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HomeMy WebLinkAbout898f STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 In re: John F. Maholick File Docket: 88 -039 -C Date Decided: June 28, 1993 Date Mailed: July 7, 1993 Before: James M. Howley, Chair Daneen E. Reese, Vice Chair Dennis C. Harrington Roy W. Wilt Austin M. Lee Allan M. Kluger Joseph W. Marshall, III The State Ethics Commission received a complaint regarding a possible violation of the State Ethics Act, No. 170 of 1978, P.L. 883. Written notice, of the specific allegation(s) was served at the commencement of the investigation. A Findings Report was issued and served, upon completion of the investigation, which constituted the Complaint by the Investigation Division. An Answer was filed and a hearing was held. The record is complete. This adjudication of the Commission is hereby issued which sets forth the individual Allegations, Findings of Fact, Discussion, Conclusions of Law and Order. This adjudication is final and will be made available as a public document fifteen days after issuance. However, reconsideration may be requested which will defer public release of this adjudication pending action on the request by the Commission. A request for reconsideration, however, does not affect the finality of this adjudication. A reconsideration request must be received at this Commission within fifteen days of issuance and must include a detailed explanation of the reasons as to why reconsideration should be granted in conformity with 51 Pa. Code §2.38. The files in this case will remain confidential in accordance with Section 8(a) of Act 170 of 1978 during the fifteen day period and no one unless the right to challenge this Order is waived, may violate confidentiality by releasing, discussing or circulating this Order. However, confidentiality does not preclude discussing this case with an attorney at law. Any person who violates confidentiality of the Ethics Act is guilty of a misdemeanor subject to a fine of not more than $1,000 or imprisonment for not more than one year, 65 P.S. 409(e). Maholick, 88 -039 -C Page 2 I. ALLEGATION: That John F. Maholick, a Councilman for Dickson City Borough, Lackawanna County, violated the following provisions of the State Ethics Act (Act 170 of 1978), when he voted to appoint John J. Maholick Electrical Service, a business with which he was associated to the position of Borough Electrician; when he failed to list on Statements of Financial Interests filed in 1986, 1987, 1988 and 1989 his employment in a business entity and his financial interest in a legal entity in business for profit: Section 3. Restricted Activities. (a) No public official or public employee shall use his public office or any confidential information received through his holding public office to obtain financial gain other than compensation provided by law for himself, a member of his immediate family, or a business with which he is associated. 65 P.S. §403(a). Section 3(c) of the Ethics Act provides: (c) No public official or public employee or a member of his immediate family or any business in which the person or a member of the person's immediate family is a director, officer, owner or holder of stock exceeding 5% of the equity at fair market value of the business shall enter into any contract valued at $500 or more with a governmental body unless the contract has been awarded through an open and public process, including prior public notice and subsequent public disclosure of all proposals considered and contracts awarded. Any contract made in violation of this subsection shall be voidable by a court of competent jurisdiction if the suit is commenced within 90 days of making of the contract. 65 P.S. §403(c). Section 5. Statement of financial interests. (b) The statement shall include the following information for the prior calendar year with regard to the person required to file the statement and the members of his immediate family: Maholick, 88 -039 -C Page 3 (5) The name and address of any person who is the direct or indirect source of income totalling in the aggregate $500 or more. However, this provision shall not be construed to require the divulgence of confidential information protected by statute or existing professional codes of ethics. (8) Any office, directorship, or employment of any nature whatsoever in any business entity. (9) Any financial interest in any legal entity engaged in business for profit. 65 P.S. § §405(b), (b)(5), (b)(8), (b)(9). II. FINDINGS: A. PLEADINGS: 1. John F. Maholick served as a Dickson City Borough Councilman from January of 1986 to December of 1991. 2. John F. Maholick was the owner of John F. Maholick Electrical Service located at 619 Boulevard Avenue, Dickson City, PA for approximately 35 years. a. The business location is the residence of Councilman John F. Maholick. 3. Councilman John F. Maholick is the father of John J. Maholick. a. John J. Maholick provides electrical services. b. John J. Maholick is not a licensed electrician. 4. John J. Maholick was appointed to the position of Borough Electrician for Dickson City Borough on September 20, 1985. 5. John J. Maholick was reappointed to the position of Dickson City Borough Electrician on January 14, 1986, January 13, 1987, January 4, 1988, and January 11, 1989. a. Borough Councilman John F. Maholick voted, in 1986, 1987, 1988 and 1989, for the reappointment of John J. Maholick, his son, to the position of Borough Electrician. 6. The work performed by John J. Maholick Electrical Service Maholick, 88 -039 -C Page 4 included repairing traffic signals and street lights; installing Christmas lights; wiring the new police headquarters in the basement of the Borough building; and installing and maintaining electrical fixtures at various Borough buildings. 7. Telephone Number 489 -2121 is the same number for John Maholick Electrical Service and the residence of Councilman John F. Maholick, 619 Boulevard Avenue, Dickson City, PA. 8. The electrical work done on the police headquarters in the basement of the Borough Building and the installation of the Christmas lights was performed by John J. Maholick, John P. Smolley and Councilman John F. Maholick. 9. Councilman John F. Maholick informed the Borough, in January of 1989, that the Recipient Identification Number for John J. Maholick Electrical Service should be changed to 23- 2528713 and should list his son's Social Security Number 196 -54 -7966. 10. National Bank of Olyphant records indicate that prior to December of 1987, John Maholick Electrical Service maintained a checking account #00- 0257 -8, at the bank. a. The account was closed on December 29, 1987. b. There was a balance of $6,121.42 in the account when it was closed. c . This account was the account established by Councilman John F. Maholick for the operation of the electrical service business. 11. National Bank of Olyphant records show on December 29, 1987, Councilman John Maholick, Social Security Number 186 -16 -7648, opened a Personal, Joint with Survivorship, Checking Account with his wife, Dorothy, listing their address as 619 Boulevard Avenue, Dickson City, PA 18519. a. The Account Number is 03- 4374 -3 and was opened with a deposit memo taking $1,000.00 from closed account #00- 0257 -8. b. This account was the personal account of Councilman John F. Maholick. 12. National Bank of Olyphant records show on December 29, 1987, John Maholick, Social Security Number 196 -54 -7966, opened a Checking Account in the name of John Maholick Electrical Service, 619 Boulevard Avenue, Dickson City, PA 18519. Maholick, 88 -039 -C Page 5 a. The Account Number is 02- 3779 -1 and was opened with $5,121.42 taken from closed account #00- 0257 -8. 13. Social Security Number 186 -16 -7648 is registered to Councilman John F. Maholick, 619 Boulevard Avenue, Dickson City, PA 18519. 14. Social Security Number 196 -54 -7966 is registered to John J. Maholick, 811 Halstead Street, Dickson City, PA 18519. 15. John F. Maholick is also known as "Mitch" Maholick. a. The statements for the calendar years 1985, 1986, 1987 and 1988 fail to list the names and addresses of direct or indirect sources of income; office or directorship or employment in any business; and financial interest in any legal entity in business for profit. b. The statement for the calendar year 1989 fails to list direct or indirect sources of income received from John Maholick Electrical Service as documented in Findings #24. 16. The statement filed for the calendar year 1989 indicates John F. Maholick transferred his interest in John Maholick Electrical Service, to his son John J. Maholick, on 1/1/89. B. TESTIMONY: 17. Anthony Romeo is a former employee of Dickson City Borough. a. From 1985 to 1989, Romeo served in the positions of Borough Administrator, Treasurer, Secretary, and Community Development Director. b. When Romeo was Secretary, he prepared the bills for the Borough meeting agenda. (1) All bills are read in public. (2) When bills were voted as approved, the bills would be processed for issuing checks in payment. 18. Eldora Talenti was employed by Dickson City Borough between January, 1980 and July, 1991. a. Talenti was Borough Clerk who as part of her duties processed checks to pay bills. (1) Checks were signed by the Secretary, Treasurer, Council President and Comptroller. Maholick, 88 -039 -C Page 6 b. The Borough of Dickson City did not use a bidding process as to the Borough Electrician. c. The IRS form 1099's were prepared by Talenti. (1) For Investigative Division Exhibit 9, the recipient I.D. Number for the years 1986, 1987, and 1988 is 231880233. (a) The 1099 for 1989 issued on January, 1990 changed to 232528713. 19. Joseph Bonenberger is a Sergeant with the Pennsylvania State Police. a. Bonenberger is a supervisor in the Documents Section. (1) The Section is responsible for identifying handwriting, hand printing, typewriting, photocopies, determinations of genuine versus counterfeit and any matters involving documents. (2) Bonenberger is employed as a Document Examiner. b. The originals of checks /cancelled checks, photocopies of which are Exhibits ID -1 and ID -2, were analyzed by Bonenberger. (1) The signatures of John F. Maholick which appeared on the front of the Borough checks were the standards or specimens used as a comparison as to other signatures. (a) The standards or specimens were compared as to the signatures which were the endorsements on the backs of the checks. (2) The writer of John F. Maholick specimen signatures was the writer of the endorsement of 49 of the Dickson City Borough checks. (a) John F. Maholick was signatory and endorser for the 49 checks. (3) In Bonenberger's review, items identified as Q -1 were 398 cancelled checks of John Maholick Electrical Services which is Exhibit ID -2. (4) Items Q -2 are the 51 Dickson City Borough checks which are marked as Exhibit ID -1. Maholick, 88 -039 -C Page 7 (5) S -1 specimens were Dickson City Borough checks with the authorizing signature of John F. Maholick. (6) S -2 specimens were 102 John Maholick Electrical Service checks payable to John J. Maholick with the endorsement as a specimen of John J. Maholick. (7) Of the 398 checks, 396 checks were written by the person whose authorizing signature is John F. Maholick. (8) John F. Maholick wrote the name of John J. Maholick as to certain checks. ( (a) John F. Maholick wrote his authorizing signature on 396 checks on John Maholick Electrical Service. The person who signed as the authorizing signature John F. Maholick is different from the person who endorsed 102 checks payable to John J. Maholick. 20. Andrew Bobrowski is a patrolman for Dickson City Borough. a. Whenever a problem occurred as to Borough traffic lights, the communication center and Borough electrician would be contacted. (1) When Bobrowski contacted the Borough electrician, he called John F. Maholick. (a) Such contacts occurred between 1986 and 1989. (1) Approximately 6 to 12 contacts were made in the period. (b) Bobrowski observed John F. Maholick working on the traffic control boxes. b. Bobrowski observed John F. Maholick working on Borough Christmas lights. c. John F. Maholick worked on occasion with his son and grandson. d. The Borough electrician was John F. Maholick according to Bobrowski's view. (1) Bobrowski did not know whom the Borough actually appointed. Maholick, 88 -039 -C Page 8 21. Ernest Kowtho is a former employee a. From 1985 through 1991, Kowtho was a truck driver/ laborer. b. As part of his employment, Kowtho assisted in putting up and taking down the Christmas lights. (1) John F. Maholick and his son Christmas lights. 22. William Stadnitski is the Borough. a. He believed that John J. Maholick was officially appointed as the Borough Electrician. b. When there were electrical problems with Borough lights, loop systems or roadway detectors, John F. Maholick was contacted by Stadnitski. (3) (4) On such projects, John F. Maholick was in charge of the work. c. During a Borough renovation project, John F. Maholick did the electrical work of wiring, installing lights, outlets and placing lines with his son John J. Maholick. 23. James F. McGrath is a special investigator for the State Ethics Commission. a. Exhibit ID -22 lists the payments made by Dickson City Borough to John Maholick Electrical Service. (1) (2) of Dickson City Borough. worked on the Police Chief of Dickson City Stadnitski observed John F. Maholick on occasion working on the electrical problems. Such activity occurred approximately from 1986 to 1992. On occasion, John F. Maholick would use his son and grandson for assistance. The total paid amounted to $28,110.15. (a) By eliminating checks which Sergeant Bonenberger could not establish that were signed by John F. Maholick, the total reduced to $26,786.15. A trace was performed to determine the ultimate Maholick, 88 -039 -C Page 9 disposition of the funds. (a) The monies were traced to three separate bank accounts. (1) One account, #00- 0257 -8, was at the National Bank of Olyphant, opened by John F. Maholick for John Maholick's Electrical Service. (3) (5) (A) John F. Maholick had signature authority of that account. (B) $7,388.65 of Borough payments were deposited into the account. (2) A second account, #03- 4374 -3, was the personal account of John F. Maholick. (A) $5,174.00 was the total of Borough payments deposited into this account. The third account, #02- 3799 -1, was the account of John J. Maholick in the National Bank of Olyphant. (A) The amount of Borough payments deposited in this account amounted to $3,961.00. (4) By virtue of a bank account in the National Bank of Dunmore, Borough checks in the amount of $4,100.50 were cashed. Borough checks amounting to $6,806.00 were cashed at the National Bank of Olyphant. b. Exhibit ID -28 represents a listing of action taken by John F. Maholick as to the payment of bills for John Maholick Electrical Service for the period from January, 1986 to December, 1989. (1) At Dickson City Council meetings, bills are voted on as a group. c. Exhibit ID -29 reflects the action of John F. Maholick as to the appointment of his son John J. Maholick as Borough electrician. Maholick, 88 -039 -C Page 10 (1) The vote on the appointment was made as part of a group of 10 to 15 appointments. d. John J. Maholick was originally appointed Borough electrician in October, 1985. (1) He was reappointed at the reorganizational meetings in 1986, 1987, 1988 and 1989. 24. John F. Maholick was a Council member of Dickson City Borough. a. An electrical contracting business was started by John F. Maholick in 1958. c. The federal income tax return of John F. Maholick for 1987 includes a Schedule C listing income on "John Maholick Electrician." g. (1) The business was never incorporated. (2) Maholick was self - employed. b. John F. Maholick asserts he turned the electrical business over to his son when he signed up for social security in January, 1987. (1) He claimed that the transfer was delayed due to the inability to obtain a new business identification number. (1) Maholick claimed ownership of the business on his 1986 tax return. d. John F. Maholick asserts that he reported no business income for his 1988, 1989, 1990 and 1991 federal income tax because he was out of business at the end of 1987. e. As to the appointment of John J. Maholick, John F. Maholick voted in 1986 in favor of that appointment. f. John F. Maholick ran his electrical business using the basement of his personal residence as his business office. It is asserted by John F. Maholick that the Borough checks were deposited in his business /personal bank account because his son John J. Maholick wanted cash so that John F. Maholick would take the checks and give his son the cash less any costs for materials. h. John F. Maholick denied that the business, John Maholick Maholick, 88 -039 -C Page 11 Electrical Service, received checks from Dickson City Borough in 1986 and 1987. i. The Financial Interests Statement (FIS) filed by John F. Maholick on April 15, 1990 for the calendar year 1989 reflects a transferral of his electrical business interest on January 1, 1989. (1) John F. Maholick did not list any business income on Schedule C for his 1988 federal income tax return. For the calendar year 1990, John F. Maholick listed $1800 of rental income on his federal tax return but did not list any rental income as sources of income on his FIS return for that year. k. For the calendar year 1988, the federal income tax return for John F. Maholick lists rental income from John J. Maholick but such rental income was not listed on the FIS for that year. 7 1. The business John Maholick Electrical is not a business entity. m. In 1988, John F. Maholick performed various electrical work for St. Adleburgs PNCC, Patrick and Debra Cary for which payments were received by checks that were endorsed by John F. Maholick. (1) John F. Maholick claims he did the work for his son and did not receive payment for his services. (2) The payments were deposited in the personal bank account of John F. Maholick but not reported on his 1988 federal income tax return. n. John F. Maholick asserts that the Borough monies that went into his personal or business account were either reimbursements for expenditures made in aiding his son or cash for checks payable to his son. o. Checks written by John F. Maholick for the repair of a bucket truck, insurance and a permanent license which were written approximately one and half years after the last Borough check did not represent expenditure reimbursements. (1) John F. Maholick asserts that he advanced money to his son to prevent default. Maholick, 88 -039 -C Page 12 p. John F. Maholick at a December 9, 1986 Council meeting of Dickson City Borough claimed that at times he was employed by John J. Maholick. (1) John J. Maholick did not have a separate electrical business in 1986. John Maholick Electrical Service is a business with which John F. Maholick was associated from 1958 through 1991. r. In 1986, John F. Maholick testified that John J. Maholick was working out of the house of John F. Maholick and was using the equipment of John F. Maholick. (1) The business insurance was in the name of John F. Maholick. q. (2) The business accounts were in the name of John F. Maholick. s. Even after the claimed transfer of the electrical business from John F. Maholick to John J. Maholick, John F. Maholick went to suppliers to order parts. t. In 1986, John J. Maholick and his son (the grandson of John F. Maholick) worked on some Borough jobs. (1) No evidence of expenditures for the grandson exist. (a) John F. Maholick kept his grandson off the books to avoid payments for Workmen's/ Unemployment Compensation. C. EXHIBITS: 25. At the January 14, 1986 public meeting of Dickson City Borough Council, John F. Maholick made a motion and voted in favor of that successful motion to appoint John J. Maholick along with other individuals as Borough officials /employees. 26. John F. Maholick voted in favor of successful motions at the January 12, 1987, January 14, 1988, and January 11, 1989 public meetings of Dickson City Borough Council as to the appointment of John J. Maholick. 27. For the public meeting of Dickson City Borough Council for December 9, 1986, the minutes reflect the following discussion occurred as to the status of John F. Maholick in connection with Borough electrical work: Mr. Mellow: Bill #74 (John Maholick -Nov. Electrical Maholick, 88 -039 -C Page 13 Services) Is a councilman working for the borough? Chair: No. The electrical contract is awarded to John Maholick III. Mr. Mellow: Mr. Maholick, are you working for the borough. Mr. Maholick: No. At times I am employed by John Maholick III, my son. 28. The following Dickson City Borough checks were paid to John Maholick Electrical Service or John J. Maholick Electrical Service. (ID -22). Check Number Check Date Amount 1795 01/15/86 $ 283.50 1848 02/11/86 $ 614.00 1904 03/12/86 $ 328.00 1959 04/09/86 $ 451.00 2032 05/08/86 $ 877.00 2098 06/11/86 $ 700.00 2153 07/09/86 $ 830.00 2239 08/13/86 $ 534.00 2298 09/10/86 $ 228.00 2378 10/15/86 $ 330.00 2413 11/13/86 $ 451.00 2496 12/10/86 $ 1,121.00 2563 01/14/87 $ 368.00 2648 02/19/87 $ 475.00 2703 03/12/87 $ 403.00 2762 04/09/87 $ 276.00 2866 05/14/87 $ 373.55 2937 06/11/87 $ 446.00 3002 07/09/87 $ 318.00 3088 08/13/87 $ 282.00 3168 09/10/87 $ 761.00 3252 10/15/87 $ 1,944.10 3316 11/13/87 $ 338.00 3370 12/10/87 $ 1,261.00 3440 01/14/88 $ 298.00 3513 02/11/88 $ 656.00 3562 03/10/88 $ 349.00 3662 04/14/88 $ 443.00 3722 05/11/88 $ 536.00 3768 06/09/88 $ 1,203.00 3846 07/14/88 $ 994.00 3906 08/11/88 $ 732.00 3981 09/15/88 $ 337.00 4044 10/13/88 $ 404.00 Maholick, 88 -039 -C Page 14 4099 11/04/88 $ 358.00 4193 12/15/88 $ 680.00 4249 01/12/89 $ 324.00 4314 09/09/89 $ 660.00 4368 03/09/89 $ 435.00 4465 04/13/89 $ 652.00 4519 05/18/89 $ 360.00 4599 06/15/89 $ 567.00 4657 07/13/89 $ 542.00 4704 08/10/89 $ 538.00 4785 09/14/89 $ 740.00 4839 10/12/89 $ 361.00 4911 11/09/89 $ 350.00 4971 12/21/89 $ 887.00 127 08/13/86 $ 270.00 133 10/10/86 $ 198.00 137 10/15/86 $ 183.00 138 12/10/86 $ 60.00 TOTAL $28,110.15 29. John F. Maholick took official action by either making motions, seconding motions or voting in favor of successful motions at Dickson City Borough Council to pay bills of John Maholick /John J. Maholick Electrical Service in 1986, 1987, 1988 and 1989. 30. The partial disposition of the Dickson City Borough funds paid to John Maholick /John J. Maholick Electrical Services occurred as follows: a. Disposition Amount 1. Deposited into personal account of John J. Maholick Account 02- 3779 -1 $ 3,961.00 (ID -25) 2. Deposited into business account of John F. Maholick Account 00- 0257 -8 $ 7,388.65 (ID -23) 3. Deposited into personal account of John F. Maholick Account 03- 4374 -3 $ 5,174.00 (ID. -24) 4. Cashed or negotiated at the First National Bank of Dunmore $ 4,100.50 (1D-26) 5. Cashed or negotiated at the First National Bank of Olyphant $ 6,806.00 (ID -27) TOTAL $27,430.15 (ID-30) Maholick, 88 -039 -C Page 15 b. The payments in subfinding a. are not broken down as to amounts for parts /supplies versus labor /services. III. DISCUSSION: As a Councilman for Dickson City Borough, Lackawanna County, John F. Maholick, hereinafter Maholick, is a public official as that term is defined in the Ethics Act, 65 P.S. §402; 51 Pa. Code §1.1. As such, his conduct is subject to the provisions of the Ethics Act and the restrictions therein are applicable to him. Initially, it is noted that Section 9 of Act 9 of June 26, 1989, P.L. 26, provides, in part, as follows: This amendatory act shall not apply to violations committed prior to the effective date of this act, and causes of action initiated for such violations shall be governed by the prior law, which is continued in effect for that purpose as if this act were not in force. For the purposes of this section, a violation was committed prior to the effective date of this act if any elements of the violation occurred prior thereto. Since the occurrences in this case transpired prior to the effective date of Act 9 (June 26, 1989), we must apply the provisions of Act 170 of 1978, P.L. 883, to determine whether the Ethics Act was violated. Under Section 3(a), quoted above, this Commission has determined that use of office by a public official to obtain a financial gain for himself or a member of his immediate family or a business with which he is associated which is not provided for in law transgresses the above provision of law. Thus, use of office by a public official to obtain a financial gain which is not authorized as part of his compensation is prohibited by Section 3(a): Hoak /McCutcheon v. State Ethics Commission, 77 Pa. Commw. Ct. 529, 466 A.2d 283 (1983); Yacobet v. State Ethics Commission, 109 Pa. Commw. Ct. 432 531 A.2d 536 (1987) . Similarly, Section 3(a) of the Ethics Act would prohibit a public official /employee from using public office to advance his own financial interests; Koslow v. State Ethics Commission, 116 Pa. Commw. Ct. 19, 540 A.2d 1374 (1988), allocatur denied, Pa. 553 A.2d 971 (1988). Section 3(c) of Act 170 of 1978 quoted above provides in part that no public official /public employee or a member of his immediate family may contract with his governmental body if the contract is five hundred dollars or more unless it is awarded through an open and public process including prior public notice and subsequent public disclosure. Maholick, 88 -039 -C Page 16 Section 5(b)(5), (8), and (9) of Act 170 of 1978, a Financial Interests Statement (FIS) disclosure provision, requires that a public official /employee list the name and address of any direct or indirect source of income totalling in the aggregate of $500.00 or more, any office or directorship or employment in any business entity, and any financial interest in a legal entity engaged in business for profit. In the instant matter, the facts of this case appear to be straight forward and simple on the surface. At first blush, we have Maholick, as a Dickson City Borough Councilman, using office by either making motions, seconding motions, and /or voting not only as to the ostensible appointment of his son, John J. Maholick (JJM), but also as to payment of JJM /John Maholick Electrical Service (JMES) bills. Certain electrical services were performed by Maholick himself for Dickson City, such as putting up and taking down Christmas lights, servicing traffic lights that malfunctioned, and performing certain electrical services as to a Borough renovation project. JJM helped Maholick on certain occasions as to the Borough electrical projects. None of the contracts, several of which exceeded the $500.00 bid requirement of Section 3(c) of Act 170 of 1978, were awarded through an open and public process. Disbursements were made by Dickson City to JMES by check with Maholick being the signatory on the front and in many instances the endorser on the back. The receipt of such disbursements constituted financial gain. The financial gain went to JMES and /or to Maholick individually in that the checks were deposited in the JMES account or personal bank account of Maholick. Lastly, the financial gain was not compensation provided for by law because there is no provision in either the Borough Code or the Ethics Law which would specifically authorize such activity. Finally, for the calendar year FIS's from 1985 through 1988, Maholick failed to list his interest in JMES under the categories of income, office or directorship, or financial interest. A superficial review of the record in this case would seem to merely compel a straightforward finding of violations of Sections 3(a), 3(c), 5(b)(5), (8), and (9) with no restitution, treble penalty or referral to a law enforcement agency. A detailed review reflects this is not a case where a public official acted naively without an awareness of the implication of his actions. A detailed review reflects that this is not a case where a public official was unaware of the provisions of the Ethics Law and other laws. A detailed review reflects that Maholick operated in a fashion Maholick, 88 -039 -C Page 17 to portray both JMES and himself in a chameleon -like fashion so that JMES would be whatever Maholick wanted it to be in any given situation and at any given point of time to insure or continue financial gain for himself. As to Maholick, JMES and JJM, a detailed review compels an initial determination as to who was the Borough Electrician. From 1986 through 1989, it appears that JJM was appointed Borough Electrician. At the December 9, 1986 Council meeting of Dickson City Borough, Maholick was questioned as to whether a Councilman was working for the Borough. Maholick's response was that the contract was awarded to JJM and that he (Maholick) was only employed at times by his son. The clear implication of Maholick's statement was that JMES was owned by JJM. Thus, up to the point in time of December, 1986 where JJM was ostensibly appointed Borough Electrician to perform various services for the Borough through contracts, Maholick characterized himself merely as an occasional employee of JMES. At the hearing on this matter, Maholick had no difficulty in characterizing his interest in JMES as the owner at that point in time. If other concerns did not exist, we would merely wonder whether this statement at the 1986 Council meeting was a poor choice of phraseology or whether it was an answer made with the intent to be evasive so as to give the impression that Maholick was a mere employee without having a financial interest in JMES. During this time, meaning at least the years 1986 and 1987, JMES appears to the world as being in a nebulous state with different trappings of ownership. Thus, JMES in one respect seems to be owned by JJM, Maholick's son, with JJM designated as the Borough Electrician. In a different context, JMES seems to be Maholick's business. Various public officials or employees of the Borough believed that Maholick or JJM was the Borough Electrician but that Maholick was the one to call when there were problems. Maholick was the person who did the Borough's electrical work and Maholick's federal income tax returns for 1986 and 1987 suggest that JMES was owned by Maholick. To add to the consternation, we have Maholick's testimony that JMES in 1986 and 1987 never received any checks from Dickson City Borough. We must conclude that Maholick owned JMES in 1986 and 1987. Having determined that JMES, in the person of Maholick, was the de facto Borough Electrician, we need to resolve the question of whether Maholick turned the business over to JJM and, if so, at what point in time. Maholick testified that at some point in 1987 he wanted to retire from JMES and turn the business over to JJM. Maholick asserted that he had difficulty in obtaining a new federal identification number for JJM which resulted in the delay of the shift in ownership of that business. Maholick would or could not commit to a date certain as to when JMES was transferred to his son, JJM. Although Maholick was consistently inconsistent as to Maholick, 88 -039 -C Page 18 when the alleged transfer occurred, he gave the impression from his testimony and actions that the ostensible singular transfer occurred at different times between January, 1987 and January, 1989. Thus, the purported time(s) that the transfer occurred continued to be changed by Maholick depending upon circumstances: signing for social security, closing his business account for JMES, reporting for federal tax purposes, obtaining identification number for his son, and reporting for FIS purposes. The FIS filed by Maholick on April 15, 1990 reported that the transfer occurred on January 1, 1989. Maholick also informed the Borough in January, 1989 to change the identification number of JMES to that of his son, JJM. Lastly, the federal income tax returns filed by Maholick for 1988 forward reflect no business income for Maholick. Interestingly, on December 29, 1987, Maholick closed out his business account for JMES. On that same date Maholick opened up his own personal account and a business account of JMES for JJM was opened. Even after the latter account was opened, it is significant that Borough checks were deposited in Maholick's personal account rather than the account of JJM for JMES. We find that JMES continued as Maholick's business in 1988 and 1989. During this time period of 1986 through 1989, Maholick individually or on occasion with JJM was seen performing electrical services for the Borough. In fact, when an electrical problem arose, the police or person who had to contact the Borough Electrician called Maholick to resolve the electrical problem. It seemed to be the consensus of some Borough employees that although JJM was designated as the Borough Electrician, Maholick was the actual Borough Electrician. A financial trace of the disbursed Borough checks as well as an expert analysis of the signatures on those checks supports the finding that JMES continued to be Maholick's business into 1988 and 1989. The handwriting analysis of the Maholick signature on the front of the Borough checks as a signatory was compared with the endorsements on the back of the checks paid to JMES. In numerous instances, Maholick's signature appears on the back as well as the front of the checks. Of these checks that were issued by the Borough to JMES, many checks were deposited in the personal account of Maholick or in the JMES business account over which Maholick had control. Maholick even admitted that as to checks made payable to JJM, Maholick signed his son's name to those checks. The check cashing activities continued after the purported transfer of JMES to JJM. When confronted with the facts that the Borough monies were deposited into Maholick's own accounts, his answer was based upon either of two justifications: (1) that he took the checks and gave Maholick, 88 -039 -C Page 19 his son cash for the face amount of the checks; or (2) that he took the checks because they were alleged reimbursements for advances on expenditures made to his son, JJM. As to the first explanation, there is not any means to verify if Maholick acted like a cash checking institution for his son. However, as to the second scenario, the excuse is a mere fabrication when one considers that Maholick admitted taking these checks for alleged advances or expenditures as far back as 1986 at a point in time when he conceded his son had no interest in the business. Maholick's concoction that he deposited the Borough checks in his own personal accounts in anticipation of a future event, several years later when his son would take over the business and when Maholick would make expenditures for that business and use these Borough checks for reimbursement based upon those anticipated future events, is an utterly ridiculous assertion which fails on its face. Lastly, for Borough checks which were deposited in Maholick's personal bank account, there are not any correlating disbursements of equal amounts to a business account. It is obvious that JMES, even after December, 1987, continued to be owned and operated by Maholick. A sleight of hand by Maholick occurred not only as to JMES in the context of the allegations before us but as to other peripheral matters which are beyond the scope of our review. For example, Maholick readily admitted taking income for electrical services performed for a church and a family in 1988 and then admitted that he did not report such income for federal tax purposes because such was done for his son. In the context of JMES, Maholick admitted that on occasion his grandson did some work for JMES but was kept off the books and paid in cash because Maholick did not want to incur the expense of Workmen's /Unemployment Compensation insurance payments and other payroll expenses. Finally, there is the Borough Code, Section 1104 of which as it was then applicable, forbids a council member from receiving compensation in such circumstances. 53 P.S. §46104. In addition, Section 1404 of that Code places a prohibition as to contracting. 53 P.S. §46404. All such issues may be addressed by the individual agencies having jurisdiction over such matters at some future juncture. Finally, we must comment upon the ultimate use of the Borough funds which went into Maholick's JMES account or Maholick's personal bank accounts. Those funds were used at least in part as payment for personal expenses of Maholick such as insurance, vehicle service, etc. The one thing that is clear in this case is that the funds do not reflect a path of disbursement from the Borough to JJM. Whatever sums did go to JJM were via Maholick's accounts and at his behest. It is beyond question that Maholick with design and through deliberative action played fast and loose as to the true nature of JMES for his own personal financial benefit. The record reflects a course of conduct to deceive and cover up as to Maholick's Maholick, 88 -039 -C Page 20 ownership of JMES. We find violations of Section 3(a), 3(c), 5(b)(5), (8), and (9) of Act 170 of 1978. In addition, based upon the totality of Maholick's actions and in particular his intent to conceal the true nature of JMES, we believe that restitution is appropriate in this case. The power of this Commission to impose restitution has been upheld by Commonwealth Court in Yacobet v. State Ethics Commission, 109 Pa. Commw. Ct. 432, 531 A.2d 536 (1987). Although we believe that this case is clearly a proper one for restitution, this Commission, based upon the evidence, cannot make a determination as to the appropriate amount of restitution. Given the egregious nature of Maholick's conduct, this matter will be referred to the appropriate law enforcement authority. IV. CONCLUSIONS OF LAW: 1. John F. Maholick, as a Dickson City Borough Councilman, was a public official subject to the provisions of Act 170 of 1978. 2. John Maholick Electrical Service is a business with which Maholick is associated from 1958 through 1991. 3. Maholick violated Section 3(a) of Act 170 of 1978 when he used public office to obtain a financial gain other than compensation provided for by law for himself and for John Maholick Electrical Service, a business with which he was associated. 4. Maholick violated Section 3(c) of Act 170 of 1978 when John Maholick Electrical Service, a business with which he was owner, contracted with Dickson City Borough as to contracts which were over $500.00 and which were not awarded through an open and public process. 5. Maholick violated Section 5(b)(5), (8), and (9) of Act 170 of 1978 when he failed to list income of $500.00 or more, his ownership and his financial interest in John Maholick Electrical Service on his Financial Interests Statements for calendar years 1985 through 1988. In re: John F. Maholick File Docket: 88 -039 -C Date Decided: June 28, 1993 Date Mailed: July 7, 1993 ORDER NO. 898 1. John F. Maholick, as a Dickson City Borough Councilman, violated Section 3(a) of Act 170 of 1978 when he used public office to obtain a financial gain other than compensation provided for by law for himself and for John Maholick Electrical Service, a business with which he was associated. 2. Maholick violated Section 3(c) of Act 170 of 1978 when John Maholick Electrical Service, a business with which he was owner, contracted with Dickson City Borough as to contracts which were over $500.00 and which were not awarded through an open and public process. 3. Maholick violated Section 5(b)(5), (8), and (9) of Act 170 of 1978 when he failed to list income of $500.00 or more, his ownership and his financial interest in John Maholick Electrical Service on his Financial Interests Statements for calendar years 1985 through 1988. 4. Based upon the egregious nature of Maholick's conduct, this matter will be referred to the appropriate law enforcement authority. BY THE COMMISSION, 74kf JAMES M. HOWL; Commissioner Joseph W. Marshall, III, did not participate in the final decision of this case because he presided at the hearing as one Commissioner and recused himself. Commissioner Roy W. Wilt concurs in the findings of violations but dissents from the failure to impose restitution.