The URL can be used to link to this page

Home My WebLink About12-531 Confidential ADVICE OF COUNSEL April 23, 2012 12-531 This responds to your letters dated March 5, 2012, and March 9, 2012, 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 a [political subdivision] to disclose on his Statement of Financial Interests his ownership interest in a Pennsylvania Limited Liability Company that owns a parcel of real estate with office space leased to the [political subdivision]. Facts: You request a confidential advisory from the Pennsylvania State Ethics Commission on behalf of Individual B. You have submitted facts that may be fairly summarized as follows. On [date], Individual B was appointed as the A for Political Subdivision C (the “Political Subdivision”). Individual B owns a [percentage in excess of 5%] interest in a Pennsylvania Limited Liability Company named [name of company] (the “LLC”). The LLC owns a parcel of real estate (the “Property”) with office space that it leases to the Political Subdivision for a D. You ask whether Individual B would be required to disclose on his Statement of Financial Interests his ownership interest in the LLC. 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 the A for the Political Subdivision, Individual B is required to file Statements of Financial Interests pursuant to the Ethics Act. Section 1104(a) of the Ethics Act provides: Confidential Advice, 12-531 April 23, 2012 Page 2 § 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: . . . . (3) Any direct or indirect interest in any real estate which was sold or leased to the Commonwealth, any of its agencies or political subdivisions or purchased or leased from the Commonwealth, any of its agencies or political subdivisions or which was the subject of any condemnation proceedings by the Commonwealth, any of its agencies or political subdivisions . . . . . (9) Any financial interest in any legal entity engaged in business for profit. . . . . 65 Pa.C.S. §§ 1105(b)(3), (9). The terms “financial interest” and “political subdivision” are defined in the Ethics Act as follows: § 1102. Definitions Confidential Advice, 12-531 April 23, 2012 Page 3 “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. “Political subdivision.” Any county, city, borough, incorporated town, township, school district, vocational school, county institution district, and any authority, entity or body organized by the aforementioned. 65 Pa.C.S. § 1102. Section 1105(b)(9) of the Ethics Act requires the filer to disclose on the Statement of Financial Interests any financial interest in any legal entity engaged in business for profit. In the instant matter, based upon the submitted facts, you are advised that Individual B has a “financial interest” in the LLC as that term is defined in the Ethics Act. Accordingly, Individual B would be required to disclose on his Statement of Financial Interests his financial interest in the LLC. You are further advised that pursuant to Section 1105(b)(3) of the Ethics Act, 65 Pa.C.S. § 1105(b)(3), Individual B would also be required to disclose on his Statement of Financial Interests his interest in the Property. This is because Section 1105(b)(3) of the Ethics Act requires the filer to disclose on the Statement of Financial Interests any direct or indirect interest in real estate that is leased to a political subdivision. 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 the A for Political Subdivision C (the “Political Subdivision”), Individual B is required to file Statements of Financial Interests pursuant to the Public Official and Employee Ethics Act (“Ethics Act”), 65 Pa.C.S. § 1101 et seq. Based upon the submitted facts that: (1) Individual B owns a [percentage in excess of 5%] interest in a Pennsylvania Limited Liability Company named [name of company] (the “LLC”); and (2) the LLC owns a parcel of real estate (the “Property”) with office space that it leases to the Political Subdivision for a D, you are advised as follows. Individual B has a “financial interest” in the LLC as that term is defined in the Ethics Act. Individual B would be required to disclose on his Statement of Financial Interests his financial interest in the LLC. Individual B would also be required to disclose on his Statement of Financial Interests his interest in the Property. 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. Confidential Advice, 12-531 April 23, 2012 Page 4 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