HomeMy WebLinkAbout12-505 Mullin
ADVICE OF COUNSEL
January 27, 2012
J. Edmund Mullin, Esquire
Hamburg, Rubin, Mullin, Maxwell & Lupin, PC
ACTS Center--Blue Bell
375 Morris Road
P.O. Box 1479
Lansdale, PA 19446-0773
12-505
Dear Mr. Mullin:
This responds to your letter dated December 12, 2011, by which you requested
an 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 impose any prohibitions or restrictions upon a member
and chairman of a borough council with regard to voting on an agreement to change the
terms of bonds guaranteed by the borough, where such bonds are owned by his second
cousin and by various entities in which the second cousin is involved.
Facts:
As Solicitor for New Morgan Borough (“Borough”), you request an
advisory from the Pennsylvania State Ethics Commission on behalf of Richard Venezia
(“Mr. Venezia”), who is a Member and Chairman of Borough Council. You have
submitted facts, the material portion of which may be fairly summarized as follows.
The New Morgan Municipal Authority (“Authority”) handles the Borough sewer
system. The Authority issued bonds (“Bonds”) which the Borough guaranteed because
of its taxing power. The Bonds are owned by Mr. Venezia’s second cousin, Nicholas
Caramenico (“Mr. Caramenico”), and by entities in which Mr. Caramenico is involved
(hereinafter collectively referred to as “Bond Holders”). You state that Mr. Venezia is
not part of any of the aforesaid entities.
You state that the Bonds are in default because the Borough does not have the
financial resources presently available to pay them. You further state that Borough
Council and the Authority made an offer to the Bond Holders to lower the interest rate
and change the payment terms favorably for the Authority but keep the same outside
date for payment.
Based upon the above submitted facts, you ask whether the Ethics Act would
permit Mr. Venezia to vote on an agreement to change the terms of the Bonds.
Mullin, 12-505
January 27, 2012
Page 2
You have proffered your own analysis of the legal issues that you have raised.
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 a Member and Chairman of Borough Council, Mr. Venezia is a public official
as that term is defined in the Ethics Act, and therefore he is subject to the provisions of
the Ethics Act.
Sections 1103(a) and 1103(j) of the Ethics Act provide:
§ 1103. Restricted activities
(a)Conflict of interest.--
No public official or public
employee shall engage in conduct that constitutes a conflict
of interest.
(j)Voting conflict.--
Where voting conflicts are not
otherwise addressed by the Constitution of Pennsylvania or
by any law, rule, regulation, order or ordinance, the following
procedure shall be employed. Any public official or public
employee who in the discharge of his official duties would be
required to vote on a matter that would result in a conflict of
interest shall abstain from voting and, prior to the vote being
taken, publicly announce and disclose the nature of his
interest as a public record in a written memorandum filed
with the person responsible for recording the minutes of the
meeting at which the vote is taken, provided that whenever a
governing body would be unable to take any action on a
matter before it because the number of members of the body
required to abstain from voting under the provisions of this
section makes the majority or other legally required vote of
approval unattainable, then such members shall be
permitted to vote if disclosures are made as otherwise
provided herein. In the case of a three-member governing
body of a political subdivision, where one member has
abstained from voting as a result of a conflict of interest and
the remaining two members of the governing body have cast
opposing votes, the member who has abstained shall be
permitted to vote to break the tie vote if disclosure is made
as otherwise provided herein.
65 Pa.C.S. §§ 1103(a), (j).
The following terms related to Section 1103(a) are defined in the Ethics Act as
follows:
§ 1102. Definitions
"Conflict" or "conflict of interest."
Use by a public
official or public employee of the authority of his office or
employment or any confidential information received through
Mullin, 12-505
January 27, 2012
Page 3
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.
"Authority of office or employment."
The actual
power provided by law, the exercise of which is necessary to
the performance of duties and responsibilities unique to a
particular public office or position of public employment.
"Immediate family."
A parent, spouse, child, brother
or sister.
"Business."
Any corporation, partnership, sole
proprietorship, firm, enterprise, franchise, association,
organization, self-employed individual, holding company,
joint stock company, receivership, trust or any legal entity
organized for profit.
"Business with which he is associated."
Any
business in which the person or a member of the person's
immediate family is a director, officer, owner, employee or
has a financial interest.
"Financial interest."
Any financial interest in a legal
entity engaged in business for profit which comprises more
than 5% of the equity of the business or more than 5% of the
assets of the economic interest in indebtedness.
65 Pa.C.S. § 1102.
Pursuant to Section 1103(a) of the Ethics Act, a public official/public employee is
prohibited 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.
The use of authority of office is not limited merely to voting, but extends to any
use of authority of office including, but not limited to, discussing, conferring with others,
and lobbying for a particular result. Juliante, Order 809.
In each instance of a conflict of interest, a public official/public employee would
be required to abstain from participation, which would include voting unless one of the
statutory exceptions of Section 1103(j) of the Ethics Act would be applicable.
Additionally, the disclosure requirements of Section 1103(j) of the Ethics Act would have
to be satisfied in the event of a voting conflict.
In applying the above provisions of the Ethics Act to the instant matter, you are
advised as follows.
Mullin, 12-505
January 27, 2012
Page 4
Subject to the statutory exceptions to the definition of “conflict” or “conflict of
interest,” pursuant to Section 1103(a) of the Ethics Act, Mr. Venezia would have a
conflict of interest in matters before Borough Council that would financially impact him, a
member of his immediate family, or a business with which he or a member of his
immediate family is associated. Mr. Venezia’s second cousin is not a member of his
“immediate family” as that term is defined in the Ethics Act. Cf., Pulice v. State Ethics
Commission, 713 A.2d 161 (Pa. Cmwlth. 1998), allocatur denied, 557 Pa. 642, 732 A.2d
1211 (1998) (Holding that a relative not encompassed by the family relationships listed
in the Ethics Act’s definition of the term “immediate family”—in that case an in-law—
would not be considered a member of immediate family).
Since Mr. Venezia’s second cousin is not a member of his immediate family, Mr.
Venezia would not have a conflict of interest under Section 1103(a) of the Ethics Act in
matters before Borough Council that would financially impact his second cousin but that
would not financially impact Mr. Venezia, a member of his immediate family, or a
business with which he or a member of his immediate family is associated. Therefore,
absent some basis for a conflict of interest such as a private pecuniary benefit to Mr.
Venezia, a member of his immediate family, or a business with which he or a member of
his immediate family is associated, Section 1103(a) of the Ethics Act would not prohibit
Mr. Venezia from voting on an agreement to change the terms of the Bonds.
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. Specifically not addressed herein is the applicability of
the Borough Code.
Conclusion:
As a Member and Chairman of Council for New Morgan Borough
(“Borough”), Richard Venezia (“Mr. Venezia”) is a public official subject to the provisions
of the Public Official and Employee Ethics Act (“Ethics Act”), 65 Pa.C.S. § 1101 et seq.
Based upon the submitted facts that: (1) the New Morgan Municipal Authority
(“Authority”) handles the Borough sewer system; (2) the Authority issued bonds
(“Bonds”) which the Borough guaranteed because of its taxing power; (3) the Bonds are
owned by Mr. Venezia’s second cousin, Nicholas Caramenico (“Mr. Caramenico”), and
by entities in which Mr. Caramenico is involved (hereinafter collectively referred to as
“Bond Holders”); (4) Mr. Venezia is not part of any of the aforesaid entities; (5) the
Bonds are in default because the Borough does not have the financial resources
presently available to pay them; and (6) Borough Council and the Authority made an
offer to the Bond Holders to lower the interest rate and change the payment terms
favorably for the Authority but keep the same outside date for payment, you are advised
as follows.
Subject to the statutory exceptions to the definition of “conflict” or “conflict of
interest,” pursuant to Section 1103(a) of the Ethics Act, Mr. Venezia would have a
conflict of interest in matters before Borough Council that would financially impact him, a
member of his immediate family, or a business with which he or a member of his
immediate family is associated. Mr. Venezia’s second cousin is not a member of his
“immediate family” as that term is defined in the Ethics Act. Since Mr. Venezia’s second
cousin is not a member of his immediate family, Mr. Venezia would not have a conflict
of interest under Section 1103(a) of the Ethics Act in matters before Borough Council
that would financially impact his second cousin but that would not financially impact Mr.
Venezia, a member of his immediate family, or a business with which he or a member of
his immediate family is associated. Therefore, absent some basis for a conflict of
interest such as a private pecuniary benefit to Mr. Venezia, a member of his immediate
family, or a business with which he or a member of his immediate family is associated,
Section 1103(a) of the Ethics Act would not prohibit Mr. Venezia from voting on an
agreement to change the terms of the Bonds. Lastly, the propriety of the proposed
conduct has only been addressed under the Ethics Act.
Mullin, 12-505
January 27, 2012
Page 5
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
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