The URL can be used to link to this page

Home My WebLink About1491 MortonIn Re: Jamie Morton, 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 07 -053 Order No. 1491 9/22/08 10/10/08 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 to the Investigative Complaint was not timely filed. Respondent's Nunc Pro Tunc Motion For An Extension Of Time to file an Answer To The Investigative Complaint, and Respondent's request that the Commission accept, nunc pro tunc, an untimely Answer, were denied. A Stipulation of Findings and a Consent Agreement were subsequently submitted by the parties to the Commission for consideration. The Stipulated Findings are set forth 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. Morton, 07 -053 Page 2 I. ALLEGATIONS: That Jamie Morton, a public official /public employee in his capacity as the Aquatics Director for the Moon School District, violated Sections 1103(a), and 1104(a) of the State Ethics Act (Act 93 of 1998), 65 Pa.C.S. §§ 1103(a) and 1104(a), when he used the authority of his public position for [the] private gain of himself and /or a business with which he is associated by scheduling the use of the district pool for the operation of his private, for - profit business, Moon Area Aqua Club, Inc.; by utilizing the non - profit status of the Moon Aqua Club, a separate legal entity, to circumvent payment of rental fees to the district for use of the pool and facilities; when Premier Coaching Associates, Inc., a business with which he is associated, contracted and received fees from Moon Area Aqua Club and Moon Aqua Club for coaching services provided at the school district pool; and when he failed to file Statements of Financial Interests for the 2002, 2003, 2004, 2005 and 2006 calendar years in his position as the school district Aquatics Director. II. FINDINGS: 1. Jamie L. Morton is currently employed as the Aquatics Director for Moon Area School District (hereafter MASD). a. Morton initially served as the MASD Aquatics Director from August 22, 1989, through June 30, 2007. 1. Morton also held the position of Varsity Swim Team Head Coach for MASD during his initial tenure as Aquatics Director. b. Morton was not re- appointed into the Aquatics Director or Swim Coach position at the conclusion of the 2006 -2007 school year. 1. Morton was reappointed into both positions at the December 17, 2007, meeting of the school board. 2. In addition to his service as Aquatics Director, Morton has been employed as a full time teacher with MASD since approximately August 27, 1996. a. Morton was initially employed as a Social Studies teacher at Moon Area High School, 904 Beaver Grade Road, Moon Township, PA 15108. 1. The MASD pool is located at the Moon Area Senior High. b. Morton was subsequently re- assigned as a Social Studies teacher to Moon Area Middle School, 8353 University Boulevard, Moon Township, PA 15108. 1. Morton currently teaches at the Middle School. c. Moon Area High School and Moon Area Middle School are located on the same campus. 3. Morton receives a salary as the Aquatics Director which is separate and apart from his teacher's salary. a. Morton receives a flat salary of $6,000.00 per year as the Aquatics Director. 4. The initial job description for the Aquatics Director set forth Morton's duties and responsibilities in the position as follows: Morton, 07 -053 Page 3 - Scheduling and arranging extra - curricular activities in the pool area; Oversight of the operation of the swimming pool during non - school hours; Coordination with maintenance to see that the pool is clean and kept in operating condition; Writing the monthly schedule of all activities in the pool and providing copies of those schedules to the building administration, custodians, and athletic director. Oversight of the lifeguard staff for scheduled events in the pool, supervision of their payroll, and submission of payroll for life guarding staff to the central office; Scheduling lifeguard certification classes and recreational swim for the community; Collection of fees for recreation swim and submission of said fees to the central office; Answering of all community questions regarding pool programming and scheduling; Ordering of safety equipment such as back board and rescue tubes, etc., and maintenance of the equipment for the district; - Monitoring first aid supplies and equipment. 5. The initial job description for the Aquatics Director position was created during or about 2004 by the Athletic Director and Director of Administrative Services. a. Zachary Kessler (then Athletic Director) and Ron Zangaro (Director of Administrative Services) determined that a job description should exist and be on file for the position. 1. The Aquatics Director position at MASD has been in existence since at least 1977. b. The job description was developed by consulting with Morton regarding the duties and responsibilities he performed in the position. 1. Kessler requested that Morton provide him a list of duties and responsibilities Morton performed in the position. 2. The list submitted by Morton was subsequently reviewed by Kessler and Zangaro. 6. The initial job description for the Aquatics Director position was amended by the school board near the end of the 2006 -2007 school year. a. The initial job description was amended to include the following: Ensure that all organizations that request the use of the pool area have completed a Facilities Use Request Form and have provided all necessary documentation according to School Board Policy. Morton, 07 -053 Page 4 7 MASD is governed by a nine - member Board of Directors. a. MASD holds a legislative meeting and a workshop meeting on the second and fourth Monday of the month respectively. b. Special meetings are held as necessary. 8. Duties and responsibilities of the MASD Board of Directors include, among other issues, the creation /amendment, presentation, approval, and enforcement of school policies and procedures. a. The MASD Board of Directors maintains a policy committee to facilitate this responsibility. 1. One board member is appointed as the Chairperson of the committee while the district business manager (i.e. Director of Fiscal Affairs) serves as the district representative. b. Policy committee meetings are held in front of all board members present at monthly workshop meetings. c. All members of the Board of Directors and all MASD administrators have a copy of the MASD policy manual or have access to said manual. 9. The creation of any new policies or amendment of existing policies is first presented at a policy meeting for discussion. a. Three public readings of the proposed policy are subsequently made during regularly scheduled legislative meetings. 1. Each public presentation occurs after discussion and approval for reading occurs at policy meetings. 2. Occasional first and final readings of proposed policy are conducted dependent upon the issue and /or time concerns. b. The vote to approve or deny the proposed policy is conducted at the same meeting as the third reading. 10. MASD maintains and utilizes a policy manual in association with the day -to -day operation of the district. a. All school board members are supplied with a copy of the policy manual. b. All district administrators are supplied with a copy of the policy manual. c. A copy of the district policy manual is on file at each district school building for reference by any district employee. 11. MASD Policy No. 707, titled Use of School Facilities," is defined under the "Property" section of the MASD Policy Manual. a. Policy No. 707 was originally adopted on October 10, 2000. b. Policy No. 707 was revised and re- adopted on April 22, 2003. Morton, 07 -053 Page 5 12. Policy No. 707 states that the Board will provide for the use of school facilities when permission has been requested in writing and has been approved by the Superintendent in accordance with the following order of priority: a. Requests by school - related organizations; b. Requests by non - school - related community activities; c. Requests by private interest groups. 13. Included with Policy No. 707 in the district policy manual are Attachments A, B and C which establish organizations eligible to rent district facilities and at what rate, the application form for facilities rental, and a specific schedule of fees for facilities rental. a. Attachment A sets forth MASD Administrative Regulations For Non - Negotiated Contracts Pertaining to Use of School Facilities and establishes categories of eligible organizations regarding fees charged. 1 Organizations falling into the no charge category include: aa. School affiliated groups that are directly related to the school and its activities (including Parent - Teacher Organizations, teacher organizations, student groups, and booster clubs). bb. Community organizations that have 100% of their members as residents of the school district or that directly and substantially serve such residents (including use for its organizations). cc. Youth agencies that work directly for the welfare of youth including groups such as Boy Scouts, Girl Scouts, YMCA (excluding child care program), YWCA, Child Welfare, etc. 2. Organizations falling into the nominal fee category include the following: aa. Educational groups recognized locally and /or nationally as organizations dedicated to the advancement of education and operate as non - profit organizations. bb. Cultural groups that sponsor cultural activities for the community (such activities to include concerts, recitals, lectures, etc., that are of interest to the entire community). cc. Civic groups in the community that have as their purpose the general betterment of the community (including groups such as garden clubs, civic clubs, etc.). dd. Social groups that are organized within the community for the purpose of friendly association, small group entertainment, and personal recreation and enjoyment which have at least 50% of their members as residents of the school district. Morton, 07 -053 Page 6 ee. Veteran's organizations that consist of veterans and regionalized local, state, and national groups (including such groups as American Legion, Veterans of Foreign Wars, and Auxiliary Organizations of the same). ff. Political groups that are locally organized and are sponsoring candidates for public office, promoting legislation, and programming and meetings on political matters. gg. Service organizations that have as a major purpose service to the community (including the Lions, Kiwanas, Rotary, etc.). hh. Churches and other religious organizations. ii. Charitable organizations that include all established groups and bona fide charitable activities. 3. Organizations falling into the full -price category include: aa. Profit making organizations or individuals that operate for private gain. bb. Entities such as but not limited to Community College of Allegheny County, Robert Morris College, and the YMCA Child Care Program (fees for these types of organizations will typically be negotiated on a case by case basis). b. Attachment B is an application form which must be completed by individuals /entities requesting use of the specific school facilities. 1. Noted on the application is that the renter agrees to supply MASD with a certificate of general liability insurance, with a single combined limit of $1,000,000.00, naming MASD as an additional insured on the policy to cover the duration of the agreement. 2. Additionally noted on the application are sections regarding conditions of facility usage and saving harmless the school district. 3. Lastly noted on the application are sections for the signatures of the Building Principal, Superintendent, and Director of Fiscal Services as well as rental fees charged including facility charge, custodial service fees, technical service fees, and other charges. c. Attachment C is a schedule of rental fees established by MASD for use of school facilities. 1. Attachment C sets forth rental fees for the nominal charge category and the full price category for the following facility usage: classroom, large group instruction room, auditorium, cafeteria, kitchen, elementary gym, high school /middle school gym, auxiliary gym, field, stadium, and pool. aa. All rentals are assessed fees on an hourly basis with the Morton, 07 -053 Page 7 exception of the auditorium, field, and stadium which are assessed fees on a daily basis. 1. The daily rate for the auditorium may be prorated based on an eight hour day. 2. Pool use is for a three hour interval. bb. Fees associated with rental of the district pool total $100.00 per hour for the nominal fee category and $200.00 per hour for the full price category. 14. An established procedure /process is in place at MASD regarding the required steps for facilities rental application and approval as shown below: a. All applications for use of facilities are to be made through the principal of the building at which the facility use is to occur. b. The principal notes whether or not he /she recommends the application, with clear and specific reasons if he /she disapproves. c. The principal sends the application, with certificate of insurance and check for payment in full attached, to the superintendent for review. d. No reservation is final until the application is approved. e. The Superintendent forwards the application to the Director of Fiscal Services for completeness regarding required documentation. f. The Director of Fiscal Services returns the application to the building principal. g. The building principal informs the applicant as to the approval or disapproval of the application. 15. Applications for facilities use are not normally presented to the school board for any type of approval. a. Rentals of district facilities are normally presented to the school board only if special circumstances arise or if a waiver or reduction of fees is requested by the applying entity. 16. The Moon Aqua Club was developed in the late 1960s as a parent -run organization for the purpose of instructing or training youth to improve and to develop their aquatic abilities. a. The Moon Aqua Club developed into a year -round developmental age -group and senior competitive swim team affiliated with United States Swimming (USS) through membership in Allegheny Mountain Swimming (AMS). b. Jim Bell, MASD varsity swim coach at that time, was one of the individuals involved in the initiation of the club. 17. Club representatives filed application for the registration of the club with the Pennsylvania Department of State under the name of the Moon Aqua Club on May 1, 1970. Morton, 07 -053 Page 8 a. Department of State Corporation Bureau records document the entity incorporation date as May 27, 1970. 18. Pennsylvania Department of State Corporation Bureau records currently document the Moon Aqua Club as an active, non - profit organization under Entity No. 238202. a. Pennsylvania Department of State Corporation Bureau records also note the Moon Aqua Club as a County Orphan. 1. Prior to the passing of the 1933 Non - Profit Law, non - profit corporations were required to file only with the County in which the entity was registered. 2. In the mid- 1980s, the State transferred all records from the County level to the State level. 3. All entities whose records were transferred from the County level to the State level are referred to by the Corporation Bureau as "county orphans." 4. The designation of "County Orphan" has no effect on the ability of an entity to conduct business or operate. 19. As a non - profit organization, the Moon Aqua Club was recognized as a tax - exempt entity by the Internal Revenue Service (IRS). a. The IRS issued the Moon Aqua Club a determination letter in June 1983 indicating that the Club was exempt from Federal Income Tax under Section 501(c)(7) of the Internal Revenue Code. b. The Federal Identification Number (a /k/a Employer Identification Number) associated with the Club is documented as 25- 1207563. 20. Membership regarding the Moon Aqua Club primarily consisted of children in the MASD area but eventually included members from surrounding areas as well. a. Members from outside the MASD area were required to pay an extra fifteen percent out -of- district - membership fee based upon applicable membership rates. b. Out -of- district fees collected were to be provided to MASD. 21. Although created to promote swimming skills and provide the opportunity to swim competitively, the Moon Aqua Club had no pool facility at which to practice or hold competitive swim meets. a. The MASD pool was the only indoor facility available at that time which could accommodate the needs of the club on a year round basis in what is now the Moon Township /Crescent area. 22. As the MASD varsity swim coach, Bell made arrangements through the district for use of the pool facilities by the Moon Aqua Club. a. The Moon Aqua Club was not charged any type of rental fee for use of the MASD pool facilities based on the fact that it was a community, non - profit organization. Morton, 07 -053 Page 9 1. No written contract or agreement exists regarding the arrangement. b. Scheduling of Moon Aqua Club practices and swim meets was arranged around existing events scheduled at the district pool (i.e. high school swim practice, swim meets, community programs, fundraisers, etc.). 1. Scheduling of Moon Aqua Club practice /meet days and times was determined by the MASD Aquatics Director. 23. From inception through approximately August 31, 2002, the Moon Aqua Club was managed and operated by parents of club members and other interested individuals on a volunteer basis. a. An established Board of Directors and Board officers existed regarding the club. 1. Individuals filling the role of the board members /officers fluctuated periodically from inception through August 31, 2002. b. Member parents assisted with Club practices, meets, etc. c. Individuals involved with the club were not compensated for their service. 24. Although managed and operated by volunteers, the Moon Aqua Club employed coaches for their service with the club. a. The Moon Aqua Club employed various individuals as coaches and assistant coaches from shortly after inception through approximately September 12, 2001. 1. Coaches and assistant coaches employed during this time frame were employed directly through the Club. 2. No outside company was utilized to provide coaches or management services during this time frame. 25. Coaches were paid via income from membership dues, fundraisers, and meets sponsored by the Club. a. The Club typically maintained several practice groups /swimming levels (i.e. Bronze, Silver, Gold, Senior, etc.) into which members were placed based on individual swimming ability. 1. Members could pay their dues via an annual membership fee or individual session (fall /winter, spring, summer) fees based on their assigned practice group. 2. Membership dues for higher level skill groups were larger than those for lower level skill groups. aa. Members in higher level skill groups received more pool /practice time than did lower level skill groups. 26. Morton has a long- standing association with the Moon Aqua Club. a. Morton was a member of the club from approximately 1970 through 1984. Morton, 07 -053 Page 10 b. Morton was employed as an assistant coach for the Club in 1988. c. Morton was employed as the Head Coach for the Club from approximately 1989 through the fall of 1997. d. Morton was compensated for his service with the Club during the time frame of 1988 through the fall of 1997. 27. Morton removed himself from his association with the Moon Aqua Club in 1997 due to differences of opinion with the Club's Board of Directors at that time and other personal reasons. a. Morton felt the Club should be operated as a feeder program for the MASD swimming program. b. Morton felt that the existing Board of Directors was operating the Club more as a business at that time. c. Morton continued to schedule the Club at the MASD pool as the Aquatics Director even though no longer officially associated with the Club. 28. Between the fall of 1997 and summer of 2001, the Moon Aqua Club experienced a decrease in club membership, parent involvement, and member motivation. a. As a result, members of the Club Board of Directors approached Morton and inquired if Morton would be interested in taking over the responsibility of coaching the Club. 29. Morton advised the Moon Aqua Club's Board of Directors that he would assume the responsibility of coaching the Club, but not as an employee of the parent -run Board. a. Morton created Premier Coaching Associates, Inc. (hereafter Premier) in order to provide coaching services for the Club and possibly other community swim programs. b. Morton, through Premier, provided advice and managed the entire coaching staff for the Club. 30. Pennsylvania Department of State Corporation Bureau records document the creation of Premier as a For Profit, Business —Stock organization under Entity Number 3018263. a. Articles of Incorporation note a filing date of August 1, 2001, for Premier. b. Premier's registered office address is noted as 1023 Chanticleer Drive, Crescent, PA 15046. 1. 1023 Chanticleer Drive, Crescent, PA 15046 is Morton's home address. 2. Morton operated Premier from his home address. c. Morton and Ed Weaver are noted as incorporators for the business. d. Morton and Weaver signed the Articles of Incorporation on July 12, 2001. 31. Morton formed Premier as an S corporation and was assigned an Employer Morton, 07 -053 Page 11 Identification Number of 22- 3821089 for the business. a. As an S corporation, Premier pays no corporate income taxes on its profits. b. Shareholders pay income taxes on their distributive shares of the S corporation's profits. 32. Morton is the sole Premier shareholder. a. Morton holds 100% of Premier's stock. b. Corporate documents note Morton, Weaver, and Julie Reiff as the Board of Directors. 33. Premier, through Morton as its President, executed a Coaching Service Agreement with the Moon Aqua Club on September 5, 2001, effective from September 13, 2001, through August 31, 2002, with no automatic renewal. a. The Agreement documented that Premier would provide trained and certified professional coaching staff for all Moon Aqua Club practices and swim meets, including all meets home, away, and /or Allegheny Mountain Swimming sanctioned, for the length of the Agreement. b. The Agreement documented that Premier would render services primarily at the facilities at the Moon Senior High School but would upon request provide agreed services at such other places as reasonably requested and secured by the Moon Aqua Club as appropriate for the performance of such services, including substitute home location(s) and all away locations. 1. The Agreement specified Moon Aqua Club's responsibility to meet any and all financial obligations for the procurement and use of any and all facilities subject to the Agreement. c. The Agreement acknowledged that the Moon Aqua Club had a set team practice schedule of Monday through Friday. 1. The Agreement did not document specific hours for practice on a daily basis. d. The Agreement documented payment due Premier by the Moon Aqua Club for services rendered from September 2001 until February 2002 in the amount of $15,000.00. 1. No provision was present in the Agreement documenting payment to Premier from February 2002 through August 2002. e. The Agreement noted Premier as an independent contractor in providing services to Moon Aqua Club. f. The Agreement noted any required written notification for Premier to be delivered to Morton's home address /Premier's business address and any verbal notification to Morton at 412 - 264 -9440, extension 2222. 1. Telephone number 412 - 264 -9440, extension number 2222 was assigned to the pool office at Moon Area High School. g. Morton entered into the Agreement while responsible for scheduling Morton, 07 -053 Page 12 activities at the MASD pool as Aquatics Director. 34. On September 13, 2001, a special meeting of the Board of Directors of Premier Coaching Associates was held at the Moon Senior High School Pool. a. Minutes of the meeting document Morton, Weaver, and Julie Reiff as members of Premier's Board of Directors. 1. Minutes note Morton as the Board President and Weaver as the Board Secretary. b. Minutes of the meeting document the unanimous passing of a Resolution acknowledging, approving, and accepting the Coaching Service Agreement entered into between Premier, through Morton as President, and the Moon Aqua Club, a Pennsylvania non - profit corporation, as amended and executed on September 5, 2001. c. Morton was responsible for scheduling at the MASD pool during the time that Morton, as the President of Premier, entered into the agreement with the Moon Aqua Club. 35. Morton, through Premier, provided coaches and coaching services to the Moon Aqua Club from approximately September 13, 2001, through August 31, 2002. a. During this time frame, Morton realized that his goals for the Club were not consistent with the majority of the parent Board. 36. Morton expressed his desire to the Board of Directors to lead the Moon Aqua Club and remove the management responsibility from the parent Board. a. The parent Board was not in complete agreement with Morton's proposal. 1. At least one of the existing Club officers refused to resign and turn the management of the Club over to Morton. 37. The refusal of the entire board to allow Morton to take control of the Club prompted Morton to create the Moon Area Aqua Club. a. Morton consulted with David Wilke of Wilke and Associates, LLP, regarding the formation of a separate non - profit organization to continue Club operations. 1. Wilke and associates is a CPA and small business advisory firm. b. Morton was informed that the development of a separate, non - profit organization to continue Club operations would likely require more time than was available before the start of the fall Allegheny Mountain Swimming session. c. Morton subsequently established the Moon Area Aqua Club as a for - profit organization in order to continue Club operations. 38. Pennsylvania Department of State Corporation Bureau records document the creation of the Moon Area Aqua Club, Inc., as a For Profit, Business —Stock organization under Entity Number 3082932. a. Articles of Incorporation note a filing date of July 12, 2002, for the Moon Morton, 07 -053 Page 13 Area Aqua Club. 1. Articles of Incorporation document an effective date of July 1, 2002. b. The Moon Area Aqua Club's registered office address is noted as 1023 Chanticleer Drive, Crescent, PA 15046. 1. 1023 Chanticleer Drive, Crescent, PA 15046 is Morton's home address. c. Morton and Ed Weaver are noted as incorporators for the business. d. Morton and Weaver signed the Articles of Incorporation on June 6, 2002. 39. Morton formed the Moon Area Aqua Club as an S corporation and was assigned an Employer Identification Number of 81- 0563571 for the business. a. Morton was the sole shareholder of the Moon Area Aqua Club. 1. Morton held 100% of the Moon Area Aqua Club's stock. 40. On July 12, 2002, Morton consented to the election of himself, Michelle Morton (his spouse), Weaver, and Wilke as Directors of the Moon Area Aqua Club in lieu of an organizational meeting. a. Morton signed a Written Consent of Shareholders to Corporate Actions in Lieu of Organizational Meeting as the sole shareholder of Moon Area Aqua Club. 41. On July 12, 2002, the Directors of the Moon Area Aqua Club, including Morton, consented to the election [of] Morton as President and Treasurer of the corporation and Michelle Morton as Secretary of the corporation in lieu of an organizational meeting. a. Morton and the remaining Directors signed a Unanimous Written Consent of the Directors to Corporate Actions in Lieu of Organizational Meeting. 42. Morton subsequently developed and distributed a team handbook for the 2002/2003 season which provided information on the Moon Area Aqua Club, USA Swimming, parent guidelines, practice group descriptions, meet schedules, etc. a. The handbook included correspondence dated September 2002 addressed to "Moon Area Aqua Club Swimmers and Parents" which documented Morton's involvement in structuring and streamlining club administration to promote smooth Club operation. b. The handbook provided information regarding methods of communication which instructed individuals to call 412 - 264 -9440, ext. 2222 to speak to a coach. 1. The main exchange number for MASD is 412 - 264 -9440. 2. Extension 2222 is the extension for the office located at the district pool. c. The handbook instructed individuals desiring any type of lengthy meeting with a Club coach to contact the Moon Area Aqua Club office (724 -457- Agreement Parties Agreement Term Time of Work /Pool USE Payment Due Effective Date Premier /MAAC* 09/01/2002 - 12/31/2002 M -F, 5:OOp -8:OOp $13,500.00 08/27/2002 Premier /MAAC 01/01/2003-12/31/2003 M -F, 5:OOp -8:OOp $42,000.00 12/20/2002 Premier /MAAC 01/01/2004-12/21/2004 M -F, 5:OOp -8:OOp $46,500.00 01/01/2004 Premier /MAAC 01/01/2005-12/31/2005 M -F, 5:OOp -8:OOp $48,000.00 12/29/2004 Morton, 07 -053 Page 14 7532) to set up an appointment. 1. The handbook documented that such conferences normally occurred at the MASD High School Pool. 2. Phone number 724 - 457 -7532 was assigned to Premier at Morton's resident address. d. The handbook documented that the coaches' office on the pool deck is a place of business." 43. Although the name and profit status of the Club changed in approximately July 2002, no significant changes in club operations occurred. a. Morton continued to supervise and manage the Club and coaching staff through Premier. b. The Club continued to utilize the district facility at no cost to the Club. 44. Morton did not inform the district administration or the school board upon the creation of the Club that the Club would be classified as a for - profit entity as of July 2002. a. Morton continued the operation of the Club at the district in the same manner as had been done in the past. 45. Premier, Morton's privately owned, for profit business, entered into Coaching Service Agreements with the Moon Area Aqua Club, Morton's privately owned, for profit business, to provide coaching services spanning the time frame of September 1, 2002, through August 30, 2006, as shown below: *MAAC =Moon Area Aqua Club a. Morton entered into each Agreement on behalf of Premier in his capacity as President of the Corporation. 1. Morton's entering into the Agreements was unanimously approved by Premier's Board of Directors at Special Meetings held on September 16, 2002; September 8, 2003; September 6, 2004; and September 2, 2005 respectively. aa. Morton was present and recommended the approval of the Agreements at each meeting. bb. Minutes of the Special Meetings document that the meetings were held at the Moon Senior High School Pool. cc. Minutes incorrectly document the execution date for the 2004 and 2005 terms. Morton, 07 -053 Page 15 1. No minutes were available for review to document the execution date for the 2003 term. b. Morton entered into each Agreement on behalf of the Moon Area Aqua Club in his capacity as president of the Corporation. 1. Morton's entering into the Agreements was unanimously approved by the Moon Area Aqua Club's Board of Directors at Special Meetings held on August 30, 2002; September 5, 2003; September 3, 2004; and September 2, 2005, respectively. aa. Morton was present and advised the approval of the Agreements at each meeting. bb. Minutes of the Special Meetings document that the meetings were held at the Moon Senior High School Pool. cc. Minutes incorrectly document the execution date for the 2004 and 2005 terms. 1. No minutes were available for review to document the execution date for the 2003 term. c. Morton was responsible for the scheduling of the Moon Area Aqua Club at the district pool at all times during the span of the Agreements. 46. No contract was available for review regarding coaching services performed for the Moon Area Aqua Club from January 1, 2006, through May 30, 2006. a. Premier provided coaching services for the Moon Area Aqua Club from January 1, 2006, through approximately May 30, 2006, although no contract could be located. 1. Premier continued to receive monthly payments from the Moon Area Aqua Club for services rendered during this time frame. 47. Specific provisions of the Agreements included, among others, the following: a. The Agreements documented that Premier would provide trained and certified professional coaching staff for all Moon Area Aqua Club practices and swim meets, including all meets home, away, and /or Allegheny Mountain Swimming sanctioned, for the length of the Agreement. b. The Agreements documented that Premier would render services primarily at the facilities at the Moon Senior High School but would upon request provide agreed services at such other places as reasonably requested and secured by the Moon Area Aqua Club as appropriate for the performance of such services, including substitute home location(s) and all away locations. 1. The Agreements specified Moon Area Aqua Club's responsibility to meet any and all financial obligations for the procurement and use of any and all facilities subject to the Agreement. c. The Agreements acknowledged that the Moon Area Aqua Club had a set team practice schedule of Monday through Friday, 5pm -8pm. Morton, 07 -053 Page 16 d. The Agreements noted Premier as an independent contractor in providing services to Moon Area Aqua Club. e. The Agreements noted any required written notification for Premier or Moon Area Aqua Club to be delivered to Morton's home address (a /k/a Premier's and Moon Area Aqua Club's business address) and any verbal notification to Morton at 412 - 264 -9440, extension 2222. 1. Telephone number 412 - 264 -9440, extension number 2222 was assigned to the pool office at Moon Area High School. 48. Morton entered into the Agreements while responsible for scheduling activities at the MASD pool as Aquatics Director. a. Morton utilized the Moon Senior High School pool as a place of business at which Premier's board of directors and the Moon Area Aqua Club's board of directors held formal meetings at which the Agreements entered into were approved and accepted. 49. Morton did not follow the formal application process established by MASD for use of the district pool by the newly created, for - profit Moon Area Aqua Club. a. Morton did not obtain, complete, or submit an application to the high school principal for use of the district pool subsequent to the formation of the for - profit Moon Area Aqua Club. b. Morton did not present a request to the school board for a waiver of fees in association with the for - profit, Moon Area Aqua Club's use of the district pool. c. The MASD administration was unaware of any potential change in regard to the profit status of the Club utilizing the district pool until late 2004. 50. On October 20, 2004, Joyce Kiritchenko, Bon Meade Elementary Parent Teacher Club member, sent an e-mail transmission to the MASD board of directors questioning why the Aqua Club was not paying for use of the district pool. a. Kiritchenko had previously attempted to organize an event at Bon Meade Elementary as a fundraising tool for the elementary school. b. Kiritchenko was informed by then Superintendent Alexander Meta that she would be required to provide a $1,000,000.00 liability insurance policy and pay hourly rental fees for use of facilities at the elementary school. c. The fundraiser did not occur due to the lack of the required insurance policy and the rental fee. 51. Board Member Peggy Bell responded to Kiritchenko via e-mail dated October 21, 2004, indicating that she did not know the nature of the agreement between the Aqua Club and the district. a. Bell indicated that she was unaware of any school /community program that paid anything to the district. 1. Bell specifically referenced Moon Area Soccer Association (MASA), Boy Scouts /Girl Scouts, Parent Teacher Organizations /Groups, basketball groups and an adult volleyball league. Morton, 07 -053 Page 17 b. Bell advised Kiritchecko that she would be in contact when she obtained the facts from the administration. c. Bell forwarded Kiritchenko's message and her response to board members Sam Tranter, Mary Tobin, Mark Scappe, Hank Pulkowski, Barbara Nolfi, and Don Radovich; Director of Administrative Services Ron Zangaro, Assistant Superintendent Billie Rondinelli; Athletic Director Zack Kessler; Principal Michael Hauser; Meta; and Morton. 52. Morton subsequently responded to Bell via e-mail dated October 22, 2004. a. Morton advised that Bell's reply to Kiritchenko regarding facilities rental and the district's commitment to youth sports programs that serve as feeders for the Middle School and varsity programs was accurate. b. Morton offered to explain how the Aqua Club operated, what the rental agreement with the district was at that point and in the past, and to provide any documentation or sit and meet with Bell. 53. The subject of the Aqua Club was subsequently discussed at the October 25, 2004, regular meeting of the MASD Board of Directors. a. The e -mail from Kiritchenko was discussed at the meeting. b. The board instructed Meta to discuss the situation with Al Bennett (Director of Fiscal Services), have Bennett meet with Morton to research the issue, and have Bennett report his findings to Meta for eventual presentation to the school board. 54. Bennett contacted Morton via e-mail transmission on October28, 2004, to schedule a meeting regarding the Aqua Club. a. The meeting was initially scheduled for November 1, 2004. 1. Individuals to attend the meeting included Meta, Bennett, Hauser, and Morton. b. Bennett indicated in the e-mail that although the administration was supportive of Moon's swimming program, it was necessary to follow established Board policy pertaining to facilities use. c. Bennett also requested the opportunity to review the Aqua Club's financial reports and tax returns for the past two years. 55. The meeting originally scheduled for November 1, 2004, regarding discussion of the Aqua Club did not occur. a. The November 1, 2004, meeting was cancelled. b. Although the meeting was cancelled, Morton had supplied Meta and Bennett with correspondence dated October 30, 2004, titled, The history of the Moon Aqua Club" for review. 1. The document was authored by Morton. 56. The document provided to Meta and Bennett provided background information on Morton, 07 -053 Page 18 the non - profit Moon Aqua Club, Morton's association with the Moon Aqua Club, Morton's eventual creation of Premier Coaching Associates and its relationship with the Moon Aqua Club, and the eventual formation of the Moon Area Aqua Club. a. The document identified the Moon Aqua Club as a non - profit entity which had utilized the district pool from the late 1960s through June 2002 and had never paid rental fees to the district. b. The document identified Premier Coaching Associates as an S- Corporation created by Morton that provided coaches and direction for the Moon Aqua Club and eventually the Moon Area Aqua Club. 1. S- Corporations are for profit entities. 2. Morton did not specifically identify in the document that S- Corporations are for profit entities. c. The document identified Morton's creation of the Moon Area Aqua Club as a result of the unwillingness of the entire Moon Aqua Club parent board to turn Club operations over to Morton completely. 1. The Moon Area Aqua Club was not identified as an S- Corporation in the document nor was the Moon Area Aqua Club specifically identified as a for profit entity. aa. Morton indicated in the correspondence that the parent board's unwillingness to relinquish the non - profit status to him for continued operation required him to form a for - profit entity. d. The document identified Morton's willingness to pay the district a reasonable rental fee for use of the pool if the district so desired. 57. The meeting between Morton and district administrative representatives was re- scheduled for and held on November 3, 2004. a. Individuals in attendance included Morton, Meta, and Bennett. b. Morton supplied Bennett with various documentation for review. 1. The documentation provided included information on the Moon Aqua Club, the Moon Area Aqua Club, and Premier Coaching Associates. c. Bennett was instructed by Meta to collect and review available documentation to make a determination on the profit status of the club. 58. Between November 3, 2004, and November 14, 2005, Morton periodically communicated with and provided documentation to Bennett regarding the continuing situation with the Aqua Club. a. b. Morton provided various correspondence indicating that the Moon Area Aqua Club was a for - profit entity. Morton continuously advised Bennett that the Moon Area Aqua Club was in the process of filing the necessary paperwork to obtain non - profit status for the business. 59. While taking steps to obtain non - profit status for the Moon Area Aqua Club, the Individual Office President Jamie Morton Steve DeLatte Vice - President Julie Reiff Secretary Michelle Morton Treasurer Morton, 07 -053 Page 19 parent board of the original non - profit Moon Aqua Club relented and turned over Club operations to Morton. a. As a result of obtaining operational responsibility of the original non - profit Moon Aqua Club, Morton discontinued pursuit of obtaining non - profit status for the Moon Area Aqua Club. 60. Although Morton obtained operational responsibility over the original non - profit Moon Aqua Club, Morton did not immediately re- institute Club operations at MASD. a. Morton, Weaver, and Wilke performed various research into the non - profit Moon Aqua Club regarding possible back tax issues; whether the entity was still recognized as a tax - exempt, non - profit entity by the IRS; etc. 1. Morton did not want to resume the non - profit operation until certain that the entity could operate as such. 61. Part of the process in reinstituting the Moon Aqua Club included filing IRS Form 990 -EZs with the federal government for calendar years 2002, 2003, and 2004 for which no returns had previously been filed. a. Forms filed for calendar years 2002 through 2004 are all dated November 2, 2005. b. The form eventually filed for calendar year 2005 is dated July 24, 2006. 62. Included with each IRS Form 990 -EZ filed was a listing of officers for the Moon Aqua Club as shown below: 63. Morton was required by Bennett to provide documentation that the Moon Aqua Club was a true non - profit entity. a. During or about the beginning of November 2005, Morton provided Bennett with a copy of an Internal Revenue Service (IRS) letter of determination originally issued in June 1983 verifying the Moon Aqua Club as a tax exempt organization under section 501(c)(7) of the Internal Revenue Code. 1. The letter provided to Bennett referenced the Moon Aqua Club although the entity utilizing the district pool at the time was the Moon Area Aqua Club. 64. After receiving the IRS determination letter from Morton, Bennett sent e-mail correspondence to Morton memorializing his belief that the information Morton provided the district confirmed that the Aqua Club was a non - profit organization. a. Bennett presented his belief that the agreement with the Aqua Club at that time was in accordance with board policy pertaining to facilities rental. 65. Morton operated the Moon Area Aqua Club at MASD until approximately June 2006. a. Morton operated the Moon Area Aqua Club at the district in essentially the Morton, 07 -053 Page 20 same manner in which the Moon Aqua Club had been operated. b. The non - profit Moon Aqua Club was placed back into operation in approximately June 2006. 66. Morton was involved in the day -to day operation, management, and coaching of the Moon Area Aqua Club and the subsequent Moon Aqua Club through Premier until approximately March 2007. a. Redman was hired through Premier as a fulltime coach and program director for The Moon Area Aqua Club Ryan [sic] approximately April 2006. b. Redman continued employment in the same capacity with the Moon Aqua Club once reinstituted in June 2006. c. Morton served as a mentor for Redman from approximately April 2006 through March 2007. 67. Morton continued to serve as a member of the Board of Directors for the Moon Aqua Club after Redman was hired. a. Morton completed these duties until a new parent board could be assembled. 68. Morton began soliciting interested individuals to sit on the parent board in 2006 and completed filling board seats by approximately May 2007. a. The board members for the Moon Area Aqua Club served as the new Moon Aqua Club board until enough interested individuals could be located to sit on the board. 69. A special meeting of the Moon Area Aqua Club's Board of Directors was held on May 30, 2006, for the purpose of canceling the Coaching Service Agreement between the Moon Area Aqua Club and Premier. a. Minutes note the cancellation occurring due to the change of parties requiring the services of Premier. b. Minutes document board members Morton, Michelle Morton, Weaver, and Wilke being present at the meeting. c. Minutes note the location of the meeting as the Moon Senior High pool. 70. The board unanimously passed a Resolution at the May 30, 2006, meeting approving the cancellation of the Coaching Service Agreement between the Moon Area Aqua Club and Premier as executed on December 29, 2005. a. The cancellation of the Agreement was to become effective midnight, Wednesday, May 31, 2006. 71. An additional special meeting of the Moon Area Aqua Club Board of Directors was held on June 3, 2006, at the Corporate Office of the Club for the purpose of recommending to the sole shareholder the dissolution of the Corporation (a /k/a Moon Area Aqua Club). a. Minutes note the Corporate Office of the Club as 1023 Chanticleer Drive, Crescent, PA. Morton, 07 -053 Page 21 1. 1023 Chanticleer Drive is Morton's home address. b. Minutes note board members Morton, Michelle Morton, Weaver, and Wilke being present at the meeting. c. Morton is the sole shareholder of the Corporation. 72. The board unanimously passed a Resolution at the June 3, 2006, meeting recommending the dissolution of the Moon Area Aqua Club pursuant to a Plan of Liquidation. a. The question of dissolving the Moon Area Aqua Club and the adoption of the Plan of Liquidation was to be submitted for vote approval of the Corporation's sole shareholder (Morton) at a special shareholder's meeting. 73. A special meeting of Moon Area Aqua Club shareholders was held on June 5, 2006, at 1023 Chanticleer Drive, Crescent, PA to consider and act on the recommendation of the Moon Area Aqua Club's Board of Directors that the corporation be dissolved pursuant to an established Plan of Liquidation. a. Morton, as the sole shareholder, passed a Resolution approving and adopting the Plan of Liquidation for the Moon Area Aqua Club at the special meeting. 74. The Resolution authorized and directed the President and Secretary of the Corporation to execute Articles of Dissolution for filing with the Pennsylvania Department of State and other such documents as necessary or appropriate to complete the dissolution of the Corporation. a. Morton was the president of the Corporation. b. Michelle Morton was the Secretary of the Corporation. 75. Although instructed via Resolution to submit necessary documents to effectuate the dissolution of the Moon Area Aqua Club, neither Morton nor Michelle Morton did so. a. Pennsylvania Department of State Corporation Bureau records currently document the Moon Area Aqua Club as being in "Active" status as of April 18, 2008. 76. The non - profit Moon Aqua Club has been utilizing the district facilities from approximately June 2006 through the present. a. Morton continued to provide coaching and managerial services for the Moon Aqua Club through Premier from approximately June 2006 through August 2007. 77. Morton entered into a Coaching Service Agreement, as the President of Premier, with the Moon Aqua Club on June 1, 2006. a. Morton entered into the Agreement at the time that he was serving as the President and Treasurer of the Moon Aqua Club. b. The Agreement was approved by Written Consent of the Directors of Premier Coaching Associates at a Special Meeting held on June 2, 2006. 1. The meeting was held at the Moon Senior High School Pool. Morton, 07 -053 Page 22 c. No actual Agreement was available for review. 1. The effective dates of the Agreement could not be determined. d. Morton entered into the Agreement while serving as the Aquatics Director responsible for scheduling at the MASD pool. 78. Morton entered into a second Coaching Service Agreement, as the President of Premier, with the Moon Aqua Club on August 31, 2006, effective from September 1, 2006, to August 2007 with no automatic renewal. a. The Agreement documented that Premier would provide trained and certified professional coaching staff for all Moon Aqua Club practices and swim meets, including all meets home, away, and /or Allegheny Mountain Swimming sanctioned, for the length of the Agreement. b. The Agreement documented that Premier would render services primarily at the facilities at the Moon Senior High School but would upon request provide agreed services at such other places as reasonably requested and secured by the Moon Aqua Club as appropriate for the performance of such services, including substitute home location(s) and all away locations. 1. The Agreement specified Moon Aqua Club's responsibility to meet any and all financial obligations for the procurement and use of any and all facilities subject to the Agreement. c. The Agreement acknowledged that the Moon Aqua Club had a set team practice schedule of Monday through Friday. 1. The Agreement did not document specific hours for practice on a daily basis. d. The Agreement documented payment due Premier by the Moon Aqua Club for services rendered in the amount of $46,000.00. e. The Agreement noted Premier as an independent contractor in providing services to Moon Aqua Club. f. The Agreement noted any required written notification for Premier to be delivered to Morton's home address /Premier's business address and any verbal notification to Morton at 412 - 264 -9440, extension 2222. 1. Telephone number 412 - 264 -9440, extension number 2222 was assigned to the pool office at Moon Area High School. Morton entered into the Agreement while responsible for scheduling activities at the MASD pool as Aquatics Director. g. 79. On September 1, 2006, a special meeting of the Board of Directors of Premier Coaching Associates was held at the Moon Senior High School Pool. a. Minutes of the meeting document Morton, Weaver, and Julie Reiff as members of Premier's Board of Directors. 1. Minutes note Morton as the Board President and Weaver as the Board Secretary. Morton, 07 -053 Page 23 b. Minutes of the meeting document the unanimous passing of a Resolution acknowledging, approving, and accepting the Coaching Service Agreement entered into between Premier, through Morton as President, and the Moon Aqua Club, a Pennsylvania non - profit corporation, as executed on August 31, 2006. c. Morton was responsible for scheduling at the district pool only until June 30, 2007. 1. Morton's service as Aquatics Director ended at the conclusion of the 2006/2007 school year until re- appointed into the position at the December 17, 2007, board meeting. 80. The Moon Aqua Club opted to hire employees /coaches directly beginning in approximately September 2007. a. The Club entered into a contract with Premier on September 10, 2007, effective from September 10, 2007, through November 21, 2007, for Morton's services only. 1. The Club agreed to pay Premier $3,400.00 in consulting fees. 2. Premier agreed to provide Morton for direct coaching instruction and supervision to a maximum of forty -two senior age group swimmers of the Club. b. Morton signed the contract as the President of Premier while Hall signed the contract as the President of the Club. c. Morton was not responsible for scheduling at the district pool at this time. 81. The MASD administration never approached Morton and requested any type of rental fee for the Moon Area Aqua Club's use of the district facilities. a. Bennett and Meta received various correspondence /documentation indicating that the Aqua Club utilizing the pool at that time was a for - profit entity. 1. Although receiving documentation regarding the Moon Area Aqua Club and its profit status, confusion existed among MASD administration regarding which club was actually using the pool, what the profit status of the club using the pool was, etc. aa. Confusion regarding the identities and status of the two clubs primarily existed due to the similarity in club names. 1. Individuals often did not distinguish the clubs as separate organizations due to only a slight variation in name. 2. Although the entity using the district pool at that time was for - profit, Morton was in the process of reviving the original non - profit Moon Aqua Club. 3. District administration did not wish to charge Morton retroactive fees for pool use which had previously occurred regarding the for - profit Date Check Number Check Amount Description Authorizing Signature 02/15/04 237 $ 1,623.79 Custodians /Jan 03/4 Morton 01/03/0 317 $ 93.75 15%Out -of- District -2004 Morton 02/09/05 333 $ 803.21 A/G Open -Jn 8/9 Morton 01/13/06 407 $ 906.85 Pool /Custodial Fee Morton 01/25/07 1047 $ 880.94 Custodial Fees (illegible) Morton Total: $ 4,308. Morton, 07 -053 Page 24 Moon Area Aqua Club. 82. Although Morton did not provide MASD with rental fees for use of the district swimming pool, accompanying facilities, or pool supplies, Morton provided fees associated with out -of- district club members to the district as well as custodial fees for actual swim meets held during the time frame of January 2004 through January 2007 totaling $4,308.54 as shown below: a. No out -of- district members existed in the Club from approximately August 2002 through September 2004. 1. Morton closed membership to out -of- district members until approximately October 2004. b. The extra fifteen percent out -of- district membership fee was issued to MASD for the 2004/2005 swim season only. 1. Neither the Moon Area Aqua Club nor the Moon Aqua Club paid any out -of- district fees to MASD for the 2005/2006 or 2006/2007 swim season. c. The Moon Area Aqua Club or Moon Aqua Club held Age Group Swim Meets at the MASD pool in January 2004, 2005, 2006, and 2007. 1. Custodial fees associated with the swim meets held were paid by Moon Area Aqua Club or Moon Aqua Club in 2004, 2005, 2006, and 2007. aa. Custodial fees incurred were based on the number of district employees working and the amount of hours worked. 83. Checks were issued from the Moon Area Aqua Club and Moon Aqua Club accounts at Dollar Bank (see, Finding Numbers 97 & 103). 1. Check numbers 237, 317, 333, and 407 were issued from the Moon Area Aqua Club's account at Dollar Bank. 2. Check number 1047 was issued from the Moon Aqua Club's account at Dollar Bank. THE FOLLOWING FINDINGS RELATE TO ALLEGATIONS THAT PREMIER COACHING ASSOCIATES, INC., CONTRACTED WITH AND RECEIVED FEES FROM THE MOON AREA AQUA CLUB FOR COACHING SERVICES PROVIDED AT THE SCHOOL DISTRICT POOL. Morton, 07 -053 Page 25 84. The Moon Aqua Club and Moon Area Aqua Club, although separate legal entities, were primarily operated in the same manner. a. Both clubs operated as comprehensive United States Swimming clubs sanctioned by United States Swimming through membership in Allegheny Mountain Swimming. b. Both clubs operated on a three season basis annually. c. Both clubs maintained different group levels in which members were /are placed. 1. Placement in specific group levels depended upon age, ability, experience, and level of commitment. d. Both clubs collected membership dues for individual members enrolled. 1. Membership dues assessed depended upon the specific group level to which each member was assigned. 2. Membership dues were /are traditionally higher for each progressive group level. aa. The amount of pool time assigned to each group level is greater for each progressive group level. 3. Membership dues collected included an annual one time registration fee, a meet escrow fee, and actual membership dues. aa. The registration fee covered registration in the respective Clubs; membership in Allegheny Mountain Swimming and United States Swimming; and mandatory United States Swimming insurance. bb. The meet escrow fee covered entry fees for members into Allegheny Mountain Swimming and United States Swimming sanctioned swim meets for the season. cc. Membership fees depended upon group assignment on a per session basis. 85. The operating budget for the original Moon Aqua Club, the subsequent Moon Area Aqua Club, and the current Moon Aqua Club was /is primarily compiled from collection of membership dues with additional income realized through sponsorship of competitive swim meets and fundraising activities. a. Checks for payment due to the Moon Aqua Club were previously and are currently collected by the Club Treasurer for eventual deposit into the Club's account. b. Checks for payment due to the Moon Area Aqua Club were sent to Morton's residence address of 1023 Chanticleer Drive, Crescent, PA 15046 or provided to Morton in person. 86. The Moon Area Aqua Club maintained a Checking Account at Dollar Bank (Account No. xxx>oo(5878) regarding Club operations. Morton, 07 -053 Page 26 a. Morton opened the account on August 3, 2002. b. Morton's address of 1023 Chanticleer Drive, Crescent, PA was documented on the account signature card as the address of the Club. c. Morton and Michelle Morton were documented as authorized signatories on the account. 1. Checks written on the account required only one signature. d. Morton maintained primary custody of the checking account information (i.e. checks, check ledgers, etc.). 87. The Moon Area Aqua Club realized deposits into Account No. xxx>ooc5878 totaling $270,907.14 between the time frame of August 2002 and March 2007 as shown below: 2002 2003 2004 2005 2006 2007 38,523.99 $88.56 64,203.39 $221.52 $169.68 0.00 a. Funds deposited into the Club's account originated primarily from membership dues, meet registration fees, swim lessons /classes, and fundraising activities. b. No deposits were made into the Club's account after June 30, 2006. 1. The account was closed effective March 31, 2007, with a zero balance. c. Morton served as the President and Treasurer of the Club during the entire time frame that deposits were made into the Club's account. 1. Morton was responsible for depositing funds coming into the Club during this timeframe. 88. Deposits into the Moon Area Aqua Club's Account for swimming lessons spanning the time frame of 2003 through May 2006 totaled a minimum of $17,000.00. a. Lessons were conducted at the MASD pool. b. Lessons were typically offered at least twice per year with actual enrollment determining if the session was to be held. c. Lessons were primarily taught by MASD swim team members. 1. MASD swim team members teaching swim lessons could earn credit to be applied to their Aqua Club dues, earn credit for expenses associated with the district swim team's annual training trip to Florida near the beginning of each swim season, receive actual payment, or utilize hours accrued for community service requirements. d. Morton was responsible for approving the use of the MASD pool for lessons offered and was responsible for scheduling of said lessons at the pool. 1. At no time did Morton request or receive approval from Hauser as the High School Principal to provide swimming lessons from the district pool. Check Date Check No. Amount Authorized Signature Check Disposition 09/09/02 101 5,000.00 J. Morton Dep. #xxxxxx9728 10/10/02 114 2,000.00 J. Morton Dep. #xxxxxx9728 11/16/02 124 10,000.00 J. Morton Dep. #xxxxxx9728 12/22/02 138 5,500.00 J. Morton Dep. #xxxxxx9728 01/07/03 141 4,000.00 M. Morton Dep. #xxxxxx9728 01/31/03 145 3,000.00 J. Morton Dep. #xxxxxx9728 02/12/03 147 1,000.00 M. Morton Dep. #xxxxxx9728 03/03/03 152 3,500.00 J. Morton Dep. #xxxxxx9728 03/06/03 153 1,200.00 M. Morton Dep. #xxxxxx9728 03/25/03 158 1,000.00 M. Morton Dep. #xxxxxx9728 04/01/03 159 3,000.00 J. Morton Dep. #xxxxxx9728 04/27/03 164 4,000.00 J. Morton Dep. #xxxxxx9728 06/01/03 171 4,000.00 J. Morton Dep. #xxxxxx9728 07/03/03 178 4,000.00 J. Morton Dep. #xxxxxx9728 08/01/03 188 1,800.00 M. Morton Dep. #xxxxxx9728 08/15/03 189 1,000.00 J. Morton Dep. #xxxxxx9728 08/25/03 192 500.00 J. Morton Dep. #xxxxxx9728 09/02/03 193 2,000.00 J. Morton Dep. #xxxxxx9728 09/24/03 196 5,000.00 J. Morton Dep. #xxxxxx9728 Morton, 07 -053 Page 27 89. Checks issued from the Moon Area Aqua Club account at Dollar Bank (Account No. xxx>oo(5878) were issued for, among other things, the purchase of business checks, team programs /advertising, team equipment, meet fees, team parties, team registrations, certifications, postage, awards, and the payment of service agreements. a. Checks issued in payment of service agreements were issued to Premier. 1. Premier was contracted with by the Club for coaching and managerial services at all times during the period of August 2002 through May 2006. 90. Premier maintained a business checking account at Dollar Bank (Account Number xxx>oo(9728) in regard to business operations. a. Morton opened the account on August 21, 2001. b. Morton's address of 1023 Chanticleer Drive, Crescent, PA was documented on the account signature card as the address of Premier. c. Morton and Michelle Morton were documented as authorized signatories on the account. 1. Checks written on the account required only one signature. d. Morton maintained primary custody of the checking account information (i.e. checks, check ledgers, etc.). 91. From September 2002 through June 2006, Morton or Michelle Morton issued a total of sixty -one checks from the Moon Area Aqua Club account at Dollar Bank (Account No. xxx>oo(5878) to Premier totaling $190,200.00 for services rendered as shown below: Check Date Check No. Amount Authorized Signature Check Disposition 09/30/03 197 1,000.00 J. Morton Dep. #xxxooc9728 10/29/03 209 4,000.00 J. Morton Dep. #xxxooc9728 11/21/03 216 2,000.00 J. Morton Dep. #xxxooc9728 12/01/03 220 1,000.00 J. Morton Dep. #xxxooc9728 12/17/03 222 700.00 J. Morton Dep. #xxxooc9728 01/08/04 227 2,500.00 J. Morton Dep. #xxxooc9728 02/02/04 233 3,500.00 J. Morton Dep. #xxxooc9728 02/29/04 241 3,000.00 J. Morton Dep. #xxxooc9728 03/16/04 244 4,000.00 J. Morton Dep. #xxxooc9728 04/30/04 248 3,000.00 J. Morton Dep. #xxxooc9728 05/06/04 249 1,000.00 J. Morton Dep. #xxxooc9728 05/29/04 261 3,000.00 J. Morton Dep. #xxxooc9728 06/29/04 265 3,500.00 J. Morton Dep. #xxxooc9728 07/22/04 270 1,500.00 J. Morton Dep. #xxxooc9728 09/02/04 273 5,000.00 J. Morton Dep. #xxxooc9728 10/04/04 288 4,000.00 J. Morton Dep. #xxxooc9728 10/30/04 302 5,000.00 J. Morton Dep. #xxxooc9728 11/28/04 311 4,500.00 J. Morton Dep. #xxxooc9728 12/27/04 313 3,000.00 J. Morton Dep. #xxxooc9728 01/03/05 314 2,500.00 J. Morton Dep. #xxxooc9728 01/24/05 328 3,500.00 J. Morton Dep. #xxxooc9728 01/29/04* 330 1,000.00 J. Morton Dep. #xxxooc9728 02/27/05 339 3,500.00 J. Morton Dep. #xxxooc9728 03/28/05 344 3,500.00 J. Morton Dep. #xxxooc9728 04/24/05 346 3,500.00 J. Morton Dep. #xxxooc9728 05/25/05 352 4,500.00 J. Morton Dep. #xxxooc9728 06/19/05 357 3,500.00 J. Morton Dep. #xxxooc9728 07/18/05 361 4,500.00 J. Morton Dep. #xxxooc9728 08/28/05 364 3,500.00 J. Morton Dep. #xxxooc9728 09/22/05 368 4,500.00 J. Morton Dep. #xxxooc9728 10/26/05 381 3,500.00 J. Morton Dep. #xxxooc9728 11/26/05 391 3,500.00 J. Morton Dep. #xxxooc9728 12/10/05 399 2,500.00 J. Morton Dep. #xxxooc9728 12/27/05 403 1,500.00 J. Morton Dep. #xxxooc9728 01/20/06 409 3,000.00 J. Morton Dep. #xxxooc9728 02/11/06 415 4,000.00 J. Morton Dep. #xxxooc9728 02/27/06 420 2,500.00 J. Morton Dep. #xxxooc9728 03/20/06 424 3,000.00 J. Morton Dep. #xxxooc9728 04/22/06 429 3,000.00 J. Morton Dep. #xxxooc9728 05/16/06 433 3,000.00 J. Morton Dep. #xxxooc9728 06/12/06 439 4,000.00 J. Morton Dep. #xxxooc9728 06/26/06 442 2,000.00 J. Morton Dep. #xxxooc9728 Total: $190,200.00 Morton, 07 -053 Page 28 * [sic]. [It appears that the date was intended to be 1/29/05. Cf., Fact Finding 99.] a. All sixty -one checks issued to Premier from the Club between the time frame of August 2002 through June 2006 were deposited into Premier's account Morton, 07 -053 Page 29 (Account No. xxx>oo(9728) at Dollar Bank. b. Morton generated and signed fifty -six of the sixty -one checks issued to Premier as an authorized signatory for the Club. c. Michelle Morton generated and signed five of the sixty -one checks issued to Premier as an authorized signatory for the Club. 92. Upon re- institution of the Moon Aqua Club, Morton opened a new checking account for the Moon Aqua Club at Dollar Bank (Account No. xxx>oo(3521) for Club operations separate and apart from the account utilized by the Moon Area Aqua Club. a. Morton opened the account on June 7, 2006. b. Morton's address of 1023 Chanticleer Drive, Crescent, PA was documented on the account signature card as the address of the Club. 1. The account signature card and statements incorrectly documented the name of the Club as the Moon Area Aqua Club instead of the Moon Aqua Club. 2. The Tax ID Number documented on the account (25- 1207563) matched that assigned to the original Moon Aqua Club. c. Morton was documented as the sole authorized signatory on the account at that time. 1. Checks written on the account required only one signature. d. Morton maintained primary custody of the checking account information (i.e. checks, check ledgers, etc.) until approximately June 13, 2007. 93. Morton continued to serve as the President and Treasurer respectively of the Moon Aqua Club upon its reinstitution in June 2006 until approximately May 2007. a. Between May 2007 and June 2007, a new parent board for the Moon Aqua Club was established composed of Shane Hall, Rob Jackson, Tracey Krisher, Dan Young, Frank Zimmerman, and Nancy Zimmerman. 1. Nancy Zimmerman serves as the current Treasurer for the Club. 94. Morton maintained sole authorized signatory [authority] over the Moon Aqua Club's account at Dollar Bank (Account No. xxx>oo(3521) from June 7, 2006, through June 13, 2007. a. Revisions to the signature card associated with the Club's account at Dollar Bank note the removal of Morton as an authorized signatory and the addition of Nancy Zimmerman and Krisher as of June 14, 2007. 95. The Moon Aqua Club realized deposits into Account No. )xx>ooc3521 totaling $60,313.93 between the time frame of June 2006 through May 2007 as shown below: 2006 (June- December) 2007 (January -May) $42,422.96 $17,890.97 Check Date Check No. Amount Authorized Signature Check Disposition 07/15/06 1007 $3,000.00 J. Morton Dep. #xxx>ooc9728 08/14/06 1010 3,000.00 J. Morton Dep. #xxx>ooc9728 09/08/06 1013 1,500.00 J. Morton Dep. #xxx>ooc9728 09/18/06 1015 2,000.00 J. Morton Dep. #xxx>ooc9728 Morton, 07 -053 Page 30 a. Funds deposited into the Club's account originated primarily from membership dues, meet registration fees, swim lessons /classes, and fundraising activities. b. Morton served as the President and Treasurer of the Club from at least June 2006 through May 2007. 1, Morton was responsible for depositing funds coming into the Club during this timeframe. 96. Deposits into the Moon Aqua Club's Account for swimming lessons spanning the time frame of June 2006 through May 2007 totaled a minimum of $1,294.00. a. Lessons were conducted at the MASD pool. b. Lessons were typically offered at least twice per year with actual enrollment determining if the session was to be held. c. Lessons were primarily taught by MASD swim team members. 1. MASD swim team members teaching swim lessons could earn credit to be applied to their Aqua Club dues, earn credit for expenses associated with the district swim team's annual training trip to Florida near the beginning of each swim season, receive actual payment, or utilize hours accrued for community service requirements. d. Morton was responsible for approving the use of the MASD pool for lessons offered and was responsible for scheduling of said lessons at the pool. 1. At no time did Morton request or receive approval from Hauser as the High School Principal to provide swimming lessons from the district pool. 97. Checks issued from the Moon Aqua Club account at Dollar Bank (Account No. xxx>oo(3521) were issued for, among other things, the purchase of business checks, team programs /advertising, team equipment, meet fees, team parties, team registrations, certifications, postage, awards, and the payment of service agreements. a. Checks issued in payment of service agreements were issued to Premier. 1. Premier was contracted with by the Club for coaching and managerial services at all times during the period of June 2006 through at least June 2007. 98. From June 2006 through June 2007, Morton issued and /or received a total of twenty checks from the Moon Aqua Club account at Dollar Bank (Account No. xxx>oo(3521) to Premier totaling $46,198.53 for services rendered as shown below: Check Date Check No. Amount Authorized Signature Check Disposition 10/10/06 1025 2,500.00 J. Morton Dep. #xxx>ooc9728 10/24/06 1029 2,500.00 J. Morton Dep. #xxx>ooc9728 11/13/06 1030 3,000.00 J. Morton Dep. #xxx>ooc9728 11/27/06 1034 2,000.00 J. Morton Dep. #xxx>ooc9728 12/11/06 1039 4,000.00 J. Morton Dep. #xxx>ooc9728 12/27/06 1042 1,000.00 J. Morton Dep. #xxx>ooc9728 01/08/07 1043 4,000.00 J. Morton Dep. #xxx>ooc9728 01/29/07 1049 1,000.00 J. Morton Dep. #xxx>ooc9728 02/12/07 1057 1,500.00 J. Morton Dep. #xxx>ooc9728 02/17/07 1059 1,500.00 J. Morton Dep. #xxx>ooc9728 03/14/07 1061 2,000.00 J. Morton Dep. #xxx>ooc9728 03/30/07 1066 2,500.00 J. Morton Dep. #xxx>ooc9728 04/17/07 1067 1,500.00 J. Morton Dep. #xxx>ooc9728 05/01/07 1068 2,000.00 J. Morton Dep. #xxx>ooc9728 05/24/07 1072 3,000.00 J. Morton Dep. #xxx>ooc9728 06/19/07 1076 2,698.53 N. Zimmerman Dep. #xxx>ooc9728 Total: $46,198.53 Source 2002 2003 2004 2005 2006 $24,500.00 2007 $ 21,698.53 MAC $ 2,024.00 - - - MAAC $22,500.00 $47,700.00 $46,500.00 $49,000.00 $24,500.00 - HAAC $ 9,000.00 $ 6,000.00 - - - - Miscellaneous $ 117.41 $ 3.00 $ 1,000.00 $ 60.94 - $ 19.42 Total: $33,641.41 $53,703.00 $47,500.00 $49,060.94 $49,000.00 $ 21,717.95 Morton, 07 -053 Page 31 a. All twenty checks issued to Premier from the Club between the time frame of June 2006 through June 2007 were deposited into Premier's account (Account No. xxx>oo(9728) at Dollar Bank. b. Morton generated and signed nineteen of twenty checks issued to Premier as an authorized signatory for the Club. 99. From the time period of July 26, 2002, through June 30, 2007, Premier realized deposits into its account at Dollar Bank (Account No. xxx>oo(9728) totaling $254,623.30 from the Moon Aqua Club (MAC), Moon Area Aqua Club (MAAC), Hopewell Area Aqua Club (HAAC), and other miscellaneous sources as shown in the chart below: 100. Premier's primary source of income from the time period of July 26, 2002, through June 30, 2007, originated from the Moon Aqua Club and the Moon Area Aqua Club. a. Funds originating from the Moon Aqua Club account and the Moon Area Aqua Club account which were eventually deposited into Premier's account accounted for 93.6 % of all funds deposited during the above listed time frame. 1. Funds originating from the Moon Area Aqua Club account accounted for 74.7 % of all funds deposited into Premier's account during the above listed time frame. Morton, 07 -053 Page 32 2. Funds originating from the Moon Aqua Club account accounted for 18.9 % of all funds deposited into Premier's account during the above listed time frame. b. Funds originating from the Hopewell Area Aqua Club account which were eventually deposited into Premier's account accounted for 5.9 % of all funds deposited during the above listed time frame. 1. Hopewell ceased utilizing Premier's services as of March 31, 2003. 2. Premier provided services to Hopewell Area Aqua Club at the swimming pool located in Hopewell School District. c. Funds originating from miscellaneous sources which were eventually deposited into Premier's account accounted for 0.5 % of all funds deposited during the above listed time frame. 101. Premier collected payment from the Moon Aqua Club and the Moon Area Aqua Club for services primarily rendered at the Moon Area School District pool. a. No other swimming facility in the Moon /Crescent area existed which could be utilized for year round training /competitive swimming. 1. Certain age groups of the Moon and Moon Area Aqua Clubs did /do utilize swimming facilities at Settler's Cabin located in Robinson Township, PA during summer sessions. 102. Funds received by Premier from the Moon and Moon Area Aqua Clubs as well as Hopewell Area Aqua Club were utilized for a variety of subjects including, among others, advertising, accounting, credit card payments, equipment, insurance, taxes, travel, entertainment, meals, payroll, payroll taxes, miscellaneous expenses, employee mileage reimbursements, automobile expenses (maintenance, fuel, inspection, insurance, lease payments, and registration), telephone expenses, legal fees, office related expenses (equipment, internet, supplies, etc.), and rent. a. Checks issued from Premier's account were primarily generated, signed, and distributed by either Morton or Michelle Morton, his wife. 103. Morton realized multiple personal benefits as a result of Premier's receipt of funds for service agreements entered into with the Moon and Moon Area Aqua Clubs. a. Morton realized the benefits through Premier's account by issuing payment for automobile expenses, telephone expenses, payroll, rent, miscellaneous reimbursement, and other miscellaneous expenses. b. Morton realized the benefits as a result of the Moon and Moon Area Aqua Clubs utilizing the MASD pool and accompanying facilities (showers, locker rooms, etc.). c. Morton realized the benefits at the time that he was responsible for scheduling activities at the MASD pool. 104. Morton currently leases a 2002 BMW 325XIA, VIN # WBAEU33432PF68831, through Premier from the Sewickley Car Store, Inc., located at 526 Ohio River Blvd., Sewickley, PA 15143. Morton, 07 -053 Page 33 a. Morton has leased the vehicle since June 10, 2002. b. Morton signed the lease approximately one month prior to the incorporation of the Moon Area Aqua Club. c. Morton signed the lease approximately two and one -half months prior to entering into a service contract with the Moon Area Aqua Club. 1. Morton was the President of both Premier and the Moon Area Aqua Club at the time the contract was signed. 105. Minutes of Premier's meetings fail to note any vote taken by Premier's Board of Directors to lease a vehicle through the business. 106. Morton completed a Business Application for the lease of the BMW on June 10, 2002. lease. lease. a. Morton documented the company name and address as Premier Coaching at 1023 Chanticleer Drive, Crescent, PA 15046 on the application. 1. The address is Morton's residence. b. Morton documented the company's date of incorporation as January 1, 2000. 1. Premier's actual date of incorporation was August 1, 2001. c. Morton signed the application as the President of Premier. 1. Morton was also required to sign as a personal guarantor for the d. Morton documented himself as the only user of the vehicle on the Operator Information and Qualifications section of the application. 107. Morton entered into a three year Closed End lease agreement with BMW Financial Services on or about June 10, 2002, to run from June 10, 2002, through June 9, 2005. a. Morton signed the lease agreement as the President of Premier. 1. Morton was also required to sign as a personal guarantor for the 108. Morton's payments for the lease totaled $572.62 per month. a. From July 2002 through July 2007 Morton issued payment to BMW Financial services from Premier's account at Dollar Bank via check. b. From August 2003 on, Dollar Bank did not receive copies of the actual cancelled checks for record keeping purposes. 1. Payments made to BMW Financial Services and the applicable check number were documented on Premier's monthly statement from Dollar Bank from August 2003 on. 109. Morton entered into a second three year Closed End lease agreement with BMW Financial Services during or about mid -May 2005 to run from June 10, 2005, Morton, 07 -053 Page 34 lease. through June 10, 2008. a. Morton signed the second lease agreement as the President of Premier. 1. Morton was also required to sign as a personal guarantor for the b. Morton's payments for the second lease total $404.81 per month. 110. Between the dates of July 2002 and June 30, 2007, Morton issued and /or approved the payment of fifty -seven checks to BMW Financial Services totaling $29,629.33 for lease payments and service fees due as shown below: Check Check Date Number Description BMW Financial 7/26/2002 183 Services BMW 9/4/2002 196 Services BMW 9/30/2002 212 Services BMW 10/29/2002 228 Services BMW Financial 11/28/2002 244 Services BMW Financial 1/5/2003 269 Services BMW Financial 1/29/2003 278 Services BMW Financial 3/6/2003 299 Services BMW Financial 4/6/2003 310 Services BMW Financial 4/28/2003 313 Services BMW Financial 6/1/2003 326 Services BMW Financial 7/3/2003 338 Services BMW Financial 8/12/2003 Debit Services BMW Financial 9/2/2003 363 Services BMW Financial 9/30/2003 369 Services 11/2/2003 379 BMW Financial BMW Financial 12/6/2003 388 Services BMW Financial 1/8/2004 393 Services BMW Financial 2/2/2004 406 Services 2/29/2004 418 BMW Financial BMW Financial 3/28/2004 428 Services BMW Financial 5/1/2004 445 Services Financial Financial Financial Check Amount Payment Date Amount $572.62 07/31/02 $572.62 $572.62 09/07/02 $572.62 $572.62 10/02/02 $572.62 $572.62 11/02/02 $572.62 $572.62 12/02/02 $572.62 $572.62 01/09/03 $572.62 $572.62 02/02/03 $572.62 $572.62 03/10/03 $572.62 $572.62 04/09/03 $572.62 $572.62 05/01/03 $572.62 $572.62 06/04/03 $572.62 $572.62 07/05/03 $572.62 $572.62 08/08/03 $572.62 $572.62 09/05/03 $572.62 $572.62 10/02/03 $572.62 $572.62 11/06/03 $572.62 $572.62 12/10/03 $572.62 $572.62 1/11/04 $572.62 $572.62 02/04/04 $572.62 $572.62 03/04/04 $572.62 $572.62 03/31/04 $572.62 $572.62 05/04/04 $572.62 Check Date Morton, 07 -053 Page 35 6/4/2004 459 7/7/2004 471 8/2/2004 480 9/13/2004 493 10/12/2004 495 11/2/2004 505 12/7/2004 521 1/10/2005 539 2/1/2005 554 3/3/2005 566 4/7/2005 575 5/5/2005 579 5/15/2005 583 7/1/2005 592 8/1/2005 600 9/2/2005 610 9/29/2005 619 11/7/2005 625 12/2/2005 632 1/6/2006 638 2/2/2006 643 3/6/2006 649 3/31/2006 654 5/10/2006 664 6/2/2006 671 6/30/2006 675 8/1/2006 690 9/6/2006 699 Check Number Description BMW Services BMW Services BMW Services BMW Services BMW Services BMW Services BMW Services BMW Services BMW Services BMW Services BMW Services BMW Services BMW Services BMW Services BMW Services BMW Services BMW Services BMW Services BMW Services BMW Services BMW Services BMW Services BMW Services BMW Services BMW Services BMW Services BMW Services BMW Financial Financial Financial Financial Financial Financial Financial Financial Financial Financial Financial Financial Financial Financial Financial Financial Financial Financial Financial Financial Financial Financial Financial Financial Financial Financial Financial Financial Check Amount $572.62 $572.62 $572.62 $572.62 $572.62 $572.62 $572.62 $572.62 $572.62 $572.62 $572.62 $572.62 $404.81 $404.81 $404.81 $404.81 $404.81 $404.81 $404.81 $404.81 $404.81 $824.62 $429.81 $404.81 $404.81 $404.81 $404.81 $404.81 Payment Date 06/03/04 07/06/04 07/31/04 09/10/04 10/08/04 11/01/04 12/06/04 01/07/05 01/31/05 03/02/05 04/06/05 05/04/05 05/18/05 06/30/05 07/29/05 09/01/05 09/28/05 11/05/05 12/01/05 01/05/06 02/01/06 03/03/06 03/30/06 05/09/06 06/01/06 06/29/06 07/31/06 09/05/06 Amount $572.62 $572.62 $572.62 $572.62 $572.62 $572.62 $572.62 $572.62 $572.62 $572.62 $572.62 $572.62 $404.81 $404.81 $404.81 $404.81 $404.81 $404.81 $404.81 $404.81 $404.81 $824.62 $429.81 $404.81 $404.81 $404.81 $404.81 $404.81 Morton, 07 -053 Page 36 Check Check Check Date Number Description Amount Payment Date Amount Services BMW Financial 11/3/2006 709 Services $404.81 11/02/06 $404.81 BMW Financial 12/1/2006 715 Services $404.81 11/30/06 $404.81 BMW Financial 1/9/2007 721 Services $404.81 01/08/07 $404.81 BMW Financial 2/9/2007 726 Services $404.81 02/08/07 $404.81 BMW Financial 3/6/2007 730 Services $404.81 03/05/07 $404.81 BMW Financial 4/9/2007 735 Services $404.81 04/06/07 $404.81 BMW Financial 5/8/2007 738 Services $404.81 05/07/07 $404.81 BMW Financial 6/11/2007 747 Services $404.81 06/08/07 $404.81 Total $29,629.33 $29,629.33 a. No payment was issued from Premier's account to BMW Financial Services for the month of October 2006. 1. Morton paid the October monthly payment to BMW Financial Services from his personal account at Dollar Bank (Account No. x)x>oo(9050) via electronic check number 5042 dated October 10, 2006, in the amount of $404.81. aa. Morton subsequently reimbursed himself in the amount of $404.81 via check number 701, dated October 5, 2006, from Premier's account at Dollar Bank. b. Morton signed each physical check issued as an authorized signatory over Premier's account at Dollar Bank. 111. Premier's 2003 Federal Tax Return Form 4562, Depreciation and Amortization, documents 10,195 total miles accrued on the 2002 BMW during the 2003 calendar year. a. Business /investment miles claimed during the year totaled 8,171. b. Commuting miles claimed during the year totaled 2,024. 1. Commuting miles driven are considered personal miles for tax purposes. c. Morton claimed no personal miles on the vehicle other than commuting miles. 112. Premier's 2002, 2004, and 2005 Federal Income Tax Returns did not document any mileage associated with the 2002 BMW. a. Premier's 2002 Federal Tax Return Form 4562 noted no automobile and /or miles claimed. b. Premier's 2004 and 2005 Federal Tax Returns provided for review had no Form 4562 attached to document mileage incurred. Morton, 07 -053 Page 37 113. Morton maintained insurance on the leased BMW through Nationwide Mutual Insurance Company under Policy No. 54 37 D 319140. a. The policy is in Premier's name C/O Morton at 1023 Chanticleer Drive, Crescent, PA 15046. b. The policy was effective as of June 10, 2002. c. The policy was a Century II Auto Policy. 114. Morton's leased BMW was the only vehicle covered via the policy. a Morton was initially noted as the only driver covered via the policy. b. Michelle Morton was added to the register of insured drivers on the policy effective August 30, 2002. 115. In addition to maintaining insurance on the leased BMW through Nationwide, Morton and Michelle Morton maintain personal vehicle insurance through Nationwide. a. Morton and Michelle Morton have utilized Nationwide for personal vehicle insurance since at least November 7, 1995. b. The policy number associated with the Morton's personal policy is 54 37 B 640884. 116. Morton and Michelle Morton concurrently insured at least two personal vehicles under policy number 54 37 B 640884 from at least October 26, 1995, through April 21, 2004. a. From October 26, 1995, through May 10, 2001, the policy covered a 1991 Acura Integra and a 1990 Plymouth Laser. b. From May 11, 2001, through September 8, 2003, the policy covered the same 1991 Acura and a 2000 Nissan Exterra. c. From September 9, 2003, through April 20, 2004, the policy covered the same 1991 Acura and a 2004 Mitsubishi Endeavor. 1. The 2004 Mitsubishi is a leased vehicle. d. From April 21, 2004, through at least April 12, 2007, the only vehicle insured via the policy was the 2004 Mitsubishi. 117. From April 21, 2004, through at least April 12, 2007, the Morton's insured only one personal vehicle through Nationwide. a. The 2004 Mitsubishi was the Morton's primary vehicle for personal use during this time frame. 118. Between the dates of July 14, 2002, and June 8, 2007, Morton issued twenty checks totaling $6,692.55 to Nationwide Mutual Insurance Company (hereafter Nationwide) from Premier's account at Dollar Bank to account for automobile insurance premiums due on his leased BMW as shown below: Check Date Check Number Payee Amount Memo Policy Period Credited 306 Commonwealth of Pennsylvania $36.00 Registration 3/20/2004 06/10/02- 7/14/2002 181 Nationwide Mutual Insurance $592.40 Check Not Available 12/10/02 9/11/2002 203 Nationwide Mutual Insurance $24.10 5437D319140 Unknown 12/10/02- 11/21/2002 243 Nationwide Mutual $308.40 5437D319140 06/10/03 12/10/02- 1/29/2003 279 Nationwide Mutual $308.40 5437D319140 06/10/03 06/10/03- 6/1/2003 328 Nationwide Mutual Insurance $293.15 5437D319140 12/10/03 06/10/03- 8/19/2003 355 Nationwide Mutual $293.15 5437D319140 12/10/03 12/10/03- 11/21/2003 387 Nationwide Mutual Insurance $365.90 5437D319140 06/10/04 12/10/03- 2/2/2004 407 Nationwide Mutual Insurance $365.90 5437D319140 06/10/04 06/10/04- 5/22/2004 453 Nationwide Mutual Insurance $329.55 5437D319140 12/10/04 06/10/04- 8/21/2004 485 Nationwide Insurance $329.55 5437D319140 12/10/04 12/10/04- 11/21/2004 515 Nationwide Insurance $636.80 5437D319140 06/10/05 06/10/05- 5/30/2005 587 Nationwide Mutual Insurance $332.60 5437D319140 12/10/05 06/10/05- 8/11/2005 604 Nationwide Insurance $332.60 5437D319140 12/10/05 12/10/05- 11/29/2005 633 Nationwide Mutual Insurance $339.40 5437D319140 06/10/06 12/10/05- 2/13/2006 646 Nationwide Insurance $339.40 5437D319140 06/10/06 06/10/06- 5/29/2006 670 Nationwide Mutual Insurance $339.40 5437D319140 12/10/06 06/10/06- 8/15/2006 695 Nationwide Mutual Insurance $339.40 5437D319140 12/10/06 12/10/06- 11/27/2006 714 Nationwide Insurance $365.90 5437D319140 06/10/07 12/10/06- 2/5/2007 727 Nationwide Mutual $344.00 5437D319140 06/10/07 6/8/2007 746 Nationwide Insurance $112.55 Check Not Available Unknown Total $6,692.55 Check Date Check Number Payee Amount Description 3/23/2003 306 Commonwealth of Pennsylvania $36.00 Registration 3/20/2004 424 Commonwealth of Pennsylvania $36.00 Registration 6/29/2004 468 Sewickley Car Store $515.74 Service Morton, 07 -053 Page 38 a. Morton's BMW has been the only vehicle insured via policy number 54 37 D 319140 over the life of the policy. b. Morton signed at least eighteen of the twenty checks issued as an authorized signatory over Premier's account. 1. Check numbers 181 and 746 were unavailable for review to determine the individual signing as the authorized signatory. 119. Morton issued at least eight additional checks from Premier's account at Dollar Bank totaling $829.73 to the Commonwealth of Pennsylvania, the Sewickly Car Store, and BMW Service Card for automobile related expenses as follows: Check Date Check Number Payee Amount Description 3/1/2005 572 Commonwealth of Pennsylvania $36.00 Registration 3/1/2005 568 Sewickley Car Store $64.09 Service 3/20/2006 653 Commonwealth of Pennsylvania $36.00 Registration 4/22/2006 662 BMW Card Services $69.90 Service 4/13/2007 736 Commonwealth of Pennsylvania $36.00 Registration Total $829.73 Morton, 07 -053 Page 39 a. Specific payment to the Commonwealth of Pennsylvania for vehicle registration fees total $180.00. b. Specific payment to the Sewickley Car Store for service provided totals $579.83. c. Specific payment to BMW Card Services totals $69.90. d. Of the eight checks issued, Morton signed all but check number 568 as an authorized signatory for Premier's account. 1. Check number 568 was signed by Michelle Morton as an authorized signatory on the account. 120. Premier maintained various telephone accounts and telephone numbers from approximately October 2001 through June 2007 in relation to its operation. a. Premier maintained a landline account with IDT America from October 10, 2001, to August 26, 2004, under Account No. 2109293. 1. The subscriber information on the account was documented as: Premier Coaching Associates, Inc. 1023 Chanticleer Drive Crescent, PA 15046 -5085 Telephone number: (724) 457 -7532 aa. The address of 1023 Chanticleer Drive, Crescent, PA 15046 is Morton's home address. b. Premier maintained a landline account with Verizon from at least August 27, 2004, through approximately March 22, 2007, under Account No. 724 457 7532 946. 1. The subscriber information on the account was documented as: Jamie Morton T -A Premier Coaching Associates 1023 Chanticleer Dr. Crescent, PA 15046 -5085 2. The telephone number associated with the account was 724 -457- 7532. 3. Premier's landline contact number was discontinued as of approximately March 22, 2007. c. The address of 1023 Chanticleer Drive, Crescent, PA 15046 is Morton's Check Date Check Number Payee Amount Memo 7/17/2002 182 IDT America $14.48 2109293 8/19/2002 191 IDT America $26.12 2109293 9/30/2002 209 IDT America $19.09 2109293 10/19/2002 223 IDT America $14.62 2109293 11/21/2002 242 IDT America $14.64 724 - 457 -7532 12/22/2002 253 IDT America $12.35 2109293 9/2/2003 361 IDT $14.37 724 - 457 -7532 1/18/2003 273 IDT America $12.83 2109293 3/2/2003 298 IDT America $13.44 2109293 3/23/2003 301 IDT America $12.26 724 - 457 -7532 4/28/2003 312 IDT America $11.59 2109293 5/26/2003 322 IDT America $14.37 2109297 6/19/2003 333 IDT America $10.48 2109293 7/23/2003 348 IDT America $12.72 2109293 9/24/2003 367 IDT America $18.11 2109293 10/21/2003 377 IDT America $19.09 724 - 457 -7532 11/21/2003 386 IDT America $12.38 2109293 1/8/2004 392 IDT America $10.13 2109293 2/2/2004 408 IDT America $21.85 2109293 2/22/2004 417 IDT America $6.04 2109293 3/20/2004 423 IDT America $12.42 2109293 4/23/2004 440 IDT America $11.43 2109293 5/22/2004 455 IDT America $12.43 2109293 6/30/2004 473 IDT America $11.28 2109293 7/28/2004 481 IDT America $13.59 2109293 8/21/2004 489 IDT America $12.61 2109293 10/4/2004 496 IDT America $44.32 2109293 Total $409.04 Morton, 07 -053 Page 40 home address. 121. Morton maintained a personal landline telephone number at his residence during the same time that Morton maintained Premier's landline telephone number at his residence. a. Morton maintained personal telephone service with Verizon from approximately June 2002 through approximately mid - January 2004. b. Morton maintained personal telephone service with IDT America from approximately mid - January 2004 through at least June 30, 2007. 122. Morton issued or approved the issuance of twenty -seven checks to IDT or IDT America from Premier's account totaling $409.04 for land based telephone services provided for Premier during the time frame of July 2002 through October 2004 as shown below: a. The memo section of each check issued references the account number assigned to the account or the telephone number assigned to the account. b. Morton signed all checks issued as an authorized signatory on the account Morton, 07 -053 Page 41 with the exception of check number 361. 1. Weaver signed check number 361 as an authorized signatory for Premier although not listed as such on the signature card for Premier's account. 123. In addition to land based telephone services provided by Verizon, Morton entered into a contract with Verizon Wireless for cellular telephone service with an effective date of December 5, 2004. a. Morton's account is documented under Account No. 219984432 (a /k/a Morton's ID Number). 1. The type of account is documented as a "PE" account. aa. The abbreviation "PE" represents a "Personal" account. b. Billing account information documents Morton as the account holder and his residence address as the billing address. c. The contract was for a two -year period to end on December 5, 2006. 124. Morton initially obtained two cellular phones and established two cellular telephone numbers on the account. 8801. a. The main plan entered into was Verizon's "Americas Choice Pri Share 800 Anytime - Unlimited In- Network" plan. 1. The number associated with the main calling plan was (412) 334- 2. The basic monthly fee was $59.99 per month. 3. Morton was the primary user of the telephone associated with telephone number (412) 334 -8801. b. The secondary plan entered into was Verizon's "Americas Choice Secondary Share In- Network Calling" plan. 1. The number associated with the secondary calling plan was (412) 334 -8802. 2. The additional monthly fee for the additional telephone was $20.00 per month. 3. Michelle Morton was the primary user of the telephone associated with telephone number (412) 334 -8802. c. Morton's signature appears on both contracts. 125. On or about December 2006, Morton entered into a second contract with Verizon Wireless for cellular telephone service. a. The effective date of the contract was December 10, 2006, with an ending date of December 10, 2008. b. Morton's account number, billing address, and account holder information Check Date Check Number Payee Total Amount Memo Amount Credited to Verizon Wireless 10/30/2004 504 Verizon $37.84 Phone $0.00 11/30/2004 523 Verizon $52.81 724 - 457 -7532 $0.00 1/3/2005 541 Verizon $51.77 724 - 457 -7532 $0.00 1/24/2005 548 Verizon $116.95 724 457 7532 Unknown 1/24/2005 549 Verizon Wireless $225.42 219984432- 00001 Unknown 2/27/2005 561 Verizon $130.97 Cell /Line Fees 78.60 4/3/2005 574 Verizon $150.39 Phone 99.37 Morton, 07 -053 Page 42 remained constant. 126. Although Morton's account information remained constant, Morton entered into a different calling plan regarding the second contract to which four separate telephones and telephone numbers were assigned. a. Morton entered into Verizon's "America's Choice 11 Familyshare Pri 700 — Any Unl N &W/ In Call" plan as the primary plan. 1. Morton retained the same cellular telephone number with the new plan. 2. The basic monthly fee was $60.00 per month. 127. The secondary plan entered into regarding the three remaining cellular phones was Verizon's "America's Choice 11 Familyshare Secondary 700 Shr w /Pri" plan. a. Michelle Morton retained the same cellular telephone number with the new plan. 1. The fee for Michelle Morton's cellular phone was $9.99 monthly. b. The two remaining cellular telephone numbers assigned to the account were (412) 334 -7813 and (412) 303 -6798. 1. Fees associated with the two remaining cellular phones were $9.99 each per month. 2. The remaining cellular telephones were provided to Morton's daughter and Michelle Morton's parents for use. 128. Morton began receiving one statement from Verizon in regard to billing which covered his local, long distance, and wireless service beginning with the statement referencing the bill date of February 7, 2005. a. Verizon terms the billing of various services into one complete statement as "single billing." 129. Morton issued thirty checks to Verizon or Verizon Wireless from Premier's account at Dollar Bank totaling $4,740.74 for land based and cellular telephone services provided during the time frame of at least August 27, 2004, through March 23, 2007, as shown below: Check Date Check Number Payee Total Amount Memo Amount Credited to Verizon Wireless Wireless 4/24/2005 577 Verizon Wireless $169.81 724 - 457 -7532 109.13 5/30/2005 589 Verizon $153.38 724 - 457 -7532 99.80 6/20/2005 590 Verizon $153.95 724 - 457 -7532 100.35 7/18/2005 596 Verizon $155.31 724 - 457 -7532 101.53 8/30/2005 612 Verizon $154.74 724 - 457 -7532 102.64 9/24/2005 617 Verizon $155.52 724 - 457 -7532 99.94 10/25/2005 623 Verizon $153.15 N/A 101.67 12/2/2005 630 Verizon $152.04 N/A 101.68 12/30/2005 635 Verizon $152.39 N/A 100.59 1/3/2006 639 Verizon Wireless $154.53 724 - 457 -7532 102.32 2/24/2006 648 Verizon $151.71 N/A 101.27 3/27/2006 652 Verizon $360.77 N/A 308.62 4/27/2006 660 Verizon $158.33 N/A 103.88 5/22/2006 669 Verizon $154.80 N/A 101.07 6/26/2006 674 Verizon Wireless $158.68 N/A 104.60 7/24/2006 686 Verizon $156.49 N/A 100.87 8/21/2006 694 Verizon $155.00 N/A 101.32 10/27/2006 706 Verizon $152.63 N/A 98.75 12/1/2006 713 Verizon $152.90 N/A 98.75 1/2/2007 718 Verizon Wireless $155.20 N/A 101.68 1/25/2007 725 Verizon $247.27 N/A 194.56 3/6/2007 729 Verizon $208.96 N/A 154.08 3/23/2007 733 Verizon $207.03 N/A 150.58 Total $4,740.74 $2,917.65 Morton, 07 -053 Page 43 a. No payment was issued from Premier's account to Verizon for the bill date of September 7, 2006. 1. Morton paid the October monthly payment to Verizon from his personal account at Dollar Bank (Account No. )xx>oo(9050) via electronic check number 5043 dated October 6, 2006, in the amount of $153.99. aa. Morton subsequently reimbursed himself in the amount of $153.99 via check number 702, dated October 5, 2006, from Premier's account at Dollar Bank. b. Morton signed each physical check issued as an authorized signatory over Premier's account at Dollar Bank. c. Fees specifically incurred regarding cellular phone usage total at least $2,917.65. Check Date Check Number Pa ee Amount Dis • osition 09/30/2002 1068 Jamie Morton $1,232.25 Deposit Account #xxx>ooc9050 11/28/2002 1082 Michelle Morton $3,723.50 Unknown 11/2/2003 1125 Jamie Morton $839.50 Deposit Account #xxx>ooc9050 06/30/2004 1142 Jamie Morton $848.90 Deposit Account #xxx>ooc9050 10/9/2004 1145 Jamie Morton $440.95 Deposit Account #xxx>ooc9050 12/27/2004 1156 Jamie Morton $692.52 Unknown Total $7,777.62 Morton, 07 -053 Page 44 130. Morton employed various coaches through Premier for services rendered during the time frame of July 2002 through June 30, 2007 as shown below: 2002 2003 B. Crosby B. Crosby P. David S. DeLatte S. DeLatte D. Herring M. Parfitt R. Prigorac J. Reiff M. Waldron M. Morton J. Morton D. Herring M. Parfitt J. Reiff M. Waldron J. Morton 2004 2005 S. DeLatte S. DeLatte D. Herring M. Sosko J. Reiff E. Watts M. Sosko K. Williams E. Wheaton J. Morton K. Williams J. Morton 2006 2007 S. DeLatte R. Redman R. Redman J. Morton M. Sosko E. Watts J. Morton a. Morton was documented as receiving compensation as an employee of Premier in 2002, 2003, 2004, 2005, 2006, and 2007. b. Michelle Morton was documented as receiving compensation as an employee of Premier in 2002 only. 131. From at least July 2002 through January 31, 2005, Morton issued payment to Premier's employees directly from Premier's account at Dollar Bank. a. Morton and Michele Morton received at least six checks totaling $7,777.62 representing payroll issued from Premier's account during the time frame of July 1, 2002, through January 31, 2005, as shown below: b. Morton signed each of the checks issued as an authorized signatory over Premier's account. c. Additional payroll checks issued to Premier employees from July 1, 2002, through February 27, 2005 (not including Morton or Michelle Morton) totaled at least $41,750.40. 132. From at least February 28, 2005, through June 30, 2007, Morton utilized the services of Paychex, Inc. (hereafter Paychex) for the purpose of issuing payroll to Premier's employees. a. Paychex is a nationwide payroll and human resource company. b. Premier's client number with Paychex was 0046 -X859 during this time frame. 133. Paychex issued payroll to Premier's employees on a monthly basis. Check Date, Check Number Payee Amount Disposition 05/31/05 3673600006 Jamie Morton $ 858.57 Unknown 06/30/05 3673600009 Jamie Morton $ 858.57 Deposit Account #xxx>ooc9050 11/30/05 3673600020 Jamie Morton $ 445.95 Deposit Account #xxx>ooc9050 05/31/06 3673600037 Jamie Morton $ 858.57 Deposit Account #xxx>ooc9050 06/30/06 3673600039 Jamie Morton $ 858.57 Deposit Account #xxx>ooc9050 07/31/06 3673600041 Jamie Morton $ 700.19 Deposit Account #xxx>ooc9050 06/01/07 3673600058 Jamie Morton $ 426.72 Deposit Account #xxx>ooc9050 Total $5,007.14 Morton, 07 -053 Page 45 a. Morton notified Paychex on a monthly basis of the number of hours worked by individual employees in order to generate monthly payroll. b. Paychex automatically withdrew funds directly from Premier's account at Dollar Bank to issue payroll and to account for taxes for Premier's employees. 134. From February 28, 2005, through June 30, 2007, Morton received seven checks totaling $5,007.14 from Paychex representative of payroll from Premier as shown below: a. Additional payroll checks issued to Premier employees through ADP from February 28, 2005, through June 30, 2007 (not including Morton or Michelle Morton) totaled at least $32,083.61. 135. Morton maintains a personal checking and savings account under Account No. xxx>ooc9050 with Dollar Bank. a. Morton opened the account on May 5, 1994. b. Morton is an authorized signator on the account. c. Account activity for both the checking and savings account is documented on the same monthly statement. 136. Of the thirteen checks issued to Morton or Michelle Morton totaling $12,784.76 representative of payroll received from Premier, ten checks totaling $7,510.17 were deposited into Morton's personal account at Dollar bank. a. The ultimate disposition of the three remaining checks totaling $5,274.59 could not be determined. 137. In addition to conducting Premier's business operations from the Moon Area School District pool and pool office, Morton also conducted business operations from his residence. a. Morton maintained a land based telephone number at his residence for Premier. b. Morton utilized his residence mailing address as a mailing address for Premier. 138. Morton charged rent to Premier as a result of conducting business operations from his home. a. Morton levied rental fees on Premier for use of an office in Morton's home Check Date Check Number Payee Amount Disposition 10/19/2002 221 Jamie Morton $150.00 Dep. #xxx>ooc9050 10/19/2002 222 Jamie Morton $100.00 Dep. #xxx>ooc9050 10/29/2002 229 Jamie Morton $100.00 Dep. #xxx>ooc9050 10/29/2002 230 Jamie Morton $150.00 Dep. #xxx>ooc9050 11/21/2002 237 Jamie Morton $150.00 Dep. #xxx>ooc9050 11/21/2002 238 Jamie Morton $100.00 Dep. #xxx>ooc9050 12/24/2002 255 Jamie Morton $150.00 Unknown 12/24/2002 256 Jamie Morton $100.00 Dep. #xxx>ooc9050 2/2/2003 283 Jamie Morton $100.00 Unknown 2/2/2003 284 Jamie Morton $150.00 Dep. #xxx>ooc9050 4/28/2003 315 Jamie Morton $450.00 Dep. #xxx>ooc9050 4/28/2003 316 Jamie Morton $300.00 Dep. #xxx>ooc9050 7/3/2003 339 Jamie Morton $300.00 Dep. #xxx>ooc9050 7/3/2003 340 Jamie Morton $450.00 Dep. #xxx>ooc9050 9/22/2003 364 Jamie Morton $200.00 Dep. #xxx>ooc9050 11/21/2003 385 Jamie Morton $800.00 Dep. #xxx>ooc9050 1/26/2004 404 Jamie Morton $350.00 Dep. #xxx>ooc9050 1/26/2004 405 Jamie Morton $250.00 Dep. #xxx>ooc9050 4/16/2004 437 Jamie Morton $750.00 Dep. #xxx>ooc9050 5/1/2004 446 Jamie Morton $250.00 Unknown 5/31/2004 463 Jamie Morton $250.00 Unknown 7/3/2004 477 Jamie Morton $250.00 Dep. #xxx>ooc9050 10/30/2004 507 Jamie Morton $750.00 Dep. #xxx>ooc9050 12/5/2004 524 Jamie Morton $500.00 Dep. #xxx>ooc9050 3/1/2005 569 Jamie Morton $500.00 Dep. #xxx>ooc9050 3/24/2005 573 Jamie Morton $550.00 Dep. #xxx>ooc9050 5/31/2005 586 Jamie Morton $550.00 Unknown Total $8,700.00 Morton, 07 -053 Page 46 and for use of Morton's garage. 139. From at least October 2002 through May 2005, Morton issued himself a minimum of twenty -seven checks from Premier's account at Dollar Bank totaling $8,700.00 for rent due the use of an office in Morton's home and Morton's garage as follows: a. Morton signed all twenty -seven checks issued for rent as an authorized signatory over Premier's account. b. Morton deposited a minimum of twenty -two rental checks totaling $7,400.00 into his personal account at Dollar Bank. c. Morton did not issue himself any rental checks beyond May 2005. 140. Morton routinely utilized Premier's account at Dollar Bank to issue reimbursement to himself or his spouse for various categories including rental car fees, gasoline, entertainment, mileage, meals, automobile service, internet service, business promotions, trips /travel, parking, consultations, and the purchase of a laptop computer totaling $26,888.47 as follows: Check Date', Check Number Payee Amount Description Disposition 9/22/2002 204 Jamie Morton $257.70 Reimbursed Rental Car Dep. #xxxxxx9050 9/22/2002 206 Jamie Morton $130.89 Gas Reimbursement Dep. #xxxxxx9050 9/22/2002 207 Jamie Morton $50.45 Reimbursement Pirate Game Dep. #xxxxxx9050 9/22/2002 205 Jamie Morton $73.17 Entertainment -Meals Dep. #xxxxxx9050 9/30/2002 214 Michelle Morton $131.04 Mileage- September Dep. #xxxxxx9050 10/19/2002 220 Jamie Morton $109.56 Mailbox Reimbursement Dep. #xxxxxx9050 11/3/2002 231 Michelle Morton $204.76 October Mileage Unknown 11/21/2002 239 Jamie Morton $163.62 Meals Dep. #xxxxxx9050 11/21/2002 240 Jamie Morton $113.49 Auto & Fuel Dep. #xxxxxx9050 11/28/2002 250 Michelle Morton $451.87 Mileage (Business /Employee) Dep. #xxxxxx9050 12/24/2002 257 Michelle Morton $401.50 Mileage- December Dep. #xxxxxx9050 1/5/2003 268 Jamie Morton $286.80 Internet Reimbursement Dep. #xxxxxx9050 1/18/2003 275 Jamie Morton $1,174.53 Reimbursement - Business Promotion Dep. #xxxxxx9050 1/18/2003 276 Jamie Morton $143.09 Gas /Carwash Reimbursement Dep. #xxxxxx9050 1/18/2003 277 Jamie Morton $205.14 Entertainment- Reimbursement Dep. #xxxxxx9050 2/18/2003 288 Michelle Morton $414.00 January Mileage Dep. #xxxxxx9050 2/18/2003 289 Jamie Morton $88.95 Auto Reimbursement Dep. #xxxxxx9050 2/18/2003 291 Jamie Morton $163.97 Meals Reimbursement Dep. #xxxxxx9050 7/3/2003 341 Jamie Morton $325.90 Business Auto Dep. #xxxxxx9050 7/3/2003 342 Jamie Morton $519.78 Dining Reimbursement Dep. #xxxxxx9050 7/3/2003 343 Michelle Morton $1,080.00 Mileage Reimbursement Unknown 4/16/2004 438 Jamie Morton $286.80 Internet 2003 Dep. #xxxxxx9050 5/6/2004 450 Jamie Morton $562.52 Meals Reimburse Dep. #xxxxxx9050 5/6/2004 451 Jamie Morton $357.14 Auto Reimbursement Dep. #xxxxxx9050 5/31/2004 462 Jamie Morton $182.81 Auto Reimbursement Unknown 5/31/2004 464 Jamie Morton $229.60 Meals Reimbursement Unknown 7/28/2004 483 Jamie Morton $172.30 Auto Fuel Unknown 8/21/2004 484 Michelle Morton $200.00 August Mileage Unknown 10/10/2004 497 Michelle Morton $200.00 Mileage Reimburse Unknown 10/30/2004 506 Michelle Morton $250.00 Mileage Unknown 11/7/2004 511 Michelle Morton $96.48 Reimbursement Dep. #xxxxxx9050 11/7/2004 512 Jamie Morton $341.26 Fuel Reimbursement Dep. #xxxxxx9050 11/14/2006* 513 Michelle Morton $138.01 Reimbursement Unknown 11/22/2004 516 Jamie Morton $496.95 Meals Reimburse Dep. #xxxxxx9050 11/22/2004 517 Jamie Morton $140.91 Fla Reimburse Dep. #xxxxxx9050 11/30/2004 520 Michelle Morton $360.00 Mileage Unknown 12/5/2004 525 Jamie Morton $149.90 Reimbursement Dep. #xxxxxx9050 12/5/2004 526 Jamie Morton $417.78 Internet Reimbursement Dep. #xxxxxx9050 12/28/2004 531 Michelle Morton $432.00 Mileage December Unknown 12/28/2004 532 Michelle Morton $134.39 Meals Reimbursement Unknown 12/28/2004 534 Jamie Morton $96.92 Gas & Parking Receipts Unknown 1/29/2005 555 Michelle Morton $420.00 Mileage Jan (1050) Unknown 2/28/2005 565 Michelle Morton $420.00 Mileage February Unknown 4/8/2005 576 Michelle Morton $420.00 Mileage Reimbursement Unknown 5/5/2005 580 Michelle Morton $420.00 Mileage Unknown 5/30/2005 585 Michelle Morton $420.00 Mileage May Unknown Morton, 07 -053 Page 47 Check Date', Check Number Payee Amount Description Disposition 6/28/2005 593 Michelle Morton $420.00 Mileage Unknown 7/18/2005 594 Jamie Morton $697.61 Meals Reimbursed Unknown 7/18/2005 595 Jamie Morton $578.73 Auto Reimbursed Unknown 7/24/2005 598 Michelle Morton $420.00 Mileage Unknown 8/1/2005 601 Jamie Morton $666.83 Meals Reimbursed Dep. #xxxooc9050 8/1/2005 602 Jamie Morton $429.39 Auto Reimbursed Dep. #xxxooc9050 8/30/2005 613 Michelle Morton $420.00 Mileage Dep. #xxxooc9050 9/30/2005 621 Michelle Morton $520.00 Mileage Unknown 11/2/2005 626 Michelle Morton $430.00 Mileage 10/05 Unknown 12/7/2005 634 Michelle Morton $400.00 Mileage- November Unknown 1/29/2006 644 Michelle Morton $400.00 December Mileage Auto Dep. #xxxooc9050 3/27/2006 655 Michelle Morton $400.00 Mileage Unknown 5/15/2006 665 Jamie Morton $542.12 Meals Reimbursed Dep. #xxxooc9050 5/15/2006 666 Jamie Morton $1,036.72 Auto Reimbursed Unknown 5/15/2006 667 Michelle Morton $520.00 Mileage 4 -06 Dep. #xxxooc9050 6/26/2006 676 Jamie Morton $210.12 Reimbursement Dep. #xxxooc9050 6/26/2006 677 Jamie Morton $301.62 Auto Reimburse Dep. #xxxooc9050 6/26/2006 678 Michelle Morton $520.00 Mileage -June Dep. #xxxooc9050 6/26/2006 679 Jamie Morton $47.62 Meals Reimbursed Dep. #xxxooc9050 6/26/2006 680 Michelle Morton $120.00 Reimburse Consultation Dep. #xxxooc9050 7/20/2006 685 Jamie Morton $401.18 Reimbursement Unknown 7/27/2006 691 Michelle Morton $460.00 July 06 Travel Dep. #xxxooc9050 10/5/2006 701 Jamie Morton $404.81 Lease (Business Auto) Dep. #xxxooc9050 10/5/2006 702 Jamie Morton $153.99 Fuel (Business Auto) Dep. #xxxooc9050 11/13/2006 711 Jamie Morton $829.91 Gas /Auto Reimbursement Dep. #xxxooc9050 11/13/2006 712 Jamie Morton $427.84 Meals /Entertainment Reimburse Dep. #xxxooc9050 12/28/2006 720 Jamie Morton $1,294.00 Reimbursed Laptop Dep. #xxxooc9050 Total $26,888.47 Check Date Check Number Payee Amount Memo 11/1/2003 378 Best Buy $74.89 Computer Desk Morton, 07 -053 Page 48 *[The date appears to be a typographical error.] a. Morton signed each check issued for reimbursement as an authorized signatory for Premier. 1. Of the twenty -nine checks issued to Michelle Morton as reimbursement, Morton signed Michelle Morton's name endorsing eighteen of said checks totaling $6,662.62 b. Of the $26,888.47 issued to Morton or his spouse, approximately $15,342.77* was deposited into Morton's personal account at Dollar Bank. *[The actual calculation appears to be higher.] 141. In addition to reimbursements received, Morton issued at least fifteen checks from Premier's Dollar Bank account totaling $1,379.78 for his own private use regarding the purchase of goods or services as shown below: Check Date Check Number Payee Amount Memo 6/19/2003 331 Stanley Steamer $161.89 Office Carpet 5/27/2004 458 Kennywood Park $128.00 724 - 457 -0860 6/16/2004 467 Chanticleer Swim Club $12.00 N/A 8/21/2004 487 Nascar Illustrated $48.00 Subscription 10/7/2004 499 Moon Class of 84 $75.00 N/A 10/30/2004 508 National Geographic $34.00 Dues 11/16/2005 628 David's Designer Portraits $30.00 Jamie 11/16/2005 629 David's Designer Portraits $30.00 John 2/5/2006 645 All Pro Restoration $70.00 Carpet Office 4/2/2006 656 Nascar Illustrated $66.00 Renewal X 2 Yrs 4/2/2006 657 Chanticleer Swim Club $303.00 2006 - Morton 10/6/2006 703 Central Baptist Christian School $25.00 Kelsey Morton 5/4/2007 739 Chanticleer Swim Club $312.00 Illegible 5/21/2007 744 Cliff Roehn Photography $10.00 Photos -John Morton Total $1,379.78 Check Date Check Number Payee Amount Memo 7/14/2002 180 Wells Fargo Card Services $42.92 xxxx xxxx xxxx 9607 8/5/2002 187 Julie Reiff $77.02 Reimburse -Ink 8/6/2002 188 Postmaster $44.40 Mailings -Fall 8/6/2002 189 State Worker's Insurance Fund $1,071.00 04440415 Renewal Morton, 07 -053 Page 49 Morton signed each of the fifteen checks issued as an authorized signatory on Premier's account with the exception of check number 467. 1. Michelle Morton signed check number 467 as the authorized signatory on Premier's account. 142. In addition to personal gain received by Morton as outlined in the previous findings, Premier, Morton's privately owned business, realized multiple benefits as a result of Premier's receipt of funds for service agreements entered into with the Moon and Moon Area Aqua Clubs. a. Premier realized the benefits through the issuance of checks from Premier's account to issue payment for charges incurred with a Wells Fargo Credit Card, employee reimbursement, postmasters fees, insurance fees, duplicating /copying fees, Sprint cellular phone fees, accounting fees, legal fees, and supplies. b. Premier realized the benefits as a result of the Moon and Moon Area Aqua Clubs utilizing the MASD pool and accompanying facilities (showers, locker rooms, etc.). 1. Premier realized the benefits at the time that [Morton] was responsible for scheduling activities at the MASD pool. 143. From July 14, 2002, through June 27, 2007, Morton or Michelle Morton issued and authorized an additional one hundred twenty -eight checks /electronic payments from Premier's account at Dollar Bank for various expenses incurred totaling $36,370.53 including the following: a. Check Date Check Number', Payee Amount Memo 8/19/2002 190 USPS $37.00 Second Mailing 8/19/2002 193 WF Bus Payment Processing $100.00 xxxx xxxx xxxx 9607 8/28/2002 195 Michelle Morton $31.11 Reimbursement Registration 9/4/2002 197 Kicher Duplicating $111.28 Moon Swim Lessons 9/7/2002 198 USPS $44.40 Postage 9/9/2002 200 Joseph Keppel & Son $656.50 Illegible 9/9/2002 201 Wells Fargo Card Services $795.79 xxxx xxxx xxxx 9607 9/30/2002 211 State Worker's Insurance Fund $567.00 4440415 11/21/2002 236 Wells Fargo Card Services $57.00 N/A (Check Not Signed) 11/28/2002 245 State Worker's Insurance Fund $567.00 4440415 12/8/2002 251 Sprint PCS $97.38 Cell Phone 12/8/2002 252 Wells Fargo Card Services $1,200.00 xxxx xxxx xxxx 9607 1/5/2003 267 Sprint PCS $40.71 N/A (Check Not Available) 1/18/2003 274 Wells Fargo Card Services $100.00 N/A (Check Not Available) 2/18/2003 290 Michelle Morton $178.92 Postage Reimbursement 2/18/2003 293 Sprint $40.04 Cell Phone 2/18/2003 295 WF Bus Payment Processing $839.90 xxxx xxxx xxxx 9607 3/5/2003 300 Wilke & Associates $695.00 Taxes 3/23/2003 302 Wells Fargo Card Services $20.00 xxxx xxxx xxxx 9607 3/23/2003 303 Sprint PCS $41.19 669370217 4/28/2003 314 Wells Fargo Card Services $50.00 xxxx xxxx xxxx 9607 5/23/2003 324 Wells Fargo Card Services $50.00 xxxx xxxx xxxx 9607 5/27/2003 325 Postmaster $37.00 Stamps Postage 6/1/2003 327 State Worker's Insurance Fund $358.00 4440415 6/19/2003 334 Wells Fargo Card Services $100.00 xxxx xxxx xxxx 9607 6/23/2003 335 Postmaster $41.52 Postage - Mailings 7/23/2003 350 Wells Fargo Card Services $100.00 xxxx xxxx xxxx 9607 8/19/2003 356 Wells Fargo Card Services $50.00 xxxx xxxx xxxx 9607 9/2/2003 362 State Worker's Insurance Fund $1,071.00 04440415 Renewal 9/24/2003 365 Wells Fargo Card Services $100.00 xxxx xxxx xxxx 9607 9/30/2003 368 State Worker's Insurance Fund $638.00 4440415 10/8/2003 371 Postmaster $37.00 Stamps 10/21/2003 375 Wells Fargo Card Services $100.00 xxxx xxxx xxxx 9607 11/18/2003 382 Wells Fargo Card Services $100.00 xxxx xxxx xxxx 9607 11/20/2003 384 Post Office (Master) $37.00 Stamps 12/17/2003 389 State Worker's Insurance Fund $638.00 4440415 12/18/2003 390 Wells Fargo Credit Services $325.00 xxxx xxxx xxxx 9607 12/18/2003 391 Postmaster $37.00 N/A 1/8/2004 394 State Worker's Insurance Fund $512.00 4440415 1/21/2004 402 Wells Fargo Card Services $150.00 xxxx xxxx xxxx 9607 2/2/2004 409 Postmaster $53.78 Stamps 2/22/2004 416 Wells Fargo $36.00 xxxx xxxx xxxx 9607 3/20/2004 421 Wells Fargo $33.00 xxxx xxxx xxxx 9607 3/22/2004 425 Post Office $40.04 Stamps 4/1/2004 430 Post Office, Postmaster $3.95 Illegible 4/2/2004 432 Postmaster $11.27 N/A 4/15/2004 436 Postmaster $2.49 Mail Morton, 07 -053 Page 50 Check Date Check Number Payee Amount Memo 441 Wells Fargo $50.00 xxxx xxxx xxxx 9607 4/27/2004 443 Postmaster $13.40 N/A 4/30/2004 444 Wilke & Associates $785.00 6409 7013 5/14/2004 452 Postmaster $3.85 Illegible 5/22/2004 456 Wells Fargo $1,000.00 xxxx xxxx xxxx 9607 5/30/2004 460 State Worker's Insurance Fund $636.00 4440415 6/8/2004 465 Postmaster $74.00 Postage 6/30/2004 474 Wells Fargo $250.00 xxxx xxxx xxxx 9607 7/22/2004 478 Wells Fargo Card Services $95.00 xxxx xxxx xxxx 9607 8/21/2004 486 State Worker's Insurance Fund $1,072.00 04440415 Renewal 8/21/2004 490 Wells Fargo $300.00 xxxx xxxx xxxx 9607 9/4/2004 492 Keppel Insurance $990.50 6062 9/25/2004 494 Wells Fargo Card Services $50.00 xxxx xxxx xxxx 9607 10/4/2004 498 State Worker's Insurance Fund $670.00 4440415 10/21/2004 503 Wells Fargo Card Services $50.00 xxxx xxxx xxxx 9607 11/21/2004 514 Wells Fargo Card Services $400.00 xxxx xxxx xxxx 9607 11/30/2004 522 State Worker's Insurance Fund $669.00 4440415 12/13/2004 527 Postmaster $67.97 N/A 12/17/2004 528 Postmaster $7.30 N/A 12/22/2004 529 Postmaster $6.93 N/A 12/28/2004 533 Michelle Morton $26.23 Postage Reimbursement 1/3/2005 538 Wells Fargo Card Services $50.00 xxxx xxxx xxxx 9607 1/24/2005 547 Wells Fargo $100.00 xxxx xxxx xxxx 9607 2/22/2005 560 Postmaster $52.40 N/A 2/27/2005 563 Wells Fargo $200.00 xxxx xxxx xxxx 9607 2/27/2005 564 State Worker's Insurance Fund $669.00 4440415 3/12/2005 571 Wells Fargo $200.00 xxxx xxxx xxxx 9607 4/23/2005 578 Wells Fargo $2,000.00 xxxx xxxx xxxx 9607 5/10/2005 582 Postmaster $44.40 24896976 5/30/2005 588 Wells Fargo $80.00 xxxx xxxx xxxx 9607 6/20/2005 591 Wells Fargo $672.67 xxxx xxxx xxxx 9607 7/21/2005 597 Wells Fargo $50.00 xxxx xxxx xxxx 9607 8/3/2005 603 Postmaster $22.78 N/A 8/11/2005 605 Wells Fargo Card Services $46.90 xxxx xxxx xxxx 9607 8/12/2005 606 Postmaster $37.00 Postage 21448052 8/22/2005 609 Postmaster $15.55 Postage 8/30/2005 611 Joseph Keppel & Son $990.50 Renewal Policy 8/30/2005 614 Postmaster $17.60 E -Bay 9/15/2005 615 Postmaster $6.18 N/A 9/24/2005 616 State Worker's Insurance Fund $734.00 4440415 9/24/2005 618 Wells Fargo $107.96 xxxx xxxx xxxx 9607 10/4/2005 622 Wilke & Associates $889.00 7013 10/21/2005 624 Wells Fargo Card Services $215.85 xxxx xxxx xxxx 9607 11/25/2005 631 Wilke & Associates $1,155.00 9810 12/25/2005 636 Wells Fargo Card Services $214.29 xxxx xxxx xxxx 9607 12/25/2005 637 State Worker's Insurance Fund $777.00 04440415 1/20/2006 640 Wells Fargo Card Services $176.67 xxxx xxxx xxxx 9607 2/12/2006 647 Wells Fargo Card Services $50.00 xxxx xxxx xxxx 9607 Morton, 07 -053 Page 51 Check Date Check Number Payee Amount Memo 651 Wells Fargo Card Services $100.00 N/A 4/22/2006 661 Wells Fargo Card Services $85.68 xxxx xxxx xxxx 9607 5/15/2006 668 Wells Fargo Card Services $400.00 xxxx xxxx xxxx 9607 6/21/2006 673 Wells Fargo Card Services $1,000.00 xxxx xxxx xxxx 9607 7/11/2006 681 Postmaster $14.40 Pa OLN 24896967 7/12/2006 682 Postmaster $14.40 Mailing 7/15/2006 683 Watkins Dulac & Roe, PC $500.00 Retainer Fee 7/15/2006 684 Wells Fargo Card Services $200.00 xxxx xxxx xxxx 9607 8/15/2006 693 Wilke & Associates $695.00 7013 8/15/2006 696 State Workers Insurance Fund $351.00 4440415 8/15/2006 697 Wells Fargo $315.80 xxxx xxxx xxxx 9607 8/30/2006 698 Postmaster $5.70 Tax Returns 9/16/2006 700 Wells Fargo Card Services $100.00 xxxx xxxx xxxx 9607 10/5/2006 Debit Check Express $47.45 N/A 10/7/2006 704 Knabes Swim Shop $46.97 Illegible 10/23/2006 705 Wells Fargo $160.89 xxxx xxxx xxxx 9607 10/23/2006 707 State Workers Insurance Fund $690.00 4440415 11/12/2006 710 Wells Fargo $100.00 xxxx xxxx xxxx 9607 12/5/2006 716 Postmaster $23.40 N/A 12/11/2006 717 Wells Fargo Card Services $700.00 xxxx xxxx xxxx 9607 12/26/2006 719 State Workers Insurance Fund $690.00 4440415 1/10/2007 722 Postmaster $40.35 Pa OLN 29896976 1/10/2007 724 Watkins Dulac & Roe $410.00 005009 KJW 1/16/2007 723 Wells Fargo Card Services $91.76 xxxx xxxx xxxx 9607 2/19/2007 728 Wells Fargo Card Services $150.00 xxxx xxxx xxxx 9607 3/16/2007 732 Postmaster $23.40 N/A 3/23/2007 734 Wells Fargo Card Services $100.00 xxxx xxxx xxxx 9607 4/24/2007 737 Wells Fargo Card Services $100.00 xxxx xxxx xxxx 9607 5/4/2007 740 Postmaster $41.00 Postage 5/11/2007 741 Postmaster $2.79 Postage 5/21/2007 742 Wells Fargo Card Services $150.00 xxxx xxxx xxxx 9607 6/26/2007 751 Wells Fargo Card Services $50.00 N/A (Check Not Available) 6/27/2007 750 State Workers Insurance Fund $11.00 N/A (Check Not Available) Total $36,370.53 Morton, 07 -053 Page 52 a. Premier maintained a business credit card through Wells Fargo Card Services under Account Number xxxx xxxx xxxx 9607. 1. Account information including the account application, billing information, purchase information, and payment information was unavailable for review. b. Morton maintained workers compensation insurance coverage for Premier through the Pennsylvania Department of Labor and Industry, State Workers Insurance Fund. 1. Morton's policy was documented under policy number 04440415. 2. Morton's application documents a requested inception date of September 1, 2001. Morton, 07 -053 Page 53 c. Morton maintained commercial general liability insurance for Premier with Keppel Insurance Agency through First Financial Insurance Company. 1. The Policy Number for the policy changed from year to year. 2. The initial proposed effective date of the policy was September 1, 2001. 3. Morton maintained the policy until September 1, 2006. aa. The policy was not renewed after the September 1, 2006, expiration date. d. Morton or Michelle Morton signed each check issued as an authorized signatory on Premier's account with the exception of check number 236, and possibly check numbers 267, 274, 750, and 751. 1. Check number 236 bears no authorized signatory. 2. Images of check numbers 267, 274, 750, and 751 were not available to determine the individual signing as the authorized signatory. THE FOLLOWING FINDINGS RELATE TO MORTON'S USE OF THE MOON AREA SCHOOL DISTRICT INTERNET SERVER TO HOST AN INTERNET WEBSITE FOR THE MOON AREA AQUA CLUB 144. MASD maintains a policy manual for guidance regarding daily operations. 145. The "Operations" section of the MASD policy manual includes Policy No. 815, titled "Electronic Systems Usage for Employees." a. The policy bears an adoption date of November 14, 2000, with a revision date of December 17, 2007. 1. Morton was employed as a full time teacher with MASD at the time the policy was adopted. b. The term technology as used in Policy No. 815 may include, but is not limited to, computers, laptops, digital cameras, scanners, projectors, network servers, etc. 146. Policy No. 815, Sub - Section six, "Web Sites" addresses the creation and maintenance of web pages on the MASD web site. a. Sub - section six permits district employees to create and maintain web pages on the district web site for instructional /communication purposes related to work. 1. MASD staff members are permitted to create their own web pages without first obtaining approval from the Director of Technology. b. MASD hosts a web site at www.masd.k12.pa.us. c. Sub - section six was present in the original policy. 147. Morton utilized the MASD webserver to host a web page for the Moon Area Aqua Morton, 07 -053 Page 54 Club from least June 2004 through May 2007. a. The Moon Area Aqua Club website was hosted by the MASD server with a home page address of www. masd. k12. pa. us /facility /teachweb /jmorton /moon area aqua club. 148. Once created, Morton had the autonomy to access the web site and make changes to the information on the website at his discretion. a. Information on the Moon Area Aqua Club web site included general club information, enrollment information, club schedules, swim lesson information, applications, etc. 149. Various Moon area community sports associations maintain websites that are linked with the MASD web site. a. Community sports programs with web sites linked to the district web site maintain their own specific site for promotion of their activity. 1. No additional community sports programs are currently hosted by the MASD server. 150. GoDaddy.Com is a domain registrar and is the flagship company of The Go Daddy Group, Inc. a. GoDaddy.com offers a complete product line, including comprehensive hosting solutions, web site creation tools, e- commerce tools, customer service and support, etc. 151. GoDaddy.com offers hosting plans for individuals and small businesses. a. GoDaddy.com offers an economy plan, a deluxe plan, and a premium plan for hosting purposes. b. The price of the service is dependent upon the plan chosen and the agreed upon term of service. 1. The longer the term of service the less the monthly cost. 152. Twelve month plan costs for the economy, deluxe, and premium plans total $4.08 per month, $6.64 per month, and $14.24 per month respectively. a. Morton used of the district server for the Moon Area Aqua Club to avoid paying an outside company for web site hosting purposes. 153. The Moon Area Aqua Club, a business with which Morton is associated, realized a financial benefit by receiving web site hosting services through the MASD server at no cost. a. Development of an aqua club website allowed for the promotion of the Aqua Club at a time when Morton was contracting with the Club to provide management and coaching services. THE FOLLOWING FINDINGS RELATE TO ALLEGATIONS THAT MORTON FAILED TO FILE STATEMENTS OF FINANCIAL INTERESTS AS THE MOON AREA SCHOOL DISTRICT AQUATICS DIRECTOR FOR CALENDAR YEARS 2002, 2003, 2004, 2005, AND 2006 July 02 -Dec 02 2003 2004 2005 2006 Jan 07 -June 07 $3,000.00 $6,000.00 $5,500.00 $6,500.00 $6,000.00 $3,000.00 Morton, 07 -053 Page 55 154. Statement of Financial Interests filing requirements for public officials and public employees are mandated by Section 1104 of the State Ethics Act. a. Morton was required to file Statements of Financial Interests by May 1 annually in his position as the Aquatics Director for MASD. 155. On March 27, 2007, a Statement of Financial Interests Compliance Review was conducted for MASD. a. No Statements of Financial Interests could be located at the district for Morton regarding calendar years 2002 through 2006. 156. Section 1104(d) of the State Ethics Act mandates that, No public official shall be allowed to take the oath of office or enter or continue upon his duties, nor shall he receive compensation from public funds, unless he has filed a Statement of Financial Interests as required by this chapter." a. Morton received compensation as the MASD Aquatics Director in calendar years 2002 through 2006 although Morton had no Statements of Financial Interests on file with the district. 157. From approximately July 2002 through June 2007, Morton received gross compensation from MASD representing wages paid as the district Aquatics Director totaling $30,000.00 as shown below: 158. Morton received approximately $30,000.00 in wages as the MASD Aquatics Director which he was not entitled to receive as a result of failing to file Statements of Financial Interests for calendar years 2002 through 2006. 159. Morton and /or his spouse, Michelle Morton, received a financial benefit of approximately $89,822.27 as a result of receiving or utilizing checks from Premier's account at Dollar Bank for personal benefit during the time which Premier was contracting with the Moon Area Aqua Club to provide administrative and coaching services. 160. Morton and /or Michelle Morton received or utilized the checks from Premier's account during the time that Morton served as the district Aquatics Director responsible for oversight of /scheduling at the district pool as shown below: 2,917.65 a. Morton's receipt of payments /benefits from Premier occurred while he was authorizing Moon Area Aqua Club and Moon Aqua Club to use the school district pool. b. Morton's use of his public position authorizing use of the district pool resulted in payments being issued to his business, Premier. Lease of BMW Insurance for BMW Checks issued for automobile related expenses /services Cellular Telephones $29,629.33 6,692.55 829.73 Payroll 12,784.76 Morton, 07 -053 Page 56 Rent received for office and garage use by Premier 8,700.00 Miscellaneous reimbursement 26,888.47 Miscellaneous purchases 1,379.78 Total $89,822.27 III. DISCUSSION: As the Aquatics Director for the Moon Area School District ( "MASD ") from August 22, 1989, through June 30, 2007, and from December 17, 2007, to the present, Respondent Jamie Morton, hereinafter also referred to as "Respondent," "Respondent Morton," or "Morton," has been a public official /public employee subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), now codified at 65 Pa.C.S. § 1101 et seq. The allegations are that Morton violated Sections 1103(a) and 1104(a) of the Ethics Act when he, as the Aquatics Director for the MASD, used the authority of his public position for the private gain of himself and /or a business with which he is associated by scheduling the use of the MASD pool for the operation of his private, for - profit business, Moon Area Aqua Club, Inc.; by utilizing the non - profit status of the Moon Aqua Club, a separate legal entity, to circumvent payment of rental fees to the MASD for use of the pool and facilities; when Premier Coaching Associates, Inc., a business with which he is associated, contracted and received fees from Moon Area Aqua Club, Inc. and Moon Aqua Club for coaching services provided at the MASD pool; and when he failed to file Statements of Financial Interests for the 2002, 2003, 2004, 2005 and 2006 calendar years in his position as the MASD Aquatics Director. 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: 65 Pa.C.S. § 1102. § 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. Morton, 07 -053 Page 57 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 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 Morton has served as the MASD Aquatics Director and Varsity Swim Team Head Coach from August 22, 1989, through June 30, 2007, and from December 17, 2007, to the present. During the time period relevant to this matter, Morton's duties as the MASD Aquatics Director included, inter alia: (1) overseeing the operation of the MASD swimming pool during non - school hours; (2) scheduling recreational swimming and extra- curricular activities in the pool area; (3) collecting and submitting to the MASD fees for recreational swimming; (4) overseeing the lifeguard staff and submitting payroll for the lifeguard staff to the central office; and (5) ordering safety equipment. Per a formal MASD policy adopted in 2000 and revised and re- adopted in 2003, those seeking to use MASD facilities are required to complete an application form, which is reviewed by the building principal, Superintendent, and Director of Fiscal Services. The building principal then informs the applicant as to the approval or disapproval of the application. Rentals of MASD facilities are not normally presented to the School Board unless special circumstances arise or a waiver or reduction of fees is requested. Certain types of organizations are permitted to use MASD facilities free -of- charge or for a nominal fee, but profit- making organizations must pay full price. Fees associated with rental of the MASD pool total $100.00 per hour for the nominal fee category and $200.00 per hour for the full price category. The Moon Aqua Club ("MAC ") is a year -round competitive swim team affiliated with United States Swimming (USS) through membership in Allegheny Mountain Swimming (AMS). The MAC was originally developed in the late 1960s and was incorporated in 1970. At all times relevant to these proceedings, the MAC has been a non - profit corporation. Prior to Respondent's service as MASD Aquatics Director/Varsity Swim Team Head Coach, the previous MASD Varsity Swim Coach arranged through the MASD for the MAC to use the MASD pool facilities. The MAC was not charged any rental fee for use of the MASD pool facilities based upon its status as a community, non - profit organization. Members of the MAC who were from outside the MASD area paid an extra fee for membership that was to be provided to the MASD. Morton was a member of the MAC from approximately 1970 through 1984. Morton was employed by the MAC as an assistant coach in 1988 and as Head Coach from approximately 1989 through the fall of 1997. Morton removed himself from his association with the MAC in 1997 due to differences of opinion with the Board of Directors and for other personal reasons. As MASD Aquatics Director, Morton continued to schedule the MAC at the MASD pool, even though he was no longer associated with the MAC. In or about 2001, members of the MAC Board of Directors asked Morton whether he would be interested in taking over the responsibility of coaching the MAC. Morton advised the MAC Board of Directors that he would assume the responsibility of coaching the MAC, Morton, 07 -053 Page 58 but not as an employee of the MAC. In the summer of 2001, Morton incorporated a for - profit corporation named "Premier Coaching Associates, Inc." ( "Premier ") to provide coaching services for the MAC and possibly other swim programs. Morton holds 100% of Premier's stock. Corporate documents note Morton, Ed Weaver, and Julie Reiff as the members of Premier's Board of Directors. On September 5, 2001, Premier, through Morton as President, executed a Coaching Service Agreement with the MAC effective from September 13, 2001, through August 31, 2002. Pursuant to the Agreement, Premier, as an independent contractor, was to provide coaching staff /services to the MAC for payment in the amount of $15,000.00. The Agreement provided that Premier would render services primarily at the facilities at the Moon Senior High School. The Agreement specified the MAC's responsibility to meet any and all financial obligations for the procurement and use of any and all facilities subject to the Agreement. The Agreement included as a point of contact the telephone number and extension number assigned to the pool office at Moon Area High School. The Board of Directors of Premier approved the Agreement at a September 13, 2001, special meeting held at the Moon Senior High School Pool. Morton, through Premier, provided coaches and coaching services to the MAC from approximately September 13, 2001, through August 31, 2002. During this time frame, Morton realized that his goals for the MAC were not consistent with those of the majority of the MAC Board of Directors. Morton expressed to the MAC Board of Directors his desire to lead the MAC and remove the management responsibility from the Board of Directors. The MAC Board of Directors did not permit Morton to take control of the MAC at that time. The refusal of the MAC Board of Directors to allow Morton to take control of the MAC prompted Morton to create another for - profit corporation, the "Moon Area Aqua Club" ( "MAAC "), in approximately July 2002. Morton held 100% of the MAAC stock. Morton, Michelle Morton (Morton's spouse), Weaver, and David Wilke became Directors of the MAAC. Morton was elected President and Treasurer of the MAAC. Michelle Morton was elected Secretary of the MAAC. Morton supervised and managed the MAAC and coaching staff through Premier. Morton developed and distributed a team handbook for the 2002/2003 season. The handbook included as a point of contact the telephone number and extension number assigned to the pool office at Moon Area High School. The handbook documented that conferences occurred at the MASD High School Pool and that the coaches' office on the pool deck was "a place of business." Premier, as an independent contractor, entered into Coaching Service Agreements with the MAAC to provide coaching services from September 1, 2002, through December 31, 2005. Morton entered into each Agreement on behalf of Premier as its President, and on behalf of the MAAC as its President. Morton's entering into the Agreements was unanimously approved by the Boards of Directors of Premier and the MAAC at special meetings held at the Moon Senior High School Pool. Morton was present and recommended the approval of the Agreements at each meeting. The Agreements provided that Premier would render services primarily at the facilities at the Moon Senior High School. The Agreements specified the MAAC's responsibility to meet any and all financial obligations for the procurement and use of any and all facilities subject to the Agreements. The Agreements included as a point of contact the telephone number and extension number assigned to the pool office at Moon Area High School. Premier continued to provide coaching services for the MAAC from January 1, 2006, through approximately May 30, 2006, although per the Stipulated Findings, no contract for that time period could be located. Premier continued to receive monthly payments from the MAAC for services rendered during such time period. Morton, 07 -053 Page 59 The MAAC utilized the MASD facility at no cost to the MAAC. Morton did not inform the MASD administration or the School Board regarding the creation of the MAAC as a for - profit entity as of July 2002. Morton continued the operation of the MAAC at the MASD in the same manner as had been done in the past as to the MAC. Morton did not obtain, complete, or submit an application for use of the district pool by the MAAC. Morton did not present a request to the School Board for a waiver of fees in association with the use of the district pool by the MAAC. The MASD administration was unaware of the change in the profit status of the Aqua Club utilizing the district pool until late 2004. In late 2004, the MASD School Board received an inquiry as to why the Aqua Club was not paying for use of the MASD pool. The School Board instructed Superintendent Alexander Meta to have MASD Director of Fiscal Services Al Bennett meet with Morton to research the issue and to report his findings to Meta for presentation to the School Board. The review of the matter by Bennett /Meta spanned approximately one year. During such review, Morton provided information indicating that the MAAC was a for - profit entity and was in the process of filing the necessary paperwork to obtain non - profit status. While Morton was taking steps to obtain non - profit status for the MAAC, the MAC Board of Directors turned over MAC operations to Morton. As a result of obtaining operational responsibility of the non - profit MAC, Morton discontinued pursuit of non - profit status for the MAAC. However, Morton did not immediately re- institute MAC operations at MASD. Morton did not want to resume the non - profit operation until making certain that the entity could operate as such. Part of the process in reinstituting the MAC included filing Form 990 -EZs with the Internal Revenue Service (IRS) for calendar years 2002, 2003, and 2004, as no returns had previously been filed. The Form 990 -EZs filed by the MAC for calendar years 2002 through 2004 are dated November 2, 2005. The form eventually filed for calendar year 2005 is dated July 24, 2006. Included with each form was a listing of officers identifying Morton as President and Michelle Morton as Treasurer of the MAC. In the meantime, Morton was required by Bennett to provide documentation that the MAC was a true non - profit entity. At or about the beginning of November 2005, Morton provided Bennett with a copy of a 1983 IRS determination letter verifying the MAC as a tax - exempt organization under section 501(c)(7) of the Internal Revenue Code. The letter provided to Bennett referenced the MAC although the entity utilizing the MASD pool at the time was the MAAC. After receiving the IRS determination letter from Morton, Bennett sent e -mail correspondence to Morton memorializing his belief that the information Morton had provided to the district confirmed that the Aqua Club was a non - profit organization. Bennett presented his belief that the agreement with the Aqua Club at that time was in accordance with board policy pertaining to facilities rental. The MASD administration never requested any type of rental fee for the MAAC's use of the MASD facilities. Morton continued to operate the MAAC at MASD until approximately June 2006. The non - profit MAC was placed back into operation in approximately June 2006. The non- profit MAC has utilized the MASD facilities from approximately June 2006 to the present. On June 1, 2006, as President of Premier, Morton entered into a Coaching Service Agreement with the MAC. The Agreement was approved by Written Consent of the Directors of Premier at a Special Meeting held on June 2, 2006, at the Moon Senior High School Pool. As President of Premier, Morton entered into another Coaching Service Agreement with the MAC on August 31, 2006. The Agreement was effective from September 1, 2006, to August 2007. The Agreement provided for Premier, as an independent contractor, to provide coaching staff and services to the MAC in exchange for payment of $46,000.00. The Agreement provided that Premier would render services primarily at the facilities at the Moon Senior High School. The Agreement specified the MAC's responsibility to meet any Morton, 07 -053 Page 60 and all financial obligations for the procurement and use of any and all facilities subject to the Agreement. The Agreement included as a point of contact the telephone number and extension number assigned to the pool office at Moon Area High School. The Board of Directors of Premier approved the Agreement at a September 1, 2006, special meeting held at the Moon Senior High School Pool. Morton was responsible for scheduling at the district pool only until June 30, 2007. Morton's service as Aquatics Director ended at the conclusion of the 2006/2007 school year and resumed with his re- appointment to the position at the December 17, 2007, School Board meeting. Between May 2007 and June 2007, a new Board of Directors for the MAC was established. Morton ceased serving as President of the MAC in approximately May 2007. The MAC opted to hire employees /coaches directly beginning in approximately September 2007. On September 10, 2007, the MAC entered into a contract with Premier effective from September 10, 2007, through November 21, 2007, for Morton's services only. Morton was not responsible for scheduling at the district pool at that time. The operating budgets of the MAAC and the MAC were primarily compiled from collection of membership dues with additional income realized through sponsorship of competitive swim meets and fundraising activities. Both the MAAC and the MAC also received payments for swimming lessons conducted at the MASD pool, which were taught primarily by MASD swim team members. At no time did Morton request or receive approval from the High School Principal to provide swimming lessons at the MASD pool. The MAAC maintained a checking account at Dollar Bank (Account No. xxxxxx5878) regarding Club operations. Morton opened the account on August 3, 2002. Morton and Michelle Morton were authorized signatories on the account. The MAAC realized deposits into Account No. xxx>ooc5878 totaling $270,907.14 between August 2002 and March 2007. The account was closed effective March 31, 2007, with a zero balance. On June 7, 2006, Morton opened a new checking account for the MAC at Dollar Bank (Account No. xx)>oo(3521) for Club operations separate and apart from the account utilized by the MAAC. Morton was the sole authorized signatory for this account from June 7, 2006, through June 13, 2007. The MAC realized deposits into Account No. xxx>ooc3521 totaling $60,313.93 from June 2006 through May 2007. Premier maintained a business checking account at Dollar Bank (Account Number xx)>oo(9728) in regard to business operations. Morton opened the account on August 21, 2001. Morton and Michelle Morton were authorized signatories on the account. From September 2002 through June 2006, Morton or Michelle Morton issued a total of sixty -one checks from the MAAC account at Dollar Bank (Account No. xx)>oo(5878) to Premier totaling $190,200.00 for services rendered as detailed in Fact Finding 91. All sixty -one checks issued to Premier from the MAAC during the time frame of August 2002 through June 2006 were deposited into Premier's account (Account No. xx)>oo(9728) at Dollar Bank. Each check was signed by Morton or Michelle Morton as an authorized signatory for the MAAC. From June 2006 through June 2007, Morton issued and /or received a total of twenty checks from the MAC account at Dollar Bank (Account No. xx)>oo(3521) to Premier totaling $46,198.53 for services rendered as set forth in Fact Finding 98. All twenty checks issued to Premier from the MAC during the time frame of June 2006 through June 2007 were deposited into Premier's account (Account No. xx)>oo(9728) at Dollar Bank. Morton generated and signed nineteen of twenty checks issued to Premier as an authorized signatory for the MAC. Morton, 07 -053 Page 61 From July 26, 2002, through June 30, 2007, Premier realized deposits into its account at Dollar Bank (Account No. xx)>oo(9728) totaling $254,623.30 from the MAC, MAAC, Hopewell Area Aqua Club (HAAC), and other miscellaneous sources as detailed in the chart at Fact Finding 99. From July 26, 2002, through June 30, 2007, Premier's primary source of income was the MAC and the MAAC. Approximately 93.6 % of all funds deposited into Premier's account during the said time frame originated from the MAC account and the MAAC account. Premier collected payment from the MAC and the MAAC for services primarily rendered at the Moon Area School District pool. The parties have stipulated that Morton and /or his spouse, Michelle Morton, received a financial benefit of approximately $89,822.27 as a result of receiving or utilizing checks from Premier's account at Dollar Bank for personal benefit during the time Morton was serving as MASD Aquatics Director and Premier was contracting to provide administrative and coaching services to the MAC /MAAC using the MASD pool. The aforesaid financial benefit consisted of the following: (1) payments totaling $29,629.33 issued from July 2002 through June 2007 for the lease of a 2002 BMW through Premier (Fact Finding 110); (2) payments totaling $6,692.55 issued from July 14, 2002, to June 8, 2007, for automobile insurance premiums for the aforesaid BMW (Fact Finding 118); (3) payments totaling $829.73 issued from March 23, 2003, to April 13, 2007, for additional automobile - related expenses (Fact Finding 119); (4) payments totaling $2,917.65 issued from February 2005, to March 23, 2007, for a private wireless account used by Morton and his family members (Fact Findings 123 -129); (5) payroll checks totaling $12,784.76 received by Morton or Michelle Morton from Premier from July 1, 2002, through June 30, 2007 (Fact Findings 131 a, 134, 136); (6) payments totaling $8,700.00 issued from October 2002 through May 31, 2005, for rent charged by Morton to Premier for the use of an office in Morton's home and Morton's garage (Fact Findings 138 -139); (7) reimbursements totaling $26,888.47 issued from Premier's account to Morton or his spouse from September 2002 through December 2006 for various expenses including rental car fees, gasoline, entertainment, mileage, meals, automobile service, internet service, business promotions, trips /travel, parking, consultations, and the purchase of a laptop computer (Fact Finding 140); and (8) payments totaling $1,379.78 issued from November 1, 2003, to May 21, 2007, for goods /services purchased for Morton's private use (Fact Finding 141). The parties have stipulated that Premier realized multiple benefits as a result of Premier's receipt of funds for service agreements entered into with the MAC and the MAAC at the time that Morton was responsible for scheduling activities at the MASD pool. From July 14, 2002, through June 27, 2007, Morton or Michelle Morton issued and authorized payments from Premier's account at Dollar Bank for various expenses incurred by Premier totaling $36,370.53 (Fact Finding 143). In addition to the above, from at least June 2004 through May 2007, Morton utilized the MASD web server to host a web page for the MAAC to avoid paying an outside company for web site hosting purposes. As for the allegations regarding Morton's Statements of Financial Interests ( "SFIs "), the parties have stipulated that as the Aquatics Director for the MASD, Morton was required to file SFIs with the MASD, and that Morton did not file SFIs with the MASD for calendar years 2002 through 2006 inclusive. 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: 3. The Investigative Division will recommend the following in relation to Morton, 07 -053 Page 62 the above allegations: a. That a violation of Section 1103(a) of the Public Official and Employee Ethics Act, 65 Pa.C.S. §1103(a) occurred in relation to Morton's use of his public position for private gain of himself and /or a business with which he is associated by scheduling the use of the district pool for the operation of his private, for - profit business, Moon Area Aqua Club, Inc.; and b. That a violation of Section 1103(a) of the Public Official and Employee Ethics Act, 65 Pa.C.S. §1103(a) occurred in relation to Morton's use of his public position for private gain of himself and /or a business with which he is associated by utilizing the non - profit status of the Moon Aqua Club, a separate legal entity to circumvent payment of rental fees to the district for use of the pool and facilities; and c. That a violation of Section 1103(a) of the Public Official and Employee Ethics Act, 65 Pa.C.S. §1103(a) occurred in relation to Morton's use of his public position for private gain of himself and /or a business with which he is associated when Premier Coaching Associates, Inc., a business with which he is associated, contracted and received fees from Moon Area Aqua Club and Moon Aqua Club for coaching services provided at the school district pool. d. That a violation of Section 1104(a) of the Public Official and Employee Ethics Act, 65 Pa.C.S. §1104(a) occurred in relation to Morton's failure to file Statements of Financial Interests for the 2002, 2003, 2004, 2005 and 2006 calendar years in his position as the school district Aquatics Director. 4. Morton agrees to make payment in the amount of $13,000.00 in settlement of this matter payable to the Commonwealth of Pennsylvania and forwarded to the Pennsylvania State Ethics Commission within thirty (30) days of the issuance of the final adjudication in this matter. 5. Morton agrees to file Statements of Financial Interests for calendar years 2002, 2003, 2004, 2005 and 2006, regarding his position as Aquatics Director for the Moon Area School District, with the Moon Area School District, and forward a copy of [sic] to this Commission. 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. Morton, 07 -053 Page 63 In considering the Consent Agreement, we agree with the parties that a violation of Section 1103(a) of the Ethics Act occurred in relation to Morton's scheduling of the use of the MASD pool for the operation of the MAAC. Each element of the recommended violation has been established. Morton used the authority of his public position as MASD Aquatics Director when he scheduled the use of the MASD pool for the operation of the MAAC, free -of- charge to the MAAC. But for being the MASD Aquatics Director, Morton would not have been in a position to schedule the use of the MASD pool for the operation of the MAAC while disregarding the MASD requirements for submitting a facilities rental application form. Morton did not obtain, complete, or submit an application for use of the district pool by the MAAC. Morton did not present a request to the School Board for a waiver of fees in association with the use of the district pool by the MAAC. Morton did not inform the MASD administration or the School Board regarding the creation of the MAAC as a for - profit entity as of July 2002. Morton continued the operation of the MAAC at the MASD in the same manner as had been done in the past as to the MAC, unbeknownst to the MASD administration until 2004 -2005. The aforesaid actions by Morton resulted in a private pecuniary benefit to the MAAC and to Morton, who is the sole shareholder of the MAAC. The private pecuniary benefit consisted of free use of the MASD pool for MAAC operations. The MAAC, as a for - profit organization, would ordinarily have been required to pay fees totaling $200 per hour for use of the MASD pool. It is axiomatic that Section 1103(a) of the Ethics Act prohibits the use of governmental facilities, equipment, and the like for private purposes, including business purposes. See, e.q., Rembold, Order 1417; Cobb, Order 1354; Confidential Opinion, 05- 001. Accordingly, we hold that a violation of Section 1103(a) of the Ethics Act occurred in relation to Morton's use of the authority of his public position as the MASD Aquatics Director for the private pecuniary gain of himself and /or the MAAC, a private, for - profit business with which Morton is associated, by scheduling the use of the MASD pool for the operation of the MAAC without charge to the MAAC. The second recommended violation proposed by the Consent Agreement is that a violation of Section 1103(a) of the Ethics Act occurred in relation to Morton's use of the non - profit status of the MAC, a separate legal entity, to circumvent payment of rental fees to the MASD for use of the pool and facilities by the MAAC. We accept the parties' recommendation as to this violation. As detailed above, from late 2004 through approximately November 2005, Director of Fiscal Services Bennett and Superintendent Meta conducted a review as to the status of the Aqua Club using the MASD pool. While the review was pending, Morton obtained operational responsibility of the non - profit MAC. At or about the beginning of November 2005, Morton provided to Bennett a 1983 IRS determination letter confirming the non - profit status of the MAC, causing Bennett to conclude that the Aqua Club was a non - profit organization and that the agreement with the Aqua Club at that time was in accordance with MASD policy. However, Morton continued to operate the MAAC at MASD until approximately June 2006. Thus, from approximately the beginning of November 2005 to the reinstitution of the MAC in approximately June 2006, Morton as MASD Aquatics Director continued to schedule the use of the MASD pool facilities by the for - profit MAAC free of charge, while the MASD administration was of the belief that the Aqua Club using the MASD facilities was the non - profit MAC. The resulting private pecuniary benefit to the MAAC and Morton consisted of the use of MASD facilities free -of- charge for conducting a for - profit business. Accordingly, we hold that a violation of Section 1103(a) of the Ethics Act occurred in Morton, 07 -053 Page 64 relation to Morton's use of the authority of his public position as the MASD Aquatics Director for the private pecuniary gain of himself and /or a business with which he is associated by utilizing the non - profit status of the MAC, a separate legal entity, to circumvent payment of rental fees to the MASD for use of the pool and facilities by the MAAC. The third recommended violation proposed by the Consent Agreement is that a violation of Section 1103(a) of the Ethics Act occurred in relation to Morton's use of his public position for the private gain of himself and /or a business with which he is associated when Premier, a business with which Morton is associated, contracted and received fees from the MAAC and the MAC for coaching services provided at the school district pool. Factually, in the summer of 2001, Morton incorporated Premier as a for - profit corporation - -with Morton owning all of the stock - -to provide coaching services for the MAC and possibly other swim programs. Premier subsequently contracted with the MAC and the MAAC to provide coaching staff /services for compensation using the MASD pool facilities free -of- charge. Morton, the MASD Aquatics Director in charge of scheduling the use of the MASD pool facilities, signed such contracts knowing that the contracts provided for Premier to perform its responsibilities under the contracts primarily using the MASD pool. Although most if not all of the aforesaid contracts specified that it was the MAC's or the MAAC's responsibility, respectively, to meet any and all financial obligations for the procurement and use of any and all facilities subject to the Agreement, Morton as MASD Aquatics Director chose to disregard the established MASD processes that would have resulted in rental fees for the use of the pool facilities. From September 2002 through June 2006, Morton or Michelle Morton issued a total of sixty -one checks from the MAAC account at Dollar Bank (Account No. xx)>oo(5878) to Premier totaling $190,200.00 for services rendered as detailed in Fact Finding 91. From June 2006 through June 2007, Morton issued and /or received a total of twenty checks from the MAC account at Dollar Bank (Account No. xx)>oo(3521) to Premier totaling $46,198.53 for services rendered as set forth in Fact Finding 98. Premier collected payment from the MAC and the MAAC for services primarily rendered at the MASD pool. Morton and /or his spouse, Michelle Morton, received a financial benefit of approximately $89,822.27 as a result of receiving or utilizing checks from Premier's account at Dollar Bank for personal benefit during the time Premier was contracting to provide administrative and coaching services to the MAC /MAAC using the MASD pool and Morton was serving as the MASD Aquatics Director responsible for oversight of and scheduling at the pool. Premier realized multiple benefits as a result of Premier's receipt of funds for service agreements entered into with the MAC and the MAAC at the time that Morton was responsible for scheduling activities at the MASD pool. From July 14, 2002, through June 27, 2007, Morton or Michelle Morton issued and authorized payments from Premier's account for various expenses incurred by Premier totaling $36,370.53 (Fact Finding 143). With each element of a violation of Section 1103(a) established, we hold that a violation of Section 1103(a) of the Ethics Act occurred in relation to Morton's use of the authority of his public position as MASD Aquatics Director for the private pecuniary gain of himself and /or a business with which he is associated when Premier Coaching Associates, Inc., a business with which Morton is associated, contracted and received fees from the MAAC and the MAC for coaching services provided at the MASD pool. Cf., Lapi, Order 1382; O'Connor, Order 1269. Finally, we agree with the parties, and we therefore hold, that a violation of Section 1104(a) of the Ethics Act occurred in relation to Morton's failure to file SF's for the 2002, 2003, 2004, 2005 and 2006 calendar years in his position as the MASD Aquatics Director. Morton, 07 -053 Page 65 As part of the Consent Agreement, Morton has agreed to make payment in the amount of $13,000.00 in settlement of this matter, payable to the Commonwealth of Pennsylvania and forwarded to this Commission within thirty (30) days of the issuance of the final adjudication in this matter. Morton has further agreed to file SFIs with the MASD for calendar years 2002, 2003, 2004, 2005 and 2006, and to forward a copy of each such filing 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, Morton is directed to make payment in the amount of $13,000.00 payable to the Commonwealth of Pennsylvania and forwarded to this Commission by no later than the thirtieth (30 day after the mailing date of this adjudication and Order. To the extent that he has not already done so, Morton is directed to file with the MASD accurate and complete aFIs for calendar years 2002, 2003, 2004, 2005, and 2006 by no later than the thirtieth (30`") day after the mailing date of this adjudication and Order, with a copy of each such filing forwarded 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 the Aquatics Director for the Moon Area School District ( "MASD ") from August 22, 1989, through June 30, 2007, and from December 17, 2007, to the present, Respondent Jamie Morton ( "Morton ") has been a public official /public employee subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), now codified at 65 Pa.C.S. § 1101 et seq. 2. Morton violated Section 1103(a) of the Ethics Act when he used the authority of his public position as the MASD Aquatics Director for the private pecuniary gain of himself and /or the "Moon Area Aqua Club, Inc." ( "MAAC "), a private, for - profit business with which Morton is associated, by scheduling the use of the MASD pool for the operation of the MAAC without charge to the MAAC. 3. Morton violated Section 1103(a) of the Ethics Act when he used the authority of his public position as the MASD Aquatics Director for the private pecuniary gain of himself and /or a business with which he is associated by utilizing the non - profit status of the "Moon Aqua Club" ( "MAC "), a separate legal entity, to circumvent payment of rental fees to the MASD for use of the pool and facilities by the MAAC. 4. Morton violated Section 1103(a) of the Ethics Act when he used the authority of his public position as MASD Aquatics Director for the private pecuniary gain of himself and /or a business with which he is associated when Premier Coaching Associates, Inc., a business with which Morton is associated, contracted and received fees from the MAAC and the MAC for coaching services provided at the MASD pool. 5. Morton violated Section 1104(a) of the Ethics Act when he failed to file Statements of Financial Interests for the 2002, 2003, 2004, 2005 and 2006 calendar years in his position as the MASD Aquatics Director. Morton, 07 -053 Page 66 In Re: Jamie Morton, Respondent ORDER NO. 1491 File Docket: 07 -053 Date Decided: 9/22/08 Date Mailed: 10/10/08 1 Jamie Morton ( "Morton "), a public official /public employee in his capacity as the Aquatics Director for the Moon Area School District ( "MASD "), violated Section 1103(a) of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1103(a), when he used the authority of his public position as the MASD Aquatics Director for the private pecuniary gain of himself and /or the "Moon Area Aqua Club, Inc." ( "MAAC "), a private, for - profit business with which Morton is associated, by scheduling the use of the MASD pool for the operation of the MAAC without charge to the MAAC. 2. Morton violated Section 1103(a) of the Ethics Act when he used the authority of his public position as the MASD Aquatics Director for the private pecuniary gain of himself and /or a business with which he is associated by utilizing the non - profit status of the "Moon Aqua Club" ( "MAC "), a separate legal entity, to circumvent payment of rental fees to the MASD for use of the pool and facilities by the MAAC. 3. Morton violated Section 1103(a) of the Ethics Act when he used the authority of his public position as MASD Aquatics Director for the private pecuniary gain of himself and /or a business with which he is associated when Premier Coaching Associates, Inc., a business with which Morton is associated, contracted and received fees from the MAAC and the MAC for coaching services provided at the MASD pool. 4. Morton violated Section 1104(a) of the Ethics Act when he failed to file Statements of Financial Interests for the 2002, 2003, 2004, 2005 and 2006 calendar years in his position as the MASD Aquatics Director. 5. Morton is directed to make payment in the amount of $13,000.00 payable to the Commonwealth of Pennsylvania and forwarded to the Pennsylvania State Ethics Commission by no later than the thirtieth (30 day after the mailing date of this Order. 6. To the extent that he has not already done so, Morton is directed to file with the MASD accurate and complete Statements of Financial Interests for galendar years 2002, 2003, 2004, 2005, and 2006 by no later than the thirtieth (30 day after the mailing date of this Order, with a copy of each such filing forwarded to this Commission for compliance verification purposes. 7 Compliance with Paragraphs 5 and 6 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, Name, Case # Page 68 Louis W. Fryman, Chair