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HomeMy WebLinkAbout1497 ZinnIn Re: Kevin A. Zinn, 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 -082 Order No. 1497 12/4/08 12/19/08 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 allegation. Upon completion of its investigation, the Investigative Division issued and served upon Respondent a Findings Report identified as an "Investigative Complaint." A Stipulation of Findings and a Consent Agreement waiving an evidentiary hearing were 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. Zinn, 07 -082 Page 2 I. ALLEGATIONS: That Kevin A. Zinn, a public official /public employee in his capacity as a Supervisor for Carroll Township, York County, violated Sections 1103(a), 1103(f), and 1105(b)(5) of the State Ethics Act (Act 93 of 1998), 65 Pa.C.S. §§ 1103(a), 1103(f), and 1105(b)(5) when he used the authority of his public position for a private pecuniary gain of himself and /or a business with which he is associated when he sold a whole life insurance policy to the Township, as part of a retirement plan for a Township employee, which benefited himself and /or his employer, Fulton Financial Group; when he used the authority of his public position to enter into a contract with the Township for the sale of a whole life insurance policy, valued at $500.00 or more, issued through Massachusetts Mutual Financial Group, to the Township absent an open and public process; and when he failed to disclose a direct or indirect source of income totaling in the aggregate $1,300 or more, including his compensation as a Township Supervisor for Carroll Township, on his 2002, 2003, 2004, 2005 and 2006 Statement of Financial Interests forms. II. FINDINGS: 1. Carroll Township is a Second Class Township located in York County, Pennsylvania. a. Carroll Township is governed by a five member Board of Supervisors. 2. Kevin A. Zinn served as a Supervisor for Carroll Township from approximately January 2002, through February 13, 2007. a. As a Township Supervisor, Zinn served on the following committees for the Township: 1. Police 2. Financial 3. Recreation 4. Roads and Building 5. Planning b. Zinn served primarily on the Financial and Police committees during his term as a Township Supervisor. c. Zinn resigned his position on the Board effective February 13, 2007. 3. As a member of the Board of Supervisors for Carroll Township, Zinn performed the following duties: a. Attended monthly Board of Supervisors meetings. b. Participated in discussions and voted on motions presented to the Board. c. Approved expenditures of Township funds. d. Participated in committee meetings. 4. Carroll Township held two public Board of Supervisors meetings per month until the beginning of 2008. a. The Board of Supervisors now holds one monthly meeting on the second Monday of each month. Zinn, 07 -082 Page 3 b. Executive sessions are held on an as needed basis before, during, or after a public meeting. 5. Minutes from the Carroll Township Board of Supervisors meetings reflect that the following generally occur[s] during a public meeting: a. The police report is given by the Chief of Police or another representative of the Police Department. b. The minutes from the previous meeting or meetings are approved. c. Any emergency reports are given. d. The bills are presented and approved for payment. e. Official actions are made. f. Public comment is heard. g. The Solicitor's comments are made. 6. The bills are presented by way of list, which is prepared monthly, and presented to the Board of Supervisors for approval. a. The bill lists are prepared by: Josephine Patton, Township Secretary; Faye Romberger, Township Treasurer; and Dianne Price, Township Manager. b. The bill list is prepared the Friday before the meeting and is available for the Board to pick up and review. c. The bill list is reviewed by the Board of Supervisors either prior to, or during the meeting. d. The Board of Supervisors approves the bills for payment and checks are prepared. e. Township checks are prepared and signed by the Township Treasurer, Faye Romberger. f. The Board of Supervisors vote to approve the bill list by way of an aye /nay vote. 1. If all Board members vote "aye" then the minutes will reflect that the motion was unanimously carried. 2. In the event of a less than unanimous vote, the minutes will reflect same and identify each board member and their respective vote. 7 In November 2001, Carroll Township enacted Ordinance No. 2001 -130, creating the office of Township Manager. a. The Ordinance created the position of Township Manager exclusively for Carroll Township. b. Prior to this time, no such position existed in Carroll Township. c. The Ordinance was signed into law on November 5, 2001. Zinn, 07 -082 Page 4 1. The Ordinance took effect five days after being signed into law. d. The position was created based, in part, on the growth of the Township. 8. Dianne B. Price was hired as the Township Manager for Carroll Township. a. Price began her employment on January 2, 2002. b. Price was the first person to hold this position since its creation on November 5, 2001. 9. In general, it is the responsibility of the Township Manager to administer the day -to- day operations of the Township government, including supervising Township staff; developing and administering Township policies; and organizing Board of Supervisors meetings, including the generation of bill lists. 10. During the spring of 2004, Zinn approached Supervisor Robert Schopfer and discussed the performance and their job approval regarding Price as the Township Manager. a. Schopfer was Chairman of the Board of Supervisors at that time. b. This discussion occurred prior to any additional discussion with the entire Board of Supervisors. c. Schopfer and Zinn agreed that they desired to retain Price as the Township Manager for an extended time period. d. Schopfer suggested to Zinn that he, Zinn, present the insurance proposal discussed to the entire Board of Supervisors. e. Zinn proposed that the township purchase a life insurance policy in Price's name as an incentive for Price to remain employed by the township. 1. The policy would remain in effect while Price served as a township employee. 11. In or about April 2004, after the discussion held between Schopfer and Zinn, Zinn initiated inquiry during an executive session of the Board of Supervisors, regarding their satisfaction with Price's performance as the Township Manager. a. The Supervisors of Carroll Township regarded the position of Township Manager as an essential employee for the Township. b. The Board of Supervisors was satisfied with Price's performance and desired to retain her as a long term employee. 12. At the same executive session, Zinn proposed to the Board of Supervisors a method which the Board could utilize to entice Price to remain the long term Township Manager for Carroll Township. a. Zinn's proposed action to retain Price was through additional retirement benefits which would be provided by the Township to Price. b. Zinn's proposal to the Board of Supervisors included obtaining a life insurance policy with a 457 plan for Township Manager Dianne Price. Zinn, 07 -082 Page 5 c. Prior to April 2004, there were no discussions of a long term retirement plan for Dianne Price or the position of Township Manager. d. Zinn's proposals were well received by the Board of Supervisors. 13. Kevin A. Zinn has been professionally employed as an Insurance Advisor by Fulton Financial Corporation since at least 2003. a. Zinn is compensated solely by commission on sales of insurance policies and retirement plans. b. The commission is placed into an account designated for Zinn, against which his monthly compensation draw is taken. c. Zinn's monthly draw is $6,000.00. d. Commissions earned from the sale of policies offset the compensation draw. e. Since December 1995, Zinn has been licensed by the Pennsylvania Insurance Department to sell accident and health, life and fixed annuities, and life /variable annuity policies. 14. Zinn is licensed by the Pennsylvania Insurance Department to write insurance policies for approximately thirty or more insurance companies. 15. As part of the Finance Committee, Kevin Zinn was given broad authorization by the Board of Supervisors to obtain additional information regarding the proposed life insurance policy for Dianne Price. a. The authorization occurred after Zinn discussed the issue with members of the Board during executive sessions. b. The decision to have Zinn develop a proposal for a life insurance policy for Price was not the result of an official vote or action of the Board of Supervisors. c. A review of the minutes of the Board's public meetings confirms that there was never any public discussion among the Board of Supervisors about the creation of a life insurance policy. 1. All discussions took place during executive sessions of township meetings. d. There were no restrictions on Zinn as to what type of information he could obtain for the policy for the Township. 16. In considering underwriting companies to supply the policy to Carroll Township, Zinn only considered insurance companies for which he was an authorized broker /agent. a. Zinn acknowledged during an interview with an investigator for the State Ethics Commission, that regardless of what underwriting company he (Zinn) chose for the policy, he (Zinn) would have received a commission as the selling /writing agent, if said policy was purchased through Fulton Financial. b. Carroll Township did not advertise for or otherwise seek any public bids or quotes for insurance policies from other qualified insurance companies, Zinn, 07 -082 Page 6 other than authorizing Zinn to research the matter. 17. Zinn did not advise the Board of Supervisors that he was considering only insurance companies for which he was licensed to sell or broker policies. a. Zinn only considered those insurance companies for which he was authorized to sell or broker as he is prohibited from offering to sell products for which he is not an appointed agent or broker. 18. In or about April or May of 2004, during an executive session of the Board, Price was approached by Zinn who explained that the Board wanted to give her an incentive to stay with the township. a. Zinn then advised Price of the insurance policy that was recommended to the Board during the executive session. 19. On May 12, 2004, Carroll Township Secretary Faye Romberger sent a letter to Massachusetts Mutual advising that Robert Schopfer, Chairman of the Board of Supervisors, was authorized to sign an agreement between Carroll Township and Massachusetts Mutual. a. No record exists of the Board of Supervisors authorizing Schopfer to sign any such agreement. b. Zinn was authorized to write insurance policies for Massachusetts Mutual in 2004. 20. Dianne Price completed an application form for insurance coverage through Massachusetts Mutual on May 11, 2004. a. The application form was provided to Price by Zinn, who then completed the form with the assistance of Price. b. The form was signed by Price as the insured, Robert Schopfer as the representative of the owner, and Zinn as the Soliciting Agent. c. The application process required Price to receive a physical examination to determine if she qualified for the life insurance policy. 1. Zinn provided Price with contact information regarding the contracted examiner chosen by the insurance company. 2. Price had a physical examination on June 8, 2004. 21. Zinn provided a policy for Price through Fulton Financial, with Massachusetts Mutual Life Insurance Company as the underwriting company. a. Zinn is licensed to sell /broker variable life /variable annuity, accident and health and life and fixed annuities policies for Massachusetts Mutual. b. The life insurance policy is a key person policy that will assist the Township in replacing Dianne Price if the need should arise due to death or any separation from the Township. c. The policy creates a mechanism to pay Price a pension should she continue employment with the Township until the age of 65. Zinn, 07 -082 Page 7 d. If a premature death occurs, the policy also creates a mechanism to assist the Township in replacing Price. e. The policy also has a cash surrender value should Price retire or otherwise separate from township service. 22. The policy written by Zinn has Carroll Township as the owner of the policy and Diane Price as the insured. a. The total value of the policy is $289,935.00 b. The policy issue date was June 24, 2004. c. Annual premiums of $8,000.02 were to be paid by the Township. d. Premiums were payable until June 24, 2022. e. The policy currently has a cash value of $21,292.72. 23. The minutes from the Board of Supervisors work session held on July 12, 2004, confirm action taken by the Board regarding the life insurance policy for Diane Price. a. A motion was made by Supervisor Murphy, seconded by Supervisor Hipp and unanimously approved to authorize the payment of S8,000.02 to open an insurance policy with an ordinance to follow to create a 457 Plan. 1. An ordinance creating a 457 Plan was never adopted by the Board. b. Zinn was present at the meeting and is not recorded as abstaining from the vote. 24. The policy was signed on July 14, 2004, by Price, Zinn, and Robert Schopfer, Chairman of the Board of Supervisors. a. The policy bore the signature of Robert Schopfer as the representative of Carroll Township (policy owner) and Kevin A. Zinn as the agent. 1. Price signed portions of the policy as the insured. b. The policy was assigned number 11351902. c. The life insurance policy was solely for the Township Manager, Dianne B. Price. d. Price is the only Carroll Township employee with this type of life insurance policy and 457 plan. e. The policy delivery receipt signed by Price on July 14, 2004, acknowledging receipt of policy is also signed by Kevin Zinn as the agent. 25. In addition to the life insurance policy for Price, Zinn also recommended the Township provide Price with a 457 retirement plan. a. Zinn utilized the services of Thomas Ahrens of Legal Directives, LLC to assist with the establishment of the retirement plan. Zinn, 07 -082 Page 8 b. Ahrens met with Zinn and Price on December 8, 2004, to discuss the plan set -up. 1. On March 15, 2005, Zinn picked up draft agreements prepared by Ahrens to take to the Board for signature. 26. At that time Price was participating in a township pension plan administered through Prudential Insurance Company. a. All non - uniform township employees participate in this plan. b. The township contributes a percentage of each employee's salary to this plan. 27. The plan drafted by Ahrens is a Deferred Compensation Agreement. a. The plan would pay Price an annual retirement of $12,000.00 if she remained employed by Carroll Township until January 31, 2016. b. The Deferred Compensation Agreement was dated March 15, 2005. c. The plan was signed by Robert F. Faulkner, Chairman of the Board of Supervisors, and Dianne Price. 28. On or about February 24, 2005, Ahrens submitted an invoice to the Township in the amount of $1,500.00 for meetings for design and preparation of the Deferred Compensation Agreement and drafting and delivery of the agreement. a. The Board approved a payment to Ahrens in the amount of $1,500.00 on March 15, 2005, the same day that Zinn obtained the Deferred Compensation Agreement from Ahrens. b. Check no. 1402120 was issued by the Township on March 15, 2005, to Ahrens. c. Zinn participated in the vote to approve the bill list, which included payment to Ahrens. 29. The Township Solicitor never provided any written advice or opinion regarding Zinn's role in providing the life insurance policy to Price and the Township. a. James Bogar and Jennifer Hipp served as the Township Solicitors from approximately 2003 through 2005. b. Bogar verbally informed Zinn and Schopfer, as township representatives, that they should seek the advice of an attorney who specializes in life insurance and deferred compensations plans. 1. Neither Bogar nor Hipp routinely practice in the area of life insurance or deferred compensation policies. 2. Zinn had Ahrens draft the 457 plan because of Ahrens' familiarity with these types of plans, and for the fact that neither Bogar nor Hipp routinely drafted deferred compensation plans. 30. Carroll Township has issued payments to Massachusetts Mutual for the Price insurance policy. The following chart outlines those payments and Zinn's Check Date Check Number Check Amount Zinn Voted to Approve 7/14/2004 11929 $8,000.02 Yes 6/23/2005 12959 $8,000.02 Yes 6/13/2006 13908 $8,000.02 Yes 6/12/2007 14868 $8,000.02 No — no longer on the Board 5/30/2008 15886 $8,000.02 No — no longer on the Board Month/Year Fulton Financial Received Zinn's Commission August 2004 $5,600.00 $1,736.00 September 2005 $ 400.00 $ 124.00 July 2006 $ 400.00 $ 124.00 Total $1,984.00 Zinn, 07 -082 Page 9 participation in approving bill lists which include, amongst others, payments to Massachusetts Mutual. 31. As the writing Agent, Zinn drafted the policy for Price and earned commission concerning the sale of the policy. a. Zinn earns 31 % of the premiums on his accounts. 32. Fulton Financial receives payments for policies sold by Fulton Financial employees from their broker /dealer, Executive/ValMark located in Akron, Ohio. a. Each agent is then paid their percentage for commission from the one check. 33. Zinn earned commission on the Price policy as follows: 34. Zinn earned a total of $1,984.00 in commission for the life insurance policy for Carroll Township Manager Dianne Price between August 2004 and July 2006. a. No commission has been earned or will be earned from 2007 through the life of the policy due to the State Ethics Commission investigation. 1. Zinn requested [that] he not receive any additional commission on this policy upon receipt of the notice of the investigation from the Investigative Division of the State Ethics Commission. b. During an interview with an investigator for the State Ethics Commission, Zinn confirmed that commissions regarding the Price policy from 2007 forward will be sent directly to Fulton Financial. 35. On March 25, 2008, Massachusetts Mutual was forwarded an agent of record change request, seeking to effectively remove Zinn from any association with the policy and transferring servicing of the policy directly to the underwriting company. a. Massachusetts Mutual no longer is an independent insurance broker. b. Independent Agents are no longer authorized to sell Massachusetts Mutual Zinn, 07 -082 Page 10 policies. 1. All agents who write Massachusetts Mutual policies must be direct employees of Massachusetts Mutual. 36. Carroll Township Supervisors were aware that Zinn may be the Agent of Record for the Price policy. a. Supervisors were not specifically informed that Zinn would receive commissions resulting from the sale of the policy. b. Zinn never formally disclosed to the Board his relationship with Fulton Financial or Massachusetts Mutual in reference to this policy. c. Zinn never formally disclosed that he would receive a yearly commission for the duration of the policy. d. The Board was not considering a Deferred Compensation and insurance policy for Price until Zinn had not [sic] advocated such a plan. e. It is Zinn's position that the Board of Supervisors had knowledge, either actual or constructive, that he, Zinn, would be receiving some form of compensation in regards to his sale of the policy to the Township. 37. The township does not have a 457 Retirement for any employee other than Price. a. No other employees were offered the 457 Plan, as it is designed to cover "key" employees as opposed to "rank and file" employees. b. No township employees receive or were offered a life insurance policy with a cash surrender value. 38. As a member of the Carroll Township Board of Supervisors, Zinn utilized his public position to research and recommend a form of deferred compensation and life insurance policy for a Township Employee, to the Board of Supervisors, knowing or having reasonable expectation, that he, Zinn, would be authorized to sell his recommended life insurance policy to the Township, and receive a commission on the sale of same. a. Zinn voted to approve the purchase of the policy on July 14, 2004, after negotiating the sale of the policy, and voted to approve bill lists including the issuance of premium payments. b. Zinn received a private pecuniary benefit of $1,984.00 in the form of sales commissions as a result of the uses of his public position. THE FOLLOWING FINDINGS RELATE TO ZINN'S NEGLECT TO DISCLOSE ALL DIRECT /INDIRECT SOURCES OF INCOME ON STATEMENTS OF FINANCIAL INTERESTS FILED FOR THE 2002 AND 2004 CALENDAR YEARS. 39. As a Carroll Township Supervisor, Zinn was required to file a Statement of Financial Interests for calendar years 2002; 2003; 2004; 2005; 2006; and 2007 by May 1 St of the following calendar year. 40. The following chart depicts compensation Zinn received for his duties as a Carroll Township Supervisor: YEAR COMPENSATION Disclosure Required 2002 $1,400.00 Yes -over reporting amount 2003 $1,200.00 No -under reporting amount 2004 $1,300.00 Yes -over reporting amount 2005 $1,250.00 No -under reporting amount 2006 $1,050.00 No -under reporting amount 2007 $150.00 No -under reporting amount Zinn, 07 -082 Page 11 41. A Statement of Financial Interests (SFI) compliance review was conducted by a State Ethics Commission Investigator on or about August 15, 2007, for Carroll Township. 42. In 2002 and 2004, Zinn received compensation from Carroll Township as a Township Supervisor that was more than $1,300, but neglected to list Carroll Township as a Direct or Indirect Source of Income on his Statements of Financial Interests for those years. 43. In addition to neglecting to disclose his compensation as a Carroll Township Supervisor, Zinn also overlooked the need to list his political subdivision on his 2002 Statement of Financial Interests. III. DISCUSSION: As a Supervisor for Carroll Township ( "Township ") from approximately January 2002, through February 13, 2007, Respondent Kevin A. Zinn, hereinafter also referred to as "Respondent," "Respondent Zinn," or "Zinn," has been a public official subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq. The allegations are that Zinn violated Sections 1103(a), 1103(f), and 1105(b)(5) of the Ethics Act: (1) when he used the authority of his public position for a private pecuniary gain for himself and /or a business with which he is associated when he sold a whole life insurance policy to the Township, as part of a retirement plan for a Township employee, which benefited himself and /or his employer, Fulton Financial Group; (2) when he used the authority of his public position to enter into a contract with the Township for the sale of a whole life insurance policy, valued at $500.00 or more, issued through Massachusetts Mutual Financial Group, to the Township absent an open and public process; and (3) when he failed to disclose a direct or indirect source of income totaling in the aggregate $1,300 or more, including his compensation as a Township Supervisor, on his 2002, 2003, 2004, 2005 and 2006 Statement of Financial Interests ( "SFI ") forms. Pursuant to Section 1103(a) of the Ethics Act, a public official /public employee is prohibited from engaging in conduct that constitutes a conflict of interest: § 1103. Restricted activities (a) Conflict of interest. —No public official or public employee shall engage in conduct that constitutes a conflict of interest. 65 Pa.C.S. § 1103(a). The term "conflict of interest" is defined in the Ethics Act as follows: § 1102. Definitions Zinn, 07 -082 Page 12 "Conflict" or "conflict of interest." Use by a public official or public employee of the authority of his office or employment or any confidential information received through his holding public office or employment for the private pecuniary benefit of himself, a member of his immediate family or a business with which he or a member of his immediate family is associated. The term does not include an action having a de minimis economic impact or which affects to the same degree a class consisting of the general public or a subclass consisting of an industry, occupation or other group which includes the public official or public employee, a member of his immediate family or a business with which he or a member of his immediate family is associated. 65 Pa.C.S. § 1102. Section 1103(a) of the Ethics Act prohibits a public official /public employee from using the authority of public office /employment or confidential information received by holding such a public position for the private pecuniary benefit of the public official /public employee himself, any member of his immediate family, or a business with which he or a member of his immediate family is associated. Section 1103(f) of the Ethics Act imposes certain restrictions as to contracting: § 1103. Restricted activities (f) Contract. —No public official or public employee or his spouse or child or any business in which the person or his spouse or child is associated shall enter into any contract valued at $500 or more with the governmental body with which the public official or public employee is associated or any subcontract valued at $500 or more with any person who has been awarded a contract with the governmental body with which the public official or public employee is associated, unless the contract has been awarded through an open and public process, including prior public notice and subsequent public disclosure of all proposals considered and contracts awarded. In such a case, the public official or public employee shall not have any supervisory or overall responsibility for the implementation or administration of the contract. Any contract or subcontract made in violation of this subsection shall be voidable by a court of competent jurisdiction if the suit is commenced within 90 days of the making of the contract or subcontract. 65 Pa.C.S. § 1103(f). Section 1103(f) of the Ethics Act provides in part that no public official /public employee or his spouse or child or business with which the public official /public employee or his spouse or child is associated may enter into a contract with his governmental body valued at five hundred dollars or more or any subcontract valued at five hundred dollars or more with any person who has been awarded a contract with the governmental body with which the public official /public employee is associated unless the contract is awarded through an open and public process including prior public notice and subsequent public disclosure of all proposals considered and contracts awarded. Section 1105(b)(5) of the Ethics Act requires the filer to disclose on the Statement Zinn, 07 -082 Page 13 of Financial Interests the name and address of any direct or indirect source of income totaling in the aggregate $1,300 or more. As noted above, the parties have submitted a Consent Agreement and Stipulation of Findings. The parties' Stipulated Findings are set forth above as the Findings of this Commission. We shall now summarize the relevant facts as contained therein. Respondent Zinn served as a Township Supervisor from approximately January 2002, through February 13, 2007. As a Township Supervisor, Zinn served on various Township committees, including the Finance Committee. In his private capacity, Zinn is licensed to write insurance policies for approximately thirty or more insurance companies. Since at least 2003, Zinn has been employed by Fulton Financial Corporation as an Insurance Advisor. Zinn is compensated solely by commissions on sales of insurance policies and retirement plans. On January 2, 2002, an individual named Dianne B. Price ( "Price ") commenced employment with the Township as the Township's first Township Manager. In early 2004, Zinn approached Robert Schopfer ( "Schopfer "), Chairman of the Township Board of Supervisors ( "Board "), and proposed that the Township purchase a life insurance policy in Price's name as an incentive for Price to remain employed by the Township. Schopfer suggested to Zinn that Zinn present the insurance proposal to the entire Board. Subsequently, during a Board executive session in or about April 2004, Zinn proposed to the Board that the Board obtain a life insurance policy with a "457 plan" (type of retirement plan) for Price. Zinn's proposals were well received by the Board. As part of the Finance Committee, Zinn was given broad authorization by the Board to obtain additional information regarding the proposed life insurance policy for Price. The decision to have Zinn develop a proposal for a life insurance policy for Price was not the result of an official vote or action of the Board. There was never any public discussion by the Board about the creation of such a life insurance policy. All discussions took place during executive sessions of the Board. In considering underwriting companies to supply the policy to the Township, Zinn only considered insurance companies for which he was an authorized broker /agent. Zinn did not advise the Board of that fact. The Township did not advertise for or otherwise seek public bids or quotes for insurance policies from other qualified insurance companies. Zinn wrote the policy for Price through Fulton Financial, with Massachusetts Mutual Life Insurance Company as the underwriting company. The application for the policy was signed by Price as the insured, Zinn as the Soliciting Agent, and Schopfer as the representative of the policy owner (the Township). The policy was a "key person" policy with a cash surrender value. The policy included a mechanism to pay Price a pension should she continue employment with the Township until age 65. Annual premiums of $8,000.02 were to be paid by the Township until June 24, 2022. The policy issue date was June 24, 2004. The parties have stipulated that the total value of the policy is $289,935.00, and that the policy currently has a cash value of $21,292.72. At the Board's work session held on July 12, 2004, a motion was made by Supervisor Murphy, seconded by Supervisor Hipp, and unanimously approved to authorize the payment of $8,000.02 to open an insurance policy with an ordinance to follow to create a 457 Plan. Zinn, who was present at the meeting, is not recorded as abstaining from the vote. (Fact Finding 23 b). The parties have stipulated that Zinn voted to approve the purchase of the policy. (Fact Finding 38 a). Zinn, 07 -082 Page 14 The Township Supervisors were aware that Zinn might be the Agent of Record for the Price policy. Supervisors were not specifically informed that Zinn would receive commissions resulting from the sale of the policy. Zinn never formally disclosed to the Board his relationship with Fulton Financial or Massachusetts Mutual in reference to the policy. The life insurance policy was signed on July 14, 2004, by Price as the insured, Zinn as the agent, and Schopfer as the representative of the Township. Subsequently, the 457 retirement plan was developed and provided to Price. There is no indication in the Fact Findings that Zinn received any additional financial benefit in relation to the 457 retirement plan. In 2004, 2005, and 2006, Zinn participated in approving Township bill lists that included annual premium payments for the life insurance policy for Price. Between August 2004 and July 2006, Zinn earned a total of $1,984.00 in commission for the life insurance policy for Price. Fulton Financial Corporation also received compensation from the sale of the policy as set forth in Fact Findings 32 -33. Upon receiving notice of the Investigative Division's investigation in this matter, Zinn requested that he not receive any additional commission on this policy. No commission has been earned or will be earned by Zinn from 2007 through the life of the policy. On March 25, 2008, Massachusetts Mutual was forwarded an agent of record change request, seeking to effectively remove Zinn from any association with the policy and transferring servicing of the policy directly to the underwriting company. The parties have stipulated that as a member of the Board, Zinn utilized his public position to research and recommend to the Board a form of deferred compensation and life insurance policy for a Township employee, knowing or having reasonable expectation that he, Zinn, would be authorized to sell his recommended life insurance policy to the Township and that he would receive a commission on the sale of same. Zinn voted to approve the purchase of the policy after negotiating the sale of the policy, and voted to approve bill lists that included the issuance of premium payments. Zinn received a private pecuniary benefit in the amount of $1,984.00 in the form of sales commissions as a result of the uses of his public position. As for Zinn's SFIs, the parties have stipulated that as a Township Supervisor, Zinn was required to file SFIs for calendar years 2002, 2003, 2004, 2005, 2006 and 2007. In 2002, Zinn received compensation from the Township in the amount of $1,400.00 for his duties as a Township Supervisor. In 2004, Zinn received compensation from the Township in the amount of $1,300.00 for his duties as a Township Supervisor. In calendar years 2003, 2005, 2006, and 2007, Zinn's compensation from the Township was less than $1,300.00. Zinn neglected to list the Township as a Direct or Indirect Source of Income on his SFIs for calendar years 2002 and 2004. Zinn also overlooked the need to list his political subdivision on his 2002 SFI. 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 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) Zinn, 07 -082 Page 15 occurred in relation to Zinn's sale of a whole -life insurance policy to the Township, as part of a retirement plan for a Township employee, resulting in a sales commission to Zinn; b. That a violation of Section 1103(f) of the Public Official and Employee Ethics Act, 65 Pa.C.S. §1103(f) occurred in relation to Carroll Township contracting with Fulton Financial Corporation, a business with which Zinn was associated, for the sale of a whole -life insurance policy for a Township employee, valued in excess of $500.00, absent an open and public process; and c. That a technical violation of Section 1105(b)(5) of the Public Official and Employee Ethics Act, 65 Pa.C.S. §1105(b)(5) occurred in relation to Zinn's omission of a direct or indirect source of income totaling in the aggregate $1,300 or more, namely his compensation as a Township Supervisor for Carroll Township, on his 2002 and 2004 Statement of Financial Interests forms. 4. Zinn agrees to make payment in the amount of $1,984.00 in settlement of this matter. Said settlement amount is to be made in monthly payments of $165.34 per month for twelve (12) months, made payable to the Commonwealth of Pennsylvania and forwarded to the Pennsylvania State Ethics Commission, with the first payment due [within] thirty (30) days of the issuance of the final adjudication in this matter. Zinn agrees to not accept any reimbursement, compensation or other payment from Carroll Township representing a full or partial reimbursement of the amount paid in settlement of this matter. 5. Zinn agrees to file Amended Statements of Financial Interests for calendar years 2002 and 2004 regarding his position as Township Supervisor for Carroll Township, with Carroll Township, and forward a copy of [same] 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. In applying the relevant provisions of the Ethics Act to the Stipulated Findings, we agree with the parties that a violation of Section 1103(a) of the Ethics Act occurred in relation to Zinn's sale of a whole -life insurance policy to the Township, as part of a retirement plan for Price, resulting in a sales commission to Zinn. Each element of a violation of Section 1103(a) has been established. The parties have stipulated that as a member of the Board, Zinn utilized his public position to research and recommend to the Board a form of deferred compensation and life insurance policy for a Township Employee (Price), knowing or having reasonable expectation that he, Zinn, would be authorized to sell his recommended life insurance Zinn, 07 -082 Page 16 policy to the Township and that he would receive a commission on the sale of same. Zinn used the authority of his public office as a Township Supervisor when he took the following actions: (1) proposed to Board Chairman Schopfer and subsequently the Board that the Township purchase a life insurance policy in Price's name; (2) after receiving broad authorization by the Board to obtain additional information regarding the proposed life insurance policy, chose an underwriting company for which he was an authorized broker /agent; (3) voted to approve the purchase of the policy; and (4) participated in approving Township bill lists that included annual premium payments for the policy. The resulting private pecuniary benefit to Zinn consisted of the sales commissions in the total amount of $1,984.00 that Zinn received between August 2004 and July 2006 for the life insurance policy for Price. Accordingly, we hold that a violation of Section 1103(a) of the Ethics Act occurred when Zinn used the authority of his public office in relation to his sale of a whole -life insurance policy to the Township in 2004, as part of a retirement plan for the Township Manager, resulting in a sales commission to Zinn. Cf., Gallen, Order 1198; Kurtz, Order 1116. We also accept the parties' recommendation as to the finding of a violation of Section 1103(f) of the Ethics Act. Per the Stipulated Findings, Fulton Financial Corporation is a business with which Zinn is associated as that term is defined by the Ethics Act. 65 Pa.C.S. § 1102; Fact Finding 13. The contract for the sale of the Price insurance policy to the Township through Fulton Financial Corporation was valued in excess of $500. When the purchase of the policy was approved at the July 12, 2004, Board work session, there had been no prior public notice and no prior public discussion by the Board about creating /purchasing such a life insurance policy. The parties are in agreement that no "open and public process" was observed as to the sale of the policy to the Township through Fulton Financial Corporation. Zinn signed the insurance application, insurance policy, and policy delivery receipt as the Selling Agent, such that legal issues raised in Bixler v. State Ethics Commission, 847 A.2d 785 (Pa. Cmwlth. 2004) are not present in this case. We accept the parties' recommendation and hold that a violation of Section 1103(f) of the Ethics Act occurred in relation to the Township contracting with Fulton Financial Corporation, a business with which Zinn was associated, for the sale of a whole -life insurance policy for the Township Manager, valued in excess of $500.00, absent an open and public process. Cf., Kurtz, supra. We further hold that a technical violation of Section 1105(b)(5) of the Ethics Act occurred when Zinn did not list the Township as a direct or indirect source of income on his 2002 and 2004 SFI forms. See, e.q., Hahn, Order 1480; Glover, Order 1389; Kolb, Order 1322. The Consent Agreement does not contain a proposed disposition of the portion of the Section 1105(b)(5) allegation pertaining to the 2003, 2005, and 2006 calendar year SFIs. We will treat the lack of a proposed disposition as to that particular portion of the Section 1105(b)(5) allegation as a "non pros" by the Investigative Division. As part of the Consent Agreement, Zinn has agreed to make payment in the amount of $1,984.00 in settlement of this matter, with said amount to be paid in monthly payments of $165.34 per month for twelve (12) months, made payable to the Commonwealth of Pennsylvania and forwarded to this Commission, with the first payment due within thirty (30) days of the issuance of the final adjudication in this matter. Zinn, 07 -082 Page 17 Zinn has further agreed to not accept any reimbursement, compensation or other payment from the Township representing a full or partial reimbursement of the amount paid in settlement of this matter. Finally, Zinn has agreed to file with the Township amended SFIs for calendar years 2002 and 2004 regarding his position as a Township Supervisor, and to forward copies of such filings 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, Zinn is directed to make payment in the amount of $1,984.00, with said amount to be paid in monthly payments of $165.34 per month for twelve (12) months, made payable to the Commonwealth of Pennsylvania and forwarded to this Commission, and with the first payment due by no later than the thirtieth (30 ") day after the mailing date of this adjudication and Order. Per the Consent Agreement of the parties, Zinn is further directed to not accept any reimbursement, compensation or other payment from the Township representing a full or partial reimbursement of the amount paid in settlement of this matter. To the extent he has not already done so, Zinn is directed to file with the Township amended SFIs for calendar years 2002 and 2004, providing full financial disclosure as required by the Ethics Act and the Regulations of this Commission, by no later than the thirtieth (30) day after the mailing date of this adjudication and Order, and to forward copies of such filings to this Commission for compliance verification purposes. Compliance with the foregoing will result in the closing of this case with no further action by this Commission. Noncompliance will result in the institution of an order enforcement action. IV. CONCLUSIONS OF LAW: 1. As a Supervisor for Carroll Township ( "Township ") from approximately January 2002, through February 13, 2007, Respondent Kevin A. Zinn ( "Zinn ") has been a public official subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq. 2. Zinn violated Section 1103(a) of the Ethics Act when he used the authority of his public office in relation to his sale of a whole -life insurance policy to the Township in 2004, as part of a retirement plan for the Township Manager, resulting in a sales commission to Zinn. 3. A violation of Section 1103(f) of the Ethics Act occurred in relation to the Township contracting with Fulton Financial Corporation, a business with which Zinn was associated, for the sale of a whole -life insurance policy for the Township Manager, valued in excess of $500.00, absent an open and public process. 4. A technical violation of Section 1105(b)(5) of the Ethics Act occurred when Zinn did not list the Township as a direct or indirect source of income on his 2002 and 2004 SFI forms. In Re: Kevin A. Zinn, Respondent ORDER NO. 1497 File Docket: 07 -082 Date Decided: 12/4/08 Date Mailed: 12/19/08 1 Kevin A. Zinn ( "Zinn "), a public official in his capacity as a Supervisor for Carroll Township ( "Township ") from approximately January 2002, through February 13, 2007, 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 office in relation to his sale of a whole -life insurance policy to the Township in 2004, as part of a retirement plan for the Township Manager, resulting in a sales commission to Zinn. 2. A violation of Section 1103(f) of the Ethics Act occurred in relation to the Township contracting with Fulton Financial Corporation, a business with which Zinn was associated, for the sale of a whole -life insurance policy for the Township Manager, valued in excess of $500.00, absent an open and public process. 3. A technical violation of Section 1105(b)(5) of the Ethics Act occurred when Zinn did not list the Township as a direct or indirect source of income on his 2002 and 2004 Statement of Financial Interests ( "SFI ") forms. 4. Per the Consent Agreement of the parties, Zinn is directed to make payment in the amount of $1,984.00, with said amount to be paid in monthly payments of $165.34 per month for twelve (12) months, made payable to the Commonwealth of Pennsylvania and forwarded to the Pennsylvania State Ethics Commission, and with the first payment due by no later than the thirtieth (30 day after the mailing date of this Order. 5. Per the Consent Agreement of the parties, Zinn is directed to not accept any reimbursement, compensation or other payment from the Township representing a full or partial reimbursement of the amount paid in settlement of this matter. 6. To the extent he has not already done so, Zinn is directed to file with the Township amended SFIs for calendar years 2002 and 2004, providing full financial disclosure as required by the Ethics Act and the Regulations of this Commission, by no later than the thirtieth (30 day after the mailing date of this Order, and to forward copies of such filings to this Commission for compliance verification purposes. 7 Compliance with paragraphs 4, 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, Louis W. Fryman, Chair