6,220; as such Council members and /or other elected officials are prohibited from serving as employees of the Borough. * [sic] [Presumably, the parties intended to refer to Finding 3(a).] 6. Prior to December 1991, the Borough of Archbald offered a pension plan exclusively for uniformed employees of the borough. a. The only participants in the Uniformed Pension Plan were members of the Borough's Police Department. b. The Borough's Uniformed Pension Plan was administered by ASCO Financial, Inc. 7 On December 27, 1991, the Archbald Borough Council voted, during a regular meeting, to adopt an ordinance providing for the establishment and regulation of a pension plan for non - uniformed employees of the borough. a. The purpose of establishing the plan was to provide non - uniformed employees of the Borough the opportunity to participate and receive a Borough pension. 8. Archbald Borough ordinance number 16 -1991 of 1991, establishing the pension plan for Non - Uniformed Employees, was adopted by the Borough and signed into law on December 27, 1991. a. The ordinance was signed by President of Council, Joseph Daley, attested to by Secretary Leonard E. Hosie, and approved by then Mayor James McLaughlin. b. Archbald Borough ordinance, number 16 -1991, reads as follows: "A pension plan is hereby established for the non - uniformed employees of the Borough of Archbald pursuant to and in compliance with the act of December 18, 1984, P.L. 1005, No. 205, as amended; said plan shall be under the direction of the borough council of the Borough of Archbald and shall be applied and set forth under such regulations as council may prescribe, said regulations being incorporated herein by reference. The effective date of the pension plan established hereby shall be January 1, 1992." c. Ordinance No. 16 -1991 is void of language regarding the inclusion of the Mayor in the pension plan. d. Propst was not a borough official at this time. 9. On January 1, 1992, the Archbald Borough Non - Uniformed Pension Plan Agreement was entered into by the Borough with plan trustees, Joseph Daley, Harold McGee and William Roe. a. The Archbald Borough Non - Uniformed Pension Plan is a single - employer defined contribution pension plan. b. Eligible employees in the plan contribute at least 4% of their gross annual compensation, which is matched by a Borough contribution of 4 %. Propst, 06 -068 Page 4 c. "Eligible employees" are defined in the plan as follows: Any person who is employed by the Employer or Affiliated Employer, but excludes any person who is an independent contractor. Employee shall include Leased Employees within the meaning of Code Sections 414(n) (2) and 414(0) (2) unless such Leased Employees are covered by a plan described in Code Section 414(n) (5) and such Leased Employees do not constitute more than 20% of the recipient's non - highly compensated work force." d. Employees of the Borough were eligible to participate in the plan after six months of service with the Borough. e. After a Borough employee completed six months of service, the Borough notified those individuals of their eligibility to participate in the pension plan in writing. f. The pension plan established a vesting schedule where participants would become fully vested after 5 years of service. 10. Newly elected /appointed council members and newly hired employees were notified of the non - uniformed pension plan upon entering office or employment. a. The newly elected officials and new hires were provided with an application upon being employed or elected to the borough. b. Propst was offered to participate in the pension plan by Borough Secretary Leonard Hosie. 11. The Borough of Archbald automatically withdrew a participant's set contribution from [the] Borough- issued compensation or payroll checks upon enrollment into the pension plan. 12. In conjunction with the participants' contributions, the Borough began to make contributions on a yearly basis to the pension plan in the form of a Minimum Municipal Obligation (MMO). a. The MMO is determined by the plan's actuary, who provides the information to the Borough. b. The MMO is approved by Council on a yearly basis as part of the annual budget. 13. During a meeting of Borough Council on September 19, 2001, a resolution amending the Borough's Non - Uniformed Pension Plan was voted on and approved. a. The resolution increased the employee and employer contribution for full - time employees from 4% to 5 %. b. The employee and employer contribution for non - full -time borough employees remained at 4 %. c. The resolution contained wording which included Council Members and Officers as employees of the Borough. 1. "Whereas, the other non - uniform employees of the borough (council members, officers, etc.) who are not full -time employees, shall Propst, 06 -068 Page 5 contribute 4% of their wages toward the retirement plan effective January 1, 1999, employer will match the 4 %." 14. On November 21, 2001, during a meeting of the Archbald Borough Council, a motion was made to adopt a resolution amending the vesting schedule of the Non - Uniform Pension Plan. a. The resolution amended the pension plan to provide for 100% vesting upon entry into the plan for all future and current plan participants. b. This motion was approved by unanimous vote. c. This resolution intended to allow Council Members and other elected officials, who participated in the plan, to be fully vested in the pension plan even if they only serve one term. d. This resolution was reviewed and signed into law by Propst, as Mayor, on November 21, 2001. e. At the time Propst signed the September 19, 2001, resolution into law, he had already been contributing to the Borough's Non - Uniformed Pension Plan for approximately 4 years. 15. On January 12, 2005, during a meeting of the Archbald Borough Council, the Council approved an ordinance which amended the investment portion of the Non - Uniformed Pension Plan. a. Borough Ordinance 1 -2005 allowed for the investment of the plan's assets in stocks, bonds, mutual funds, annuities, money markets and certificates of deposit. b. The ordinance was enacted by Council based on the advice of the plan administrator, Michael Cummings. c. Propst reviewed Borough Ordinance 1 -2005 and signed same into law. d. At the time Propst signed Borough Ordinance 1 -2005 into law, he had already been contributing to the Borough's Non - Uniformed Pension Plan for approximately 4 years *. e. At the time Propst executed the resolution, he was already a vested member in the Borough's Pension Plan. * [sic] [Cf., Findings 14e, 16, 16a, and 16d.] 16. Kenneth Propst participated in the Non - Uniform Pension Plan continuously from January 1998 to January 31, 2007. a. Yearly contributions into the pension plan were made by Propst in the amount of 15% of his annual compensation as Mayor from 1998 through 2005. b. The Borough contributed an additional 4% of Propst's annual Mayoral compensation into the pension fund from 1998 through 2005. Year Employee contribution Employer contribution 2001 $750.00 $200.00 2002 $750.01 $250.00 2003 $750.10 $200.00 2004 $778.95 $207.69 2005 $750.10 $200.00 2006 - - Total $3779.16 $1057.69 Propst, 06 -068 Page 6 c. From January 2006 through January 2007, Propst's pension account continued to receive income from the pension plan in the form of accrued interest. d. From 1998 through January 2007, Propst contributed a total of $5,135.98 of his compensation as Mayor for Archbald Borough into the Borough's non- uniform pension plan. 17. From January 1, 2001, through December 31, 2005, Propst had contributed $3,779.16 of his annual gross compensation to the pension plan and the Borough had contributed $1,057.69. a. Propst's and the Borough's contributions into the pension plan, as of 2001, are as follows: 18. On or around January 25, 2007, Propst requested a lump sum payout of his pension account balance. a. Archbald Borough Plan Trustee, Brian Burke, sent a letter to Morgan Stanley requesting that check be issued to Propst in the amount of $8,585.64. b. The amount represented the balance of Propst's account on that date. 19. Morgan Stanley issued a check on January 31, 2007, made payable to Kenneth Propst in the amount of $8,585.64. a. Propst's account was closed out following the disbursement. 20. Borough Code (53 P.S. §46202 (37)) directs that a borough may provide a pension plan only for employees of the borough. a. The position of Mayor is not a borough employee. b. As Mayor, Propst could not be included in any pension plan. 21. At the time Propst executed pension related ordinances, in his capacity as Borough Mayor, he was also a member of the borough's pension plan. 22. As a result of Propst's participation in the pension plan, he received a cash payout of his borough pension. a. Propst's payout was the result of accumulated interests on funds contributed by himself and the Borough into the pension plan. b. Propst also received a payout in the form of the funds contributed directly by himself and the Borough into the pension plan. 23. At no time during his participation in the Borough Pension Plan was Propst an Propst, 06 -068 Page 7 employee of the Borough. (See 53 P.S. §46104). 24. Per the Borough Code (53 Pa. C.S. §46025) Propst was ineligible to receive any mayoral compensation outside that set by borough ordinance and in excess of $5,000.00 per year. a. Contributions by the Borough into a pension plan would be considered compensation in excess of that allowed by the Borough Code. 25. Propst realized a private pecuniary gain of $3,449.66 as a result of Borough contributions into the pension plan. a. Private pecuniary gain is determined as follows: Distribution to Propst on January 31, 2007 $8,585.64 Propst's Accumulated Employee Contribution $5,135.98 Borough Contributions and Investment Income $3,449.66 b. Other borough officials also participated in the program. 26. Propst was unaware of the prohibition on borough official's participation in pension programs. a. He only enrolled in the program because it was offered to him when he took office. THE FOLLOWING FINDINGS RELATE TO THE ALLEGATIONS CONCERNING PROPST FAILING TO FILE STATEMENTS OF FINANCIAL INTERESTS AND FILING DEFICIENT STATEMENTS OF FINANCIAL INTERESTS. 27. As the Mayor for the Borough of Archbald, Propst is a public official /public employee and as such is required annually to file Statement of Financial Interest forms by the May 1 deadline, containing information for the prior calendar year. 28. Statement of Financial Interests forms on file with the Borough of Archbald [include] the following filings by Propst: a. Calendar year: 2002- No Form Filed b. Calendar year: 2003 Filed: January 16, 2003, on SEC form 01/02 Position: Mayor Creditors: None Direct or Indirect Sources of Income: None All Other Financial Interests: None c. Calendar year: 2004 Filed: December 15, 2003, on SEC form 01/04 Position: None Creditors: None Direct or Indirect Sources of Income: None All Other Financial Interests: None d. Calendar year: 2004 Filed: April 14, 2004, on SEC form 01/00 Position: Mayor Creditors: None Direct or Indirect Sources of Income: None Propst, 06 -068 Page 8 All Other Financial Interests: None e. Calendar year: 2005 Filed: February 1, 2006, on SEC form: unknown Position: Mayor Creditors: None Direct or Indirect Sources of Income: None All Other Financial Interests: None 29. Propst failed to file a Statement of Financial Interests with the Borough of Archbald for calendar year 2002 by May 1, 2003. 30. During calendar year 2002, when Propst failed to file a Statement of Financial Interests with the Borough of Archbald, he received compensation totaling $5,000.00, from the borough. 31. Propst did not disclose income received from his position as the Mayor of Archbald Borough on Statement of Financial Interests forms filed for the 2003, 2004 and 2005 calendar years. a. Propst received income in excess of $1,300.00 from the borough annually from 2002 through 2005. 32. Propst did not disclose income received from Propst Buy -Rite Mini Mart on Statement of Financial Interests forms filed for the 2003 calendar years. a. Propst received in excess of $1,300 from Buy -Rite Mini Mart. 33. Propst did not disclose his office, directorship, or employment regarding his position as "proprietor" of Propst Buy -Rite Mini Mart on Statement of Financial Interests forms filed for the 2003 calendar years. 34. Propst did not disclose his financial interests in Propst Buy -Rite Mini Mart on Statement of Financial Interests forms filed for the 2003 calendar years. III. DISCUSSION: Respondent Kenneth Propst (hereinafter also referred to as "Respondent" or "Propst "), in the capacity as Mayor of Archbald Borough (also referred to herein as "Archbald" or "Borough ") from January 1998 to December 2005, was at all times relevant to these proceedings a public official subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq. The allegations are that Propst violated Sections 1103(a), 1104(a), 1105(b)(5) and 1105(b)(9) of the Ethics Act when he, as Mayor of Archbald Borough, used the authority of his office for a private pecuniary gain when he participated in actions of Archbald Borough resulting in his authorization to participate in a pension plan funded in part with Borough funds; when he failed to file a Statement of Financial Interests for the 2002 calendar year by May 1, 2003; and when he failed to disclose his ownership interest and income in excess of $1,300 from Propst Buy -Rite on Statements of Financial Interests filed for the 2003, 2004 and 2005 calendar years. Pursuant to Section 1103(a) of the Ethics Act, a public official /public employee is prohibited from engaging in conduct that constitutes a conflict of interest: § 1103. Restricted Activities Propst, 06 -068 Page 9 65 Pa.C.S. § 1103(a). (a) Conflict of interest. —No public official or public employee shall engage in conduct that constitutes a conflict of interest. The term "conflict of interest" is defined in the Ethics Act as follows: § 1102. Definitions "Conflict" or "conflict of interest." Use by a public official or public employee of the authority of his office or employment or any confidential information received through his holding public office or employment for the private pecuniary benefit of himself, a member of his immediate family or a business with which he or a member of his immediate family is associated. The term does not include an action having a de minimis economic impact or which affects to the same degree a class consisting of the general public or a subclass consisting of an industry, occupation or other group which includes the public official or public employee, a member of his immediate family or a business with which he or a member of his immediate family is associated. 65 Pa.C.S. § 1102. Section 1103(a) of the Ethics Act prohibits a public official /public employee from using the authority of public office /public employment or confidential information received by holding such a public position for the private pecuniary benefit of the public official /public employee himself, any member of his immediate family, or a business with which he or a member of his immediate family is associated. Section 1104(a) of the Ethics Act provides that each public official /public employee must file a Statement of Financial Interests for the preceding calendar year, each year that he holds the position and the year after he leaves it. Section 1105(b)(5) of the Ethics Act requires the filer to disclose on the Statement of Financial Interests the name and address of any direct or indirect source of income totaling in the aggregate $1,300 or more. Section 1105(b)(9) of the Ethics Act requires the filer to disclose on the Statement of Financial Interests any financial interest in any legal entity engaged in business for profit. The term "financial interest" is defined in the Ethics Act as "[a]ny financial interest in a legal entity engaged in business for profit which comprises more than 5% of the equity of the business or more than 5% of the assets of the economic interest in indebtedness." 65 Pa.C.S. § 1102. As noted above, the parties have submitted a Consent Agreement and Stipulation of Findings. The parties' Stipulated Findings are reproduced above as the Findings of this Commission. We shall now summarize the relevant facts as contained therein. Kenneth Propst served as Mayor of Archbald Borough from January 1998 to December 2005. As Mayor, Propst regularly attended Borough Council meetings, provided input, reviewed and signed Ordinances and Resolutions into law, reviewed the Borough's annual budget, and oversaw the operations of the Borough police department. Archbald Borough's population, per the U.S. Census Bureau's 2000 census, is Propst, 06 -068 Page 10 6,220. Pursuant to the Borough Code, compensation for a borough mayor is fixed by ordinance. For boroughs with populations of five thousand or more but less than ten thousand, the Borough Code sets maximum compensation for borough mayors at $5,000 per year. 53 P.S. § 46025. For calendar years 2001 through 2005, Propst's salary as Mayor of Archbald Borough was set at the maximum amount of $5,000 per year. The Borough Code authorizes boroughs to establish pension plans for borough employees only. 53 P.S. § 46202 (37). Pursuant to the Borough Code, elected officials of a borough with a population of 3,000 or more cannot serve as borough employees. 53 P.S. § 46104. As Mayor of Archbald Borough, Propst could not be included in any pension plan. Prior to December 1991, Archbald Borough offered a pension plan, administered by ASCO Financial, Inc., which was only available to uniformed Borough employees. The only participants in this pension plan were members of the Borough Police Department. At its December 27, 1991, regular meeting, the Archbald Borough Council voted to adopt an ordinance providing for the establishment and regulation of a pension plan for non - uniformed Borough employees. The Ordinance, specifically Borough Ordinance number 16 -1991 of 1991, was signed into law by the Borough Council President and approved by the Mayor. Propst was not Mayor at the time this Ordinance was signed into law. Borough Ordinance Number 16 -1991, which does not specifically include the Mayor as eligible to participate in the pension plan, provides as follows: A pension plan is hereby established for the non - uniformed employees of the Borough of Archbald pursuant to and in compliance with the act of December 18, 1984, P.S. 1005, No. 205, as amended; said plan shall be under the direction of the borough council of the Borough of Archbald and shall be applied and set forth under such regulations as council may prescribe, said regulations being incorporated herein by reference. The effective date of the pension plan established hereby shall be January 1, 1992. Archbald Borough Ordinance No. 16 -1991 of 1991. On January 1, 1992, Archbald Borough entered into the "Archbald Borough Non - Uniformed Pension Plan Agreement," establishing the Archbald Borough Non - Uniformed Pension Plan ( "the Plan "). The Plan is a single - employer defined contribution pension plan, where participants in the Plan contribute at least 4% of their gross annual compensation which is matched by a Borough contribution of 4 %. The Plan was available to eligible employees who had worked for the Borough for six months. The Plan defined "eligible employees" as follows: Any person who is employed by the Employer or Affiliated Employer, but excludes any person who is an independent contractor. Employee shall include Leased Employees within the meaning of Code Sections 414(n) (2) and 414(0) (2) unless such Leased Employees are covered by a plan described in Code Section 414(n) (5) and such Leased Employees do not constitute more than 20% of the recipient's non - highly compensated work force. After six months of Borough employment, eligible employees were notified in writing of their eligibility to participate in the Plan. For an eligible employee who chose to participate ( "participant "), the Borough automatically withdrew a set contribution from the Propst, 06 -068 Page 11 participant's Borough- issued compensation or payroll checks. Participants in the Plan became fully vested after 5 years of Borough service. Newly elected or appointed Council members and newly hired employees were notified of the Plan and provided with an application upon entering office or beginning employment. Borough Secretary Leonard Hosie offered Propst the opportunity to participate in the Plan. The Borough made yearly contributions to the Plan in the form of a Minimum Municipal Obligation ( "MMO "). The MMO was determined by the Plan Actuary, who provided the information to the Borough. The Borough Council approved the MMO on a yearly basis as part of the annual Borough budget. At its September 19, 2001, meeting, the Borough Council voted to approve a resolution amending the Plan to specifically include Borough Council members and Officers as employees of the Borough for purposes of eligibility in the Plan. The Resolution provides: Whereas, the other non - uniform employees of the borough (council members, officers, etc.) who are not full -time employees, shall contribute 4% of their wages toward the retirement plan effective January 1, 1999, employer will match the 4 %. Fact Finding 13(c). This resolution also increased the employee and employer contribution for full time employees in the Plan from 4% to 5% but did not change the employee and employer contribution for non -full time employees. At the time Propst signed this resolution into law, he had been contributing to the Plan for approximately four years. At the November 21, 2001, Borough Council meeting, a motion was made to adopt a resolution to amend the vesting schedule of the Plan to provide for 100% vesting upon entry into the Plan for all current and future Plan participants. The purpose of this resolution was to ensure that Council members and other elected Borough Officials could be fully vested in the Plan after serving just one term of office. This motion was approved by unanimous vote of the Borough Council and reviewed and signed into law by Propst, as Mayor, on November 21, 2001. At the time Propst signed this resolution into law, he was not yet vested. At a January 12, 2005, meeting of Archbald Borough Council, the Council approved Borough Ordinance 1 -2005, which amended the investment portion of the Plan to allow for investment of the Plan's assets in stocks, bonds, mutual funds, annuities, money market accounts, and certificates of deposit. Propst, as Mayor, signed Borough Ordinance 1 -2005 into law. At the time Propst signed Borough Ordinance 1 -2005 into law, he was a vested Plan member. Propst participated in the Plan continuously from January 1998 to January 31, 2007. At no time during his participation in the Plan was Propst an employee of the Borough. From 1998 through 2005, Propst made yearly contributions of 15% of his annual compensation as Mayor, and the Borough contributed 4% of Propst's annual compensation as Mayor. From January 2006 through January 2007, Propst's account accrued interest. From 1998 through January 2007, Propst contributed a total of $5,135.98 to the Plan. From January 1, 2001 through December 31, 2005, Propst contributed $3,776.16 to the Plan, and the Borough contributed $1,057.69 on his behalf. As of January 25, 2007, Propst had accumulated $8,585.64 in the Plan through his Propst, 06 -068 Page 12 own contributions of $5,135.98, Borough contributions, and accrued interest. The parties have stipulated that Propst realized a total private pecuniary gain of $3,449.66 as a result of Borough contributions to the Plan, calculated as $8,585.64 less $5,135.98. On or about January 25, 2007, Propst requested a lump -sum payout of his total pension account balance of $8,585.64. At the request of the Plan Trustee, Morgan Stanley issued a check on January 31, 2007, made payable to Propst, in the amount of $8,585.64. Propst's account was then closed. As Mayor of the Borough, Propst was required to annually file a Statement of Financial Interests ( "SFI ") by May 1, disclosing information for the prior year. For calendar years 2002 through 2005, Propst received income from the Borough in excess of $1,300 annually. Propst was required to disclose the Borough as a source of income for the aforesaid calendar years. In calendar year 2003, Propst received income in excess of $1,300 from Propst Buy -Rite Mini Mart and served as proprietor of Propst Buy -Rite Mini Mart. Propst was required to disclose Propst Buy -Rite Mini Mart as a source of income, as well as his position as proprietor of Propst Buy -Rite Mini Mart on his SFI for calendar year 2003. Propst failed to file an SFI for calendar year 2002. Propst filed an SFI for calendar year 2003 on January 16, 2003, but did not list the Borough and Propst Buy -Rite Mini Mart as sources of income, his position as proprietor of Propst Buy -Rite Mini Mart, or his financial interest(s) in Propst Buy -Rite Mini Mart. Propst filed two SFIs for calendar year 2004, prior to the May 1, 2005, filing deadline. Both SFIs for calendar year 2004 failed to list the Borough as a source of income. Propst filed an SFI for calendar year 2005 on February 1, 2006, which also failed to list the Borough as a source of income. Having highlighted the Stipulated Findings and issues before us, we shall now apply the Ethics Act to determine the proper disposition of this case. The parties' Consent Agreement sets forth a proposed resolution of the allegations: 3. The Investigative Division will recommend the following in relation to the above allegations: a. That an unintentional violation of Section 1103(a) of the Public Official and Employee Ethics Law, 65 Pa.C.S. § 1103(a) occurred in relation to Propst participating in actions of the borough resulting in his authorization to receive a pension funded, in part, with borough funds. b. That a violation of Section 1104(a) of the Public Official and Employee Ethics Law, 65 Pa.C.S. § 1104(a) occurred in relation to Propst failing to file Statements of Financial Interests for the 2002 calendar year by May 1, 2003. c. That a technical violation of Section 1105(b)(5) of the Public Official and Employee Ethics Law, 65 Pa.C.S. § 1105(b)(5) occurred in relation to Propst failing to disclose Archbald Borough as a source of income in excess of $1,300 on his Statement of Financial Interests for calendar years 2003, 2004 and 2005. d. That a violation of Section 1105(b)(5) [and] (9) of the Public Official and Employee Ethics Law, 65 Pa.C.S. § 1105(b)(5), (9) occurred when Propst failed to disclose Propst Buy -Rite as a source of income in excess of $1,300 and his ownership Propst, 06 -068 Page 13 interest in Propst Buy -Rite on Statements of Financial Interests for calendar years [sic] 2003. 4. Propst agrees to make payment in the amount of $3,449.66 in settlement of this matter payable to the Commonwealth of Pennsylvania and forwarded to the Pennsylvania State Ethics Commission within thirty (30) days of the issuance of the final adjudication in this matter. 5. Propst will file amended Statements of Financial Interests for calendar years 2003, 2004, and 2005 disclosing all required information, including but not limited to income from and his ownership interest in Propst Buy -Rite. 6. The Investigative Division will recommend that the State Ethics Commission take no further action in this matter; and make no specific recommendations to any law enforcement or other authority to take action in this matter. Such, however, does not prohibit the Commission from initiating appropriate enforcement actions in the event of Respondent's failure to comply with this agreement or the Commission's order or cooperating with any other authority who may so choose to review this matter further. Consent Agreement, at 1 -2. In considering the Consent Agreement, it is clear that the elements for the recommended unintentional violation of Section 1103(a) of the Ethics Act have been established. Propst initially used the authority of his public office as Mayor by entering the Plan as a participant. This particular action occurred in 1998 and may not form the basis for an alleged violation in this matter due to the passage of time. (See, limitations provision of the Ethics Act, 65 Pa.C.S. § 1108(m).) In September 2001, Propst signed into law a resolution amending the Plan to specifically include Borough Council members and Officers as employees of the Borough for purposes of eligibility in the Plan and increasing the employee and employer contribution for full time employees in the Plan from 4% to 5 %. During the time period of November 2001 through 2005, Propst used the authority of office by: (1) continuing to unlawfully participate in the Plan; (2) reviewing and signing into law a resolution amending the Plan vesting schedule to provide for 100% vesting upon entry into the Plan for both future and current Plan participants; and (3) reviewing and signing into law Borough Ordinance 1 -2005 (approved by Borough Council on January 12, 2005), which allowed for the investment of Plan assets in various forms of investment accounts. But for his position as Borough Mayor, Propst would not have been able to take the aforesaid actions. Propst's use of the authority of his public office in matters pertaining to the Plan resulted in a private pecuniary benefit to Propst, consisting of Borough contributions made to the Plan on Propst's behalf and accrued interest, received in contravention of the Borough Code. As noted above, the Borough Code provides that a borough may provide a pension plan for borough employees. 53 P.S. § 46202 (37). Elected officials in a borough with a population of 3,000 or more cannot serve as employees of the borough. 53 P.S. § 46104. As Mayor, Propst was not, and could not be, a Borough employee during the time that he participated in the Plan. Therefore, Propst could not lawfully participate in the Plan. Propst was unaware that Borough Officials were prohibited from participating in the Plan, and he Propst, 06 -068 Page 14 enrolled in the program because it was offered to him when he took office. Per the Borough Code, Propst's compensation as Mayor could not exceed $5,000 per year. 53 P.S. § 46025. Contributions by the Borough to the Plan on Propst's behalf were in excess of his authorized $5,000 yearly Borough compensation. Such excess compensation was unauthorized in law. The private pecuniary benefit that Propst received, as stipulated by the parties, was in the amount of $3,449.66. Intent is not a requisite element for a violation of Section 1103(a) of the Ethics Act. See, Yocabet v. State Ethics Commission, 531 A.2d 536 (Pa. Cmwlth. 1987). Nevertheless, we find that the aforesaid violation was unintentional. Based upon the facts as stipulated by the parties, it would appear that Propst reasonably believed that he was entitled to participate in the Plan. Despite Propst's lack of intent to violate the Ethics Act, Propst did in fact use the authority of his public office for his own private pecuniary benefit, necessitating our conclusion that an unintentional violation of Section 1103(a) of the Ethics Act occurred. Therefore, we agree with the parties that an unintentional violation of Section 1103(a) of the Ethics Act occurred in relation to Propst participating in actions of the Borough resulting in his receiving a pension funded, in part, with Borough funds. Turning to the recommended violations of Sections 1104(a), 1105(b)(5), and 1105(b)(9) of the Ethics Act, the parties have stipulated that Propst failed to file a Statement of Financial Interests with the Borough for calendar year 2002 by May 1, 2003. Propst was required to file a Statement of Financial Interests for calendar year 2002 in his position as Mayor. The parties have stipulated that Propst's Statements of Financial Interests for calendar years 2003, 2004 and 2005 failed to disclose the Borough as a source of income in excess of $1,300 for each of these calendar years. The parties have further stipulated that Propst's Statement of Financial Interests for calendar year 2003 failed to disclose income in excess of $1,300 received in 2003 from Propst Buy -Rite Mini Mart, Propst's position as proprietor, or Propst's financial interest in Propst Buy -Rite Mini Mart. Accordingly, we hold that a violation of Section 1104(a) of the Ethics Act occurred in relation to Propst failing to file a Statement of Financial Interests with the Borough for calendar year 2002 by May 1, 2003. We further hold that a technical violation of Section 1105(b)(5) of the Ethics Act occurred in relation to Propst failing to disclose Archbald Borough as a source of income in excess of $1,300 on his Statements of Financial Interests for calendar years 2003, 2004 and 2005. We note that the allegations set forth in the Consent Agreement as to Propst's Statements of Financial Interests do not reference Propst's failure to disclose the Borough as a source of income on his Statements of Financial Interests for calendar years 2003, 2004, and 2005. If the parties had not entered into a Consent Agreement, we might have been presented with legal issues as to whether the allegations encompass such a violation. However, given: (1) that the parties have entered into a comprehensive Consent Agreement with the benefit of legal counsel to assist them in weighing all relevant factual and legal considerations; and (2) the parties are in agreement that a violation of Section 1105(b)(5) as to Propst's failure to disclose the Borough as a source of income on Statements of Financial Interests for calendar years 2003, 2004, and 2005 would be appropriate as part of an overall settlement of this case, we shall accept the parties' proposed disposition. Per the Consent Agreement of the parties, we hold that violations of Sections 1105(b)(5) and 1105(b)(9) of the Ethics Act occurred when Propst failed to disclose Propst Propst, 06 -068 Page 15 Buy -Rite Mini Mart as a source of income in excess of $1,300 as well as his ownership interest in Propst Buy -Rite Mini Mart on his Statement of Financial Interests for calendar year 2003. Propst has agreed to make payment in the amount of $3,449.66 in settlement of this matter, payable to the Commonwealth of Pennsylvania and forwarded to this Commission within thirty (30) days of the issuance of the final adjudication in this matter. With respect to the amount of the payment, although some portion of the agreed -upon private pecuniary gain was contributed to the Plan more than five years prior to the Investigative Division's investigation of this matter (see, 65 Pa.C.S. § 1108(m)), the parties have agreed that an appropriate resolution of this matter would be for Propst to pay the aforesaid amount which appears to represent the entire amount of the private pecuniary gain. We accept the terms of the Consent Agreement as negotiated by the parties with benefit of legal counsel. Propst has also agreed to file amended Statements of Financial Interests for calendar years 2003, 2004, and 2005, disclosing all required information, including but not limited to income from and his ownership interest in Propst Buy -Rite Mini Mart. We determine that the Consent Agreement submitted by the parties sets forth the proper disposition for this case, based upon our review as reflected in the above analysis and the totality of the facts and circumstances. Per the Consent Agreement, we direct Propst to make payment in the amount of $3,449.66, payable to the Commonwealth of Pennsylvania and forwarded to this Commission within thirty (30) days of the issuance of this Order. Propst is further directed to file with the Borough amended Statements of Financial Interests for calendar years 2003, 2004, and 2005, disclosing all required information including but not limited to his receipt of income from and his ownership interest in Propst Buy -Rite Mini Mart, and to forward to this Commission copies of all of the aforesaid filings for compliance verification purposes within thirty (30) days of the issuance of this Order. Compliance with the foregoing will result in the closing of this case with no further action by this Commission. Noncompliance will result in the institution of an order enforcement action. IV. CONCLUSIONS OF LAW: 1. Kenneth Propst ( "Propst "), as Mayor of Archbald Borough ( "Borough ") from January 1998 to December 2005, was at all times relevant to these proceedings a public official subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq. 2. Propst unintentionally violated Section 1103(a) of the Ethics Act when he, as Borough Mayor, participated in actions of the Borough resulting in his receiving a pension funded, in part, with Borough funds. 3. Propst violated Section 1104(a) of the Ethics Act when he, as Borough Mayor, failed to file a Statement of Financial Interests with the Borough for calendar year 2002 by May 1, 2003. 4. Propst technically violated Section 1105(b)(5) of the Ethics Act when he, as Borough Mayor, failed to disclose Archbald Borough as a source of income in excess of $1,300 on his Statements of Financial Interests for calendar years 2003, 2004 and 2005. Propst, 06 -068 Page 16 5. Propst violated Sections 1105(b)(5) and 1105(b)(9) of the Ethics Act when he, as Borough Mayor, failed to disclose Propst Buy -Rite Mini Mart as a source of income in excess of $1,300 as well as his ownership interest in Propst Buy -Rite Mini Mart on his Statement of Financial Interests for calendar year 2003. In Re: Kenneth Propst, Respondent File Docket: 06 -068 Date Decided: 10/23/07 Date Mailed: 11/7/07 ORDER NO. 1448 1 Respondent Kenneth Propst ( "Propst "), a public official in his capacity as Mayor of Archbald Borough ( "Borough ") from January 1998 to December 2005, unintentionally violated Section 1103(a) of the Ethics Act when he as Borough Mayor participated in actions of the Borough resulting in his receiving a pension funded, in part, with Borough funds. 2. Propst violated Section 1104(a) of the Ethics Act when he, as Borough Mayor, failed to file a Statement of Financial Interests with the Borough for calendar year 2002 by May 1, 2003. 3. Propst technically violated Section 1105(b)(5) of the Ethics Act when he, as Borough Mayor, failed to disclose Archbald Borough as a source of income in excess of $1,300 on his Statements of Financial Interests for calendar years 2003, 2004 and 2005. 4. Propst violated Sections 1105(b)(5) and 1105(b)(9) of the Ethics Act when he, as Borough Mayor, failed to disclose Propst Buy -Rite Mini Mart as a source of income in excess of $1,300 as well as his ownership interest in Propst Buy -Rite Mini Mart on his Statement of Financial Interests for calendar year 2003. 5. Per the Consent Agreement of the parties, Propst is directed to make payment in the amount of $3,449.66, payable to the Commonwealth of Pennsylvania and forwarded to the Pennsylvania State Ethics Commission within thirty (30) days of the issuance of this Order. 6. Per the Consent Agreement of the parties, Propst is further directed to file with the Borough amended Statements of Financial Interests for calendar years 2003, 2004, and 2005, disclosing all required information including but not limited to his receipt of income from and his ownership interest in Propst Buy -Rite Mini Mart, and to forward to this Commission copies of all of the aforesaid filings for compliance verification purposes within thirty (30) days of the issuance of this Order. 7 Compliance with paragraphs 5 and 6 above will result in the closing of this case with no further action by this Commission; non - compliance will result in the institution of an order enforcement action. BY THE COMMISSION, Louis W. Fryman, Chair Name, Case # Page 18