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HomeMy WebLinkAbout1537 OWENIn Re: Thomas Owen, Respondent File Docket: X -ref: Date Decided: Date Mailed: Before: Louis W. Fryman, Chair John J. Bolger, Vice Chair Donald M. McCurdy Raquel K. Bergen Nicholas A. Colafella Mark Volk 08 -034 Order No. 1537 9/22/09 10/6/09 This is a final adjudication of the State Ethics Commission. Procedurally, the Investigative Division of the State Ethics Commission conducted an investigation regarding possible violation(s) of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq., by the above -named Respondent. At the commencement of its investigation, the Investigative Division served upon Respondent written notice of the specific allegations. Upon completion of its investigation, the Investigative Division issued and served upon Respondent a Findings Report identified as an "Investigative Complaint." An Answer was filed and a hearing was requested. A Stipulation of Findings and a Consent Agreement waiving an evidentiary hearing were subsequently submitted by the parties to the Commission for consideration. The 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. Owen, 08 -034 Page 2 I. ALLEGATIONS: That Thomas Owen, a public official in his capacity as a Member of the Board of Directors of the Valley View School District, Lackawanna County, violated Sections 1103(a) and 1103(f) of the State Ethics Act (Act 93 of 1998), 65 Pa.C.S. §§ 1103(a) and 1103(f), when a business with which he and /or a member of his immediate family is associated, Thomas Bear Owen, Jr. Paving, entered into a contract with the School District in excess of $500.00 without an open and public process; and when he participated in Board actions to approve payments to said company. II. FINDINGS: 1. Thomas Owen, Sr. has served as a member of the Valley View Board of School Directors since approximately 2001. a. The Valley View Board of School Directors consists of nine (9) members including Thomas Owen, Sr. b. The Valley View Board of School Directors has general supervisory responsibility over the District's four (4) schools (High School, Middle School, Intermediate School, and Elementary Center) and the District's administrators. 2. Thomas Owen, Sr. is married to Erin A. Owen. a. The Owens reside at [Respondent's residence address]. b. [Respondent's residence address] is within the geographical boundaries of the Valley View School District. 3. Thomas Owen, Jr. is the adult son of Respondent Thomas Owen, Sr. a. Thomas Owen, Jr. resided at [Respondent's residence address] at all times relevant to this investigation. 4. The Owens family has been in the paving and construction business in the Lackawanna County area since at least 1994. a. Over the years the business has operated under business names including, but not limited to, Bear Paving and Construction, Inc. and Tom Bear Owen, Jr. Paving Company. 5. Articles of Incorporation on file with the Pennsylvania Department of State include corporate filings for Bear Paving and Construction, Inc. a. Articles of Incorporation for Bear Paving and Construction, Inc. were filed on March 15, 1994. b. The Department of State assigned entity number 2571006 to Bear Paving and Construction, Inc. c. Erin Owen is the stated President of Bear Paving and Construction, Inc. d. No other corporate officers were registered with the Department of State. e. Erin Owen is the wife of the Respondent. Owen, 08 -034 Page 3 6. Thomas Owen, Jr. has operated a paving and construction business under the business name, Thomas Bear Owen, Jr. Paving Company since at least 2003. 7. Thomas Owen, Jr. asserts that he has operated Thomas Bear Owen, Jr. Paving Company as a sole proprietorship independent of Bear Paving and Construction, Inc. since 2003. 8. No documents have been filed with the Pennsylvania Department of State amending corporate filings for Bear Paving and Construction, Inc. to do business as Thomas Bear Owen, Jr. Paving Company. 9. Tom Bear Owen, Jr. Paving Company has used [Respondent's residence address] as its business address since approximately 2003. a. [Respondent's residence address] is the primary residence of the Respondent, his wife Erin Owen and Thomas Owen, Jr. b. [Respondent's residence address] is the only address listed on business invoices for Tom Bear Owen, Jr. Paving Company used during 2005. 10. Thomas Owen, Jr. is an employee of Tom Bear Owen, Jr. paving company. a. b. Erin Owen, Thomas Owen, Jr.'s mother, has performed bookkeeping functions for the business. Owen, Jr. has employed his uncle, Glen Owen, on occasion. 11. Respondent Thomas Owen, Sr. disclosed direct /indirect income from Tom Bear Owen, Jr. Paving Company on Statement of Financial Interests forms filed with the Valley View School District for calendar years 2003 through 2005. a. Thomas Owen, Sr. disclosed his occupation as laborer on these forms. b. Thomas Owen, Jr. denies his father, Respondent Thomas Owen, Sr., was ever employed by Tom Bear Owen, Jr. Paving Company. 12. During the summer of 2005, Ken Marchegiani, Director of Buildings and Grounds for the Valley View School District, authorized repairs to portions of the asphalt parking lots at the District's intermediate and high schools. a. Both parking lots had cracked, damaged and /or broken asphalt. b. As Director of Buildings and Grounds, Marchegiani was responsible for the general care, maintenance and upkeep of all District buildings and grounds. c. Marchigiani was annually provided with an operating budget to be used at his discretion for maintenance and upkeep purposes. 13. Marchegiani was required by the District to follow purchasing guidelines as set forth in the Public School Code when making purchases on behalf of the District for his Department. a. For purchases under $4,000.00, Marchegiani was not required to get any bids or quotes. b. For purchases valued between $4,000.00 and $10,000.00, Marchegiani was required to get three (3) quotes and /or proposals. Owen, 08 -034 Page 4 c. For purchases valued in excess of $10,000.00, competitive, sealed bids are obtained at the Board level. 14. As a matter of common practice, Marchegiani attempts to utilize businesses located within the geographical boundaries of the Valley View School District when possible for Buildings and Grounds purchases under $4,000.00. a. Marchegiani is not required to obtain Board approval to initiate these purchases. b. The payment[s] of these purchases are approved by the Board consistent with the District's bill paying process. 15. Between June and August 2005, Marchegiani contacted Tom Owen, Jr. to obtain a quote to repair and seal damaged portions of the parking lots at the District's intermediate and high schools. a. Marchegiani decided to have this work performed over the summer months when vehicle traffic in the two (2) lots would be minimal. b. Marchegiani was familiar with Tom Owen, Jr. as a local paver and the son of School Board Member Thomas Owen, Sr. 16. Marchegiani met Owen, Jr. on -site to discuss the District's paving needs. a. Respondent Thomas Owen, Sr. did not participate in this meeting. b. Owen, Jr. provided Marchegiani with verbal quotes to perform the desired work. c. Based on the verbal quotes Marchegiani authorized Owen, Jr. to perform the work. 17. Marchegiani did not seek bids, quotes or proposals for the paving repair work from any firms other than Thomas Owen, Jr. a. The anticipated costs of the repairs were in excess of $500.00 at each school location. 18. Marchegiani did not bring Thomas Owen, Jr. quotes before the Valley View School Board for any review or consideration prior to the work being performed. a. Marchegiani had the authority to accept quotes for work performed for the Buildings and Grounds Department under $4,000.00 without any prior approval from the Board of School Directors. 19. On or about August 2005, Tom Bear Owen, Jr. Paving Company performed patch and sealing work at the High School and Intermediate School complexes. a. This work was done under the general supervision of Marchegiani as the District's Director of Buildings and Grounds. b. Completed work was also verified by Corry E. Castellani, the District's Business Manager, prior to any payments being made. c. The District did not retain documentation detailing the dates that the actual Owen, 08 -034 Page 5 work was performed. d. Work was performed as part of two separate projects; middle school and high school. 20. On or before September 22, 2005, Tom Bear Owen, Jr. Paving Company submitted an undated invoice to the Valley View School District in the amount of $2,300.00. a. Contained on the invoice was the following description of work: "Valley View patchwork, saw cut and dig out bad areas. Install ID -2 asphalt and seal edges. All labor & material $2,300." b. This invoice had the Business Manager's initials in the form of an approval stamp affixed to it, approving it for payment. c. No other initials were contained on the invoice. d. The stated business address of [residence address] listed on the invoice is the primary residence of the Respondent. e. This invoice did not include the date(s) or school location(s) of the work. f. This invoice was for work completed at the District's high school complex. 21. On September 22, 2005, the Valley View School District issued general fund check number 10011822 in the amount of $2,300.00 to Bear Paving, Tom Owen, [Respondent's residence address]. a. This check was for the payment of the invoice for work performed at the high school complex. b. The front side of this check included facsimile signatures for Board Members Maggie Lund, James Addley, and Robert Munley. c. The reverse side of this check is signed "Tom Owen, Jr." and was cashed on or about September 26, 2005. d. This check was cashed by Erin Owen at the direction of Thomas Owen, Jr. e. Erin Owen signed "Tom Owen, Jr." on the back side of this check at the direction of Thomas Owen, Jr. f. At the time of this payment, Tom Bear Owen Paving did not have a business checking account. 22. Valley View School District check number 10011822 in the amount of $2,300.00 was issued by the District's Business Office prior to the approval by the School Board. a. The Business Office will pay routine bills prior to a Board meeting without prior Board authorization based on the bills' due date[s]. b. The Tom Bear Owen, Jr. Paving Company invoice which generated the payment did not include a due date. c. This payment was approved by the School Board during its October 24, 2005, meeting. Owen, 08 -034 Page 6 23. Marchegiani then authorized Owen, Jr. to seal cracks at the District's intermediate school. a. This hiring also was for work valued in excess of $500.00. b. No formal bid process was followed. c. Owen, Jr. provided a verbal quote to Marchegiani for this project. d. Marchegiani did not get Board approval for this work as the anticipated costs were to be less than $4,000. 24. On or before October 24, 2005, Tom Bear Owen, Jr. Paving Company submitted an undated invoice to the Valley View School District in the amount of $1,875.00. a. Contained on the invoice was the following description of work: "Valley View crack repair. Apply hot crack sealer, 3,250 L.F. All labor & material - $1,875." b. This invoice had the Business Manager's initials in the form of an approval stamp affixed to it, approving it for payment. c. No other initials were contained on the invoice. d. The stated business address of [Respondent's residence address] listed on the invoice is the primary residence of the Respondent. e. This invoice did not include the date(s) or school locations(s) of the work. f. This work was performed at the District's intermediate school. 25. On October 24, 2005, the Valley View School District issued general fund check number 10011904 in the amount of $1,875.00 to Bear Paving, Tom Owen, [Respondent's residence address]. a. This check was for the payment of the invoice detailed in Finding No. 24. b. The front side of this included facsimile signatures for Board Members Maggie Lund, Robert Munley and James Addley. c. The reverse side of this check is signed Tom Owen and was cashed on or about October 31, 2005. d. Thomas Owen, Jr. asserts that he signed this check and provided it to his mother for deposit into the business account of Tom Bear Owen Paving Company. 26. Valley View School District check number 10011904 was approved for payment by the Board during its October 24, 2005, regular meeting. 27. During 2005 when these payments were made to Thomas Owen, Jr., the Valley View School District utilized the following process for the approval and payment of bills. a. Invoices to be paid would be submitted to the District's business office for review and processing. Owen, 08 -034 Page 7 b. The business office would compile accounts payable lists and monthly Treasurer's Reports to be approved by the Board at a public meeting. c. Monthly treasurer's reports include payments which are made by the District between meetings. d. The accounts payable list details payments dated and approved by the Board the same day as the meeting. e. The actual checks issued include facsimile signatures for the Board President, Secretary and Treasurer. f. In 2005 these signatures were Maggie Lund, President; James Addley, Secretary and Robert Munley, Treasurer. 28. Respondent, Thomas Owen, Sr. participated in the approval of both payments issued to "Bear Paving, Tom Owen," which occurred during the Board's October24, 2005, meeting. a. The October 24, 2005, treasurer's report includes a payment in the amount of $2,300.00 listed as being made to Bear Owen Paving. 1. This was included along with approximately 120 total payments. 2. The actual check number is not listed on the treasurer's report. b. The October 24, 2005, accounts payable report includes check number 10011904 in the amount of $1,875.00 listed as being issued to Bear Paving. 1. Under description of purchase is "repair & maint. serv." 2. A total of approximately 139 payments were included on this accounts payable report. 29. Minutes from the Valley View School Board's October 24, 2005, meeting include the following recorded official action taken approving payments issued to Bear Paving Company and other vendors. a. "Motioned by Mr. Barry Lupini and seconded by Mr. Joseph Buckshon Jr. to approve the treasurer's report. All in Favor: Ms. Maggie Lund, Mr. James Addley, Mr. Barry Lupini, Mr. Thomas Owen, Mr. Robert Munley, Mr. Anthony Calvario, Mr. David Burak, Mr. James Murphy, Mr. Joseph Buckshon Jr." b. "Motioned by Mr. Barry Lupini and seconded by Mr. James Murphy to approve Accounts Payable in the amount of $258,768.57. All in favor: Ms. Maggie Lund, Mr. Barry Lupini, Mr. Thomas Owen, Mr. Robert Munley, Mr. Anthony Calvario, Mr. David Burak, Mr. James Murphy, Mr. Joseph Buckshon Jr. Opposed: Mr. James Addley." 30. Minutes from the Board's November 21, 2005, meeting confirm that the minutes from the October 24, 2005, meeting were approved without any changes. This approval was given by a 9 -0 vote of the Board. a. During the Board's October 24, 2005, meeting, the Board voted to approve the payment of two Bear Paving Company Invoices submitted to the District. Owen, 08 -034 Page 8 b. These motions passed by 9 -0 and 8 -1 votes respectively, with Respondent Owen on record as voting with the majority. c. These votes also included the approval of other District payments as well. 31. During the same time Respondent Thomas Owen, Sr. participated in the approval of payments issued to Bear Paving, Tom Owen, in his official capacity as a Member of the Valley View Board of School Directors, [sic] his wife, Erin Owen, received payments from the Bear Owen Paving business checking account at Fidelity Bank. a. On October 21, 2005, Thomas Owen, Jr. opened a business account (ending 7412) at Fidelity Bank in the name Tom Bear Owen Paving Company. b. Erin Owen was added as a signatory on this account on May 24, 2006. 32. Account activity in the business account of Tom Bear Owen Paving Company detailed ten (10) cash deposits totaling $31,185 between October 24, 2005, and December 27, 2005, after Thomas Owen, Jr. received the two (2) payments from the Valley View School District. 33. On October 31, 2005, Thomas Owen, Jr. deposited $7,275.00 cash into the business account identified above for Tom Bear Owen Paving Company. a. Owen, Jr. cashed District check number 10011904 in the amount of $1,875.00 on October 31, 2005. 34. Cash deposited into the business account of Tom Bear Owen, Paving was used to issue payments to Erin Owen, the wife of the Respondent. a. Between November 18, 2005, and December 29, 2005, twelve (12) payments totaling $1,985.00 from this account were issued to Erin Owen. 35. Erin Owen was the President of Bear Paving and Construction, Inc. at the time these payments were made. a. Erin Owen is the mother of Thomas Owen, Jr. and wife of Respondent Thomas Owen, Sr. b. No business filings existed in 2005 for Tom Bear Owen, Jr. Paving Company. 36. In addition to payments made directly to Erin Owen from the business account of Tom Bear Owen Paving Company during this timeframe, checks were also issued to cover personal living expenses for the Owen family. a. These payments included Adelphia, MCI, PP &L, Eckerd, Propst Buy Rite, cash, and Quinns. 1. Adelphia provided cable television service to the Owen residence. 2. PP &L provided electrical service to the Owen residence. 3. MCI provided phone service to the Owen residence. 4. Food, gasoline and other goods were obtained from Propst Buy Rite, Owen, 08 -034 Page 9 Eckerd, Quinns, and by way of cash. 37. During November and December 2005, fifty -three (53) charges totaling $4,421.79 were paid from the Tom Bear Owen Paving business account for the Owens' living expenses. 38. Thomas Owen, Sr. did not disclose to Members of the Valley View Board of School Directors that two (2) bills totaling $4,175.00 payable to Tom Owen Paving Company on the October 24, 2005, accounts payable and Treasurer's Reports were bills from a business owned by his son. a. Erin Owen, the Respondent's wife, was the stated President of the business on Articles of Incorporation on file with the Pennsylvania Department of State. b. Thomas Owen, Jr. is the son of the Respondent. c. The Owens collectively resided at [Respondent's residence address]. d. [Respondent's residence address] also served as the business address of Tom Bear Owen, Jr. Paving Company during 2005. 39. Statement of Financial Interest Forms on file with the Valley View School District include the following filings for Thomas Owen: a. Calendar year: 2007 Filed: 01/29/08 on SEC -1 REV. 01/08 Position: School Director Occupation: Unemployed Creditors: Fidelity Bank, Eynon, PA, 9.5% Direct /indirect income: None Transportation, lodging and hospitality: Valley View, $728.00 All other financial interests: None b. Calendar year: 2006 Filed: 01/22/07 on SEC -1 REV. 01/07 Position: School Director Occupation: Unemployed Creditors: Fidelity Bank, Eynon, PA, 9.5% Direct /indirect income: None All other financial interests: None c. Calendar year: 2005 Filed: 01/16/06 on SEC -1 REV. 01/06 Position: School Director Occupation: Laborer Creditors: None Direct /indirect income: Tom Bear Owen Paving Co. All other financial interests: None d. Calendar year: 2004 Filed: 01/17/05 on SEC -1 REV. 01/05 Position: School Director Occupation: Laborer Creditors: None Direct /indirect income: Tom Bear Owen, Jr. Paving Co. All other financial interests: None Owen, 08 -034 Page 10 e. Calendar year: 2003 Filed: 01/14/04 on SEC -1 REV. 01/04 Position: School Director Occupation: Laborer Creditors: None Direct /indirect income: Tom Bear Owen Paving Co. All other financial interests: None 40. The no bid contract issue involving payments to Tom Bear Owen, Jr. Paving Company was raised during a school audit conducted by the Commonwealth of Pennsylvania's Department of the Auditor General for the school years ending June 30, 2005, and June 30, 2006. a. During the audit process, auditors determined a family relationship between Valley View School Board Member Thomas Owen and the Bear Owen Paving Company. b. As a result of the relationship the final audit report referenced a potential conflict of interest involving Board Member Owen's participation in the approval of two payments issued to the company totaling in excess of $4,000.00 without any bid process. 41. A corrective action plan to address the conflict of interest issue raised in the audit report was approved by the Valley View School Board during its December 4, 2006, meeting. a. A corrective action plan was initially discussed during the Board's November 21, 2006, meeting. b. The corrective action plan was approved by a 9 -0 vote with Respondent Owen voting and submitted to the Department of the Auditor General as a Management Response. c. A corrective action plan was implemented to address possible conflict of interest situations should they occur in the future. The plan did not take any action relating to the two payments in question. 42. By way of correspondence dated November 21, 2006, from Superintendent Joseph Daley to the Pennsylvania Department of Education, Bureau of Budget and Fiscal Management, the District responded to the conflict of interest allegations against Board Member Owen raised by the audit. Superintendent Daley responded to audit findings contained on pages five through seven of the report as stated: Findings pages 5 -7 Possible conflict of interest transaction. "District records and minutes of the School Board Meetings disclose a possible conflict of interest where it appears that required disclosures were not made or that a board member may have engaged in prohibited conduct. The two instances of a potential conflict of interest transaction involved a business entity (owned by the son of a board member) being paid for repair and maintenance blacktop work by the School District ($2,300 and $1,875) on October 24, 2005. This same business entity also employed the board member himself. Additionally, the board member's 2005 Statement of Financial Interests Form indicates that the board member disclosed direct or indirect sources of income from his son's business. In both instances, the school board member did not abstain from the vote to pay the business entity. In accordance with the vote, the contractor was provided two Owen, 08 -034 Page 11 payments totaling $4,175.00 for services rendered over the course of thirty - five (35) days." Response of Management "Management agrees with the finding and provides the following response: Although we agree with the finding, at the time this work was being reviewed by our Director of Maintenance, the work in question was considered as minor repairs valued at much less than $4,000. This work was also done on two different sites (High School) and (Intermediate School) at two different times leading the supervisor to believe that competitive quotes or bid processes for the School District were not warranted. Since this time, however, it has been determined and acknowledged by the Board, that since the work was being performed by a business entity owned by the son of a board member, additional concern for (65 PA. CS.1103(f)) under the Ethics Act should have been addressed as well. This is to say the $500.00 contract value should have been evaluated. It is further acknowledged and agreed that said board member should have abstained from voting and publicly announced and disclosed the nature of his interest as a public record in a written memorandum filed with the board secretary responsible for recording the minutes of the meeting in question. He has been notified of this concern. Regarding the board member's Statement of Financial Interests, it is acknowledged that it had been completed as indicated in the findings. A board investigation has been conducted since the finding was reported, however, and it should be noted that at the time in question, the remaining board members would only have access to their own personal Statement of Financial Interest and therefore, would have no knowledge as to what was reported and filed on any other board member's statements. Therefore, remaining members were not aware of the potential conflict occurring. Since this issue was raised, the board member in question has filed an Amended Statement to reflect his current work status." 43. Thomas Owen, Sr. agreed and approved the District's audit report response which characterized his business relationship as follows: a. The two instances of a potential conflict of interest transaction involved a business entity owned by the son of a Board member being paid for repair and maintenance blacktop work by the School District $2,300.00 and $1,875.00 on October 24, 2005. This same business entity also employed the Board member himself. Additionally, the Board member's 2005 Statement of Financial Interests form indicates that the Board member disclosed direct or indirect sources of income from his son's business." b. Owen, Sr. voted in favor of the District response on December 4, 2006. c. Owen, Sr. signed the Board response dated November 20, 2006, which was submitted to the Department of Education. 44. Thomas Owen, Sr. and /or members of his immediate family including his wife Erin Owen and son Thomas Owen, Jr. received a private pecuniary gain of $4,175.00 as a result of two (2) no bid repairs performed for the Valley View School District under the business name Tom Bear Owen, Jr. Paving Company as detailed in this report. Owen, 08 -034 Page 12 a. A portion of the funds received from the school district were paid directly to Erin Owen, the Respondent's wife. b. A portion of the funds received from the school district were used to pay living expenses associated with the family's common residence and business location of [Respondent's residence address]. III. DISCUSSION: As a School Director for the Valley View School District ( "School District ") since approximately 2001, Respondent Thomas Owen, Sr. (hereinafter also referred to as "Respondent," "Respondent Owen," and "Owen ") 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 Respondent Owen violated Sections 1103(a) and 1103(f) of the Ethics Act when a business with which he and /or a member of his immediate family is associated, Thomas Bear Owen, Jr. Paving, entered into a contract with the School District in excess of $500.00 without an open and public process; and when he participated in actions of the School District Board of Directors ( "Board ") to approve payments to said company. 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: 65 Pa.C.S. § 1103(a). § 1103. Restricted activities (a) Conflict of interest. —No public official or public employee shall engage in conduct that constitutes a conflict of interest. The term "conflict of interest" is defined in the Ethics Act as follows: § 1102. Definitions "Conflict" or "conflict of interest." Use by a public official or public employee of the authority of his office or employment or any confidential information received through his holding public office or employment for the private pecuniary benefit of himself, a member of his immediate family or a business with which he or a member of his immediate family is associated. The term does not include an action having a de minimis economic impact or which affects to the same degree a class consisting of the general public or a subclass consisting of an industry, occupation or other group which includes the public official or public employee, a member of his immediate family or a business with which he or a member of his immediate family is associated. 65 Pa.C.S. § 1102. Section 1103(a) of the Ethics Act prohibits a public official /public employee from using the authority of public office /employment or confidential information received by holding such a public position for the private pecuniary benefit of the public official /public Owen, 08 -034 Page 13 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. 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 has served as a Member of the Board since approximately 2001. The Board consists of nine Members. Respondent is married to Erin Owen. Thomas Owen, Jr. ( "Owen, Jr. ") is the adult son of Respondent and Erin Owen. Respondent's residence address is the primary residence of Respondent, Erin Owen and Owen, Jr. Owen, Jr. resided at Respondent's residence address at all times relevant to the investigation of this matter. The Owens family has been in the paving and construction business in the Lackawanna County area since at least 1994. Over the years the business has operated under business names including, but not limited to, "Bear Paving and Construction, Inc." and "Tom Bear Owen, Jr. Paving Company." Articles of Incorporation for Bear Paving and Construction, Inc. were filed with the Pennsylvania Department of State on March 15, 1994. Erin Owen is the stated President of Bear Paving and Construction, Inc. No other corporate officers were registered with the Owen, 08 -034 Page 14 Department of State. Since at least 2003, Owen, Jr. has operated a paving and construction business under the business name, Thomas Bear Owen, Jr. Paving Company (also referred to herein as "Tom Bear Owen, Jr. Paving Company "). Since 2003 Thomas Bear Owen, Jr. Paving Company has used Respondent's residence address as its business address. Owen, Jr. asserts that since 2003, he has operated Thomas Bear Owen, Jr. Paving Company as a sole proprietorship independent of Bear Paving and Construction, Inc. Owen, Jr. is an employee of Tom Bear Owen, Jr. Paving Company. Erin Owen has performed bookkeeping functions for the business. Respondent's Statements of Financial Interests ( "SFIs ") filed with the School District for calendar years 2003 through 2007 did not disclose any office, directorship, employment or financial interest in any business. On his SFIs for calendar years 2003 through 2005, Respondent listed his occupation as "laborer" and "Tom Bear Owen Paving Co." or "Tom Bear Owen, Jr. Paving Co." as a direct /indirect source of income. Owen, Jr. denies that Respondent was ever employed by Tom Bear Owen, Jr. Paving Company. Between June and August 2005, Ken Marchegiani ( "Marchegiani "), Director of Buildings and Grounds for the School District, contacted Owen, Jr. to obtain a quote to repair and seal damaged portions of the parking lots at the School District's intermediate and high schools. Marchegiani did not seek bids, quotes or proposals for the paving repair work from any other firms. Marchegiani met Owen, Jr. on -site to discuss the School District's paving needs. Respondent did not participate in this meeting. Owen, Jr. provided Marchegiani with verbal quotes to perform the desired work. Based on the verbal quotes, Marchegiani authorized Owen, Jr. to perform the work at both locations. The anticipated costs of the repairs were in excess of $500.00 at each school location. Marchegiani did not bring Owen, Jr. quotes before the Board for any review or consideration prior to the work being performed. Marchegiani had the authority to accept quotes for work under $4,000.00 without any prior approval from the Board. Payments for such work were to be approved by the Board as part of the School District's bill paying process. On or about August 2005, Tom Bear Owen, Jr. Paving Company performed patch and sealing work at the High School and Intermediate School complexes. This work was performed as part of two separate projects. On or before September 22, 2005, Tom Bear Owen, Jr. Paving Company submitted an invoice to the School District in the amount of $2,300.00 for work completed at the School District's high school complex. On or before October 24, 2005, Tom Bear Owen, Jr. Paving Company submitted an invoice to the School District in the amount of $1,875.00 for work performed at the School District's intermediate school. Both invoices bear the Business Manager's initials approving them for payment. The business address listed on both invoices is the primary residence of Respondent. On September 22, 2005, the School District issued general fund check number 10011822 in the amount of $2,300.00 to "Bear Paving, Tom Owen," at Respondent's residence address. This check was payment of the invoice for work performed at the School District's high school complex. The check was negotiated by Erin Owen, who endorsed it for Owen, Jr. at the direction of Owen, Jr. On October 24, 2005, the School District issued general fund check number 10011904 in the amount of $1,875.00 to "Bear Paving, Tom Owen," at Respondent's residence address. This check was payment of the invoice for the work performed at the School District's intermediate school. The reverse side of this check was signed "Tom Owen, 08 -034 Page 15 Owen," and this check was cashed on or about October 31, 2005. Owen, Jr. asserts that he signed this check and provided it to his mother for deposit into the business account of Tom Bear Owen Paving Company. During the Board's October 24, 2005, meeting, the Board voted to approve the payment of the aforesaid invoices in the amounts of $2,300.00 and $1,875.00. These motions passed by 9 -0 and 8 -1 votes respectively, with Respondent Owen voting with the majority. These votes also included the approval of other School District payments as well. Respondent did not disclose to the other Board Members that the two aforesaid invoices approved at the October 24, 2005, meeting were from a business owned by his son. On October 21, 2005, Owen, Jr. opened a business account at Fidelity Bank in the name "Tom Bear Owen Paving Company." Erin Owen was added as a signatory on this account on May 24, 2006. During November and December 2005, twelve payments totaling $1,985.00 were issued from this account to Erin Owen, and 53 charges totaling $4,421.79 were paid from this account for the Owens' living expenses. An audit report from a school audit conducted by the Pennsylvania Department of the Auditor General for the school years ending June 30, 2005, and June 30, 2006, referenced a potential conflict of interest as to Respondent's participation in the approval of the aforesaid two payments totaling in excess of $4,000.00, which were issued without any bid process. At the Board's December 4, 2006, meeting, Respondent participated in the Board's unanimous vote approving a corrective action plan to address future conflicts of interest. The corrective action plan did not take any action relating to the two payments in question. Respondent also agreed with and approved the School District's audit report response which characterized his business relationship as follows: The two instances of a potential conflict of interest transaction involved a business entity owned by the son of a Board member being paid for repair and maintenance blacktop work by the School District $2,300.00 and $1,875.00 on October 24, 2005. This same business entity also employed the Board member himself. Additionally, the Board member's 2005 Statement of Financial Interests form indicates that the Board member disclosed direct or indirect sources of income from his son's business. Fact Finding 43 a. The parties have stipulated that Respondent and /or members of his immediate family including his wife Erin Owen and son Owen, Jr. received a private pecuniary gain of $4,175.00 as a result of two no bid repairs performed for the School District under the business name "Tom Bear Owen, Jr. Paving Company." 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), occurred in relation to Owen's participation in Board actions to approve Owen, 08 -034 Page 16 payments to Thomas Bear Owen, Jr. Paving, a company with which Owen or his son is associated. b. That an unintentional violation of Section 1103(f) of the Public Official and Employee Ethics Act, 65 Pa.C.S. §1103(f), occurred when Thomas Bear Owen, Jr. Paving, a company with which Owen or his son is associated, entered into a contract with the School District in excess of $500.00 without an open and public process. 4. Owen agrees to make payment in the amount of $2,530.00 in settlement of this matter payable to the Valley View School District and forwarded to the Pennsylvania State Ethics Commission within thirty (30) days of the issuance of the final adjudication in this matter. 5. 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 1 -2. In considering the Consent Agreement, we accept the parties recommendation for a finding that a violation of Section 1103(a) of the Ethics Act occurred in relation to Owen's participation in Board actions to approve payments to Thomas Bear Owen, Jr. Paving Company. Respondent used the authority of his public office as a School Director when he participated in the Board's votes at the Board's October 24, 2005, meeting to approve payment of two invoices in the amounts of $2,300.00 and $1,875.00 to Thomas Bear Owen, Jr. Paving Company. Thomas Bear Owen, Jr. Paving Company is a business with which Respondent's son, a member of Respondent's immediate family, is associated. In the instant matter, the parties have not stipulated as to whether Thomas Bear Owen, Jr. Paving Company is a business with which Respondent is associated, and based upon the Consent Agreement, we need not decide that issue. With each element of the recommended violation established, we hold that a violation of Section 1103(a) of the Ethics Act occurred in relation to Respondent's participation in actions of the Board to approve payments to Thomas Bear Owen, Jr. Paving Company, a business with which Respondent or his son is associated. Cf., Gold, Order 1461; Vaughn, Order 1450. As for the recommended finding of an unintentional violation of Section 1103(f), the repair work was valued in excess of $500, both collectively and at each location. Thus, pursuant to Section 1103(f) of the Ethics Act, the contract(s) for the work were required to be awarded through an open and public process, including prior public notice and subsequent public disclosure of all proposals considered and contracts awarded. However, the contract(s) were directed to Thomas Bear Owen, Jr. Paving Company by Owen, 08 -034 Page 17 Marchegiani without an open and public process. We are mindful of the recent ruling in Bixler v. State Ethics Commission, 847 A.2d 785 (Pa. Commw. Ct. 2004). In Bixler, supra, the Commonwealth Court held that a township supervisor did not violate Section 1103(f) of the Ethics Act when a business that employed him entered into a contract in excess of $500 with his township without an open and public process, but the supervisor himself was neither a party to the contract nor a principal of the contracting business. Id. The Court determined that Section 1103(f) of the Ethics Act prohibited the conduct of entering into the contract under such circumstances. The Court concluded that although a violation of Section 1103(f) of the Ethics Act would be established under such circumstances, it would not be the public official who would be in violation of the law. Id. See also, Means, Opinion 04 -007. In the instant matter, the parties have not stipulated as to whether Respondent is a principal of Thomas Bear Owen, Jr. Paving Company. If the parties had not determined to enter into a Consent Agreement, we might have been presented with factual and legal issues as to whether, under the circumstances of this case, Bixler would apply. However, given: (1) that the parties have entered into a comprehensive Consent Agreement with the benefit of legal counsel to assist them in weighing all relevant factual and legal considerations, and (2) the parties are in agreement that the finding of an unintentional violation of Section 1103(f) would be appropriate as part of an overall settlement of this case, we shall accept the parties' proposed disposition as to Section 1103(f). Accordingly, we hold that per the Consent Agreement of the parties, an unintentional violation of Section 1103(f) of the Ethics Act occurred when Thomas Bear Owen, Jr. Paving Company, a business with which Respondent or his son is associated, entered into a contract with the School District in excess of $500.00 without an open and public process. We note that the Section 1103(f) determination in this case based upon the agreement of the parties should not be considered as precedent for other cases, which would be determined based upon their facts and circumstances. As part of the Consent Agreement, Respondent has agreed to make payment in the amount of $2,530.00 payable to the Valley View School District and forwarded to this Commission within thirty (30) days of the issuance of the final adjudication in this matter. We determine that the Consent Agreement submitted by the parties sets forth a proper disposition for this case, based upon our review as reflected in the above analysis and the totality of the facts and circumstances. Accordingly, per the Consent Agreement of the parties, Respondent is directed to make payment in the amount of $2,530.00 payable to the Valley View School District and forwarded to this Commission by no later than the thirtieth (30 day after the mailing date of this adjudication and Order. 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 School Director for the Valley View School District ( "School District ") since approximately 2001, Respondent Thomas Owen, Sr. ( "Owen ") 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. Owen violated Section 1103(a) of the Ethics Act, 65 Pa.C.S. § 1103(a), in relation to his participation in actions of the School District Board of Directors to approve Owen, 08 -034 Page 18 payments to Thomas Bear Owen, Jr. Paving Company, a business with which Owen or his son is associated. 3. Per the Consent Agreement of the parties, an unintentional violation of Section 1103(f) of the Ethics Act, 65 Pa.C.S. § 1103(f), occurred when Thomas Bear Owen, Jr. Paving Company, a business with which Owen or his son is associated, entered into a contract with the School District in excess of $500.00 without an open and public process. In Re: Thomas Owen, Respondent ORDER NO. 1537 File Docket: 08 -034 Date Decided: 9/22/09 Date Mailed: 10/6/09 1 Thomas Owen, Sr. ( "Owen "), a public official in his capacity as a School Director for the Valley View School District ( "School District ") since approximately 2001, violated Section 1103(a) of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1103(a), in relation to his participation in actions of the School District Board of Directors to approve payments to Thomas Bear Owen, Jr. Paving Company, a business with which Owen or his son is associated. 2. Per the Consent Agreement of the parties, an unintentional violation of Section 1103(f) of the Ethics Act, 65 Pa.C.S. § 1103(f), occurred when Thomas Bear Owen, Jr. Paving Company, a business with which Owen or his son is associated, entered into a contract with the School District in excess of $500.00 without an open and public process. 3. Per the Consent Agreement of the parties, Owen is directed to make payment in the amount of $2,530.00 payable to the Valley View School District and forwarged to the Pennsylvania State Ethics Commission by no later than the thirtieth (30 day after the mailing date of this Order. 4. Compliance with Paragraph 3 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