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HomeMy WebLinkAbout1600 Ellison In Re: James Ellison, : File Docket: 10-046 Respondent : X-ref: Order No. 1600 : Date Decided: 4/12/12 : Date Mailed: 4/27/12 Before: Louis W. Fryman, 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 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. I.ALLEGATIONS: That James Ellison, a public official/public employee in his capacity as a Member of The Harrisburg Authority, violated Sections 1103(a) and 1103(f) of the State Ethics Act (Act 93 of 1998), 65 Pa.C.S. §§ 1103(a) and 1103(f), when he participated in discussions and actions of the Authority resulting in contracts being entered into with a business with which he is associated, Rhoads and Sinon law firm, [and] when the contracts were entered into without an open and public process; and when he subsequently participated in [Authority] Board actions resulting in payments being issued to Rhoads and Sinon. II.FINDINGS: 1. James Ellison served as a Member of the Board of Directors (“Board”) of The Harrisburg Authority (“THA”) from August 2007 until March 12, 2010. a. Ellison was appointed to the THA Board by Harrisburg City Council in January 2007, but was not seated as a THA Board Member until August 2007 due to court challenges to the appointment by Harrisburg Mayor Stephen Reed. 2. Ellison served as Chairman and Chairperson of the Board for THA from August 2007 until March 12, 2010, when he resigned from his position with THA. 3. Ellison was not compensated as a Member of the THA Board. Ellison, 10-046 Page 2 4. Ellison has been employed as an attorney with the law firm of Rhoads & Sinon, LLP since August 25, 1997. a. Ellison served as an associate attorney from 1997 until January 2005. b. Ellison became a partner at Rhoads & Sinon on or about January 1, 2005. c. As an attorney with Rhoads & Sinon, Ellison’s area of practice has included Civil & Commercial Litigation, School & Personnel Law, and Labor & Employment Law. d. Ellison is an equity partner in Rhoads & Sinon. 5. THA was formed by the City of Harrisburg in May 1957 pursuant to the Municipality Authorities Act of 1945. 6. Articles of Incorporation for THA have been amended by Harrisburg City Council, by way of ordinance, periodically from 1957 through the present. a. When first established in 1957, THA was known as the Harrisburg Sewerage Authority. b. On July 17, 1978, the terms of THA’s existence were extended through May 31, 2028. c. On December 1, 1987, the Harrisburg Sewerage Authority became known as the Harrisburg Water and Sewer Authority. d. On January 23, 1990, the Harrisburg Water and Sewer Authority changed to its current name: The Harrisburg Authority. 7. Articles of Incorporation for THA provide [as follows]: To engage in acquiring, holding, constructing, financing, improving, maintaining and operating, owning and leasing projects of the kind and character contemplated by law for a general purpose authority, as authorized and permitted by, and also as limited by provisions of the Municipality Authorities Act, the Act of May 2, 1945, P.L. 382, as amended or supplemented, and by any other applicable statute or law. 8. The THA Board consists of five Members serving staggered terms. a. Appointments are currently made by the Mayor, subject to the approval of Harrisburg City Council. b. Prior to 2007, the Harrisburg Mayor made appointments without City Council approval. 9. THA by-laws created the officer positions of Chairman, Vice-Chairman, Secretary, Treasurer, and one/or more Assistant Secretary/Treasurer(s). 10. The by-laws of THA effective October 4, 2007, pursuant to THA Resolution No. 2007-022 under Article III, Section 2, identified the functions of Chairman as follows: Chairman - a. The Chairman shall function as the Chief Executive Officer of the Authority exercising the executive and administrative powers of the Ellison, 10-046 Page 3 Authority. The Chairman shall preside at all meetings of the Authority, and shall submit to the Authority such recommendation and information as the Chairman may consider proper. Except as otherwise authorized by resolution of the Authority, the Chairman shall execute all contracts, deeds, bonds, or other instruments made by the Authority in its name. The Chairman shall appoint all members of committees, established by resolution of the Authority. The Chairman shall notify Harrisburg City Council, at least one month in advance, of the expiration of the term of office of any member of the Authority. In addition, the Chairman shall notify Harrisburg City Council of any resignation of a member of the Authority, stating the unexpired term thereof. He shall, in the intervals between meetings, consult with the various officers and employees of the Authority regarding the business of the Authority and perform such other duties as directed by the Authority. 1. On October 24, 2007, the by-laws of THA were amended by the THA Board under Resolution No. 2007-024, in that all language in the current amended and restated by-laws of THA became gender neutral. aa. As a result, the Chairman became known as Chairperson. 2. On December 22, 2008, the THA Board, by motion, authorized the Executive Director to notify Harrisburg City Council of the expiration of the term of any office of any Member of the Authority at least one month in advance. 11. As a Board Member, Ellison participated in approving THA Resolutions on October 4 and 24, 2007, amending the by-laws by changing the functions of Chairman, and making terms gender neutral. 12. Throughout its existence, THA has utilized the services of various law firms to provide legal services. a. THA has appointed a General Counsel (Solicitor) for most legal services. b. THA has retained outside firms for specialized legal services. 13. The law firm of Rhoads & Sinon has been providing legal services to THA since approximately 1997. a. The firm served as General Counsel for THA from in or around 1997 through 2004. 1. Ellison, as a Rhoads & Sinon associate, was THA’s Assistant General Counsel from 1997 until about 2000. 14. From about 1997 through January 2008, Rhoads & Sinon provided legal services to THA involving, amongst others, an issue with a Conrail railroad track line and a THA water line. 15. In 1994, Conrail received approval from the Public Utility Commission (“PUC”) to recover costs from the City of Harrisburg and THA for relocating a track line under the Maclay Street Bridge due to the track impacting a water line. a. Rhoads & Sinon was retained by THA to represent THA. Ellison, 10-046 Page 4 b. J. Bruce Walter of Rhoads & Sinon was involved in multiple proceedings, on behalf of THA, to contest this ruling beginning in or around 2000 and continuing through January 2008. 1. The Commonwealth Court of Pennsylvania ruled on January 18, 2008, that the City of Harrisburg and THA were required to compensate Conrail for the costs of relocating a track line. 16. In January 2005, the law firm of Rhoads & Sinon was replaced by Bruce Foreman, of Foreman & Foreman, as General Counsel of THA. a. Foreman served as General Counsel of THA through October 2010. 17. Attorney J. Bruce Walter of Rhoads & Sinon continued to provide legal guidance to THA on the Conrail matter after the appointment of Bruce Foreman as THA General Counsel/Solicitor. 18. On August 29, 2007, the THA Board appointed Royce Morris of Goldberg, Katzman, P.C. as Special Counsel to THA. The motion approved by the THA Board appointing Morris included the following: a. “In part, the services he provided included all areas and aspects of all negotiations, studies, reports, legal and other opinions, correspondence, discussions from or to any person or persons, including the City of Harrisburg related in any manner to agreements, contracts and amendments thereto (including any drafts) entered into by the Harrisburg Authority and Covanta Harrisburg, Inc. and related entities, as well as all financial reports and analysis and proposed transactions related to such agreements, contracts and amendments.” 19. Royce Morris was later appointed General Counsel of THA by the THA Board in October 2010. 20. In or about 2007, THA was in the process of a landfill expansion project at THA’s Resource Recovery Facility. a. Approval was required from the Pennsylvania Department of Environmental Protection (“DEP”). 21. Michele Torres was employed by THA from August 29, 2007, until May 3, 2011. a. In or about August 2007, Torres was hired as a Special Administrative Assistant. b. Torres was subsequently appointed as Acting Executive Director effective September 14, 2007, and as permanent Executive Director effective January 1, 2008, by the THA Board. c. James Ellison, while serving as Solicitor for the Harrisburg School District (“HSD”), became acquainted with Torres and encouraged her to apply for a position with THA. 1. Torres was employed by HSD from 1995 through 2000. 22. On December 28, 2007, Michele Torres, while serving as Acting Executive Director of THA, advised the Board that a meeting had been scheduled with DEP for Ellison, 10-046 Page 5 January 15, 2008, regarding the landfill expansion project at the Resource Recovery Facility for THA. a. Torres wanted to have legal counsel present for the meeting. 23. Torres consulted with James Ellison, in his capacity as THA Board Chairman, on or about December 28, 2007, as to how to proceed with the DEP matter. a. Torres had weekly meetings with the THA Board Chairman during the early part of her tenure as Executive Director. 24. Torres also contacted THA Special Counsel Royce Morris, seeking information as to law firms/attorneys skilled in handling environmental matters. a. Morris was not able to provide Torres with the names of any attorneys who handled environmental matters. 25. Sometime between December 28, 2007, and January 3, 2008, Torres contacted attorney Paul Bruder of Rhoads & Sinon to assist her in preparation for the meeting with DEP. a. Torres was provided with Bruder’s name by James Ellison. b. Torres was made aware of Bruder handling environmental matters by Ellison. c. Torres contacted Bruder after consulting with Ellison. 26. Bruder has been an attorney with Rhoads & Sinon since 1998. a. Bruder has been a partner with Rhoads & Sinon since approximately 2004. b. Bruder previously was employed by DEP from 1995 through 1998. 27. Bruder’s billings to THA reflect that he telephonically spoke with Torres on January 3, 2008. a. Bruder also listed that he met with Ellison and researched Chesapeake Bay issues and credit trading. b. Bruder also billed THA for a discussion with Ellison on January 7, 2008. 28. On February 14, 2008, Rhoads & Sinon submitted Bruder’s billable hours, referenced as General Environmental Counseling, to THA as part of Invoice #264142. 29. Bruder’s billable hours for January 2008, regarding services rendered to THA, totaled 43.67 hours. a. Bruder’s billable hours included meetings and discussions with James Ellison on January 3, 2008, and January 7, 2008. b. Bruder’s billable hourly rate was $270.00 per hour. c. The total of Bruder’s billable hours was $11,795.90, based on the following: $270.00 x 43.67 + $5.00 for copier service = $11,795.90. Ellison, 10-046 Page 6 30. Payment was issued to Rhoads & Sinon on February 26, 2008, by THA in the amount of $11,795.90 by Check # 1258 from THA’s Solid Waste Revenue Fund. a. The check was signed by THA Board Chairman James Ellison and Executive Director Michele Torres. b. The payment issued to Rhoads & Sinon by THA for the general environmental counseling was deposited into the firm’s Business Checking Account on or around February 28, 2008. 31. In 2008, payments issued from THA’s Solid Waste Revenue Fund required two signatures. a. The Chairman and the Executive Director Assistant Secretary/Treasurer [sic] of the Authority were the signature authority on the account. 1. Ellison served as Chairman in 2008. b. No stamp or facsimile signatures were used. 32. From the time Bruder began accruing billable hours on January 3, 2008, through February 26, 2008, no Board action was taken by THA to authorize Bruder and/or Rhoads & Sinon to provide legal services. a. No contract was signed and no rates were approved by the THA Board. 33. The payment issued to Rhoads & Sinon was authorized as a result of Resolution No. 2007-030, approved by the THA Board on December 28, 2007, which authorized the 2008 Resource Recovery Facility Operating Expense Budget. a. The Solid Waste Revenue Fund was part of the Resource Recovery Facility Operating Expense Budget. b. Ellison voted as a Member of the THA Board to approve the Resource Recovery Facility Operating Expense Budget. 34. On June 30, 2008, Rhoads & Sinon invoiced THA for billable hours of Bruder for professional services rendered for the months of February, March and April of 2008 in regard to the Resource Recovery Facility for a total of $9,935.00. a. Bruder’s hourly rate for the above listed billable hours was $250.00 per hour. b. Included in Bruder’s billable hours were telephone conversations with James Ellison on February 5, 2008, and correspondence with Ellison and Torres on February 11, 2008. 35.Payment was issued to Rhoads & Sinon on August 12, 2008, by THA in the amount of $9,935.00 via Check # 1364 from the Solid Waste Revenue Fund for Bruder’s billable hours from February through April 2008. a. The check was signed by THA Board Chairman James Ellison and Executive Director Michele Torres. 36. In March 2008, Bruder/Rhoads & Sinon was selected by THA to provide additional legal services, including counsel on sewer related matters. Ellison, 10-046 Page 7 a. These services were separate from the services being provided by Bruder related to the Resource Recovery Facility. 37. Minutes of THA’s March 26, 2008, Board meeting confirm the following regarding the appointment of Bruder: A motion was made by Mr. House, seconded by Ms. Bryce, that the Board of Directors of The Harrisburg Authority hereby appoints Paul Bruder, Esq. as agent on behalf of the Authority to employ the law firm of Hall & Associates as special counsel to the Harrisburg Authority, to perform such legal and related services as may be requested or directed from time to time by the Chairman or by a majority vote of the members of the Harrisburg Authority, such services to include but not be limited to all areas and aspects of all negotiations, studies, reports, legal and other opinions, correspondence, discussions from or to any person or persons, including the City of Harrisburg, related to the matter of Paxton Creek/TMDLs (Sewer Related). Financial terms and conditions for such services shall be subject to mutual agreement of Counsel and the Board. The motion was approved with Ellison abstaining from the vote. a. No abstention memo setting forth the reasons for his abstention was submitted by Ellison. 1. It was common knowledge among Board Members of Ellison’s association with Rhoads & Sinon and his intention to abstain from matters related to that firm. 38. No THA records exist which identify that any other law firms were considered or that the contract was publicly advertised. 39.On April 17, 2008, Paul Bruder submitted to Michele Torres an Agreement of Representation identifying the basis from which the firm would provide legal services and bill for those services. The agreement provided, in part, the following: a. The representation would consist of advising and counseling THA on matters pertaining to sewage and stormwater collection, conveyance and treatment, water treatment and distribution, waste incineration and disposal, compliance with the Chesapeake Bay Tributary Strategy, and issues related to these matters. b. Paul Bruder would be the primary attorney assigned to the matter and his hourly rate would be $250.00. Other attorneys and paralegals would be billed at standard hourly rates as well. The hourly rates would prevail until December 31, 2008, at which time they would be reviewed and adjusted. c. In addition to the fees, statements for services would include charges for filing fees and disbursements, including photocopying, travel (transportation, lodging and meals), computerized legal research, transcripts, postage, messenger and courier services, long distance telephone charges, etc. d. No retainer was required or requested. e. Statements would be submitted on a monthly basis identifying the work done and time expended. f. THA had the right to terminate services at any time. Similarly, if THA did not cooperate with reasonable requests or disagree[d] with the course of action Ellison, 10-046 Page 8 recommended or [did not] pay the statements in a timely manner, Rhoads & Sinon could terminate the relationship. The termination would be in writing. g. The agreement was not formally approved by THA. 40. On April 23, 2008, six days after Bruder forwarded the Agreement of Representation to Torres for his service as Environmental Counsel, THA approved a motion authorizing Torres as Executive Director to issue a Request for Proposal (“RFP”) for Special Environmental Counsel. 41. Minutes of the THA Board meeting of April 23, 2008, confirm the following motion was approved by unanimous vote: The Board of Directors of The Harrisburg Authority authorizing the Executive Director to issue RFPs for Special Environmental Counsel. Special Environmental Counsel will perform such legal and related services as may be requested or directed from time to time by the Chairman or by a majority vote of the members of THA. Such services to include, but not limited to all areas and aspects of all negotiations, studies, reports, legal and other opinions, correspondence, discussions from or to any person or persons, related in any manner to agreements, contracts and amendments thereto (including all drafts) entered into by THA to represent THA’s interests with respect to environmental matters relating to Advanced Wastewater Treatment, Water and Resource Recovery Facilities, and any permitting or enforcement issues relating to such matters. a. James Ellison was present at the meeting. The vote to approve the motion was unanimous with no abstentions noted. 42. The RFPs issued for Special Environmental Counsel by THA occurred six days after Bruder had submitted an Agreement of Representation to THA to serve as Environmental Counsel. 43. The RFPs occurred after Bruder had been submitting billable hours related to environmental matters to THA, from January 2008 through April 2008, totaling $21,730.00. 44. Torres forwarded RFPs to no less than seven (7) lawyers/law firms in the greater Harrisburg area, seeking Special Environmental Counsel for THA. 45. On June 24, 2008, Paul Bruder of Rhoads & Sinon submitted a response to Torres for the RFP for Special Environmental Counsel that highlighted the following: a. Statement of Qualifications. b. Commitment to Serve the Capital Region. c. Attorneys designated to serve THA. d. Fees and costs. 1. The rate for all attorneys would be a fixed rate of $240.00 per hour. They would maximize the use of paralegals at $120.00 per hour. Ellison, 10-046 Page 9 46. Torres received responses from no less than six (6) other lawyers/law firms to whom RFPs were forwarded. a. Hourly rates ranged from $150.00 to $325.00 an hour for legal services. b. The rate of $150.00 per hour was noted as being “discounted” from the responding attorney’s normal hourly rate. c. The average hourly rate of all responding parties, not including the discounted rate, was $245.00 an hour. 47. During the THA Board meeting of October 1, 2008, motions were presented to the Board for approval to authorize Torres, as Executive Director, to appoint a Special Environmental Counsel from the list of attorneys submitting proposals in response to the April 23, 2008, RFP, and a motion to appoint Paul Bruder as Special Environmental Counsel. a. The motions were listed under New Business as part of a group of motions labeled A through R. b. The motion to authorize Torres to appoint Special Environmental Counsel was Motion D. c. The motion to appoint Bruder as Special Environmental Counsel was listed as Motion F. 48. Minutes for the October 1, 2008, Board meeting reflect the approval of motions as follows: a. Motion made by House, seconded by Kurowski to approve Items A through E, G, H, J, N through R was unanimously approved. 1. Motion D: The Board hereby authorizes the Executive Director to appoint Special Environmental Counsel for matters arising in the Sewer, Water or Resource Recovery facilities from the list of attorneys that submitted proposals in response to the Authority’s motion for request for qualification approved on April 23, 2008. Said listing of responsive legal counsel is attached as Exhibit “A.” The motion was unanimously approved. Ellison was present and not recorded as abstaining. b. Motion by Bryce, seconded by Kurowski, that Item F be approved as follows: The Board ratifies the appointment of Paul Bruder, Esquire of Rhoads & Sinon as Special Environmental Counsel on the matter of the Authority’s NPDES Permit and the TMDL Paxton Creek issue effective January 2, 2008. Ellison abstained from the vote to approve the motion. 49. The motion making Bruder’s appointment effective January 2, 2008, included all aspects of environmental issues affecting THA. a. Paul Bruder/Rhoads & Sinon had been submitting billable hours to THA since January 3, 2008, for several different environmental issues. Ellison, 10-046 Page 10 b. Bruder billed no less than 84.91 hours for all legal services rendered to THA between February 2008 and July 2008. 50. Payments issued to Rhoads & Sinon as a result of the work Bruder performed for THA, prior to the vote on October 1, 2008, were as follows: Check Date Number Amount Memo Environmental 02/26/2008 1258 $11,795.90 Counseling 08/12/2008 1364 $9,935.00 None Environmental Counseling 09/08/2008 1375 $375.00 Matter 2 a. Checks issued by THA were signed by Ellison. b. The difference between the rate billed by Bruder and the average of parties responding to the RFP (See, Finding No. 46) was $1,297.95. Average Responding Bruder’s Submitted Hours Party Fee of Invoice $245.00* 43.67 hours @ $11,790.90 $10,699.15 $270.00/hour 39.74 hours @ $9,935.00 $9,736.30 250.00/hour 1.5 hours @ $375.00 $367.50 $250.00/hour Total $22,100.90 $20,802.95 Difference $1,297.95 * See, Finding No. 46(c). 51. Subsequent to THA’s appointment of Paul Bruder to serve as Environmental Counsel for THA, the following procedures were used by THA in approving invoices for Rhoads & Sinon: Prior to 3/09: a. Office Manager received and reviewed invoices. Office Manager would determine based upon the work performed which utility was to be charged, Water, Sewer, RRF or Admin. b. Invoices were then sent to Executive Director and/or Construction or Engineering Director for review and approval. c. (Water and Admin) – Office Manager would enter the invoices into AP and prepare the checks from the respective accounts. d. (Sewer and RRF): Invoices to be paid from these funds require board approval of requisitions via the trust Indentures. Office Manager would prepare the proper requisitions and add them to the listing for board Ellison, 10-046 Page 11 approval at the next regular monthly meeting. e. After the Board Members approved the requisitions, the Office Manager would obtain all signatures from the Chairman, Secretary-Treasurer, Legal Counsel and/or Consulting Engineer (dependent upon the name of the account being drawn upon) and prepare a transmittal letter to the appropriate trustee for processing the payment of the requisition to the vendor, Rhoads & Sinon. f. The trustee made the payment to Rhoads & Sinon once all required signatures and Board approval were obtained. After 3/09: a. Invoices come into the Accounting Department and are sent to the Finance Director for approval and coding. b. Invoices are circulated for approval and signed off by various departments, accounting, engineering, and Executive Director and/or the facility Director based on the utility being charged. c. Once all approvals are received, the following occurs: Sewer: Accounting Assistant prepares the requisitions and provides them along with a listing of requisitions to be voted on by the Board at the next monthly meeting to the Office Manager. RRF: Invoices are processed from the Solid Waste Revenue Fund and paid stth on the 1 and 15 of each month. Water: Invoices are processed from the Water Revenue Fund and stth paid on the 1 and 15 of each month. Admin: Invoices are processed from the business checking account and paid stth on the 1 and 15 of each month. 52. After March 2009, Torres and THA department heads had more control and involvement in approving and reviewing the invoices for Rhoads & Sinon. 53. As part of THA’s process of approving payments to Rhoads & Sinon, requisitions were to be approved by the THA Board. 54. Following THA Board approval, requisitions were then signed by the Chairman, Treasurer or Assistant Treasurer, and Consulting Engineer of THA to authorize payment to Rhoads & Sinon. 55. After Ellison resigned from the THA Board on March 12, 2010, THA discontinued utilizing Paul Bruder as Environmental Counsel. 56. On September 22, 2010, the THA Board appointed Steven Hann of Hamburg, Rubin, Mullin, Maxwell & Lupin as Special Environmental Counsel for environmental issues relating to wastewater issues only. a. The appointment of Hann was made from the list of approved law firms authorized by the THA Board at the THA meeting on April 23, 2008. Ellison, 10-046 Page 12 57. As an equity partner in Rhoads & Sinon, James Ellison would have shared in income and/or profits of Rhoads & Sinon, which would have included any payments Rhoads & Sinon received from THA from 2008 through 2010. 58. Ellison, as Chairman of the THA Board, participated in discussions which resulted in the hiring of Paul Bruder, Esquire, who was at the time employed by Rhoads & Sinon, LLP, to serve as Environmental Counsel for THA. a. Between December 28, 2007, and January 3, 2008, Executive Director Torres discussed with Ellison and others the selection of counsel regarding an issue with DEP. b. Ellison identified the name of Paul Bruder to Torres. 1. Torres then selected Paul Bruder of Rhoads & Sinon. c. Ellison voted on April 23, 2008, as a Member of the THA Board, to authorize Torres to issue RFPs for Special Environmental Counsel. 1. The vote occurred one week after Torres received an Acceptance of Agreement from Bruder to provide Special Environmental Counsel services. d. On October 1, 2008, Ellison participated in the discussion and vote of the THA Board authorizing Torres to appoint Special Environmental Counsel. 59. Ellison, as [a Member and Chairman of the THA Board], signed checks issued to Rhoads & Sinon. a. Ellison signed THA check(s) issued to Rhoads & Sinon, LLP, on February 26, 2008, prior to any action by the Board authorizing Bruder’s services. b. Ellison signed THA check(s) issued to Rhoads & Sinon on August 12, 2008, for services provided by Bruder from February through April 2008. c. Ellison signed 29 of 35 requisitions as Chairman for payments to be made to Rhoads & Sinon. 60. Ellison maintains that at the time he spoke with Torres regarding the hiring of Special Environmental Counsel, he was unaware that his actions may violate the Ethics Act (65 Pa.C.S. § 1101 et seq.); and further asserts that he was unaware that the signing of checks in his role as a THA Board Member, after the THA Board voted to approve payment, would violate the Ethics Act (65 Pa.C.S. § 1101 et seq.). III.DISCUSSION: As a Member of the Board of Directors (“Board”) of The Harrisburg Authority (“THA”) from August 2007 until March 12, 2010, Respondent James Ellison, hereinafter also referred to as “Respondent,” “Respondent Ellison,” and “Ellison,” was a public official subject to the provisions of the Public Official and Employee Ethics Act (“Ethics Act”), 65 Pa.C.S. § 1101 et seq. The allegations are that Ellison violated Sections 1103(a) and 1103(f) of the Ethics Act: (1) when he participated in discussions and actions of the Authority resulting in contracts being entered into with a business with which he is associated, the Rhoads and Sinon law firm; (2) when the contracts were entered into without an open and public Ellison, 10-046 Page 13 process; and (3) when he subsequently participated in THA Board actions resulting in payments being issued to Rhoads and Sinon. Per the Consent Agreement, the Investigative Division has exercised its prosecutorial discretion to nol pros the allegation under Section 1103(f) of the Ethics Act. Based upon the nol pros, we need not address the Section 1103(f) allegation that 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 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. 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. Ellison served as a Member of the THA Board from August 2007 until March 12, 2010, when he resigned from his position on the Board. Ellison was appointed to the THA Board by Harrisburg City Council in January 2007, but he was not seated as a THA Board Member until August 2007 due to court challenges to the appointment by Harrisburg Mayor Stephen Reed. Ellison served as Chairman/Chairperson of the THA Board from August 2007 until March 12, 2010. Ellison, 10-046 Page 14 Ellison has been employed as an attorney with the law firm of Rhoads & Sinon, LLP (“Rhoads & Sinon”) since August 25, 1997. On or about January 1, 2005, Ellison became a partner at Rhoads & Sinon. Ellison is an equity partner in Rhoads & Sinon. Throughout its existence, THA has utilized various law firms to provide legal services. THA has appointed a General Counsel (Solicitor) for most legal services and has retained outside firms for specialized legal services. Rhoads & Sinon has been providing legal services to THA since approximately 1997. From in or around 1997 through 2004, Rhoads & Sinon served as General Counsel for THA. In January 2005, Rhoads & Sinon was replaced as General Counsel for THA by Bruce Foreman (“Foreman”) of Foreman & Foreman. After Foreman was appointed as THA General Counsel, J. Bruce Walter, an attorney with Rhoads & Sinon, continued to provide legal guidance to THA on a matter involving a Conrail railroad track line and a THA water line. Effective September 14, 2007, the THA Board appointed Michele Torres (“Torres”) as Acting Executive Director of THA. The THA Board appointed Torres as permanent Executive Director effective January 1, 2008. On December 28, 2007, Torres, as Acting Executive Director, advised the THA Board that a meeting had been scheduled with the Pennsylvania Department of Environmental Protection (“DEP”) for January 15, 2008, regarding a landfill expansion project at THA’s Resource Recovery Facility. Torres wanted to have legal counsel present for the meeting. Between December 28, 2007, and January 3, 2008, Torres discussed with Ellison, in his capacity as Chairman of the THA Board, and others the selection of counsel regarding the DEP matter. Ellison provided Torres with the name of Paul Bruder (“Bruder”), an attorney with Rhoads & Sinon, and made Torres aware that Bruder handled environmental matters. Torres also contacted THA Special Counsel Royce Morris, of Goldberg, Katzman, P.C., seeking information as to law firms/attorneys skilled in handling environmental matters, but he was not able to provide her with the names of any attorneys who handled environmental matters. Sometime between December 28, 2007, and January 3, 2008, after consulting with Ellison, Torres contacted Bruder to assist her in preparation for the meeting with DEP. On February 14, 2008, Rhoads & Sinon submitted an invoice to THA that included Bruder’s billable hours, referenced as General Environmental Counseling, for services rendered to THA in January 2008. Bruder’s billable hours totaled 43.67 hours and included a telephone conversation with Torres on January 3, 2008, research, and meetings and discussions with Ellison on January 3, 2008, and January 7, 2008. The amount billed to THA totaled $11,795.90, based upon Bruder’s billable hourly rate of $270.00 per hour for 43.67 hours ($270.00 x 43.67 = $11,790.90), plus $5.00 for copier service. THA issued a check in the amount of $11,795.90 to Rhoads & Sinon on February 26, 2008. The check was from THA’s Solid Waste Revenue Fund and was signed by Ellison as the THA Board Chairman and Torres. On June 30, 2008, Rhoads & Sinon invoiced THA a total of $9,935.00 for Bruder’s billable hours for professional services rendered from February 2008 through April 2008 with regard to the Resource Recovery Facility. Bruder’s hourly rate for the billable hours was $250.00 per hour. Telephone conversations with Ellison on February 5, 2008, and correspondence with Ellison and Torres on February 11, 2008, were included in the hours billed. Ellison, 10-046 Page 15 THA issued a check in the amount of $9,935.00 to Rhoads & Sinon on August 12, 2008. The check was from THA’s Solid Waste Revenue Fund and was signed by Ellison as the THA Board Chairman and Torres. In March 2008, THA selected Bruder/Rhoads & Sinon to provide additional legal services, including counsel on sewer related matters. These services were separate from the services being provided by Bruder related to the Resource Recovery Facility. Minutes of the THA Board meeting on March 26, 2008, confirm that Ellison abstained from a Board vote to appoint Bruder to perform legal services related to the matter of “Paxton Creek/TMDLs (Sewer Related).” On April 17, 2008, Bruder submitted to Torres an Agreement of Representation (“Agreement”) to serve as Environmental Counsel for certain matters. The Agreement provided, in part, that Bruder would be the primary attorney assigned to the matters and that his hourly rate would be $250.00. The Agreement was not formally approved by THA. At a meeting on April 23, 2008, the THA Board approved a motion authorizing Torres to issue a Request for Proposal (“RFP”) for Special Environmental Counsel. Ellison was present at the meeting and voted to approve the motion. Six days after Bruder had submitted an Agreement of Representation to THA to serve as Environmental Counsel, THA issued RFPs for Special Environmental Counsel. The RFPs were issued after Bruder had been submitting billable hours related to environmental matters to THA for the period from January 2008 through April 2008. Torres forwarded RFPs to no less than seven lawyers/law firms in the greater Harrisburg area, seeking Special Environmental Counsel for THA. On June 24, 2008, Bruder submitted a response to Torres for the RFP for Special Environmental Counsel, indicating that the rate for all attorneys would be a fixed rate of $240.00 per hour. Torres received responses from no less than six other lawyers/law firms to whom RFPs were forwarded. The responding lawyers’/law firms’ hourly rates for legal services ranged from $150.00, which was noted as being “discounted” from the responding attorney’s normal hourly rate, to $325.00. Without including the “discounted” rate, the average hourly rate of those responding was $245.00 per hour. At the THA Board meeting on October 1, 2008, Ellison participated in the discussion and vote of the THA Board to authorize Torres to appoint a Special Environmental Counsel “for matters arising in the Sewer, Water or Resource Recovery facilities” from the list of attorneys who submitted proposals to the April 23, 2008, RFP. The Board further voted to ratify the appointment of Bruder as Special Environmental Counsel “on the matter of the Authority’s NPDES Permit and the TMDL Paxton Creek issue” effective January 2, 2008. Ellison abstained from the Board’s vote regarding Bruder’s appointment. Since January 3, 2008, Bruder/Rhoads & Sinon had submitted billable hours to THA for several different environmental issues. Bruder billed no less than 84.91 hours for all legal services rendered to THA between February 2008 and July 2008. THA issued three checks to Rhoads & Sinon as a result of the work that Bruder performed for THA prior to the THA Board vote on October 1, 2008. Ellison, as Chairman of the Board, signed the checks, which were in the amounts of $11,795.90, $9,935.00, and $375.00. Ellison, as Chairman of the Board, also signed 29 of 35 requisitions for payments to be made to Rhoads & Sinon. Invoices submitted to THA for 84.91 hours billed by Bruder at his respective hourly rate ($270.00 per hour or $250.00 per hour) totaled $22,100.90. See, Fact Finding 50 b. The 84.91 hours billed by Bruder would have cost $1,297.95 less if they had been billed at Ellison, 10-046 Page 16 the average hourly rate of the lawyers/law firms that responded to THA’s aforesaid RFP for Special Environmental Counsel ($245.00 per hour). See, Fact Findings 46 c, 50 b. After Ellison resigned from the THA Board on March 12, 2010, THA discontinued utilizing Bruder as Environmental Counsel. The parties have stipulated that as an equity partner in Rhoads & Sinon, Ellison would have shared in income and/or profits of Rhoads & Sinon, which would have included any payments Rhoads & Sinon received from THA from 2008 through 2010. Having highlighted the Stipulated Findings and issues before us, we shall now apply the Ethics Act to determine the proper disposition of this case. The parties' Consent Agreement sets forth a proposed resolution of the allegations as follows: 3. The Investigative Division will recommend the following in relation to the above allegations: a. That a violation of Section 1103(a) of the Public Official and Employee Ethics Act, 65 Pa.C.S. §1103(a), occurred when Ellison, as Chairman of The Harrisburg Authority, participated in discussions which resulted in the hiring of a lawyer employed by Rhoads and Sinon, LLP, to serve as counsel for The Harrisburg Authority, at a time when Ellison was both a Member of The Harrisburg Authority and an equity partner of Rhoads and Sinon, LLP. A violation of 1103(a) also occurred when Ellison signed checks resulting in payments being issued to Rhoads and Sinon, LLP. b. As part of a negotiated settlement agreement, the allegations arising under § 1103(f) of the Public Official and Employee Ethics Act, 65 Pa.C.S. § 1103(f), namely that a violation occurred when Ellison, as a Member of The Harrisburg Authority entered into contracts with a business with which he is associated, without an open and public process, are hereby nol prossed. 4. Ellison agrees to make payment in the amount of $2,297.95 in settlement of this matter as follows: a. $1,297.95 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. b. $1,000.00 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 Ellison, 10-046 Page 17 matter, payable by certified check or money order made payable to the Pennsylvania State Ethics Commission. 5. Ellison agrees to not accept any reimbursement, compensation or other payment from the Harrisburg Authority representing a full or partial reimbursement of the amount paid in settlement of 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 of the parties, we accept the recommendation of the parties for findings that a violation of Section 1103(a) of the Ethics Act occurred when Ellison, as Chairman of THA, participated in discussions which resulted in the hiring of a lawyer employed by Rhoads & Sinon, to serve as counsel for THA, at a time when Ellison was both a Member of THA and an equity partner of Rhoads & Sinon, and that a violation of Section 1103(a) also occurred when Ellison signed checks resulting in payments being issued to Rhoads & Sinon. Rhoads & Sinon is a business with which Ellison is associated. The parties have stipulated that Ellison is an equity partner in Rhoads & Sinon and that Ellison became a partner of Rhoads & Sinon on or about January 1, 2005. Between December 28, 2007, and January 3, 2008, Ellison, in his capacity as Chairman of the THA Board, discussed with Torres, the Acting Executive Director/Executive Director of THA, the selection of counsel to attend a meeting scheduled with DEP for January 15, 2008, regarding a landfill expansion project. Ellison provided Torres with the name of Bruder, an attorney with Rhoads & Sinon, and made Torres aware that Bruder handled environmental matters. After consulting with Ellison, Torres contacted Bruder to assist her in preparation for the meeting with DEP. On February 14, 2008, Rhoads & Sinon submitted an invoice to THA that included Bruder’s billable hours for services rendered to THA in January 2008. The amount billed to THA totaled $11,795.90. On June 30, 2008, Rhoads & Sinon invoiced THA a total of $9,935.00 for Bruder’s billable hours for professional services rendered from February 2008 through April 2008. Ellison used the authority of his office when he signed, as an authorized signatory for THA, three THA checks in the amounts of $11,795.90, $9,935.00, and $375.00, which THA issued to Rhoads & Sinon as a result of work that Bruder performed for THA prior to October 1, 2008. The hours billed by Bruder would have cost $1,297.95 less if they had been billed at the average hourly rate of other lawyers/law firms that responded to THA’s aforesaid RFP for Special Environmental Counsel. Based upon the Stipulated Findings and Consent Agreement, we hold that a violation of Section 1103(a) of the Ethics Act, 65 Pa.C.S. § 1103(a), occurred when Ellison, Ellison, 10-046 Page 18 as Chairman of THA, participated in discussions which resulted in the hiring of a lawyer employed by Rhoads & Sinon to serve as counsel for THA, at a time when Ellison was both a Member of THA and an equity partner of Rhoads & Sinon, and that a violation of 1103(a) also occurred when Ellison signed checks resulting in payments being issued to Rhoads & Sinon. As part of the Consent Agreement, Ellison has agreed to make payment in the amount of $2,297.95 in settlement of this matter payable as follows: (a) $1,297.95 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) $1,000.00 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. Ellison has also agreed to not accept any reimbursement, compensation or other payment from THA representing a full or partial reimbursement of the amount paid in settlement of this matter. We determine that the Consent Agreement submitted by the parties sets forth a proper disposition for this case, based upon our review as reflected in the above analysis and the totality of the facts and circumstances. Accordingly, per the Consent Agreement of the parties, Ellison is directed to make payment in the amount of $2,297.95 as follows: (a) $1,297.95 payable to the Commonwealth of Pennsylvania and forwarded to this Commission by no later than the th thirtieth (30) day after the mailing date of this adjudication and Order; and (b) $1,000.00 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. Per the Consent Agreement of the parties, Ellison is further directed to not accept any reimbursement, compensation or other payment from THA representing a full or partial reimbursement of the amount paid in settlement of this matter. Compliance with the foregoing will result in the closing of this case with no further action by this Commission. Noncompliance will result in the institution of an order enforcement action. IV.CONCLUSIONS OF LAW: 1. As a Member of the Board of Directors of The Harrisburg Authority from August 2007 until March 12, 2010, Respondent James Ellison (“Ellison”) was a public official subject to the provisions of the Public Official and Employee Ethics Act (“Ethics Act”), 65 Pa.C.S. § 1101 et seq. 2. A violation of Section 1103(a) of the Ethics Act, 65 Pa.C.S. § 1103(a), occurred when Ellison, as Chairman of The Harrisburg Authority, participated in discussions which resulted in the hiring of a lawyer employed by Rhoads & Sinon, LLP, to serve as counsel for The Harrisburg Authority, at a time when Ellison was both a Member of The Harrisburg Authority and an equity partner of Rhoads & Sinon, LLP, and a violation of Section 1103(a) also occurred when Ellison signed checks resulting in payments being issued to Rhoads & Sinon, LLP. In Re: James Ellison, : File Docket: 10-046 Respondent : Date Decided: 4/12/12 : Date Mailed: 4/27/12 ORDER NO. 1600 1. A violation of Section 1103(a) of the Public Official and Employee Ethics Act (“Ethics Act”), 65 Pa.C.S. § 1103(a), occurred when James Ellison (“Ellison”), as Chairman of The Harrisburg Authority, participated in discussions which resulted in the hiring of a lawyer employed by Rhoads & Sinon, LLP, to serve as counsel for The Harrisburg Authority, at a time when Ellison was both a Member of The Harrisburg Authority and an equity partner of Rhoads & Sinon, LLP, and a violation of Section 1103(a) of the Ethics Act also occurred when Ellison signed checks resulting in payments being issued to Rhoads & Sinon, LLP. 2. Per the Consent Agreement of the parties, Ellison is directed to make payment in the amount of $2,297.95 as follows: (a) $1,297.95 payable to the Commonwealth of Pennsylvania and forwarded to the Pennsylvania State Ethics Commission by no th later than the thirtieth (30) day after the mailing date of this Order; and (b) $1,000.00 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. 3. Per the Consent Agreement of the parties, Ellison is further directed to not accept any reimbursement, compensation or other payment from The Harrisburg Authority representing a full or partial reimbursement of the amount paid in settlement of this matter. 4. Compliance with Paragraphs 2 and 3 of this Order will result in the closing of this case with no further action by this Commission. a. Non-compliance will result in the institution of an order enforcement action. BY THE COMMISSION, ___________________________ Louis W. Fryman, Chair