HomeMy WebLinkAbout1450 VAUGHNIn Re: Charles Vaughn,
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 -030
Order No. 1450
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 filed and a hearing was requested. A
Stipulation of Findings and a Consent Agreement waiving an evidentiary hearing 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.
Vaughn, 06 -030
Page 2
I. ALLEGATIONS:
That Charles Vaughn, a public official /public employee, in his capacity as a
Supervisor for Highland Township, Elk County, violated Sections 1103(a), 1103(f) and
1104(a) of the State Ethics Act (Act 93 of 1998), 65 Pa.C.S. § §1103(a), 1103(f) and
1104(a) when he used the authority of his office for the private pecuniary gain of himself
and /or a business with which he and /or a member of his immediate family is associated by
authorizing contracts in excess of $500 without an open and public process to K &B
Construction, a business owned in part by his son; when he authorized payments to K &B
Construction including signing checks; when he participated in actions of the board to
approve a payment to K &B Construction at a time when K &B Construction was not
performing services for the township; and when he intentionally backdated Statement of
Financial Interests forms for calendar years 2003 and 2004 and failed to file his 2005
calendar year Statement of Financial Interests form by May 1, 2006.
II. FINDINGS:
1. Charles Vaughn has served as a Supervisor for Highland Township, Elk County,
from March 29, 1996, to the present.
a. Vaughn has been serving as the Chairman of the Board since January 2006.
b. Vaughn was appointed as the township roadmaster on January 5, 1998, and
continues to serve in that capacity.
c. Vaughn is also employed by Highland Township Sewer Authority as a Plant
Operator.
2. Vaughn, as roadmaster, is responsible for the following duties, including, among
others, maintenance of township roads, inspecting roads, plowing roads,
overseeing the township's road department, employees, equipment, facilities, and
activities.
a. Vaughn's roadmaster position is full -time.
b. Vaughn is compensated at a rate of $15.00 an hour for work performed as a
roadmaster.
3. Vaughn has been in charge of soliciting bids /quotes for the township since
becoming roadmaster in January 1998.
a. The roadmaster is typically the individual responsible for performing this
duty.
4. Highland Township is a 2 Class Township governed by a three - member board of
supervisors.
a. Vaughn receives $50.00 per meeting.
b. The supervisors must be present at the meeting to receive their
compensation.
5. Robert Vaughn is Charles Vaughn's son.
a. Robert Vaughn is 50% owner of K &B Construction (hereafter K &B), located
at 208 Pennsylvania Avenue, James City, PA 16734.
Project
Amount
Adver
Bid or
Solicited
tised
Quote
Bid /Quote
Build Salt Shed
$19,188.00
Yes
Bid
Vaughn
Repair Fire Hall Gutters
$ 430.08
No
Quote
Vaughn
Remodel Bathroom
$ 5,465.00
No
Quotes
Vaughn
Install Bathroom Floor
$ 625.00
No
Quote
Vaughn
Pavilion Layout
$ 608.00
No
Quote
Vaughn
Build Pavilion
$ 8,739.70
No
Quotes
Vaughn
Electrical Work
$ 160.00
No
None
Vaughn
Vaughn, 06 -030
Page 3
1. K &B operates out of Robert Vaughn's residence.
b. K &B is not incorporated in the Commonwealth of Pennsylvania.
c. Robert Vaughn is also a member of the Highland Township Municipal
Authority Board where Charles Vaughn is employed as plant operator.
d. Charles Vaughn has no interest in K &B Construction.
6. Kevin Moran is Robert Vaughn's business partner.
a. Kevin Moran owns the remaining interest (50 %) of K &B.
b. Kevin Moran is also a member of the Highland Township Municipal Authority
Board.
7 K &B specialized in roofing, constructing additions, installing bathroom facilities,
remodeling and additional construction activities.
8. Robert Vaughn and Kevin Moran are the only employees of K &B.
9. Highland Township has maintained a business relationship with K &B since at least
2001.
a. Highland Township's business relationship with K &B occurred during
Charles Vaughn's term of office with the township.
b. Highland Township has continued its business relationship with K &B during
Vaughn's tenure as supervisor /roadmaster.
10. Throughout its existence, K &B has not contracted with any local municipalities other
than Highland Township.
a. Approximately 10% of K &B's business in 2006 was the result of work done
for Highland Township.
11. From September 2001 through November 2006, Highland Township selected K &B
and /or the owners of K &B to complete nine township projects.
a. Only one of the projects was publicly bid.
b. Charles Vaughn solicited bids /quotes from K &B or one of its principals for
the other eight projects.
12. The following nine Highland Township projects were awarded to K &B between 2001
and 2006.
Repair Township Bldg. Roof
$ 1,156.91
No
Quote
Vaughn
Install Shelves in Township
Garage
$ 400.00
No
None
Vaughn
TOTAL:
$36,772.69
Vaughn, 06 -030
Page 4
a. All projects excluding the salt shed were completed in 2006.
1. The salt shed was completed in approximately early September 2001.
13. Of the nine projects K &B completed for Highland Township, six exceeded $500.
a. Three projects were under $500.
14. Of the six contracts awarded to K &B in excess of $500 as delineated above, five
were not publicly bid or advertised by the township as shown below:
Contracted Projects Amount
Remodeling of Bathroom $5,465.00
Installing of Bathroom Floor $625.00
Pavilion Layout $608.00
Building of Pavilion $8,739.70
Repairing of Twp. Roof $1,156.91
Total: $16,594.61
a. The only contract awarded through an open and public process occurred in
2001 for the building of the salt shed ($19,188.00).
15. Vaughn was involved in soliciting quotes in the nine projects performed by K &B
Construction.
16. Of the nine projects K &B Construction performed for the township, Charles Vaughn
obtained quotes only from K &B for four projects completed in 2006.
a. Quotes or bids were not solicited from any other vendors /contractors.
b. Charles Vaughn made the sole decision to solicit quotes only from K &B.
c. These projects were in relation to:
i. February 2006 - repair /replace five [sic] hall gutters and
downspout $430.08
ii. Spring 2006 - bathroom floor trim material
Timbertech $70.91
50# thinset $28.95
10# grout $9.95
25# leveler mix $100.99
$210.80
Tax $12.69
Labor $401.56
Total $625.05
iii. Spring 2006 - pavilion layout
2x6, 120' $58.79
Vaughn, 06 -030
Page 5
Meeting Vaughn's
Date Actions
7/11/2001 voted
9/12/2001 2nd motion, voted
2/8/2006 Not recorded
3/8/2006 Not recorded
fur strips
2x4
Misc.
Labor
Total
iv. Fall 2006 - repair township roof
replace (4) sheets of tin, install new end wall, flashing, caulk and seal
Material
Labor
Total
$28.00
$22.21
$10.00
$489.00
$608.00
$656.91
$500.00
$1,156.91
a. Quotes provided by K &B were handwritten on K &B letterhead.
1. Quotes for the roof repair and gutter repair were signed by Kevin
Moran and Bob Vaughn.
2. The other two quotes were not signed.
17. Vaughn approved K &B to complete the projects outlined in Finding #35 [sic] without
the approval of the board.
18. On two other projects, Vaughn solicited quotes from other vendors prior to awarding
the work to K &B construction (pavilion construction and bathroom remodeling)
19. Vaughn also authorized K &B to complete electrical work in July 2006 and the
installing of shelves in the township garage in or about October 2006.
a. No quotes were solicited from any other contractor.
b. Vaughn approved K &B to complete the aforementioned work without the
formal approval of the board of supervisors or input from any other board
member.
c. Vaughn informed board member Vanderneck of his decision.
20. The final project of the nine (salt shed) was publicly bid.
21. Vaughn routinely participated, as a member of the board of supervisors, in voting to
approve monthly bills which included payment to K &B and /or the owners of K &B
and routinely signed as a township signatory on checks issued to K &B and /or the
owners of K &B as shown below:
Check
Check Date Number Amount Project
Check Signatures
7/11/2001 1492 $8,000.00 Salt Shed George Punk, Leatrice Maze
Charles Vaughn, Leatrice
9/12/2001 1525 $11,188.00 Salt Shed Maze
Charles Vaughn, Leatrice
2/8/2006 788 $430.08 Gutters Maze
Remodel Charles Vaughn, Leatrice
3/8/2006 2390 $5,465.00 Bathroom Maze
Vaughn, 06 -030
Page 6
Bathroom
Floor,
Pavilion Charles Vaughn, Leatrice
4/12/2006 Motion, voted 4/6/2006 2394 $1,233.00 Layout Maze
Charles Vaughn, Leatrice
5/10/2006 Motion, voted 5/9/2006 2420 $8,739.70 Pavilion Maze
Charles Vaughn, Leatrice
7/12/2006 Motion, voted 5/29/2006 2459 $80.00 Electric Maze
Charles Vaughn, Leatrice
7/12/2006 Motion, voted 5/29/2006 2460 $80.00 Electric Maze
Paul Burton Sr., Leatrice
10/11/2006 Motion, voted 10/11/2006 2536 $1,156.91 Roof Maze
Lavern Vanderneck, Leatrice
11/8/2006 Motion, voted 11/8/2006 2546 $400.00 Shelves Maze
Total: $36,772.69
a. Vaughn voted affirmatively to approve monthly bills eight of ten times which
included payment to K &B and /or the K &B owners.
1. Vaughn is not documented as abstaining from voting to approve
payment to K &B and /or its owners.
b. Vaughn signed seven of the ten checks issued to K &B and /or K &B owners
as an authorized township signatory totaling $27,215.78.
22. Vaughn did not publicly disclose his son's association with K &B prior to voting to
approve monthly bills which included payment to K &B.
a. Robert Vaughn's association with K &B was common knowledge among the
supervisors.
b. Robert Vaughn's family relationship with Vaughn was common knowledge.
23. K &B project estimates are based on estimated material costs plus estimated labor
costs.
a. Profit realized by K &B is the material costs subtracted from the amount paid.
24. K &B realized a profit margin of $19,538.97 as a result of the work performed for
Highland Township on nine separate occasions as detailed below:
Total Profit Profit Realized
Total Paid Material Realized by Robert
Project to K &B Expenses by K &B Vaughn
Salt Shed $19,188.00 $8,410.62 $10,777.38 $5,388.69
Gutters $430.08 $130.08 $300.00 $150.00
Remodel
Bathroom $5,465.00 $2,953.11 $2,511.89 $1,255.95
Vaughn, 06 -030
Page 7
Bathroom
Floor $625.00 $225.00 $400.00 $200.00
Pavilion
Layout $608.00 $119.00 $489.00 $244.50
Pavilion $8,739.70 $4,739.00 $4,000.70 $2,000.35
Electric $160.00 $0.00 $160.00 $80.00
Roof $1,156.91 $656.91 $500.00 $250.00
Shelves $400.00 $0.00 $400.00 $200.00
TOTALS: $36,772.69 $17,233.72 $19,538.97 $9,769.49
25. The profit realized by Robert Vaughn on the eight (8) projects where quotes were
solicited and where the work was approved by Charles Vaughn totaled $4,380.80.
THE FOLLOWING FINDINGS RELATE TO K &B RECEIVING TOWNSHIP FUNDS
DURING A TIME PERIOD WHEN K &B WAS NOT PROVIDING SERVICES TO THE
TOWNSHIP.
26. Charles Vaughn served as an employee (plant operator) for the Highland Township
Municipal Authority. (HTMA)
a. Robert Vaughn, son of Charles Vaughn and part owner of K &B Construction
served as a member of the authority where Charles Vaughn was employed
as plant operator.
b. Kevin Moran, the other owner of K &B was also a member of the Authority.
27. Highland Township Municipal Authority (hereafter HTMA) was created pursuant to
the Pennsylvania Municipality Authorities Act of June 28, 1935, P.L. 463, as
amended by the Act of May 20, 1937, P.L. 739, and amended by the Act of May 17,
1939, P.L. 167.
a. HTMA was incorporated on June 12, 1972, for the purpose of providing
sanitary water to James City and Highland Township.
b. HTMA is a separate legal entity from Highland Township.
28. The HTMA is operated by a five (5) member Authority Board.
a. Board Members are appointed by the Highland Township Board of
Supervisors.
29. In 2004 and 2005, the board was comprised of Kevin Moran, Robert Vaughn, Jack
Vanderneck, Joe Niklas, and Bryan Punk.
a. Charles Vaughn regularly attended the Authority meetings in his capacity as
sewer plant operator and made recommendations to the Authority board.
b. Robert Vaughn is the son of Charles Vaughn.
1. Robert Vaughn and Kevin Moran, another board member, own K &B.
Vaughn, 06 -030
Page 8
30. On March 2, 2004, the Authority board discussed work which needed to be
completed at the sewer treatment plant.
a. A suggestion was made at the meeting that an addition be built over the
remaining open area of the plant.
31. At the September 7, 2004, Authority meeting, the board discussed what projects
should be submitted to Elk County for a Community Development Block Grant
(hereafter CDBG).
a. Charles Vaughn, as plant operator, was present at the meeting and in his
official capacity stated that a building over the remainder of the sewer plant
was needed.
b. Board member Vanderneck asked Robert Vaughn to write -up an estimate for
the building addition.
32. The October 5, 2004, minutes of the authority meeting detail that the board decided
to submit an application to Elk County for CDBG funds so that an addition could be
built.
a. Kevin Moran and Bob Vaughn were present and participated in the
discussion leading to the authority deciding to ask for funds to build an
insulated steel pole building with a steel roof, three garage doors and a man
door.
33. On October 11, 2004, ECPD received an application from HTMA requesting
$72,000.00 in CDBG funding to replace deteriorating pipes and to construct an
addition over part of the remaining open area of the sewer treatment plant.
a. The amount requested included a cost estimate of $39,9000.00 [sic] to
construct the building addition.
1. A cost estimate was required to be submitted with the CDBG
application.
34. The cost estimate prepared by K &B and submitted to the HTMA included the
following:
We hereby propose to furnish the materials and the labor necessary for the
completion of James City Sewer Plant Building.
Materials for 16' x 60' building
Pressure treated framing lumber, 4x6 posts, 16' roof trusses 4/12 pitch 48" O.C.,
29GA. Painted Galavume siding, one 36" steel man door 25GA,. Three 8'x7' 26GA
insulated steel garage doors, 4 turbine roof vents, 239GA., Galavume roof, ridge
cap, screws, fasteners, misc. Two interior 60'x3' walkways (treated lumber).
Interior insulation. Electrical; EMT, connectors, couplings, boxes, wire, switches,
receptacles, explosion proof light fixtures, straps, circuit breakers, and misc.
All material is guaranteed to be as specified, and the above work to be performed in
accordance with specifications submitted for the above work for the sum of:
$39,900.00.
a. Robert Vaughn, part owner of K &B was a member of the HTMA Board when
Vaughn, 06 -030
Page 9
the estimate was submitted to HTMA to be used as part of the grant
application.
35. A letter dated October 6, 2004, from the Highland Township Supervisors
accompanied the application and indicated the following:
"We, the Supervisors of Highland Township are aware that the Municipal Authority
is making an application for a CDBG Grant to replace deteriorating pipe in the water
sphere and to construct a building over the remaining open portion of the sewer
treatment plant and we have no objection to these worthwhile projects."
a. At the time that the supervisors authorized this statement Charles Vaughn
was aware of the fact that a business owned by his son would be working on
the project to be funded by the grant.
36. On October 27, 2004, the Elk County Planning Commission made its
recommendation to the Elk County Commissioners to approve the building addition
project as well as the replacement of water pipes for CDBG funding.
37. On February 15, 2005, the Elk County Commissioners approved the addition project
as well as the replacement of water pipes for CDBG funding by passing Resolution
2005 -05.
38. During the April 4, 2005, authority meeting, board member Joe Niklas stated he
would talk to Matt Pfeufer, ECPD about putting the bid out sooner for the piping and
building at the STP.
a. HTMA Board member Jack Vanderneck stated he would ask the township
board of supervisors to loan the authority the money (for the project) until we
get reimbursed by the county.
b. The authority secretary was directed to inquire of Matt Pfeuffer if it was
permissible to get a loan from the township.
39. On May 18, 29, and 31, 2005, the HTMA addition project was publicly advertised in
the Kane Republican by the Elk County Planning Department (ECPD).
a. The solicitation indicated that bids were to be received by ECPD by 4:00
p.m., June 6, 2005.
b. Bids were scheduled to be opened at the June 7, 2005, Commissioner's
Meeting at 10:00 a.m.
40. On May 26, 2005, a pre -bid conference was held to discuss the CDBG projects.
a. Kevin Moran and Bob Vaughn were present along with other members of the
authority.
41. On or about June 4, 2005, Robert Vaughn and Kevin Moran d /b /a K &B submitted a
bid in the amount of $29,800.00 on behalf of K &B to build the addition over the
open area of the sewer plant.
42. K &B's bid was $10,100.00 less than the estimate K &B submitted to the HTMA
(Finding #54).
43. Robert Vaughn was a member of the HTMA board when he submitted this bid to
work on the HTMA project.
Vaughn, 06 -030
Page 10
44. K &B's bid was the only bid received by ECPD for the HTMA project.
45. During its June 7, 2005, meeting, the Elk County Commissioners selected, K &B to
complete the HTMA building project.
a. The contract was signed by the Commissioners and Robert Vaughn and
Kevin Moran as partners in K &B.
46. A letter dated June 7, 2005, from Matthew Pfeufer, CDBG Coordinator, ECPD, to
K &B indicated that K &B's bid was accepted by the Commissioners.
a. Pfeufer further indicated in his letter that K &B's Performance Bond and
Payment Bond had to be submitted to ECPD before the Notice to Award,
Contract, and Notice to Proceed were forwarded to K &B.
47. ECPD will not contract with a business unless the contractor is bonded for the full
amount of the bid (i.e. Performance Bond and Payment Bond).
a. A Performance Bond insures that the work will be fully completed to
specifications and that the laborers will be paid their wages for work
performed.
48. By correspondence dated July 14, 2005, DCED notified the ECPD that funding [for]
the projects was available.
a. Matt Pfeufer was the ECPD grant coordinator responsible for "drawing down"
funds from the grant to HTMA for the building project.
b. ECPD issues payments directly to contractors.
1. Payments will be issued upon receipt of invoices confirming that work
has been completed.
2. Payments are not issued unless work is completed and
documentation is provided.
c. Payments from the county to the contractor can occur in several different
ways.
1. Partial payments can be made to the contractor throughout the
process by the county once documentation has been received
confirming that a portion of the project has been completed.
2. If funding has not yet been received by the county, a municipality can
pay the contractor and subsequently be reimbursed by the county.
3. A single payment for the full amount of the project can be issued by
the county.
d. Payment from the county is contingent on the submittal of documentation by
the contractor to justify payment.
49. K &B Construction did not have the necessary funds to purchase materials needed
to start or complete the building addition to the sewer treatment plant without relying
upon an existing line of credit they established with Kane Lumber & Fuel.
Vaughn, 06 -030
Page 11
a. The ECPD could not release any grant funds prior to the completion of the
project or completion of a portion of the project.
50. In or about May 2005 the HTMA discussed seeking a loan from the board of
supervisors for the project until the CDBG funds were received from the county.
a. If the board of supervisors did not agree to a loan, the project could have
been delayed or terminated.
b. K &B did not want to incur financing charges by charging materials
purchased or using its own line of credit from a lending institution or from
Kane Lumber & Fuel.
51. As a result of K &B's preference to avoid incurring financing charges, the township
board of supervisors made a decision to loan K &B $29,800.00, the total amount of
their bid.
a. Charles Vaughn actively participated in the board action to loan the money
to his son's business, K &B.
b. The loan amount of $29,800.00 represented K &B's material costs plus labor
and profit.
c. The loan was made directly to K &B Construction.
52. At the July 13, 2005, Highland Township meeting, the supervisors (including
Vaughn) approved township check #2241 to K &B in the amount of $29,800.00, the
amount of the approved bid to construct the building addition for the HTMA.
a. The township check was signed by Supervisor Vanderneck and
Secretary /Treasurer Maze.
1. Vaughn did not sign the check.
b. Vaughn was present at the meeting and voted to approve the issuance of the
check.
c. Township check #2241 was issued on July 28, 2005, a date subsequent
[sic]* to K &B's construction and completion of the sewage project at issue.
d. K &B did not provide the township with a written invoice to justify the payment
of $29,800.00.
e. The loan was unsecured.
*[This appears to be a typographical error, as it is clear from other Stipulated
Findings that the Authority project had not been completed as of July 28, 2005.
See, Fact Findings 56, 58 c, 60 a, 62.]
53. K &B was not contracted with the township to complete any work during the time
frame that the check was approved and /or issued.
a. Township check #2241 was deposited into K &B's bank account on July 29,
2005.
54. The $29,800.00 payment issued to K &B enabled K &B to pay for materials obtained
to build the covering over the sewer plant, as well as, provide the owners of K &B
Vaughn, 06 -030
Page 12
with payments.
a. Prior to the check being deposited into K &B's account, the balance was
$7,745.77.
55. On July 29, 2005, the same day that the township check was deposited to the K &B
account, Robert Vaughn wrote check #214 from K &B's account to Kane Lumber and
Fuel Company for $11,473.11.
a. Materials were obtained from Kane Lumber and Fuel Company by K &B from
June 30, 2005, to approximately July 19, 2005, to construct the covering
over the sewer plant.
56. The check issued by the township to K &B was utilized to payoff the material
expenses related to said construction so that K &B could complete the project
without incurring interest charges from Kane Lumber and Fuel Company.
57. K &B did not have the funds available to pay for the materials totaling $11,089.40
obtained from Kane Lumber prior to the depositing of township check #2241 on July
29, 2005.
a. K &B's bank account balance on July 29, 2005, was $7,745.77.
58. Robert Vaughn and Kevin Moran also issued payments to each other on July 29,
2005, subsequent to the receipt of the township payment.
a. Check no. 215 was issued to Robert Vaughn in the amount of $8,250.00.
b. Check no. 216 was issued to Kevin Moran in the amount of $8,250.00.
c. Vaughn and Moran used the funds received from Highland Township to pay
themselves even though the HTMA project was not completed.
59. ECPD never knew of the advanced payment that K &B received from the township.
a. In situations where the county has to reimburse a municipality,
documentation is required to be on file at the county to verify that the
municipality paid the contractor for the work completed.
b. Records on file at the county did not reflect that a payment was made to K &B
by Highland Township.
60. During the construction phase of the HTMA project, additional material needed to
be purchased as listed below.
a. K &B submitted an invoice ( #8773) dated October 15, 2005, for $5,080.40 to
the county to document the cost K &B incurred to purchase additional
materials.
b. Said invoice increased the total contract from $29,800.00 (the original bid) to
$34,880.30.
c. To further document the change, K &B submitted voucher #1199130 (not
dated) which indicated changes as follows:
- Install new 3/4 in. conduit from control room to old building;
- Install new 3/ in. conduit from lighting and receptacles and old
Vaughn, 06 -030
Page 13
addition;
- Install new 3/4 in. conduit to both sides of buildings for new fan;
- Install fan;
- Troubleshoot some control issues at plant;
- Install two extra rural vents.
61. On October 18, 2005, a purchase requisition was completed by Pfeufer to
document that K &B was to be paid $34,880.30.
a. Pfeufer issued payment to K &B after K &B produced documentation of the
additional purchases.
b. K &B never informed Elk County that this had already been paid for the work
by Highland Township.
62. On October 21, 2005, County check #1104 was issued to K &B in the amount of
$34,880.30 for the completion of the HTMA project.
a. Said check was deposited into K &B's Hamlin Bank account on October 27,
2005.
b. On that same day, K &B check #259 was issued to Highland Township in the
amount of $29,800.00.
c. As of this point K &B had received double payments for the work performed.
63. On November 27, 2005, Maze deposited the K &B check into the township's forestry
account.
a. When the township secretary deposited the K &B check the deposit slip
reflected the payment was actually a reimbursement from the HTMA for a
loan.
b. No loan was issued to HTMA by the township during or about that time.
64. K &B has been banking with Hamlin Bank & Trust Company since August 10, 2004.
65. Hamlin Bank & Trust Company offers various loan options.
a. One of the various loan options available is a 90 day loan.
b. The interest rate of a 90 day loan is 3 %.
c. The principle and the interest must be paid at the conclusion of the loan.
66. Had K &B received a three month loan from Hamlin Bank & Trust Company for
$29,800.00, K &B would have incurred an interest charge of $894.00.
THE FOLLOWING FINDINGS RELATE TO ALLEGATIONS THAT VAUGHN
BACKDATED STATEMENTS OF FINANCIAL INTERESTS.
67. Vaughn in his official capacity as a Highland Township supervisor was required to
file a Statement of Financial Interests form by May 1 annually containing
information for the prior calendar year.
a. Highland Township supervisors have annually been provided with blank
Statements of Financial Interests forms from the State Ethics Commission to
Vaughn, 06 -030
Page 14
complete and file with the township.
68. On June 6, 2007, a Statement of Financial Interests compliance review was
conducted for Highland Township.
a. Vaughn's SFIs for calendar years 2003, 2004, and 2005 were reviewed.
69. Statement of Financial Interests forms on file with the township as of June 6, 2006,
included the following filings for Vaughn:
a. Calendar Year: 2003
Filed: "2004" on SEC Form 01/06
Position: Highland Twp Supervisor
Creditors: "No"
Interest Rate: None
Direct /indirect sources of income: Highland Twp PA. Ave James City PA 16734
Office, directorship or employment in any business: None
All other financial interests: None
(Note: form was not marked as amended)
b. Calendar Year: 2004
Filed: "2005" on SEC Form 01/06
Position: Highland Twp Supervisor
Creditors: "No"
Interest Rate: None
Direct /indirect sources of income: Highland Twp PA. Ave James City PA
Office, directorship or employment in any business: None
All other financial interests: None
(Note: form was not marked as amended)
c. Calendar Year: 2005
Filed: "2006" on SEC Form 01/06
Position: Highland Twp Supervisor
Creditors: "No"
Interest Rate: None
Direct /indirect sources of income: Highland Twp Penna Ave James City PA
Office, directorship or employment in any business: None
All other financial interests: None
70. Vaughn failed to file a Statement of Financial Interests form by May 1, 2004, for
calendar year 2003.
71. Vaughn submitted an SFI purportedly for calendar year 2003 with the township in
"2004."
He failed to list any filing date other then "2004 ".
The filing dated "2004" was on an SFI form with a revision date of January
2006 (SEC -1 REV 01/06).
72. SFI forms with a revision date of SEC -1 REV 01/06 were not distributed to
municipalities until December 2005.
a. This form was not available for completion by Vaughn in 2004.
73. Vaughn failed to file a Statement of Financial Interests form by May 1, 2005, for
calendar year 2004.
a.
b.
Vaughn, 06 -030
Page 15
74. Vaughn submitted an SFI purportedly for calendar year 2004 with the township in
"2005."
a. Vaughn failed to list any filing date other then "2005."
b. The filing dated "2005" was on an SFI form with a revision date of January
2006 (SEC -1 REV 01/06).
75. SFI forms with a revision date of SEC -1 REV 01/06 were not distributed to
municipalities until December 2005.
a. This form was not available for completion by Vaughn in 2005.
76. Prior to June 6, 2006, but after May 1, 2006, a Commission Investigator contacted
Secretary /Treasurer Maze to inform her that an SFI compliance review would be
conducted.
a. After Maze received said call, she reviewed the SFIs on file and noted those
years that Vaughn failed to file.
b. Maze informed Vaughn of those years he failed to file and supplied him with
blank forms to complete.
c. Vaughn had failed to file Statements of Financial Interests for calendar years
2003 -2005 inclusive.
77. Vaughn did not indicate the month and date in which he filed his SFI for calendar
year 2005.
a. Vaughn only disclosed that he filed the form in "2006."
b. Vaughn completed a SFI for calendar year 2005 only after Maze informed
Vaughn of those years in which he failed to file.
78. Vaughn was compensated $600.00 annually between 2003 and the end of 2005 for
his position as township supervisor.
a. Vaughn was paid $50.00 /meeting for 12 meetings each year between 2003
and 2005.
79. Vaughn received payments as a township supervisor totaling $1,800.00 during the
time period when he was not filing Statement[s] of Financial Interests.
III. DISCUSSION:
As a Supervisor for Highland Township ( "Township ") from March 29, 1996, to the
present, Respondent Charles Vaughn, hereinafter also referred to as "Respondent,"
"Respondent Vaughn," and "Vaughn," has at all times relevant to these proceedings been
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 Vaughn violated Sections 1103(a), 1103(f) and 1104(a) of
the Ethics Act when he used the authority of his office for the private pecuniary gain of
himself and /or a business with which he and /or a member of his immediate family is
associated by authorizing contracts in excess of $500 without an open and public process
to K &B Construction, a business owned in part by his son; when he authorized payments
Vaughn, 06 -030
Page 16
to K &B Construction including signing checks; when he participated in actions of the
Township Board of Supervisors ( "Board ") to approve a payment to K &B Construction at a
time when K &B Construction was not performing services for the township; and when he
intentionally backdated Statement of Financial Interests forms for calendar years 2003 and
2004 and failed to file his 2005 calendar year Statement of Financial Interests form by May
1, 2006.
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
(a) Conflict of interest. —No public official or public
employee shall engage in conduct that constitutes a conflict of
interest.
65 Pa.C.S. § 1103(a).
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 /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 1103(f) of the Ethics Act imposes certain restrictions as to contracting:
§ 1103. Restricted activities
(f) Contract. —No public official or public employee or
his spouse or child or any business in which the person or his
spouse or child is associated shall enter into any contract
valued at $500 or more with the governmental body with which
the public official or public employee is associated or any
subcontract valued at $500 or more with any person who has
been awarded a contract with the governmental body with
which the public official or public employee is associated,
unless the contract has been awarded through an open and
Vaughn, 06 -030
Page 17
public process, including prior public notice and subsequent
public disclosure of all proposals considered and contracts
awarded. In such a case, the public official or public employee
shall not have any supervisory or overall responsibility for the
implementation or administration of the contract. Any contract
or subcontract made in violation of this subsection shall be
voidable by a court of competent jurisdiction if the suit is
commenced within 90 days of the making of the contract or
subcontract.
65 Pa. C. S. § 1103(f).
Section 1103(f) of the Ethics Act provides in part that no public official /public
employee or his spouse or child or business with which the public official /public employee
or his spouse or child is associated may enter into a contract with his governmental body
valued at five hundred dollars or more or any subcontract valued at five hundred dollars or
more with any person who has been awarded a contract with the governmental body with
which the public official /public employee is associated unless the contract is awarded
through an open and public process including prior public notice and subsequent public
disclosure of all proposals considered and contracts awarded.
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.
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.
Respondent Vaughn has served as a Township Supervisor from March 29, 1996, to
the present. Vaughn has served as Chairman of the Township Board since January 2006.
The Township Board consists of three members. As a Supervisor, Vaughn receives
$50.00 per meeting. Township supervisors must be present at a Board meeting to receive
their compensation.
Vaughn has served as Township roadmaster since January 5, 1998. Since
becoming Township roadmaster in 1998, Vaughn has been in charge of soliciting
bids /quotes for the Township. Per the stipulated Fact Findings, the Township's
roadmaster is typically the individual responsible for performing this duty.
Vaughn is also employed by Highland Township Sewer Authority ( "Authority ") as a
Plant Operator.
Robert Vaughn is Respondent Vaughn's son. Robert Vaughn and his business
partner, Kevin Moran, each own 50% of K &B Construction (hereafter "K &B "). Robert
Vaughn and Kevin Moran are the only employees of K &B. K &B operates out of Robert
Vaughn's residence. K &B is not incorporated in the Commonwealth of Pennsylvania.
Respondent Vaughn has no interest in K &B.
Robert Vaughn and Kevin Moran are also members of the Authority Board.
The Township has maintained a business relationship with K &B since at least 2001.
This business relationship occurred and has continued during Vaughn's service as a
Township Supervisor.
From September 2001 through November 2006, K &B and /or the owners of K &B
completed nine Township projects totaling $36,772.69, as detailed in Fact Finding 12. The
Vaughn, 06 -030
Page 18
nine projects were for: construction of a salt shed at a cost of $19,188; repair of fire hall
gutters, at a cost of $430.08; remodeling of a bathroom, at a cost of $5,465; installation of
a bathroom floor, at a cost of $625; construction of a pavilion layout, at a cost of $608;
construction of a pavilion, at a cost of $8,739.70; electrical work, at a cost of $160; repair
of the Township building roof, at a cost of $1,156.91; and installation of shelves in the
Township garage, at a cost of $400.
Of the aforesaid nine projects, six were in excess of $500. However, only one
project, the construction of the salt shed, was publicly bid. The parties have stipulated that
the contract for construction of the salt shed was awarded through an open and public
process.
Vaughn solicited bids /quotes from K &B or one of its principals for the other eight
projects. For the following six projects, Vaughn obtained quotes only from K &B: repair of
fire hall gutters; installation of bathroom floor; construction of pavilion layout; repair of
Township building roof; electrical work; and installation of shelves in the Township garage.
For these projects, quotes or bids were not solicited from any other vendors /contractors.
Vaughn made the decision to solicit quotes only from K &B. For two other projects,
specifically, the construction of the pavilion and remodeling of the bathroom, Vaughn
solicited quotes from other vendors prior to awarding the work to K &B. Vaughn approved
K &B to complete some if not all of the above projects without the approval of the Township
Board. (See, Fact Findings 17, 19 b, 25).
As specified in Fact Finding 21, Vaughn participated as a member of the Township
Board in voting to approve monthly bills that included payment to K &B and /or the owners
of K &B. Vaughn did not publicly disclose his son's association with K &B prior to voting to
approve monthly bills that included payment to K &B. The parties have stipulated that
Robert Vaughn's association with K &B was common knowledge among the supervisors.
Vaughn also signed, as an authorized Township signatory, seven of the ten checks
detailed in Fact Finding 21 that were issued by the Township to K &B and /or K &B owners.
The seven aforesaid Township checks signed by Vaughn as an authorized Township
signatory totaled $27,215.78.
K &B realized a profit margin in the amount of $19,538.97 as a result of the work
performed for the Township on the aforesaid nine projects, as detailed in Fact Finding 24.
The profit realized by Robert Vaughn on the eight (8) projects where quotes were solicited
from K &B by Vaughn and where the work was approved by Vaughn totaled $4,380.80.
We shall now review the stipulated Fact Findings pertaining to certain work
performed by K &B for the Authority.
The Authority Board consists of five members, all of whom are appointed by the
Township Board. As noted above, Robert Vaughn and his business partner, Kevin Moran,
have served as members of the Authority Board.
In October 2004, the Authority submitted to the Elk County Planning Department
( "ECPD ") an application requesting $72,000 in Community Development Block Grant
( "CDBG ") funding to replace deteriorating pipes and to construct an addition over part of
the remaining open area of the sewer treatment plant. The amount requested included a
cost estimate of $39,900 to construct the building addition. The cost estimate was
prepared by K &B and submitted to the Authority. A letter from the Township supervisors
dated October 6, 2004, accompanied the application and indicated that the Township
Supervisors had no objection to the projects. At the time that the supervisors authorized
this statement, Vaughn was aware of the fact that a business owned by his son would be
working on the Authority project to be funded by the grant.
Vaughn, 06 -030
Page 19
On February 15, 2005, the Elk County Commissioners approved the addition project
as well as the replacement of water pipes for CDBG funding.
At an April 4, 2005, Authority Board meeting, Authority Board Member Jack
Vanderneck stated he would ask the Township Board to loan the Authority the money for
the project until the Authority would get reimbursed by the county. The Authority secretary
was directed to inquire of Matt Pfeufer of the ECPD if it was permissible to get a loan from
the Township.
In May 2005, the Authority addition project was publicly advertised by the ECPD.
On or about June 4, 2005, Robert Vaughn and Kevin Moran d /b /a K &B submitted a bid in
the amount of $29,800 on behalf of K &B to build the addition over the open area of the
sewer plant. K &B's bid was $10,100 less than the estimate K &B had provided to the
Authority for submission with the grant application. K &B's bid was the only bid received by
ECPD for the Authority project.
During its June 7, 2005, meeting, the Elk County Commissioners selected K &B to
complete the Authority building project. The contract was signed by the Commissioners
and Robert Vaughn and Kevin Moran as partners in K &B.
Matt Pfeufer was the CDBG Coordinator for ECPD. ECPD issues payments directly
to contractors. Payments will be issued upon receipt of invoices confirming that work has
been completed. Payments are not issued unless work is completed and documentation is
provided. Payments from the county to the contractor can occur in several different ways.
Partial payments can be made to the contractor throughout the process by the county once
documentation has been received confirming that a portion of the project has been
completed. If funding has not yet been received by the county, a municipality can pay the
contractor and subsequently be reimbursed by the county. A single payment for the full
amount of the project can be issued by the county. Payment from the county is contingent
on the submittal of documentation by the contractor to justify payment.
The ECPD could not release any grant funds for the Authority's project prior to the
completion of the project or completion of a portion of the project. K &B did not have the
necessary funds to purchase materials needed to start or complete the building addition to
the sewer treatment plant without incurring financing charges by charging materials
purchased or using its own line of credit.
As a result of K &B's preference to avoid incurring financing charges, the Township
Board made a decision to loan K &B $29,800, the total amount of the bid. Vaughn actively
participated in the Township Board's action to loan the money to K &B. The loan amount of
$29,800 represented K &B's material costs plus labor and profit. The loan was made
directly to K &B Construction - -not the Authority - -at a time when K &B had no contracts with
the Township.
At the July 13, 2005, Township Board meeting, the supervisors including Vaughn
approved Township check #2241 to K &B in the amount of $29,800, the amount of the
approved bid to construct the building addition for the Authority. Vaughn did not sign the
check. K &B did not provide the Township with a written invoice to justify the payment of
$29,800. The loan was unsecured.
Township check #2241 was deposited into K &B's bank account on July 29, 2005.
Prior to the Township check being deposited into K &B's account, the account balance was
$7,745.77, and K &B did not have the funds available to pay for materials totaling
$11,089.40 already obtained from Kane Lumber and Fuel Company ( "Kane Lumber"). The
$29,800 payment from the Township to K &B enabled K &B to pay for the materials that had
been obtained for the project, without incurring interest charges, as well as provide Robert
Vaughn and Kevin Moran, the owners of K &B, with funds to issue payments to themselves.
Vaughn, 06 -030
Page 20
Robert Vaughn and Kevin Moran used the funds received from the Township to issue
payments to themselves even though the Authority project was not completed. Check no.
215 was issued to Robert Vaughn in the amount of $8,250. Check no. 216 was issued to
Kevin Moran in the amount of $8,250.
ECPD never knew of the advanced payment that K &B received from the Township.
In situations where the county has to reimburse a municipality, documentation is required
to be on file at the county to verify that the municipality paid the contractor for the work
completed. Records on file at the county did not reflect that a payment was made to K &B
by the Township.
During the construction phase of the Authority project, additional material needed to
be purchased, increasing the total contract from $29,800 (the original bid) to $34,880.30.
K &B submitted an invoice and voucher to the county to document the cost.
On October 18, 2005, a purchase requisition was completed by Pfeufer to document that
K &B was to be paid $34,880.30. K &B never informed Elk County of the payment already
received from the Township. On October 21, 2005, County check #1104 was issued to
K &B in the amount of $34,880.30 for the completion of the Authority project. Said check
was deposited into a K &B bank account on October 27, 2005. On that same day, K &B
check #259 was issued to the Township in the amount of $29,800.
On November 27, 2005, Maze deposited the K &B check into the Township's forestry
account. When the Township secretary deposited the K &B check the deposit slip reflected
the payment was actually a reimbursement from the Authority for a loan. No loan was
issued to the Authority by the Township during or about that time.
The parties have stipulated that if K &B had received a three -month loan from its
bank for $29,800, K &B would have incurred an interest charge of $894.
We shall now review the stipulated Fact Findings relating to Vaughn's Statements of
Financial Interests (SFIs). As a Township Supervisor, Vaughn was required to file a SFI
form by May 1 of each year, containing information for the prior calendar year.
As of May 1, 2006, Vaughn had failed to file SFIs with the Township for calendar
years 2003 -2005 inclusive. This came to the attention of Township Secretary /Treasurer
Maze as a result of a contact from a Commission investigator, who informed Maze that a
SFI compliance review would be conducted at the Township. After Maze received said
call, she reviewed the SFIs on file, informed Vaughn of the years he had failed to file, and
supplied him with blank SFI forms to complete.
Vaughn subsequently filed SFIs with the Township for calendar years 2003, 2004,
and 2005. Vaughn's 2003 calendar year SFI bore a filing date of 2004. Vaughn's 2004
calendar year SFI bore a filing date of 2005. Both forms were backdated.
Vaughn did not indicate the month and date in which he filed his SFI for calendar
year 2005. Vaughn only disclosed that he filed the form in "2006." Vaughn completed a
SFI for calendar year 2005 only after Maze informed Vaughn of those years in which he
failed to file.
The parties have stipulated that Vaughn received payments as a Township
Supervisor totaling $1,800 during the time period when he was not filing SFIs.
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
as follows:
Vaughn, 06 -030
Page 21
3. The Investigative Division will recommend the following in relation to
the above allegations:
a. That Charles Vaughn violated Section 1103(a) of the
Public Official and Employee Ethics Law, 65 Pa.C.S.
§1103(a), when he, as a Supervisor for Highland
Township, participated in soliciting quotes, approving
the award of business and voting to pay bills to K &B
Construction, a business with which his son, a member
of his immediate family, was associated, relating to
eight (8) township projects.
b. That Charles Vaughn, as a Highland Township
Supervisor, committed a technical violation of Section
1103(a) of the Public Official and Employee Ethics Law,
65 Pa.C.S. §1103(a), when he voted to pay invoices
submitted by K &B Construction, a business [with] which
his son, a member of his immediate family, was
associated, relating to the township's construction of a
salt shed.
c. That Charles Vaughn, as a Highland Township
Supervisor, violated Section 1103(f) of the Public
Official and Employee Ethics Law, 65 Pa.C.S. §1103(f),
in relation to the award of five (5) contracts to K &B
Construction, a business owned in part by his son,
when such contracts were in excess of $500 and not
awarded through an open and public process.
d. That no violation of Section 1103(f) of the Public Official
and Employee Ethics Law, 65 Pa.C.S. §1103(f),
occurred in relation to the township's award of a
contract to K &B Construction, a business in which
Charles Vaughn's son was an owner, to build a
township salt shed, as such contract was awarded
through an open and public process.
e. That no violation of Section 1103(f) of the Public Official
and Employee Ethics Law, 65 Pa.C.S. §1103(f),
occurred in relation to the award of three (3) township
contracts, regarding the repair of fire hall gutters,
certain electrical work, and installation of shelves in the
township garage, to K &B Construction, a business
owned in part by his son, as all such contracts were
under $500.
f. That Charles Vaughn violated Section 1103(a) of the
Public Official and Employee Ethics Law, 65 Pa.C.S.
§1103(a), when he participated in the township's
actions to issue a loan in the amount of $29,800 to K &B
Construction, a business with which his son, a member
of his immediate family, is associated, to complete a
project for a municipal authority, at a time when K &B
was not performing any township services relating to
said payment.
Vaughn, 06 -030
Page 22
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 Charles Vaughn's failure to
timely file Statements of Financial Interests for calendar
years 2003 through 2005 inclusive.
4. Vaughn agrees to make payment in the amount of $7,074.80 in
settlement of this matter payable to the Commonwealth of
Pennsylvania and forwarded to the Pennsylvania State Ethics
Commission. Said amount representing the profit realized by
Vaughn's son as a result of the eight (8) projects referenced in No.
3(a) above ($4,380.80); the compensation received by Vaughn during
the time that he had not filed Statements of Financial Interests
($1,800.00); and the interest saved by K &B Construction as a result
of the township's loan to that company ($894.00). Said payment to be
made over a period of one year, based upon a schedule to be
arranged after the issuance of the final adjudication in this matter.
5. Vaughn agrees to file accurate and complete Statements of Financial
Interests, if such has not already been done, within thirty (30) days of
the date of the issuance of the final adjudication of the matter.
Copies of such forms must also be forwarded to the State Ethics
Commission.
g.
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 2 -3.
In considering the Consent Agreement, a clear violation of Section 1103(a) of the
Ethics Act occurred with regard to Vaughn's official involvement with all of the projects
K &B performed for the Township except for the construction of the salt shed. Each
element of a violation of Section 1103(a) has been established.
Vaughn solicited bids /quotes from K &B or one of its principals for the aforesaid
eight projects. Per the Consent Agreement, the parties are in agreement that Vaughn
solicited such bids /quotes in his capacity as a Township Supervisor. Consent Agreement,
paragraph 3 a. For six projects, Vaughn obtained quotes only from K &B. For two other
projects, Vaughn solicited quotes from other vendors prior to awarding the work to K &B.
Vaughn approved K &B to complete some if not all of the eight projects without the approval
of the Township Board. (See, Fact Findings 17, 19, 25).
Vaughn also used the authority of his public office as Township Supervisor when he
participated as a member of the Township Board in voting to approve monthly bills that
included payment to K &B and /or the owners of K &B, and when he signed, as a Township
signatory, seven of the ten checks that were issued by the Township to K &B and /or K &B
owners. See, Kehoe, Order 1413; Glover, Order 1389; Findley, Order 1103.
The parties have stipulated that the profit realized by Vaughn's son, Robert Vaughn,
on the aforesaid eight projects where quotes were solicited from K &B by Vaughn and
where the work was approved by Vaughn totaled $4,380.80. Such profit constituted a
Vaughn, 06 -030
Page 23
private pecuniary benefit to Vaughn's son, a member of Vaughn's immediate family. There
was no authorization in law permitting Vaughn to direct Township contracts to his son's
business.
Accordingly, we hold that Vaughn violated Section 1103(a) of the Ethics Act when
he, as a Township Supervisor, participated in soliciting quotes, approving the award of
business and voting to pay bills to K &B, a business with which his son, a member of his
immediate family, was associated, relating to eight Township projects.
Per the Consent Agreement of the parties, we further hold that Vaughn, as a
Township Supervisor, committed a technical violation of Section 1103(a) of the Ethics Act
when he voted to pay invoices submitted by K &B Construction, a business which his son, a
member of his immediate family, was associated, relating to the township's construction of
a salt shed.
We shall next consider the recommendation of the parties that Vaughn violated
Section 1103(f) of the Ethics Act in relation to the award of five Township contracts to K &B,
which contracts were in excess of $500 and were not awarded through an open and public
process. These particular projects were for: remodeling of a bathroom, at a cost of $5,465;
installation of a bathroom floor, at a cost of $625; construction of a pavilion layout, at a
cost of $608; construction of a pavilion, at a cost of $8,739.70; and repair of the Township
building roof, at a cost of $1,156.91.
We note that in Bixler v. State Ethics Commission, 847 A.2d 785 (Pa. Cmwlth.
2004), the Commonwealth Court of Pennsylvania held that a township supervisor did not
violate Section 1103(f) of the Ethics Act when a business that employed him entered into a
contract in excess of $500 with his township without an open and public process, but the
supervisor himself was neither a party to the contract nor a principal of the contracting
business. Id. The Court determined that Section 1103(f) of the Ethics Act prohibited the
conduct of entering into the contract under such circumstances. The Court concluded that
although a violation of Section 1103(f) of the Ethics Act would be established under such
circumstances, it would not be the public official who would be in violation of the law. Id.
See also, Means, Opinion 04 -007.
In the instant matter, Vaughn's son has a 50% ownership interest in K &B and is a
principal of K &B. Vaughn has no interest in K &B. In his capacity as a Township
Supervisor, Vaughn approved K &B to complete some if not all of the aforesaid projects
without the approval of the Township Board.
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 the parties are in agreement that a violation of Section 1103(f) would be appropriate
as part of an overall settlement of this case. We shall accept the parties' proposed
disposition.
We hold that Vaughn, as a Township Supervisor, violated Section 1103(f) of the
Ethics Act in relation to the award of five contracts to K &B, a business owned in part by his
son, when such contracts were in excess of $500 and were not awarded through an open
and public process.
Per the Consent Agreement, we hold that no violation of Section 1103(f) of the
Ethics Act occurred in relation to the Township's award of a contract to K &B to build a
Township salt shed, as such contract was awarded through an open and public process.
Additionally, no violation of Section 1103(f) of the Ethics Act occurred in relation to
the award of three Township contracts to K &B for the repair of fire hall gutters, certain
electrical work, and installation of shelves in the Township garage, because all three of
Vaughn, 06 -030
Page 24
these contracts were under $500.
The stipulated Fact Findings support the parties' recommendation of a violation of
Section 1103(a) of the Ethics Act with regard to Vaughn's participation in the Township's
actions to issue a loan in the amount of $29,800 to K &B to complete a project for the
Authority -- specifically, the construction of an addition at the sewer treatment plant - -at a
time when K &B was not performing any Township services relating to said payment.
Vaughn used the authority of his public office when he actively participated in the
Township Board's action to loan the money to K &B and to approve Township check #2241
to K &B in the amount of $29,800. The loan was made directly to K &B - -not the Authority - -at
a time when K &B had no contracts with the Township. These Township funds were used
in part to pay outstanding K &B charges at Kane Lumber for materials in excess of $11,000
that K &B had acquired for the Authority project. K &B did not otherwise have sufficient
funds to pay for the materials. K &B's use of the Township funds to pay for the materials
enabled K &B to avoid paying interest charges.
The parties have stipulated that if K &B had received a three -month loan from its
bank for $29,800, K &B would have incurred an interest charge in the amount of $894. The
savings of interest charges constituted a private pecuniary benefit to K &B, a business with
which Vaughn's son is associated.
Based upon the above, we hold that Vaughn violated Section 1103(a) of the Ethics
Act when he participated in the Township's actions to issue a loan in the amount of
$29,800 to K &B, a business with which his son, a member of his immediate family, is
associated, to complete a project for the Authority, at a time when K &B was not performing
any Township services relating to said payment.
Finally, we hold that a violation of Section 1104(a) of the Ethics Act occurred in
relation to Vaughn's failure to timely file SFIs for calendar years 2003 through 2005
inclusive. Per the stipulated Findings, Vaughn failed to timely file SFIs with the Township
for calendar years 2003 through 2005 inclusive and subsequently filed backdated forms for
two of those calendar years. The parties have stipulated that Vaughn received payments
as a Township Supervisor totaling $1,800.00 during the time period when he was not filing
SFIs.
As part of the Consent Agreement, Vaughn has agreed to make payment in the
amount of $7,074.80 in settlement of this matter payable to the Commonwealth of
Pennsylvania and forwarded to this Commission, with said amount to be paid over a period
of one year based upon a schedule to be arranged after the issuance of the final
adjudication in this matter. The agreed -upon amount represents the sum of: (1) the profit
of $4,380.80 realized by Vaughn's son as a result of the eight aforesaid Township projects
performed by K &B for which quotes were solicited from K &B by Vaughn and where the
work was approved by Vaughn; (2) supervisor compensation in the amount of $1,800
received by Vaughn from the Township during the time that Vaughn had not filed SFIs; and
(3) interest in the amount of $894 saved by K &B as a result of the Township's aforesaid
loan to K &B.
Vaughn has also agreed to file accurate and complete SFIs, if such has not already
been done, within thirty (30) days of the date of the issuance of the final adjudication of
this matter, and to forward copies of such forms to this Commission.
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.
Accordingly, per the Consent Agreement, Vaughn is directed to make payment in
the amount of $7,074.80 payable to the Commonwealth of Pennsylvania and forwarded to
Vaughn, 06 -030
Page 25
this Commission, with said amount to be paid over a period of one year based upon a
schedule to be arranged after the issuance of this Order.
Vaughn is further directed to file accurate and complete SFIs with the Township for
calendar years 2003, 2004, and 2005, if such has not already been done, within thirty (30)
days of the date of the issuance of this Order, and to forward copies of such forms to this
Commission for compliance verification purposes.
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. As a Supervisor for Highland Township ( "Township ") from March 29, 1996, to the
present, Respondent Charles Vaughn ( "Vaughn ") has at all times relevant to these
proceedings been 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. Vaughn violated Section 1103(a) of the Ethics Act when he, as a Township
Supervisor, participated in soliciting quotes, approving the award of business and
voting to pay bills to K &B Construction, a business with which his son, a member of
his immediate family, was associated, relating to eight (8) Township projects.
3. Vaughn, as a Township Supervisor, committed a technical violation of Section
1103(a) of the Ethics Act when he voted to pay invoices submitted by K &B
Construction, a business which his son, a member of his immediate family, was
associated, relating to the Township's construction of a salt shed.
4. Vaughn, as a Township Supervisor, violated Section 1103(f) of the Ethics Act in
relation to the award of five (5) contracts to K &B Construction, a business owned in
part by his son, when such contracts were in excess of $500 and were not awarded
through an open and public process.
5. No violation of Section 1103(f) of the Ethics Act occurred in relation to the
Township's award of a contract to K &B Construction, a business in which Vaughn's
son was an owner, to build a Township salt shed, as such contract was awarded
through an open and public process.
6. No violation of Section 1103(f) of the Ethics Act occurred in relation to the award of
three (3) Township contracts, regarding the repair of fire hall gutters, certain
electrical work, and installation of shelves in the Township garage, to K &B
Construction, a business owned in part by Vaughn's son, as all three of these
contracts were under $500.
7 Vaughn violated Section 1103(a) of the Ethics Act when he participated in the
Township's actions to issue a loan in the amount of $29,800 to K &B Construction, a
business with which his son, a member of his immediate family, is associated, to
complete a project for a municipal authority, at a time when K &B was not performing
any Township services relating to said payment.
8. Vaughn violated Section 1104(a) of the Ethics Act in relation to his failure to timely
file Statements of Financial Interests with the Township for calendar years 2003
through 2005 inclusive.
Vaughn, 06 -030
Page 26
In Re: Charles Vaughn,
Respondent
ORDER NO. 1450
File Docket: 06 -030
Date Decided: 10/23/07
Date Mailed: 11/7/07
1 Charles Vaughn ( "Vaughn "), a public official in his capacity as a Supervisor for
Highland Township ( "Township ") from March 29, 1996, to the present, violated
Section 1103(a) of the Public Official and Employee Ethics Act ( "Ethics Act "), 65
Pa.C.S. § 1103(a), when he, as a Township Supervisor, participated in soliciting
quotes, approving the award of business and voting to pay bills to K &B
Construction, a business with which his son, a member of his immediate family, was
associated, relating to eight (8) Township projects.
2. Vaughn, as a Township Supervisor, committed a technical violation of Section
1103(a) of the Ethics Act when he voted to pay invoices submitted by K &B
Construction, a business which his son, a member of his immediate family, was
associated, relating to the Township's construction of a salt shed.
3. Vaughn, as a Township Supervisor, violated Section 1103(f) of the Ethics Act in
relation to the award of five (5) contracts to K &B Construction, a business owned in
part by his son, when such contracts were in excess of $500 and were not awarded
through an open and public process.
4. No violation of Section 1103(f) of the Ethics Act occurred in relation to the
Township's award of a contract to K &B Construction, a business in which Vaughn's
son was an owner, to build a Township salt shed, as such contract was awarded
through an open and public process.
5. No violation of Section 1103(f) of the Ethics Act occurred in relation to the award of
three (3) Township contracts regarding the repair of fire hall gutters, certain
electrical work, and installation of shelves in the Township garage, to K &B
Construction, a business owned in part by Vaughn's son, as all three of these
contracts were under $500.
6. Vaughn violated Section 1103(a) of the Ethics Act when he participated in the
Township's actions to issue a loan in the amount of $29,800 to K &B Construction, a
business with which his son, a member of his immediate family, is associated, to
complete a project for a municipal authority, at a time when K &B was not performing
any Township services relating to said payment.
7 Vaughn violated Section 1104(a) of the Ethics Act in relation to his failure to timely
file Statements of Financial Interests with the Township for calendar years 2003
through 2005 inclusive.
8. Per the Consent Agreement of the parties, Vaughn is directed to make payment in
the amount of $7,074.80 payable to the Commonwealth of Pennsylvania and
forwarded to the Pennsylvania State Ethics Commission, with said amount to be
paid over a period of one year based upon a schedule to be arranged after the
issuance of this Order.
9. Per the Consent Agreement of the parties, Vaughn is directed to file accurate and
complete Statements of Financial Interests with the Township for calendar years
2003, 2004, and 2005, if such has not already been done, within thirty (30) days of
the date of the issuance of this Order, and to forward copies of such forms to this
Commission for compliance verification purposes.
10. Compliance with Paragraphs 8 and 9 of this Order will result in the closing of this
case with no further action by this Commission.
a. Non - compliance will result in the institution of an order enforcement action.
BY THE COMMISSION,
Louis W. Fryman, Chair