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ADVICE OF COUNSEL
October 3, 2011
11-552
This responds to your letters dated August 1, 2011, and August 15, 2011, by
which you requested a confidential advisory from the Pennsylvania State Ethics
Commission.
Issue:
Whether the Public Official and Employee Ethics Act (“Ethics Act”), 65
Pa.C.S. § 1101 et seq., would require an A for the Governmental Body B C to disclose
on his Statement of Financial Interests a one-time payment in excess of $1,300.00
which he received in his capacity as a beneficiary of his father’s life insurance policy.
Facts:
You request a confidential advisory from the Pennsylvania State Ethics
Commission based upon submitted facts that may be fairly summarized as follows.
You are employed with the Governmental Body B C as an A. You have
submitted a copy of the job description for the position of A with the Governmental Body
B C, which document is incorporated herein by reference.
Your father died on [date]. In or around [month, year], in your capacity as a
beneficiary of your father’s life insurance policy, you received a one-time payment in
excess of $1,300.00 from [name of insurance company].
You ask whether you would be required to disclose on your Statement of
Financial Interests as a “direct or indirect source of income” the payment that you
received as a beneficiary of your father’s life insurance policy.
Discussion:
It is initially noted that pursuant to Sections 1107(10) and 1107(11) of
the Ethics Act, 65 Pa.C.S. §§ 1107(10), (11), advisories are issued to the requester
based upon the facts that the requester has submitted. In issuing the advisory based
upon the facts that the requester has submitted, the Commission does not engage in an
independent investigation of the facts, nor does it speculate as to facts that have not
been submitted. It is the burden of the requester to truthfully disclose all of the material
facts relevant to the inquiry. 65 Pa.C.S. §§ 1107(10), (11). An advisory only affords a
defense to the extent the requester has truthfully disclosed all of the material facts.
As an A with the Governmental Body B C, you are a public employee subject to
the provisions of the Ethics Act, including the requirements for filing Statements of
Financial Interests.
Confidential Advice, 11-552
October 3, 2011
Page 2
Section 1104(a) of the Ethics Act provides:
§ 1104. Statement of financial interests required to be
filed
(a)Public official or public employee.--
Each public
official of the Commonwealth shall file a statement of
financial interests for the preceding calendar year with the
commission no later than May 1 of each year that he holds
such a position and of the year after he leaves such a
position. Each public employee and public official of the
Commonwealth shall file a statement of financial interests for
the preceding calendar year with the department, agency,
body or bureau in which he is employed or to which he is
appointed or elected no later than May 1 of each year that
he holds such a position and of the year after he leaves such
a position. Any other public employee or public official shall
file a statement of financial interests with the governing
authority of the political subdivision by which he is employed
or within which he is appointed or elected no later than May
1 of each year that he holds such a position and of the year
after he leaves such a position. Persons who are full-time or
part-time solicitors for political subdivisions are required to
file under this section.
65 Pa.C.S. § 1104(a).
Section 1105 of the Ethics Act sets forth the substantive disclosure requirements
for Statements of Financial Interests. Section 1105(b) provides, in pertinent part, as
follows:
§ 1105. Statement of financial interests
(b) Required information.--
The statement shall
include the following information for the prior calendar year
with regard to the person required to file the statement:
. . . .
(5) The name and address of any direct
or indirect source of income totaling in the
aggregate $1,300 or more. However, this
provision shall not be construed to require the
divulgence of confidential information protected
by statute or existing professional codes of
ethics or common law privileges.
(6) The name and address of the
source and the amount of any gift or gifts
valued in the aggregate at $250 or more and
the circumstances of each gift. This paragraph
shall not apply to a gift or gifts received from a
spouse, parent, parent by marriage, sibling,
child, grandchild, other family member or friend
when the circumstances make it clear that the
motivation for the action was a personal or
family relationship. However, for the purposes
of this paragraph, the term "friend" shall not
Confidential Advice, 11-552
October 3, 2011
Page 3
include a registered lobbyist or an employee of
a registered lobbyist.
. . . .
65 Pa.C.S. §§ 1105(b)(5), (6).
The Ethics Act defines the term “income” as follows:
§ 1102. Definitions
"Income."
Any money or thing of value received or
to be received as a claim on future services or in recognition
of services rendered in the past, whether in the form of a
payment, fee, salary, expense, allowance, forbearance,
forgiveness, interest, dividend, royalty, rent, capital gain,
reward, severance payment, proceeds from the sale of a
financial interest in a corporation, professional corporation,
partnership or other entity resulting from termination or
withdrawal therefrom upon assumption of public office or
employment or any other form of recompense or any
combination thereof. The term refers to gross income and
includes prize winnings and tax-exempt income. The term
does not include gifts, governmentally mandated payments
or benefits, retirement, pension or annuity payments funded
totally by contributions of the public official or employee, or
miscellaneous, incidental income of minor dependent
children.
65 Pa.C.S. § 1102.
The Ethics Act defines the term “gift” as that term is defined in Section 13A03 of
Pennsylvania’s lobbying disclosure law, 65 Pa.C.S. § 13A03 (see, 65 Pa.C.S. § 1102).
The definition of “gift” is as follows:
§ 13A03. Definitions.
"Gift."
Anything which is received without
consideration of equal or greater value. The term shall not
include a political contribution otherwise reportable as
required by law or a commercially reasonable loan made in
the ordinary course of business. The term shall not include
hospitality, transportation or lodging.
65 Pa.C.S. § 13A03.
Section 1105(b)(5) of the Ethics Act requires the filer to include on the Statement
of Financial Interests the name and address of any direct or indirect source of income
totaling in the aggregate $1,300 or more.
Section 1105(b)(6) of the Ethics Act requires the filer to disclose on the
Statement of Financial Interests the name and address of the source and the amount of
any gift or gifts valued in the aggregate at $250 or more and the circumstances of each
gift. The filer is not required to disclose gifts from a family member or friend (with the
term “friend” excluding a registered lobbyist or employee of a registered lobbyist) when
the circumstances make it clear that the motivation for the action was the
personal/family relationship.
Confidential Advice, 11-552
October 3, 2011
Page 4
In Rouzer, Opinion 08-001, the Commission held that an inheritance received
from a family member would ordinarily be considered a gift that would not have to be
disclosed on the Statement of Financial Interests as per Section 1105(b)(6) of the Ethics
Act. The Commission concluded that an inheritance received from a family member
would not be considered “income” for purposes of financial disclosure under the Ethics
Act unless the inheritance would be expressly designated as a payment for, or in
recognition of, services.
Having established the above general principles, your specific question shall now
be addressed.
You are advised that there is no basis in the submitted facts for concluding that
the payment you received as a beneficiary of your father’s life insurance policy would
fall under the Ethics Act’s definition of the term “income.” Therefore, under the
submitted facts, you are advised that you would not be required to disclose the payment
you received as a beneficiary of your father’s life insurance policy on your Statement of
Financial Interests conditioned upon the assumption that such payment was not
expressly designated as a payment for, or in recognition of, services. Cf., Rouzer,
supra.
The propriety of the proposed conduct has only been addressed under the Ethics
Act; the applicability of any other statute, code, ordinance, regulation or other code of
conduct other than the Ethics Act has not been considered in that they do not involve an
interpretation of the Ethics Act.
Conclusion:
As an A with the Governmental Body B C, you are a public
employee subject to the provisions of the Public Official and Employee Ethics Act
(“Ethics Act”), 65 Pa.C.S. § 1101 et seq., including the requirements for filing
Statements of Financial Interests. Based upon the submitted facts that: (1) your father
died on [date]; and (2) in or around [month, year], in your capacity as a beneficiary of
your father’s life insurance policy, you received a one-time payment in excess of
$1,300.00 from [name of insurance company], you are advised as follows. There is no
basis in the submitted facts for concluding that the payment you received as a
beneficiary of your father’s life insurance policy would fall under the Ethics Act’s
definition of the term “income.” Therefore, under the submitted facts, you are advised
that you would not be required to disclose the payment you received as a beneficiary of
your father’s life insurance policy on your Statement of Financial Interests conditioned
upon the assumption that such payment was not expressly designated as a payment
for, or in recognition of, services. Lastly, the propriety of the proposed conduct has only
been addressed under the Ethics Act.
Pursuant to Section 1107(11) of the Ethics Act, an Advice is a complete defense
in any enforcement proceeding initiated by the Commission, and evidence of good faith
conduct in any other civil or criminal proceeding, provided the requester has disclosed
truthfully all the material facts and committed the acts complained of in reliance on the
Advice given.
This letter is a public record and will be made available as such.
Finally, if you disagree with this Advice or if you have any
reason to challenge same, you may appeal the Advice to the full
Commission. A personal appearance before the Commission will be
scheduled and a formal Opinion will be issued by the Commission.
Any such appeal must be in writing and must be actually
received at the Commission within thirty (30) days of the date of this
Advice pursuant to 51 Pa. Code § 13.2(h). The appeal may be
Confidential Advice, 11-552
October 3, 2011
Page 5
received at the Commission by hand delivery, United States mail,
delivery service, or by FAX transmission (717-787-0806). Failure to
file such an appeal at the Commission within thirty (30) days may
result in the dismissal of the appeal.
Sincerely,
Robin M. Hittie
Chief Counsel