HomeMy WebLinkAbout1579 Cole
In Re: Kenneth Cole, Sr., : File Docket: 09-039
Respondent : X-ref: Order No. 1579
: Date Decided: 12/15/10
: Date Mailed: 12/20/10
Before: Louis W. Fryman, Chair
John J. Bolger, Vice Chair
Donald M. McCurdy
Raquel K. Bergen
Nicholas A. Colafella
Mark Volk
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.” 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.
Cole, 09-039
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I.ALLEGATIONS:
That Kenneth Cole, Sr., a public official/public employee in his capacity as Mayor of
the City of Monongahela, Washington County, violated Sections 1103(a), 1103(f) and
1104(a) of the State Ethics Act (Act 93 of 1998), 65 Pa.C.S. §§ 1103(a), 1103(f) and
1104(a), when he used the authority of his public position for the private pecuniary benefit
of a member of his immediate family member [sic] and/or a business with which a member
of his immediate family is associated by participating in decisions to award contracts for
the purchase of computers and servers and computer related services from JK Networking,
an entity owned by his son, Kenneth Cole, Jr.; when he participated in actions to authorize
payments to JK Networking; when the contracts awarded to JK Networking were entered
into without an open and public process; and when he failed to file Statements of Financial
Interests for the 2003, 2004, 2005, 2006, 2007, and 2008 calendar years.
II.FINDINGS:
1. Kenneth Cole Sr. served as Mayor of the City of Monongahela (hereafter
City), Washington County, from July 21, 1998, to December 31, 2007.
a. Cole was appointed Mayor on July 21, 1998, to fill a vacancy, as a
result of the passing of John Moreschi.
b. Cole served as a City Council Member from February 15, 1979, to
July 21, 1998.
2. The City of Monongahela is a Third Class City governed by a Mayor and a
three-Member Council.
a. The Mayor serves as President of Council and is a voting Member of
Council.
3. Council meetings are held on the second Wednesday of every month at City
Hall.
a. Special meetings are held as necessary.
4. Any individual serving the City in the capacity of Mayor/President of Council
is compensated in the amount of $4,000.00 each year for his/her service.
a. The Mayor/President of Council is not required to attend meetings in
order to receive the payment.
b. The Mayor/President of Council is compensated monthly.
5. Cole’s duties as Mayor included the following:
a. Attending and presiding over Council meetings;
b. Making recommendations to have matters voted on for approval by
Council;
c. Serving as the Director of Public Affairs;
1. The Third Class City Code specifically provides in Article XI,
Section 1103, that “the Mayor shall be director of the
department of public affairs and as such shall have
supervision over the City Police.”
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d. Directing/supervising the day-to-day activities of City offices (i.e. City
Clerk, City Assessor, etc.);
e. Ensuring enforcement of City ordinances and Commonwealth laws;
f. Preserving the peace of the City by prohibiting activities that present
a clear and present danger to life or property;
g. Authorizing the expenditure of grant monies awarded to the City;
h. Taking acknowledgements pertaining to the business of the City;
i. Solemnizing marriages; and
j. Administering oaths and affirmations.
6. Council voting procedures occur in roll call fashion after a motion is made, moved,
and seconded.
a. Minutes reflect that action requested is not made in the form of a
motion but rather a recommendation.
b. The motion is routinely moved by the Council Member who initially
made the recommendation.
c. All objections and abstentions cast at Council meetings are
specifically documented in the minutes.
d. The minutes of each meeting are approved for accuracy at each
subsequent meeting.
7. For approximately the past thirty-seven years the City has approved the payment of
bills received, as detailed below:
a. The City Clerk reviews the bills submitted to the City for payment.
1. The City Clerk occasionally contacts Department heads and/or
vendors to verify that expenses charged the City are accurate in
relation to services received.
b. The City Clerk generates check(s) to pay the bills if the expenses appear to
be proper.
c. The bills and corresponding checks (attached to check duplicates) are
subsequently reviewed on a weekly basis by a Council Member and the City
Controller.
1. The Council Member appointed to oversee the City’s finances
normally reviews the aforementioned information.
d. The Council Member and the City Controller sign the bills and the
corresponding check duplicates to signify that they were reviewed and
appear to be proper.
e. City checks are then forwarded to the appropriate signatories for signature.
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f. Checks are subsequently forwarded to the appropriate payees throughout
the month by the City Clerk.
1. Checks are not held until a vote of approval by Council.
g. Council votes to approve the monthly bills for payment without the
assistance of a bill list.
1. Bills approved for payment represent all bills received by the City
since the last monthly meeting [and] bills that are to be issued
throughout the month in which the meeting was held.
8. A bill list is enclosed in the minute book for each meeting detailing the general fund
checks that were approved by Council.
a. Checks issued from City bank accounts, other than the general fund, are not
detailed on the bill lists.
b. Council as a whole is not made aware of any payments issued out of any
other bank accounts at public meetings.
9. Other City bank accounts include accounts that were specifically created for the
deposit of grant monies received by the City.
a. The City Clerk routinely maintains, for accounting purposes, separate bank
accounts for the deposit of grant monies received.
b. Bills and checks associated with grant funds have not been reviewed or
approved by the Council Member designated to oversee the City's finances
or by the City Controller.
1. The Mayor was the sole approving authority to issue checks from
accounts in which grant monies were maintained to pay bills
associated with grants.
10. Individuals maintaining signature authority over City accounts and the number of
signatures required on City checks vary depending upon the accounts.
a. The City Treasurer maintains sole signature authority over the City's general
fund account.
1. The City maintained a general fund account (#XXXXXX600) with
National City Bank (now PNC Bank) from 2004 through 2007.
b. The Mayor and City Clerk maintain signature authority over all other bank
accounts associated with the City, including accounts holding grant funds.
1. Accounts other than the general fund account require the signatures
of both the Mayor and City Clerk.
11. Kenneth Cole Jr. is Mayor Kenneth Cole Sr.’s son.
12. Cole’s son and James Wack jointly owned and operated JK Networking (hereafter
JKN) from approximately January 2001 through the beginning of 2006.
a. Both Cole’s son and Wack maintained a 50% interest in the business.
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b. Cole’s son and Wack were the only employees of JKN from approximately
2001 through the beginning of 2006.
c. Due to Cole’s son’s ownership and employment interests in JKN, JKN is a
business with which Cole’s son is associated.
13. JKN specialized in Windows computer networking, hardware/software repairs, and
web site design/publishing.
a. Windows is a type of computer operating system.
b. JKN also performed limited services related to the UNIX operating system.
1. UNIX is a type of computer operating system different from Windows.
14. JKN did not advertise its services other than by publishing a web site on the
Internet.
a. JKN mainly developed business relationships through word-of-mouth
referrals.
b. The majority of the work conducted by JKN occurred during evenings or
weekends, or remotely.
15. During the time period from 2001 through March of 2004, payments to JKN were
deposited into personal bank accounts of JKN’s owners and/or or taken as cash.
16. On April 2, 2004, JKN opened a DBA (Doing Business As) bank account at National
City Bank (now PNC Bank) on behalf of JKN.
a. During the aforementioned time period, checks issued to JKN were
deposited into the DBA account.
b. JKN’s partners were responsible for segregating the payments due each
partner/employee from April 2, 2001, to the beginning of 2006, when the
partnership dissolved.
17. JKN maintained a clientele of approximately seven businesses from 2001 through
2007.
a. The City of Monongahela was one of [JKN’s clients].
b. JKN maintained various additional clients not considered business entities.
18. Beginning in 2001, Cole, in his capacity as Mayor, used his public position to steer
City business to JKN….
a. Cole directed subordinate staff to utilize the services of JKN for City
computer needs.
b. Contracts were routinely awarded to JKN, in excess of $500.00, at Cole’s
direction.
c. Contracts awarded to JKN, at Cole’s direction, were done so without public
notice or bidding.
19. JKN did no business with the City prior to Cole taking office and has not performed
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any services for the City since Cole left office.
20. JKN was utilized by the City for computer services from approximately April 2001
through October 2007.
a. JKN’s business relationship with the City began during Cole's tenure as
Mayor and as a result of Cole directing subordinate City personnel to utilize
JKN.
b. JKN did not do business with the City after Cole left office.
21. JKN began providing services to the City approximately four months after JKN was
established.
a. JKN was established in or about January 2001.
b. The first JKN invoice submitted to the City was dated April 11, 2001.
22. In or about early 2001, the owners of JKN met with Mayor Cole and then Chief of
Police Dennis Mendicino to introduce JKN to the City and to offer a free computer
audit of the City’s computers.
a. The meeting was arranged by Cole, in his capacity as Mayor.
1. Cole, as Mayor, had oversight of the Police Department and was
Mendicino's immediate supervisor.
b. Cole authorized JKN to conduct the audit.
c. The audit was conducted during a weekend.
1. City Council did not vote to authorize the audit and was never made
aware of the audit by Cole.
2. Cole, as Mayor, was the only City official aware of the audit.
23. JKN was the only computer company authorized to complete a computer audit for
the City during Cole’s tenure.
a. The audit occurred as a result of the arrangements made by Mayor Cole.
24. Subsequent to completing the audit, JKN staged a PowerPoint presentation at City
Hall which Cole, Mendicino, and City Clerk Carole Foglia attended.
a. During the presentation, JKN recommended that the City establish a web
site presence because the City did not previously have a site.
25. Cole authorized JKN to create a web site for the City at the conclusion of the
presentation.
a. There was no vote of Council authorizing JKN to create the web site.
b. No other companies were considered for the web site development.
c. The contract was not advertised publicly.
d. JKN registered for the domain name www.cityofmonongahela.com on or
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about April 11, 2001, on behalf of the City.
26. JKN invoices dated April 11, 2001, and June 21, 2001, issued to the City, document
a combined charge of $1,975.00 for the initial designing, building, and publishing of
the web site for the City.
a. JKN invoices dated April 11, 2001, and June 21, 2001, were paid via City
checks numbers 183 and 186 dated April 24, 2001, and June 22, 2001,
respectively.
1. Cole and Foglia signed both checks issued to JKN for the services
provided by JKN related to the web site.
27. In early 2001 when Cole authorized JKN to create the City web site, the City had an
ongoing business relationship with Unimax Systems Inc. (hereafter Unimax).
a. Unimax specializes in Windows and UNIX operating systems, computer
networking, and hardware/software repairs.
b. Unimax does not have the capabilities to design/publish web sites.
c. Unimax is utilized by the City for computer related projects.
28. The City initially utilized Unimax in 1988 to install the first computer workgroup in
City Hall.
a. A computer workgroup is established when two or more computers are
connected to each other.
1. The City’s initial computer workgroup consisted of two terminals
connected to a TANDY RadioShack computer.
b. During the same time frame, Unimax also created a real estate tax collection
program and a wage tax collection program for the City to use.
1. Both programs were written by Unimax in UNIX.
2. Said programs are still in use by the City and maintained by Unimax.
c. From 1988 through 2000, the City primarily utilized Unimax for both
Windows and UNIX related installations, repairs, updates, etc.
29. In 2001, the City began using JKN in addition to Unimax to address Windows
related issues as well as hardware related issues.
a. JKN was utilized by the City at the direction of Cole.
30. Beginning in 2001 when he first authorized JKN to provide services for the City,
Cole instructed City Clerk Foglia that he wanted JKN utilized when possible.
a. Cole specifically informed Foglia that JKN would be used to complete certain
computer projects for the City.
31. During the time period from 2001 through 2004, City employees also attempted to
correct computer related issues/problems themselves.
a. If the City employees could not correct the issues themselves, they either
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informed Foglia or contacted JKN or Unimax directly.
b. City employees had the authority to call computer vendors directly if they
were experiencing a problem that they could not resolve.
32. City employees were made aware to contact Unimax or JKN based upon
conversations they had with Foglia.
a. Between 2001 and 2007, Foglia made City staff aware that Cole wanted to
have JKN utilized when possible.
1. JKN was contacted to repair issues related to Windows programming
and/or to install hardware.
2. City employees contacted JKN out of fear of reprisal from Cole if a
vendor other than JKN was contacted.
b. City employees routinely contacted Unimax if issue(s) arose which pertained
to work Unimax had previously performed.
1. Unimax was contacted to repair software that Unimax wrote and/or to
install hardware.
33. Between 2001 and 2007, City computer projects/issues were not advertised and/or
publicly bid.
a. Cole never informed Council that JKN had been utilized for computer related
issues until after the fact, or occasionally not at all.
b. JKN would send unsolicited proposals to the City for specific computer
related projects.
1. Cole would direct that JKN be utilized for computer projects whenever
JKN submitted proposals.
c. All quotes and/or other information obtained by Foglia from JKN were
forwarded to Cole for review.
1. Cole occasionally participated in meetings/discussions with JKN
individually or with Foglia present.
34. From April 11, 2001, through August 24, 2004, JKN submitted at least ten invoices
totaling $4,701.35 to the City for work performed.
a. The invoices were related to computer services that Cole directed City staff
to obtain from JKN.
b. The City issued eight (8) checks totaling $4,701.35 to JKN between April
2001 and August 2004.
c. The City received the goods and services invoiced by JKN, which met the
City’s needs and requirements.
THE FOLLOWING FINDINGS RELATE TO EVENTS THAT OCCURRED ENABLING JKN
TO BE THE PRIMARY COMPUTER SERVICE PROVIDER FOR THE CITY.
35. In 2003, the City was utilizing several stand-alone computers in City Hall.
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a. The stand-alone computers were not networked or otherwise connected to
other computers and/or servers.
36. Clark Adams, owner of Unimax, recommended to Cole and Foglia in 2003 that the
City's computers be connected to a server.
a. Adams made the recommendation because a server would provide
additional capabilities to the City such as security, file sharing, disaster
recovery, etc.
37. Between 2003 and 2004, Foglia had several meetings with Adams in regards to the
installation of the server.
a. Cole attended one of the meetings during which Foglia and Adams
discussed the server.
b. Foglia did not have any meetings and/or discussions with JKN in regards to
the server.
38. Cole discussed the server project with his son at or about the same time as he was
discussing the project with Foglia and Adams.
a. The discussions were not part of any formal meetings.
39. Between 2001 and 2007, JKN was the primary vendor being utilized for computer
maintenance and repairs, as directed by Cole.
a. Unimax was the primary vendor prior to JKN being formed in 2001.
b. With the exception of 2002 and 2003, JKN was paid more for computer
services than Unimax.
c. The following chart compares amounts paid by the City to Unimax and JKN
between 2001 and [2008]:
YEAR UNIMAX JKN
2001 $ 1,127.50 $ 2,922.00
2002 $ 6,510.84 $ 250.00
2003 $ 2,053.75 $ 899.35
2004 $ 2,809.00 $ 8,744.98
2005 $ 1,255.00 $29,259.87
2006 $ 350.00 $ 9,198.41
2007 $ 2,779.07 $ 2,911.00
2008 $ 6,317.66 $ .00
40. In or about December 2004, JKN submitted a quote to the City for the installation of
a client/server network.
a. No other proposals were solicited from other vendors.
b. Proposals were not solicited from other vendors because of fear of reprisals
from Cole.
41. JKN submitted proposal #122804, dated December 28, 2004, for the purchase and
installation of a client/server LAN (Local Area Network), totaling $6,644.98.
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a. JKN's proposal identified the purchase and installation of equipment and
services which addressed the concerns expressed by Adams, of Unimax, to
Foglia during meetings.
1. JKN was not present during these meetings.
b. The proposal submitted by JKN was ultimately submitted to Cole for his
review.
1. Cole approved the proposal submitted by JKN.
42. Cole, as Mayor, and a representative of JKN signed JKN proposal #122804 on
December 28, 2004, acknowledging the proposal as a binding contract between the
City and JKN.
a. No other official of the City reviewed or approved the proposal.
b. Cole accepted the proposal on the same day that it was generated.
c. [As a result of Cole] authorizing JKN to complete the work outlined in
proposal #122804, JKN became the City’s primary computer service
provider.
43. Check #10999, dated December 31, 2004, in the amount of $6,644.98 was issued
from the City’s general fund to JKN for charges outlined in JKN proposal #122804.
44. Pursuant to the City’s bill payment procedures, all expenses incurred by the City in
December 2004 were approved at the December 8, 2004, Council meeting.
a. Cole made the motion which was seconded by Councilman Thomas Caudill
and passed by a 3-0 vote with Cole voting in favor of the motion.
b. The motion and subsequent vote included the payment of bills through
December 2004.
45. JKN proposal #122804 was never submitted to or reviewed by Council prior to
payment being issued.
a. The proposal/invoice was not on the bill list on December 8, 2004, when
payment of December’s invoices was approved.
b. The only City official with knowledge of JKN’s proposal was Cole.
46. On or about January 21, 2005, Foglia contacted Adams to submit a quote to the
City for the same server project that already had been awarded to JKN.
a. Foglia solicited Adams [for a quote] after Cole had approved JKN’s proposal
and after JKN had accepted the work and been paid.
b. On January 21, 2005, Adams submitted quote #M012105.1 to purchase and
install a server for the City at an approximate cost of $8,760.00.
1. Adams was not aware that Cole had accepted JKN’s proposal and
had issued payment to JKN.
c. Foglia subsequently contacted Adams and informed him that Cole had
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decided to utilize a local vendor to complete the server project.
d. Adams was not aware that the local company selected was JKN.
47. In order to maintain a secure client/server LAN, security features such as local and
domain usernames and passwords are necessary.
a. Prior to December 2004, the City utilized local usernames and passwords
that allowed users to download updates, install software, etc.
1. Local usernames and passwords were implemented by the City in
approximately 2001 when JKN updated the Windows operating
system from Windows ’95, Windows ’98, and Windows ME to
Windows 2000.
2. From 2001 through 2004, the City employees’ usernames had
administrative rights associated with them that were not significantly
restrictive.
b. When JKN installed the client/server LAN in approximately early 2005, the
administrative rights associated with the local usernames and passwords
were reduced to prevent the users from unknowingly/knowingly jeopardizing
the security of the client/server LAN.
c. A domain username and password was created by JKN and was the only
username and password that did not have any restrictions associated with it.
1. Cole, Foglia, and JKN employees were the only individuals who knew
the username and password and had access to it.
48. City employees could no longer download updates, install software, etc. after their
administrative rights were reduced and the domain username and password was
set.
a. City employees had no other option but to contact JKN if a computer issue
arose because issues could not be addressed without knowing the domain
username and password.
49. JKN was the only vendor that could be utilized for City computer services because
other vendors did not have access to the domain username and password.
a. JKN created and maintained the user name and rights.
b. Adams/Unimax did not know or have access to the domain username and
password, making them unable to correct issues associated with the City
computers/server.
1. Prior to the domain username and password being set,
Adams/Unimax and JKN had equal access to the City computers.
2. Unimax’s payments in 2005 decreased to $1,255.00 while JKN’s
payments increased to $29,259.87.
50. JKN’s computer services to the City increased after Cole awarded JKN the contract
to install the server/LAN for the City.
a. JKN became the primary computer services provider, as a result of this
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contract.
b. In 2007, JKN’s business at the City began to decrease as Cole’s term as
Mayor was coming to an end.
c. JKN did not submit another invoice to be paid out of the general fund after
Cole lost the November 2007 election.
d. The relationship between JKN and the City was terminated after Cole lost
his campaign for re-election as Mayor.
51. From August 25, 2004, through December 31, 2007, JKN submitted thirty-three
invoices to the City totaling $16,672.58 for services provided.
a. The invoices submitted were paid via the issuance of twenty-eight separate
City checks from the City’s general fund account.
52. None of the [invoiced computer services by JKN] were advertised or publicly bid.
a. No other companies were considered for any of the services provided by
JKN.
b. Of the thirty-three invoices submitted to the City for payment from the
general fund, ten exceeded $500.00.
53. From August 25, 2004, through December 31, 2007, twenty-eight City checks
totaling $16,672.58 were issued out of the City general fund account to JKN as
payment for thirty-three invoices received.
a. Services performed included general computer maintenance, repair,
updates, etc.
b. The City received the goods and services invoiced by JKN, which met the
City’s needs and requirements.
54. Cole recommended, moved, and voted to approve the payment of all twenty-eight
checks issued to JKN as documented on the bill lists.
a. Cole did not abstain from approving payments to JKN … at any time from
August 2004 through December 2007.
55. JKN maintained a bank account with National City Bank (now PNC Bank) from April
2, 2004, through December 31, 2007.
a. Of the twenty-eight City general fund checks issued to JKN totaling
$16,672.58from August 25, 2004, through December 31, 2007, twenty
checks totaling $13,200.38* were deposited into JKN bank account
#XXXXXX738.
b. The eight remaining checks totaling $3,547.50* were cashed upon receipt.
*[sic] [There is a discrepancy in the calculation of these amounts that does not
affect the outcome of this case.]
56. All of the proposals submitted by JKN to the City were authorized by Cole.
THE FOLLOWING FINDINGS RELATE TO PAYMENTS ISSUED TO JKN VIA STATE
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GRANT MONIES RECEIVED BY THE CITY.
57. In early 2004, the City contacted the office of State Senator J. Barry Stout to inquire
if the City was eligible for any grant assistance.
a. Correspondence dated February 18, 2004, from Senator Stout to the City,
indicated that Stout had secured $10,000.00 in grant monies from the
Pennsylvania Department of Community and Economic Development
(DCED) on behalf of the City.
1. The $10,000.00 secured by Senator Stout was grant money related to
the DCED Community Revitalization Grant Program.
b. Stout's correspondence requested that the City complete a DCED Single
Application for Assistance, and submit the application back to his office no
later than April 1, 2004, in order for the City to obtain the $10,000.00 grant.
58. In or about March 2004, Cole directed Foglia to solicit JKN for a proposal related to
replacing the existing City workgroup LAN (Local Area Network) with a client/server
LAN.
a. Cole did not direct Foglia to solicit proposals from any other vendors.
59. JKN submitted proposal #033104, dated March 31, 2004, to the City for replacing
the LAN at a total cost of $18,602.86.
a. The proposal was separated into two quotes detailing the hardware and
installation of the server at $5,283.58, and the hardware and installation of
six computers at an additional cost of $13,319.28.
b. The proposal was not acted on by the City.
60. On March 31, 2004, the same day that the proposal from JKN was submitted to the
City, Foglia completed the DCED application for the $10,000.00 grant at the
direction of Cole.
a. Enclosed with the application was a narrative to DCED.
1. Narratives are submitted with grant applications to justify why the
grant money is needed and what it will be used for.
61. The narrative enclosed with the DCED application outlined that the $10,000.00
would be used to purchase computer hardware/services.
a. The narrative is nearly identical to the hardware/services detailed in JKN
proposal #033104.
b. The narrative for the grant application was typed by City Property Assessor
Tamie Gido.
1. Gido typed handwritten information provided to her by Cole, Foglia,
and Mendicino.
62. The application and narrative were sent to Senator Stout in mid to late 2004 and
were subsequently forwarded to DCED by Stout’s office.
a. The Office of Chief Counsel for DCED approved the City's application on or
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about November 29, 2004.
63. In December of 2004, correspondence from Dennis Yablonsky, Secretary,
Operations & Compliance Office, DCED, to Cole informed Cole that the City was
awarded the $10,000.00 grant.
a. Yablonsky advised Cole that a DCED contract was enclosed for Cole's
review.
1. The grant contract number was C000009660.
64. The DCED contract forwarded to Cole for review outlined multiple mandates that
the City had to abide by in order to be compliant.
a. Included among those mandates in Article V, Section (a) of the contract was
that the "Contractor" (the City) agreed to comply with applicable state
statutes and regulations.
b. Cole signed the contract on December 21, 2004, acknowledging that the City
would comply with the stipulations outlined within the contract.
1. The signed contract was subsequently forwarded to DCED for
processing.
c. The payment requisition form was completed by Foglia and signed by Cole
as an authorized City official on December 21, 2004.
65. In or about February 2005, JKN submitted a proposal to the City related to
purchasing and installing six computers.
a. JKN’s proposal was forwarded to Cole for review and approval.
b. No work for JKN would be authorized without Cole’s approval.
66. JKN’s proposal #021505, dated February 15, 2005, detailed costs totaling
$8,750.88 related to the purchase and installation of six computers.
a. The proposal was accepted but was not signed by a representative of the
City or JKN.
67. No other competitive proposals were solicited from any other computer vendors.
a. The computer project outlined in JKN proposal #021505 exceeded $500.00.
b. The computer project was not advertised and/or publicly bid.
68. On or about March 31, 2005, the City received the $10,000.00 grant from DCED.
a. Foglia deposited the grant into National City Bank account XXXXXX351 on
March 31, 2005.
1. Foglia opened the account on March 31, 2005.
2. Cole and Foglia were the only City officials who had signature
authority over the account.
69. Between April 2005 and February 2006, JKN submitted seven invoices to the City
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requesting payment in the amount of $10,033.95, for services provided in relation to
proposal #021505.
a. Of the seven invoices submitted and ultimately paid, none were related to
purchasing and installing a server as indicated by the narrative submitted to
DCED for the grant money.
b. The City received the goods and services invoiced by JKN, which met the
City’s needs and requirements.
70. Cole authorized five checks to be issued out of the National City Bank Account
XXXXXX351 to JKN for the above invoiced work, during the time frame of April
2005 through February 2006, totaling $10,002.21.
a. Of the $10,033.95 that JKN invoiced the City, $10,002.21 in DCED grant
funds was used to pay the charges.
1. An additional $2.21 was available for disbursement from the account
in the form of interest.
2. The remaining $31.74 was paid by a separate City check from the
City’s general fund.
b. Cole directed Foglia to pay the aforementioned JKN invoices out of account
XXXXXX351 over which he had signature authority.
c. Cole signed all five checks issued as one of two authorized signatories for
the City.
71. JKN invoices to the City and City checks issued out of account XXXXXX351 were
not reviewed or approved by any Council Members or the City Controller.
a. Checks issued out of account XXXXXX351 were not documented on any City
bill lists.
b. Council was not aware that grant monies were being directed to JKN due to
its limited oversight of the disbursement of grant monies.
1. Cole was the only elected City official with oversight over these grant
expenditures.
72. All five of the City grant related checks issued to JKN totaling $10,002.21 from April
2005 through February 2006 were deposited into JKN’s bank account
#XXXXXX738.
73. On March 10, 2006, Foglia completed the DCED Grant Closeout Report for contract
C000009660 and submitted it to DCED.
a. On or about October 31, 2006, Mayor Cole received correspondence from
Dick Wagner, Compliance Manager, Office of Audits and Compliance,
DCED, indicating that the relevant materials for the grant were received and
that contract C000009660 was officially closed.
74. Cole authorized JKN to receive the entire proceeds of the $10,000 grant received
from DCED on March 31, 2005.
75. In 2005, the City submitted a second grant application to DCED.
Cole, 09-039
Page 16
a. A DCED Single Application for Assistance for web application was
completed by City officials, after becoming aware that grant monies were
available.
b. The web application submitted requested $10,000.00 in grant assistance.
c. The online application was completed by City staff, after receiving approval
to do so from Cole and Council.
1. No signatures from any City official or staff appear on the grant
application.
76. Included with the application was a narrative justifying the need for the grant and its
intended use.
a. The narrative submitted to DCED was identical to the narrative Gido typed in
2004.
77. The application and narrative were submitted to DCED in early to mid-2005.
a. The Office of Chief Counsel for DCED approved the City's application on or
about August 12, 2005.
78. In August 2005, correspondence from Dennis Yablonsky, Secretary, Operations &
Compliance Office, DCED, to Cole informed Cole that the City was awarded a
$10,000.00 grant.
a. The grant contract number was C000014367.
b. The DCED contract forwarded to Cole for review outlined multiple mandates
that the City had to abide by in order to be compliant.
79. Cole, as Mayor, signed the contract on August 26, 2005, accepting the grant and
agreeing that the City would comply with the stipulations outlined within the
contract.
a. The signed contract was subsequently forwarded to DCED for processing.
b. The payment requisition form had been completed by Foglia and signed by
Cole as an authorized City official on August 26, 2005.
80. On or about December 21, 2005, the City received the $10,000.00 grant from
DCED.
a. Foglia deposited the grant into National City Bank (now PNC Bank) account
XXXXXX771 on December 21, 2005.
1. Foglia opened the account on December 21, 2005.
2. Cole and Foglia were the only City officials who had signature
authority over the account.
81. JKN began providing services to the City in relation to grant no. C000014367 on or
about December 1, 2005.
a. At that time, no proposal had been formally submitted by JKN to the City.
Cole, 09-039
Page 17
b. The services began prior to the receipt of the grant funds.
c. City Council played no role in the selection of JKN as the vendor.
82. From December 2005 through May 2007, JKN submitted six invoices to the City
requesting payment in the amount of $7,734.47, for services rendered.
a. Of the six invoices submitted by JKN and ultimately paid by the City, none
were related to purchasing and installing a server as indicated in the
narrative submitted to DCED for the grant money.
b. The City received the goods and services invoiced by JKN, which met the
City’s needs and requirements.
83. Invoices dated 3-7-2007 and numbered JK2007300, totaling $1,845.13, relate to a
JKN proposal #030207 submitted to the City on or about March 2, 2007.
a. As part of its standard practice with the City, JKN submitted proposals to the
City for computer services that JKN believed needed to be completed.
1. Proposals would be submitted by JKN without a specific request from
Foglia or other City staff.
2. Proposals submitted by JKN would be forwarded to Cole for review
and approval.
b. No other competitive proposals were solicited from any other computer
vendors.
c. The computer project outlined in JKN proposal #030207 exceeded $500.00.
d. The computer project was not advertised and/or publicly bid.
84. JKN invoices Moncity120105 and JK000210 were for services in excess of $500.00.
a. Neither project was advertised for public bid.
b. No other vendors or companies were solicited to provide a quote.
85. Cole authorized the issuance of five checks from the National City Bank (now PNC
Bank) Account XXXXXX771 to JKN for work during the time frame of December
2005 to April 2007.
a. Grant funds were used to pay all of the invoices submitted by JKN.
b. Cole directed Foglia to pay the JKN invoices from account XXXXXX771.
c. Cole signed all five checks issued as one of two authorized signatories for
the City.
1. The checks were also signed by Foglia, a subordinate of Cole.
86. The JKN invoices and City checks issued from account XXXXXX771 were not
reviewed by any Council Members or the City Controller.
a. Checks issued out of account XXXXXX771 were not documented on any City
Cole, 09-039
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bill lists.
b. Council was not aware that grant monies were being directed to JKN due to
its limited oversight of the disbursements of grant monies.
87. All five of the City’s grant-related checks issued to JKN, totaling $7,734.47 from
April 2005 through February 2007*, were deposited into JKN’s bank account
#XXXXXX738.
*[Cf., Fact Findings 82, 85.]
88. On May 23, 2007, Foglia completed the DCED Grant Closeout Report for contract
C0000014367 and submitted it to DCED.
a. Cole signed the report on or about the day it was completed.
89. Correspondence dated May 25, 2007, from Norm Bergel, Director, Office of Audits
and Compliance, DCED, to Cole indicated that the closeout report submitted by the
City had been rejected.
a. Bergel informed Cole in his correspondence that if DCED did not receive a
satisfactory report within 30 days, the City would become ineligible for any
additional grant assistance from DCED.
b. On June 11, 2007, Cole issued correspondence to Bergel indicating that an
invoice inadvertently omitted from the original report was the cause of the
closeout report being rejected.
c. On or about June 15, 2007, correspondence from Terri Barge, Director,
Financial Management Center, DCED, to Cole indicated that the relevant
materials for the grant were received and that contract C000014367 was
officially closed.
90. Between March 31, 2005, and December 21, 2005, the City received two grants
from DCED totaling $20,000 for upgrading and/or expanding the City’s [computer]
system.
a. Cole, in his capacity as Mayor, informed City employees that JKN was to be
utilized for computer services.
b. Cole authorized JKN to perform the services.
THE FOLLOWING FINDINGS RELATE TO PAYMENTS ISSUED TO JKN VIA FEDERAL
GRANT MONIES RECEIVED BY THE CITY.
91. Cole, as Mayor, had oversight of the City Police Department (hereafter
Department), and was the immediate supervisor of the Chief of Police.
a. Dennis Mendicino served as the Chief of Police from 1994 through 2007.
1. Mendicino currently holds the position of Sergeant.
2. Mendicino was demoted after Cole left office as Mayor at the end of
2007.
3. Mendicino has been with the Department since 1979.
Cole, 09-039
Page 19
b. The current Chief of Police is Brian Tempest.
92. As Mayor, Cole would be informed of the day-to-day activities of the Department by
Mendicino.
a. Concerns that Mendicino had in regards to equipment, personnel, and funds
were addressed to Cole.
1. Mendicino routinely addressed equipment concerns and needs with
Cole.
b. Mendicino did not have the authority to make purchases without Cole's
approval due to budget constraints.
93. City Police Officers engaged in fundraising activities for the Department by selling
advertising space on a fundraising calendar.
a. The calendars were then sold in the community and in businesses within the
area.
94. Funds raised through such activities were maintained in National City Bank (now
PNC Bank) Account XXXXXXX745.
a. The account was established and controlled by the Monongahela Police
Officers Association (hereafter Association).
1. The Association was comprised of the Chief and other City officers.
b. The account was active from at least January 13, 1997, until about August
2009.
c. City Council was not involved in the oversight of the Association's account.
d. In approximately August 2008, Council ordered the Association to close the
account.
95. The Association would determine how the funds raised/received would be spent.
a. Items purchased by the Association in the past included primarily office
equipment.
b. The Association did not need the approval of the Mayor to make purchases
utilizing Association funds.
96. In or about 2004, Cole and Police Chief Dennis Mendicino discussed applying for
grants to assist the Police Department.
a. Mendicino advised of grants possibly available through the Commonwealth.
b. Cole and Council authorized Mendicino to identify grant sources.
97. In approximately 2005, Mendicino became aware that Mountain Top Technologies
Inc. (hereafter MTT) was securing grants on behalf of municipalities from the
federal government.
a. MTT is a business that provides education/training related to company
quality improvement, network design and security, and aviation.
Cole, 09-039
Page 20
98. Mendicino discussed with Cole applying for a grant through MTT for the purpose of
upgrading the Department’s computer system.
a. Cole authorized Mendicino to apply for the grant.
99. In or about June 2005, Mendicino requested JKN to provide quotes relating to the
purchase and installation of a server and four desktop computers for the
Department.
a. On or about June 20, 2005, JKN sent correspondence to Mendicino
documenting their telephone conversation.
b. Enclosed with the correspondence was a proposal related to the purchase
and installation of a server as well as a proposal related to the purchase and
installation of four desktop computers.
1. JKN was instructed by Mendicino to separate the project into two
separate proposals.
2. The original proposals and their respective amounts could not be
located.
100. JKN was the only computer service provider solicited by Mendicino for proposals.
a. Mendicino was aware that JKN had already installed the client/server LAN
for the City and that JKN was performing services for the Department.
b. Mendicino discussed JKN providing computer services to the Department
with Cole.
1. Cole instructed Mendicino to contact JKN if the Department had any
computer related issues.
2. Cole never advised Mendicino to contact other vendors for computer
and system related issues.
c. Mendicino did not solicit proposals from any other computer business.
101. On or about June 27, 2005, Mendicino submitted correspondence to then
Congressman John Murtha’s office requesting that consideration be given to the
Department for a grant.
a. Mendicino included with his correspondence the proposals he received from
JKN on or about June 20, 2005.
102. On or about July 7, 2005, Mendicino received correspondence from Fred
Vornbrock, Grant Administrator, MMT advising Mendicino that the Department was
selected to receive a U.S. Department of Justice COPS (Community Oriented
Policing Services) grant.
a. Enclosed with Vornbrock's correspondence was MTT check 1063, dated July
19, 2005, in the amount of $15,000.00 payable to the City of Monongahela
Police.
103. Between July 7, 2005, and July 27, 2005, Mendicino contacted JKN and advised it
to resubmit the two proposals to the Department, but not to exceed the $15,000.00
Cole, 09-039
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grant amount.
a. The original proposals submitted to the Department by JKN were in excess
of the $15,000.00 grant amount.
104. On or about July 27, 2005, JKN submitted proposal #072705 (regarding the
client/server LAN) and proposal #072705b (regarding three desktop computers)
totaling $14,999.98.
a. The proposals were signed by JKN and Mendicino on July 27, 2005.
105. On July 27, 2005, JKN issued an invoice to "City of Monongahela - Police dept" in
the amount of $15,000.00.
a. The City received the goods and services invoiced by JKN, which met the
City’s needs and requirements.
106. On July 29, 2005, Mendicino deposited the $15,000.00 grant into the Association's
account (745) at PNC Bank.
a. Mendicino did not advise Council of the grant received by the Department.
1. As Mayor, Cole was aware of the grant funds received and had
authorized the application.
b. Mendicino deposited the grant funds into the account over which Council
had no control.
1. The City’s standard procedure for grant monies received was to
deposit the funds into an account [overseen by a Council Member].
c. This was the first time that any grant monies were deposited into the
Association's account.
107. On August 1, 2005, Association checks numbers 0864 and 0865 were issued to
JKN totaling $12,000.00.
a. Both checks were signed by Officers George Langan and Bob Boyer.
b. Both checks were in the amount of $6,000.00.
c. Both checks documented in the memo section that they were for "station
computers."
108. On or about August 3, 2005, JKN ordered a PowerEdge800 server from Dell on
behalf of the City.
a. Subsequently, on or about August 8, 2005, JKN ordered three OptiPlex
GX620 desktop computers for the City.
b. The equipment was then installed at the City Police Department by JKN.
109. JKN created local and domain usernames and passwords so that the equipment
could be accessed by the authorized users.
a. As a result of JKN establishing a domain username and password that was
known only by JKN employees, Wack, and Mendicino, JKN by default
Cole, 09-039
Page 22
became the primary computer service provider for the Department.
1. If officers other than Mendicino had an issue with a computer, JKN
had to be contacted to correct the issue due to the limited
administrative rights associated with the officers' usernames and
passwords.
2. Adams did not know the domain username and password and could
not perform services for the Department as he had done in the past.
110. On September 2, 2005, Officers Langan and Boyer issued Association check #0868
in the amount of $3,000.00 to JKN to pay the balance of JKN’s invoice.
111. All three Association checks were deposited into JKN bank account #XXXXXX738.
112. City Council was unaware of the receipt of the grant until about August 29, 2008.
a. On or about August 29, 2008, Department of Justice Special Agent Laura
Rousseau served a subpoena upon the City to produce records related to
the COPS grant.
b. The only City officials aware that the grant had been awarded were Cole and
Mendicino.
c. City Council subsequently ordered that the Association’s account be closed.
113. The contract was awarded to JKN without being publicly bid or proposals being
sought from other vendors.
a. Cole, in his capacity as Mayor with supervision of the Police Department,
authorized the submission of the grant requests and instructed the Chief of
Police to contact JKN … for any Department computer issues.
114. As a result of Cole’s use of his public position, [JKN] received payments from the
City totaling $49,409.26.
a. Cole was one of two authorized signatories on all checks issued from City
accounts over which Cole held signature authority.
b. The City received the goods and services invoiced by JKN, which met the
City’s needs and requirements.
THE FOLLOWING FINDINGS RELATE TO ALLEGATIONS ASSOCIATED WITH COLE’S
FAILURE TO FILE STATEMENTS OF FINANCIAL INTERESTS FOR CALENDAR
YEARS 2004 THROUGH 2007.
115. Statement of Financial Interests filing requirements for public officials and public
employees are mandated by Section 1104 of the State Ethics Act.
st
a. Cole was required to file Statements of Financial Interests by May 1
annually in his position as Mayor of the City of Monongahela.
116. On June 16, 2010, a Statement of Financial Interests Compliance Review was
conducted for the City of Monongahela.
a. No Statements of Financial Interests were on file with the City for Cole for
calendar years 2004 through 2007.
Cole, 09-039
Page 23
b. Cole served as the Mayor of the City of Monongahela for multiple years
including 2004, 2005, 2006, and 2007.
117. Cole received compensation as the Mayor of the City of Monongahela in calendar
years 2004 through 2007 when he had no Statements of Financial Interests on file
with the City.
a. Cole was paid monthly in his position as City Mayor.
118. IRS W-2 forms issued to Cole by the City for calendar years 2004 through 2007
document Cole’s receipt of gross compensation from the City representing wages
paid as shown below:
2004 2005 2006 2007 Total
$4,000.00 $4,000.00 $4,000.00 $4,000.00 $16,000.00
III.DISCUSSION:
As Mayor of the City of Monongahela (“City”) from July 21, 1998, to December 31,
2007, Respondent Kenneth Cole, Sr. (hereinafter also referred to as “Respondent,”
“Respondent Cole,” and “Cole”) was a public officialsubject to the provisions of the Public
Official and Employee Ethics Act (“Ethics Act”), 65 Pa.C.S. § 1101 et seq.
The allegations as set forth in the Consent Agreement are that Cole violated
Sections 1103(a), 1103(f), and 1104(a) of the Ethics Act: (1) when he used the authority of
his public position for the private pecuniary benefit of a member of his immediate family
and/or a business with which a member of his immediate family is associated when he
participated in decisions to award contracts for the purchase of computers and servers and
computer related services from JK Networking, an entity owned by his son, Kenneth Cole,
Jr.; (2) when he participated in actions to authorize payments to JK Networking; (3) when
the contracts awarded to JK Networking were entered into without an open and public
process; and (4) when he failed to file Statements of Financial Interests for the 2003, 2004,
2005, 2006, 2007, and 2008 calendar years.
With regard to the allegations, following the submission of the Consent Agreement
by the parties, the Investigative Division exercised its prosecutorial discretion to nol pros
the alleged violation of Section 1103(f) of the Ethics Act. Based upon the nol pros, we
need not address the Section 1103(f) allegation, which is no longer before us.
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
"Conflict" or "conflict of interest."
Use by a public
official or public employee of the authority of his office or
Cole, 09-039
Page 24
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 1104(a) of the Ethics Act provides that each public official/public employee
must file a Statement of Financial Interests for the preceding calendar year, each year that
he holds the position and the year after he leaves it.
As noted above, the parties have submitted a Consent Agreement and Stipulation of
Findings. The parties' Stipulated Findings are set forth above as the Findings of this
Commission. We shall now summarize the relevant facts as contained therein.
Background:
As noted above, Respondent Cole served as Mayor of the City from July 21, 1998,
to December 31, 2007.
The City is a Third Class City, and it is governed by a Mayor and a Council
(“Council”) that consists of three Members. The Mayor serves as President of Council and
is a voting Member of Council. As Mayor, Cole’s duties included, inter alia, serving as the
Director of Public Affairs, overseeing the City Police Department (“Police Department”),
and authorizing the expenditure of grant monies awarded to the City.
For approximately the past thirty-seven years, the City has approved the payment of
bills received through procedures detailed in Fact Findings 7-10. Under the aforesaid
procedures, the City would maintain separate bank accounts specifically created for the
deposit of grant monies received by the City; bills and checks associated with grant funds
would not be reviewed or approved by the Council Member designated to oversee the
City's finances or by the City Controller; the Mayor would be the sole approving authority to
issue checks from accounts in which grant monies would be maintained to pay bills
associated with grants; and payments from such accounts would require the signatures of
both the Mayor and City Clerk.
Kenneth Cole, Jr. (“Cole Jr.”) is Cole’s son. From approximately January 2001
through the beginning of 2006, Cole Jr. and James Wack (“Wack”) jointly owned and
operated JK Networking (“JKN”). Cole Jr. and Wack each maintained a 50% interest in
JKN, and they were the only employees of JKN from approximately 2001 through the
beginning of 2006.
JKN specialized in Windows computer networking, hardware/software repairs, and
web site design/publishing, and it performed limited services related to the UNIX operating
Cole, 09-039
Page 25
system. JKN mainly developed business relationships through word-of-mouth referrals.
From approximately April 2001 through October 2007, the City was a client of JKN.
Beginning in 2001, Cole used his public position as Mayor to steer City business to
JKN. Between 2001 and 2007, City computer projects were not advertised and/or publicly
bid. Cole directed subordinate staff to utilize the services of JKN for City computer needs,
and at Cole’s direction, contracts in excess of $500.00 were routinely awarded to JKN
without public notice or bidding. JKN would send unsolicited proposals to the City for
specific computer related projects, and all quotes and information obtained from JKN by
City Clerk Carole Foglia (“Foglia”) were forwarded to Cole for review. Cole occasionally
participated in meetings/discussions with JKN, and he would direct that JKN be utilized for
computer projects whenever JKN submitted proposals. Cole never informed Council that
JKN had been utilized for computer related issues until after the fact, and occasionally he
did not inform Council at all.
JKN’s Provision of Computer Services from 2001 to August 2004
In or about early 2001, JKN’s owners met with Cole and Chief of Police Dennis
Mendicino (“Mendicino”) to introduce JKN to the City and to offer a free computer audit of
the City’s computers. Cole arranged the meeting in his capacity as Mayor, and he
authorized JKN to conduct the audit. Council did not vote to authorize the audit and was
never made aware of the audit by Cole.
After conducting and completing the audit, JKN staged a PowerPoint presentation at
City Hall that was attended by Cole, Mendicino, and Foglia. JKN recommended that the
City establish a web site presence because the City did not have a web site, and at the
conclusion of the presentation, Cole authorized JKN to create a web site for the City.
There was no vote of Council authorizing JKN to create the web site, no other companies
were considered for the web site development, and the contract was not publicly
advertised.
On or about April 11, 2001, JKN registered for the domain name www.
cityofmonongahela.com on behalf of the City. JKN issued invoices to the City dated April
11, 2001, and June 21, 2001, documenting a combined charge of $1,975.00 for the initial
designing, building, and publishing of the City web site. The aforesaid JKN invoices were
paid via two City checks dated April 24, 2001, and June 22, 2001, and signed by both Cole
and Foglia.
When Cole authorized JKN to create the City web site in early 2001, the City had
an ongoing business relationship with Unimax Systems Inc. (“Unimax”). Unimax
specializes in Windows and UNIX operating systems, computer networking, and
hardware/software repairs. From 1988 through 2000, the City primarily utilized Unimax for
both Windows and UNIX related installations, repairs, and updates.
Beginning in 2001, Cole instructed Foglia that he wanted JKN to be utilized when
possible, and he specifically informed Foglia that JKN would be used to complete certain
computer projects for the City. The City then began using JKN in addition to Unimax to
address Windows related issues as well as hardware related issues.
During the time period from 2001 through 2004, if City employees could not correct
computer related issues themselves, they either informed Foglia or contacted JKN or
Unimax directly. City employees had the authority to call computer vendors directly if they
were experiencing a problem that they could not resolve, and Foglia made City staff aware
that Cole wanted JKN to be utilized when possible. Unimax was contacted for issues
pertaining to work that Unimax had previously performed, and JKN was contacted to repair
issues related to Windows programming and/or to install hardware. City employees
contacted JKN out of fear of reprisal from Cole if a vendor other than JKN was contacted.
Cole, 09-039
Page 26
Between April 2001 and August 2004, the City issued eight checks totaling
$4,701.35 to pay invoices from JKN for computer services that Cole directed City staff to
obtain from JKN. The City received the goods and services invoiced by JKN.
The City Client/Server LAN Project:
In 2003, the City was utilizing several stand-alone computers in City Hall that were
not networked or otherwise connected to other computers and/or servers. Clark Adams
(“Adams”), the owner of Unimax, recommended to Cole and Foglia that the City's
computers be connected to a server. Between 2003 and 2004, Cole was in attendance at
one of several meetings during which Foglia and Adams discussed the installation of a
server. Foglia did not have any meetings and/or discussions with JKN with regard to a
server. Cole discussed the server project with his son at or about the same time that Cole
was discussing the project with Foglia and Adams.
In or about December 2004, JKN submitted a proposal (“Proposal #122804”) dated
December 28, 2004, to the City for the purchase and installation of a client/server LAN
(Local Area Network) for the total of $6,644.98. No other proposals were solicited from
other vendors because of fear of reprisals from Cole.
Cole approved Proposal #122804 after it was submitted to him for his review, and
on December 28, 2004, Cole and a representative of JKN signed Proposal #122804,
acknowledging it as a binding contract between the City and JKN. No other City official
had knowledge of, or reviewed or approved, Proposal #122804. On December 31, 2004,
pursuant to the City’s bill payment procedures, a check in the amount of $6,644.98 was
issued from the City’s general fund account to JKN for charges outlined in Proposal
#122804.
On or about January 21, 2005, Foglia contacted Adams for a quote for the same
server project that already had been awarded to JKN. On January 21, 2005, Adams
submitted a quote to purchase and install a server for the City at an approximate cost of
$8,760.00. Foglia subsequently contacted Adams and informed him that Cole had decided
to utilize a local vendor to complete the server project.
In order to maintain a secure client/server LAN, security features such as local and
domain usernames and passwords are necessary. Prior to December 2004, the City
utilized local usernames and passwords that allowed users to download updates and
install software. When JKN installed the client/server LAN in approximately early 2005,
the administrative rights associated with the local usernames and passwords were reduced
to prevent the users from unknowingly/knowingly jeopardizing the security of the
client/server LAN. JKN created only one domain username and password with no
associated restrictions, and only Cole, Foglia, and JKN employees knew and had access
to the username and password. City employees then could no longer download updates or
install software, and they had no other option but to contact JKN if a computer issue arose
because no other vendors had access to the domain username and password.
Between August 25, 2004, and December 31, 2007, JKN submitted thirty-three
invoices to the City totaling $16,672.58 for services provided to the City, including
computer maintenance, repair, and updates. Ten of the aforesaid invoices exceeded
$500.00. All of the proposals submitted by JKN to the City were authorized by Cole, and
none of the services were advertised or publicly bid. Between August 25, 2004, and
December 31, 2007, twenty-eight City checks totaling $16,672.58 were issued from the
City general fund account to JKN as payment for the aforesaid invoices. Cole
recommended, moved, and voted to approve the payment of all twenty-eight checks issued
to JKN as documented on the bill lists.
Cole, 09-039
Page 27
Payments to JKN from Two Commonwealth Grants Received by the City:
In early 2004, the City contacted the office of State Senator J. Barry Stout (“Senator
Stout”) to inquire whether the City was eligible for any grant assistance. By
correspondence dated February 18, 2004, Senator Stout informed the City that he had
secured on behalf of the City $10,000.00 in grant monies related to the Pennsylvania
Department of Community and Economic Development’s (“DCED’s”) Community
Revitalization Grant Program. Senator Stout asked that the City complete a DCED Single
Application for Assistance and submit it to his office in order for the City to obtain the grant.
In or about March 2004, Cole directed Foglia to solicit JKN for a proposal related to
replacing the existing City workgroup LAN (Local Area Network) with a client/server LAN.
Cole did not direct Foglia to solicit proposals from any other vendors. JKN submitted a
proposal (“Proposal #033104”), dated March 31, 2004, to the City for replacing the LAN at
a total cost of $18,602.86. The proposal was not acted on by the City.
On March 31, 2004, Foglia completed the DCED application for the $10,000.00
grant at the direction of Cole. Enclosed with the application was a narrative providing that
the grant would be used to purchase computer services and hardware nearly identical to
those detailed in Proposal #033104. In December 2004, DCED informed Cole that the City
had been awarded a $10,000.00 grant and forwarded a contract to Cole for his review.
Cole signed the DCED contract on December 21, 2004.
In or about February 2005, JKN submitted a proposal (“Proposal #021505”), dated
February 15, 2005, to the City, related to the purchase and installation of six computers for
the total cost of $8,750.88. Proposal #021505 was forwarded to Cole for review and
approval, and it was accepted but was not signed by a representative of the City or of JKN.
No other competitive proposals were solicited from any other computer vendors, and the
computer project was not advertised and/or publicly bid.
On or about March 31, 2005, the City received the $10,000.00 grant from DCED,
and Foglia deposited the grant into a newly opened account (“the First Grant Account”) at
National City Bank (“NCB”). Cole and Foglia were the only City officials who had signature
authority over the First Grant Account.
Between April 2005 and February 2006, JKN submitted seven invoices to the City
requesting payment in the amount of $10,033.95 for goods and services that the City
received in relation to Proposal #021505. Cole directed Foglia to pay the seven JKN
invoices out of the First Grant Account. Between April 2005 and February 2006, as one of
two signatories, Cole signed five checks totaling $10,002.21 in payment of such invoices.
The remaining invoiced balance of $31.74 was paid by a separate check issued from the
City’s general fund account. The JKN invoices and checks issued from the First Grant
Account were not reviewed or approved by any Council Members or the City Controller,
and Council was not aware that grant monies were being directed to JKN due to Council’s
limited oversight of the disbursement of grant monies.
In early to mid-2005, the City submitted a second grant application to DCED that
requested $10,000.00 in grant assistance. In August 2005, DCED informed Cole that the
City had been awarded a $10,000.00 grant and forwarded a contract to Cole for his review.
Cole signed the DCED contract on August 26, 2005. After the City received the
$10,000.00 grant from DCED, Foglia deposited the grant into a newly opened account
(“the Second Grant Account”) at NCB. Cole and Foglia were the only City officials who
had signature authority over the Second Grant Account.
On or about December 1, 2005, JKN began providing services to the City in relation
to the second $10,000 grant from DCED. Cole authorized JKN to provide the services,
and Council played no role in the selection of JKN as the vendor.
Cole, 09-039
Page 28
Between December 2005 and May 2007, JKN submitted six invoices to the City
requesting payment in the amount of $7,734.47 for goods and services that the City
received from JKN. Two JKN invoices in excess of $500.00 were for services for projects
that were not advertised for bid, and other invoices totaling $1,845.13 were related to a
computer project that was not advertised or publicly bid.
Cole directed Foglia to pay the six JKN invoices out of the Second Grant Account,
and between December 2005 and April 2007, as one of two signatories, Cole signed five
checks totaling $7,734.47 in payment of such invoices. The JKN invoices and City checks
issued from the Second Grant Account were not reviewed or approved by any Council
Members or the City Controller, and Council was not aware that grant monies were being
directed to JKN due to Council’s limited oversight of the disbursement of grant monies.
Payments to JKN from a Federal Grant Received by the City:
Cole, as Mayor, was the immediate supervisor of Mendicino, who served as Chief of
Police throughout Cole’s tenure as Mayor. Mendicino routinely addressed concerns
regarding equipment and personnel with Cole.
In approximately 2005, Mendicino became aware that Mountain Top Technologies
Inc. (“MTT”), a business that provides education and training, was securing grants from the
federal government on behalf of municipalities. Cole subsequently authorized Mendicino
to apply for a grant through MTT for the purpose of upgrading the Police Department’s
computer system, and he instructed Mendicino to contact JKN if the Police Department
had any computer related issues.
In or about June 2005, at Mendicino’s request, JKN provided two separate
proposals for the purchase and installation of a server and four desktop computers for the
Police Department. The proposals exceeded $15,000.00. Mendicino did not solicit any
other computer service providers for proposals, and the project was not publicly bid.
On or about July 7, 2005, Mendicino received from MTT a check in the amount of
$15,000.00, payable to the City of Monongahela Police, for a U.S. Department of Justice
COPS (Community Oriented Policing Services) grant (“COPS Grant”). After receiving the
COPS Grant, Mendicino contacted JKN and advised it to resubmit the aforesaid proposals
to the Police Department but not to exceed the COPS Grant amount. Mendicino
subsequently deposited the check for the COPS Grant into a bank account that was
controlled by the Monongahela Police Officers Association (“the Association”) and not
Council.
On July 27, 2005, JKN and Mendicino signed two proposals totaling $14,999.98 for
a client/server LAN and three desktop computers, and JKN issued an invoice to the Police
Department in the amount of $15,000.00. JKN then ordered and installed the aforesaid
computer equipment for the Police Department. As a result of JKN establishing a domain
username and password that was known only by JKN employees, Wack, and Mendicino,
JKN by default became the primary computer service provider for the Police Department.
Adams could not perform services for the Police Department as he had done in the past,
and if police officers other than Mendicino had an issue with a computer, JKN had to be
contacted to correct the issue due to the limited administrative rights associated with the
officers' usernames and passwords.
The aforesaid JKN invoice was paid by three checks totaling $15,000.00 which were
issued to JKN from the aforesaid Association bank account and were signed by two City
police officers.
Cole, 09-039
Page 29
The business relationship between JKN and the City was terminated after Cole did
not win re-election as Mayor in the November 2007 election, and JKN has not performed
any services for the City since December 31, 2007.
The parties have stipulated that as a result of Cole’s use of his public position, JKN
received payments from the City totaling $49,409.26. See, Fact Finding 114.
Cole’s Statements of Financial Interests:
A Statement of Financial Interests (“SFI”) compliance review conducted for the City
on June 16, 2010, revealed no SFIs on file for Cole for calendar years 2004 through 2007.
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 remaining
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 Cole’s
participation in the award of contracts to JK
Networking; the purchase of computer
equipment and computer related services from
JK Networking; and the authorization of
payments to JK Networking, a business with
which Cole was associated.
. . .
c. That a violation of Section 1104(a) of the Public
Official and Employee Ethics Act, 65 Pa.C.S. §
1104(a) occurred in relation to Cole’s failure to
file Statements of Financial Interests for the
2003, 2004, 2005, 2006, and 2007 calendar
years.
d. That no violation of Section 1104(a) of the Public
Official and Employee Ethics Act, 65 Pa.C.S. §
1104(a) occurred in relation to Cole’s failure to
file Statements [sic] of Financial Interests for the
2008 calendar year, as Cole was not required to
file a Statement of Financial Interests form for
that year.
4. Cole agrees to make payment in the amount of $7,000.00 in
settlement of this matter as follows:
a. $5,500.00 payable by certified check or money
order, made payable to the Commonwealth of
Pennsylvania, and forwarded to the
Pennsylvania State Ethics Commission within
thirty (30) days of the issuance of the final
adjudication in this matter.
Cole, 09-039
Page 30
b. $1,500.00 in reimbursement representing a
portion of the expenses and costs incurred by
the State Ethics Commission in the investigation
and administrative prosecution of the instant
matter, payable by certified check or money
order made payable to the Pennsylvania State
Ethics Commission. Said payment to be made
upon the execution of this agreement by Cole
and submitted therewith.
c. Cole agrees to not accept any reimbursement,
compensation or other payment from the City of
Monongahela representing a full or partial
reimbursement of the amount paid in settlement
of this matter.
5. Cole agrees to file Statements of Financial Interests with the
City of Monongahela, through the Pennsylvania State Ethics
Commission, for calendar years 2003, 2004, 2005, 2006, and
2007 within thirty (30) days of the issuance of the final
adjudication in this matter.
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 1-2.
In considering the Consent Agreement submitted by the parties, we agree with the
parties that a violation of Section 1103(a) of the Ethics Act occurred when Cole
participated in the award of contracts to JKN, the purchase of computer equipment and
computer related services from JKN, and the authorization of payments to JKN.
Cole used the authority of his public position: (1) when he arranged a meeting in
early 2001 to introduce JKN to the City and authorized JKN to conduct an audit of the
City’s computers; (2) when he authorized JKN to create a web site for the City and signed
two City checks payable to JKN for creating said web site; (3) when he instructed the City
Clerk that he wanted JKN to be utilized when possible; (4) when he directed City staff to
obtain computer services from JKN; (5) when he approved and signed a JKN proposal for
the purchase and installation of a client/server LAN for the City; (6) when he
recommended, moved, and voted to approve the payment of twenty-eight checks issued to
JKN from August 25, 2004, through December 31, 2007, for work that he had authorized;
(7) when he signed DCED grant contracts, accepted a JKN proposal and authorized JKN
to provide services in relation to two grants received by the City from DCED, and then
directed payments and signed checks from the grant monies--which he and the City Clerk
controlled--to pay JKN invoices pertaining to said proposal and services; and (8) when he
authorized the Chief of Police to apply for a grant to upgrade the Police Department’s
computer system and instructed the Chief to contact JKN as to any computer related
issues.
Cole, 09-039
Page 31
Cole’s son, Cole Jr., was a fifty percent owner of JKN. Cole’s actions resulted in a
private pecuniary benefit to JKN. The parties have stipulated that as a result of Cole’s use
of his public position, JKN received payments from the City totaling $49,409.26.
With each element of a violation of Section 1103(a) established, we hold that a
violation of Section 1103(a) of the Ethics Act, 65 Pa.C.S. § 1103(a), occurred when Cole
participated in the award of contracts to JKN, the purchase of computer equipment and
computer related services from JKN, and the authorization of payments to JKN, a business
with which Cole was associated. Cf., Owen, Order 1537; Gold, Order 1461; Vaughn,
Order 1450.
We further accept the recommendation of the parties that a violation of Section
1104(a) of the Ethics Act occurred in relation to Cole’s failure to file SFIs for the 2003,
2004, 2005, 2006, and 2007 calendar years. Per the Stipulated Findings, Cole failed to
file SFIs for the 2004, 2005, 2006, and 2007 calendar years. Although the Stipulated
Findings do not address Cole’s SFI for the 2003 calendar year, per the Consent
Agreement, the parties are in agreement that Cole failed to file an SFI for the 2003
calendar year and that a violation should be found as to said calendar year.
We hold that a violation of Section 1104(a) of the Ethics Act, 65 Pa.C.S. § 1104(a),
occurred in relation to Cole’s failure to file SFIs for the 2003, 2004, 2005, 2006, and 2007
calendar years.
As to the allegation that Cole violated Section 1104(a) of the Ethics Act when he
failed to file a Statement of Financial Interests for the 2008 calendar year, the parties have
agreed that no violation occurred in that Cole was not required to file a Statement of
Financial Interests for calendar year 2008. We accept the parties’ recommendation and
find no violation of Section 1104(a) of the Ethics Act for the reason stated. There is no
basis in the stipulated findings for concluding that Cole was required to file a Statement of
Financial Interests for calendar year 2008, given that Cole’s service as Mayor of the City
terminated on December 31, 2007. See, Fact Finding 1.
As part of the Consent Agreement, Cole has agreed to make payment in the amount
of $7,000.00 in settlement of this matter as follows: (a) $5,500.00 payable by certified
check or money order made payable to the Commonwealth of Pennsylvania and forwarded
to this Commission within thirty (30) days of the issuance of the final adjudication in this
matter; and (b) $1,500.00 in reimbursement representing a portion of the expenses and
costs incurred by this Commission in the investigation and administrative prosecution of
the instant matter, payable by certified check or money order made payable to the
Pennsylvania State Ethics Commission, with said payment of $1,500.00 tendered upon the
execution of the Consent Agreement by Cole.
Cole has also agreed to not accept any reimbursement, compensation or other
payment from the City representing a full or partial reimbursement of the amount paid in
settlement of this matter.
Cole has further agreed to file SFIs for calendar years 2003, 2004, 2005, 2006, and
2007 with the City, through 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 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, per the Consent Agreement of the parties, Cole is directed to make
payment in the amount of $7,000.00 as follows: (a) $5,500.00 payable by certified check or
money order made payable to the Commonwealth of Pennsylvania and forwarded to this
Cole, 09-039
Page 32
th
Commission by no later than the thirtieth (30) day after the mailing date of this
adjudication and Order; and (b) $1,500.00 in reimbursement representing a portion of the
expenses and costs incurred by this Commission in the investigation and administrative
prosecution of the instant matter, payable by certified check or money order made payable
to the Pennsylvania State Ethics Commission, with said payment of $1,500.00 tendered
upon the execution of the Consent Agreement by Cole.
Per the Consent Agreement of the parties, Cole is further directed to not accept any
reimbursement, compensation or other payment from the City representing a full or partial
reimbursement of the amount paid in settlement of this matter.
Cole is further directed to file SFIs with the City through this Commission, for
th
calendar years 2003, 2004, 2005, 2006, and 2007, 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 Mayor of the City of Monongahela (“City”), Washington County, from July 21,
1998, to December 31, 2007, Respondent Kenneth Cole, Sr. (“Cole”) was a public
officialsubject to the provisions of the Public Official and Employee Ethics Act
(“Ethics Act”), 65 Pa.C.S. § 1101 et seq.
2. Cole violated Section 1103(a) of the Ethics Act, 65 Pa.C.S. § 1103(a), when he
participated in the award of contracts to JK Networking, the purchase of computer
equipment and computer related services from JK Networking, and the
authorization of payments to JK Networking, a business with which Cole was
associated.
3. A violation of Section 1104(a) of the Ethics Act, 65 Pa.C.S. § 1104(a), occurred in
relation to Cole’s failure to file Statements of Financial Interests for the 2003, 2004,
2005, 2006, and 2007 calendar years.
4. No violation of Section 1104(a) of the Ethics Act, 65 Pa.C.S. § 1104(a), occurred in
relation to Cole’s alleged failure to file a Statement of Financial Interests for the
2008 calendar year as Cole was not required to file a Statement of Financial
Interests form for that calendar year.
In Re: Kenneth Cole Sr., : File Docket: 09-039
Respondent : Date Decided: 12/15/10
: Date Mailed: 12/20/10
ORDER NO. 1579
1. As Mayor of the City of Monongahela (“City”), Washington County, Kenneth Cole,
Sr. (“Cole”) violated Section 1103(a) of the Public Official and Employee Ethics Act
(“Ethics Act”), 65 Pa.C.S. § 1103(a), when he participated in the award of contracts
to JK Networking, the purchase of computer equipment and computer related
services from JK Networking, and the authorization of payments to JK Networking, a
business with which Cole was associated.
2. A violation of Section 1104(a) of the Ethics Act, 65 Pa.C.S. § 1104(a), occurred in
relation to Cole’s failure to file Statements of Financial Interests for the 2003, 2004,
2005, 2006, and 2007 calendar years.
3. No violation of Section 1104(a) of the Ethics Act, 65 Pa.C.S. § 1104(a), occurred in
relation to Cole’s alleged failure to file a Statement of Financial Interests for the
2008 calendar year as Cole was not required to file a Statement of Financial
Interests form for that calendar year.
4. Per the Consent Agreement of the parties, Cole is directed to make payment in the
amount of $7,000.00 as follows: (a) $5,500.00 payable by certified check or money
order made payable to the Commonwealth of Pennsylvania and forwarded to the
th
Pennsylvania State Ethics Commission by no later than the thirtieth (30) day after
the mailing date of this Order; and (b) $1,500.00 in reimbursement representing a
portion of the expenses and costs incurred by the Pennsylvania State Ethics
Commission in the investigation and administrative prosecution of the instant
matter, payable by certified check or money order made payable to the
Pennsylvania State Ethics Commission, with said payment of $1,500.00 tendered
upon the execution of the Consent Agreement by Cole.
5. Per the Consent Agreement of the parties, Cole is further directed to not accept any
reimbursement, compensation or other payment from the City representing a full or
partial reimbursement of the amount paid in settlement of this matter.
6. Cole is directed to file Statements of Financial Interests for calendar years 2003,
2004, 2005, 2006, and 2007 with the City, through the Pennsylvania State Ethics
th
Commission, by no later than the thirtieth (30) day after the mailing date of this
Order.
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,
___________________________
Cole, 09-039
Page 34
Louis W. Fryman, Chair