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HomeMy WebLinkAbout08-586 CoreyADVICE OF COUNSEL Rodney A. Corey, Esquire Deputy Chief Counsel Majority Chief Counsel's Office Pennsylvania House of Representatives Suite B -6 Main Capitol P.O. Box 202228 Harrisburg, PA 17120 -2228 October 23, 2008 08 -586 Dear Mr. Corey: This responds to your letter of September 16, 2008, by which you requested an advisory from the Pennsylvania State Ethics Commission ( "Commission "). Issue: Whether, in a factual scenario like that addressed by the Commission's ruling in Corey, Opinion 08 -005, the slightly different facts that: (1) there would be only two settlors of the trust established in the name of the public official's minor child; and (2) there would be an expanded definition of permissible expenses, would change the financial disclosure requirements set forth by the Commission in Corey, supra. Facts: As Deputy Chief Counsel within the Majority Chief Counsel's Office of the Pennsylvania House of Representatives (hereinafter also referred to as the "House of Representatives" or "House ") you have been authorized by a Member of the House Republican Caucus ( "Member ") to request an advisory from the Pennsylvania State Ethics Commission based upon the following submitted facts. You state that the Member's minor child is currently undergoing hospitalization and treatment for a serious medical condition. A married couple would like to establish a trust ( "the Trust ") in the Member's child's name in order to assist with the significant medical and incidental expenses associated with the child's hospitalization and treatment. You state that permissible expenses would include unreimbursed medical care, personal care, recreation, and special needs. Special needs would include any extra or supplemental needs for the maintenance of the child's health, safety, and welfare in addition to any insurance or governmental benefits. The trustees would consist of a local bank and an attorney. You state that the married couple, who are not registered lobbyists, would be the only settlors of the Trust. You state that it is contemplated that upon the expiration of the need for the Trust, any funds remaining in the Trust would be returned to the settlors. If the settlors would predecease the expiration of the need for the Trust, the principal and accrued but Corey, 08 -586 October 23, 2008 Page 2 undistributed income would be retained in a trust for the benefit of two local churches and any other charitable organization in the local area consistent with the intent of the settlors. You note that Corey, Opinion 08 -005, was issued to you on behalf of a Member of the House based upon facts similar to those submitted in the instant matter. It is administratively noted that in Corey, the Commission concluded: The Member of the Pennsylvania House of Representatives ( "Member ") who is the subject of this advisory Opinion is a public official subject to the provisions of the Public Official and Employee Ethics Act, 65 Pa.C.S. § 1101 et seq. ( "Ethics Act "), including the requirements for filing Statements of Financial Interests. Under the submitted facts that: (1) the minor child of the Member is currently undergoing hospitalization and treatment for a serious medical condition; (2) friends of the Member wish to establish a trust in the Member's child's name in order to assist with the medical and incidental expenses associated with the child's hospitalization and treatment; (3) incidental expenses would include reimbursement for mileage expenses and food and lodging for family members to be present for and assist with treatments at distant medical facilities; (4) the Member's child would be the named beneficiary of the trust; (5) the trustees would be one employee of the bank that will hold the res of the trust and another individual who is a friend of the Member; (6) it is contemplated that once the Member's child's hospitalization and treatment has been successful, any funds remaining in the trust would be donated to a local hospital or other charitable interest; and (7) the trust would not be a blind trust, but rather, the Member and his family would be aware of the names of the donors, you are advised as follows. Contributions to the minor child's trust would not be subject to disclosure by the Member. Disbursements from the trust to the Member as well as disbursements from the trust to pay the medical expenses of the Member's minor child and other expenses for which the Member would have legal responsibility would generally constitute gifts to the Member. The source of such gifts would be the trust itself, not the donors who contributed to the trust. If the disbursements from the trust that would be provided to the Member or that would be used to pay expenses for which the Member could have legal responsibility would be valued in the aggregate at $250 or more for a given calendar year, then the Member would be required to disclose such gifts on his Statement(s) of Financial Interests, identifying the trust itself as the source of the gift(s) and listing the address of the depository institution holding the res of the trust and the amount of the gift(s) received in the calendar year. The date of a given disbursement would be the date that particular gift would be deemed to have been received by the Member. Disbursements from the trust for meals, beverages, transportation or lodging expenses would not constitute "gifts" or "transportation and lodging or hospitality received in connection with public office or employment." Disbursements from the trust to other family members to reimburse payments made for expenses for which the Member has had legal responsibility would constitute reportable gifts to the Member. Corey, supra, at 6. You have posed a narrow question as to whether, in the instant matter, the submitted facts that there would be only two settlors of the Trust and an expanded definition of permissible expenses would change the financial disclosure requirements set forth by the Commission in Corey, supra. Corey, 08 -586 October 23, 2008 Page 3 Discussion: It is initially noted that pursuant to Sections 1107(10) and 1107(11) of the Ethics Act, 65 Pa.C.S. §§ 1107(10), (11), advisories are issued to the requester based upon the facts that the requester has submitted. In issuing the advisory based upon the facts that the requester has submitted, the Commission does not engage in an independent investigation of the facts, nor does it speculate as to facts that have not been submitted. It is the burden of the requester to truthfully disclose all of the material facts relevant to the inquiry. 65 Pa.C.S. §§ 1107(10), (11). An advisory only affords a defense to the extent the requester has truthfully disclosed all of the material facts. A Member of the Pennsylvania House of Representatives is a public official subject to the rovisions of the Ethics Act and specifically the financial disclosure requirements of Sections 1104 and 1105 of the Ethics Act. See, e.q., Corey, supra; Boback, Opinion 08 -002; Feese, Opinion 07 -015. Section 1104(a) of the Ethics Act provides that each public official /public employee must file a Statement of Financial Interests for the preceding calendar year, each year that he holds the position and the year after he leaves it. Section 1105(b) of the Ethics Act prescribes the substantive information that must be disclosed on the Statement of Financial Interests. Corey, supra, addressed the financial disclosure requirements of the Ethics Act based upon facts similar to those submitted in the instant matter. In response to the specific question that you have posed, you are advised as follows. In the instant matter, the submitted facts that there would be only two settlors of the Trust and an expanded definition of permissible expenses would not change the financial disclosure requirements set forth by the Commission in Corey, supra. Finally, this advisory does not address potential conflicts of interest in matters involving donors /donations to the Trust. Act. The propriety of the proposed conduct has only been addressed under the Ethics Conclusion: The Member of the Pennsylvania House of Representatives ( "Member ") who is the subject of this advisory is a public official subject to the provisions of the Public Official and Employee Ethics Act, 65 Pa.C.S. § 1101 et seq. ( "Ethics Act "), including the requirements for filing Statements of Financial Interests. Under the submitted facts that: (1) the minor child of the Member is currently undergoing hospitalization and treatment for a serious medical condition; (2) a married couple, who are not registered lobbyists, would like to establish a trust ( "the Trust ") in the Member's child's name in order to assist with the medical and incidental expenses associated with the child's hospitalization and treatment; (3) permissible expenses would include unreimbursed medical care, personal care, recreation, and special needs such as supplemental needs for the maintenance of the child's health, safety, and welfare; (4) the trustees would consist of a local bank and an attorney; (5) it is contemplated that upon expiration of the need for the Trust, any funds remaining in the Trust would be returned to the settlors; and (6) if the settlors would predecease the expiration of the need for the Trust, the principal and accrued but undistributed income would be retained in a trust for the benefit of two local churches and any other charitable organization in the local area consistent with the intent of the settlors, you are advised as follows. In the instant matter, the submitted facts that there would be only two settlors of the Trust and an expanded definition of permissible expenses would not change the financial disclosure requirements set forth by the Commission in Corey, Opinion 08 -005. This advisory does not address potential conflicts of interest in matters involving donors /donations to the Trust. Corey, 08 -586 October 23, 2008 Page 4 Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. Pursuant to Section 1107(11) of the Ethics Act, an Advice is a complete defense in any enforcement proceeding initiated by the Commission, and evidence of good faith conduct in any other civil or criminal proceeding, provided the requester has disclosed truthfully all the material facts and committed the acts complained of in reliance on the Advice given. This letter is a public record and will be made available as such. Finally, if you disagree with this Advice or if you have any reason to challenge same, you may appeal the Advice to the full Commission. A personal appearance before the Commission will be scheduled and a formal Opinion will be issued by the Commission. Any such appeal must be in writing and must be actually received at the Commission within thirty (30) days of the date of this Advice pursuant to 51 Pa. Code § 13.2(h). The appeal may be received at the Commission by hand delivery, United States mail, delivery service, or by FAX transmission (717 - 787 - 0806). Failure to file such an appeal at the Commission within thirty (30) days may result in the dismissal of the appeal. Sincerely, Robin M. Hittie Chief Counsel