Loading...
HomeMy WebLinkAbout1616 Gentile In Re: James Gentile, : File Docket: 11-026 Respondent : X-ref: Order No. 1616 : Date Decided: 1/28/13 : Date Mailed: 2/21/13 Before: John J. Bolger, Chair Nicholas A. Colafella, Vice Chair Raquel K. Bergen Mark Volk Mark R. Corrigan Roger Nick 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 Gentile, a public official/public employee in his capacity as Executive Director and Member of the Board of Directors of the Keystone Education Center Charter School, violated Section 1103(a) of the State Ethics Act (Act 93 of 1998), 65 Pa.C.S. § 1103(a), when he used the authority of his public position for the private pecuniary benefit of himself, members of his immediate family and/or businesses with which he and members of his immediate family are associated including but not limited to participating in discussions and actions of the Charter School Board to approve rental payments to Gentile Enterprises, Inc./Gentile Enterprises, a business with which he and/or members of his immediate family are associated; and when he signed leases for classroom space from Gentile Enterprises, Inc. as both President of the Charter School Board of Directors and as President of the Keystone Adolescent Center. II.FINDINGS: 1. James Gentile has been affiliated with the following entities as an officer, director and employee: • Gentile Enterprises, LLC – President/Director • Gentile Enterprises, Inc. – President/Director Gentile, 11-026 Page 2 • Keystone Adolescent Center, Inc. (“KAC”) – President/Director/Executive Director • Keystone Education Center Charter School (“KECCS”) – Board Member/Board President/ Executive Director 2. James Gentile (“Gentile”) has served as the Executive Director of the Keystone Education Center Charter School (hereafter “KECCS”) from approximately July 9, 1997, to the present. a. Gentile also had served as a Member of the KECCS Board of Directors from approximately July 9, 1997, to January 14, 2010. b. Gentile held the office of President of the KECCS Board of Directors during his entire tenure on the Board. c. Gentile voluntarily resigned from the Board of Directors, as a result of a performance audit of the KECCS by the Pennsylvania Department of the Auditor General recommending his resignation. 3. The KECCS was established to serve at-risk/high risk students in grades seven through twelve from over forty school districts in western Pennsylvania. a. The KECCS was established to provide educational alternatives to address the needs of a variety of students found to have difficulty functioning in the traditional public school environment. b. The KECCS was the first operational charter school in the Commonwealth of Pennsylvania, beginning operations on or about August 26, 1997. 4. The KECCS was established pursuant to Act 22 of 1997 of June 19, 1997, permitting the establishment and operation of charter schools. a. Act 22 amended the Act of March 10, 1949 (known as the Public School Code of 1949) by adding Article XVII-A, Charter Schools. b. Article XVII-A, Charter Schools, is known as the Charter School Law. c. The procedure for the establishment of a charter school is defined in Section 17-1717-A. 5. Section 17-1715-A(11) of the Charter School Law mandates charter school requirements including, in part, that those individuals who serve as trustees on a charter school board of trustees are public officials…. a. Section 17-1715-A(12) of the Charter School Law also identifies charter school administrators as public officials under 65 Pa.C.S. Ch. 11. 6. Section 17-1716-A(a) of the Charter School Law identifies the powers of the board of trustees, in part, as follows: “The board of trustees of a charter school shall have the authority to decide matters related to the operation of the school, including, but not limited to, budgeting, curriculum, and operating procedures, subject to the school’s charter….” 7. The KECCS is governed by a five Member Board of Directors. Gentile, 11-026 Page 3 a. The KECCS Board currently holds regularly scheduled legislative meetings on a bi-monthly basis. b. The KECCS Board holds special meetings as necessary. c. The KECCS Board does not hold separate regularly scheduled workshop/agenda meetings. 8. Voting at KECCS meetings routinely occurs via group aye/nay vote of those Board Members present. a. Any abstentions cast by Board Members during roll call votes are to be specifically noted in the minutes. b. Minutes of all meetings held are approved for accuracy by the Board at subsequent Board meetings. 9. The KECCS Board of Directors receives informational packets via facsimile transmission which includes the meeting agenda, a copy of the prior month’s meeting minutes, a summary budget report, a bill listing, etc., one to two days prior to the monthly legislative meetings. a. The packets are developed by the KECCS Chief Executive Officer with input/assistance from the KECCS Director of Finance. b. Board Members may also receive updates/additional information at the actual legislative meeting after initial distribution of the meeting packet. 10. The bill listing presented for approval at the legislative meeting is composed of bills received by the KECCS between the time frame of the prior legislative meeting and the current legislative meeting. a. Normal recurring bills are paid as the bills are received at the KECCS. 1. Bills received are not held for payment until approved at a legislative Board meeting. 2. The Board’s vote to approve payment of the monthly bills often represents approval to pay various bills after the fact. 11. Signature authority over KECCS accounts is maintained by Gentile, James T. Gentile, Michael Gentile, Robert Gentile, and Karen Gentile. a. The employment positions and family relationships to Gentile of those individuals are as follows: Name Employment Position Family Relationship Gentile Executive Director N/A Robert Gentile Director of Personnel Son James T. Gentile Business Manager/Director of Finances Son Michael Gentile Chief Executive Officer Son Karen Gentile Accounts Payable Employee Spouse 12. KECCS General Fund checks require the signature of at least two of five authorized signatories. Gentile, 11-026 Page 4 a. Although only two signatures are required, KECCS checks routinely bear the signatures of three authorized signatories. b. KECCS checks may be signed/authorized by any combination of the individuals holding signature authority. 13. General Fund checks issued are generated via computer. a. A facsimile stamp is routinely utilized to affix signatures of authorized signatories. 14. Gentile is the President of Gentile Enterprises, Inc., a privately owned and operated entity. a. Gentile Enterprises, Inc., is registered as a domestic Pennsylvania Close Corporation with the Pennsylvania Department of State Corporation Bureau. 1. Gentile Enterprises, Inc., Articles of Incorporation-For Profit were filed with the Pennsylvania Department of State on June 7, 1993. 15. Current ownership of Gentile Enterprises, Inc., is divided among Gentile and members of Gentile’s immediate family as shown below: Name PositionFamily Relationship Ownership Percentage Gentile President N/A 10% Robert Gentile VP/Treasurer Son 20% James T. Gentile VP/Secretary Son 20% Michael Gentile Shareholder Son 20% Matthew Gentile Shareholder Son 20% Karen Gentile Shareholder Spouse 10% a. Percentages of Gentile Enterprises, Inc. owned by individual Gentile family members have remained consistent over the life of the entity. 16. Gentile Enterprises, Inc., By-Laws which manage the entity’s internal affairs were adopted on April 7, 1993, at a regular meeting of Gentile Enterprises, Inc.’s Board of Directors. a. The By-Laws were signed by Gentile in his capacity as a Board Member/President of the Corporation. b. Gentile’s son, Robert Gentile, signed the By-Laws as a Board Member/Secretary of the Corporation. 17. Specifically identified under Article III, Membership and Article IV: Board of Directors in the company By-Laws, among other information, is the following: a. The members of the corporation shall be its Board of Directors (Article III). b. The number of Directors of the corporation shall be three (Article IV). c. The management of all corporation affairs, both fiscal and programmatic, shall be vested in the Board of Directors (Article IV). Gentile, 11-026 Page 5 18. In or about April 1993, Gentile Enterprises, Inc. sought to obtain property for the operation of what was to become the Keystone Adolescent Center, Inc. (“KAC”). a. Gentile Enterprises, Inc. ultimately purchased property located at 270 Sharon Road, Greenville, PA, 16125 in 1993 which included land and an existing structure from which to operate the Keystone Adolescent Center, Inc. (KAC). 19. The KAC was incorporated on June 7, 1993, to serve as a privately owned, non- profit, residential group home for at-risk court adjudicated youth and/or county agency (e.g., CYS) adjudicated youth. a. The KAC is registered as a Pennsylvania Corporation with the Pennsylvania Department of State Corporation Bureau. 1. The KAC’s principal office address and registered office address is the same as Gentile Enterprises, Inc.’s principal office address. 20. The KAC approved a set of company By-Laws on July 19, 1993, at a regular meeting of the KAC Board of Directors. a. Gentile signed the By-Laws in his capacity as a Board Member/President of the Corporation. b. Robert Gentile signed the By-Laws as a Board Member/Secretary of the Corporation. 21. Specifically provided in Article III, Membership and Article IV: Board of Directors of the By-Laws is the following: a. The members of the corporation shall be its Board of Directors (Article III). b. The number of Directors of the corporation shall be three (Article IV). 1. The KAC By-Laws were amended at the July 26, 1994, annual meeting of the Board of Directors to expand the Board from three to five Members. c. The management of all corporation affairs, both fiscal and programmatic, shall be vested in the Board of Directors (Article IV). 22. Gentile has served as a Member of the KAC’s Board of Directors and has held the office of President since formation of the corporation in July 1993. a. Robert Gentile also consistently served as a Member of the KAC Board of Directors during the entire tenure of the Corporation. 1. Gentile and Robert Gentile were the primary founding members of the KAC. b. No additional members of Gentile’s immediate family have served on the KAC Board of Directors during the existence of the KAC. 23. Gentile and members of his immediate family have been employed by the KAC since or about 1993. Gentile, 11-026 Page 6 a. Gentile has consistently been employed by the KAC since its inception in addition to serving as the President of the KAC Board of Directors. 1. Gentile was initially employed as the KAC Executive Director from inception until or about early 2012. 2. Gentile has been employed as the KAC Chief Executive Officer (“CEO”) from approximately early 2012 through the present. 24. The KAC has leased property at the 270 Sharon Road, Greenville, Pennsylvania location from Gentile Enterprises, Inc. since August 1993. a. The KAC has entered into an annual lease with Gentile Enterprises, Inc., for use of the property and structure(s) at the 270 Sharon Road, Greenville, Pennsylvania, location dating back to 1993. 1. Although entered into annually, each lease maintains a “Holdover By Tenant” clause and an “Option” clause. aa. The Holdover By Tenant clause states, in part, the following: “If Tenant shall continue to occupy the Demised Premises after the expiration of the term of this Lease and any extension or renewal thereof, with the consent of the Lessor, such tenancy shall be a month-to-month tenancy, upon the same terms and conditions as set forth in this Lease, and in no event shall such holdover tenancy be deemed a year-to-year tenancy.” bb. The Option clause states, in part, the following: “Lessor grants Tenant an option to renew and extend the term of this Lease for one (1) additional year, based upon the same terms and condition as herein contained, except that the rent for the term shall be negotiated at that time, with the extension to become effective only if a new rental is agreed upon.” b. The initial lease entered into between the KAC and Gentile Enterprises, Inc., was effective as of August 1, 1993. 1. The initial lease entered into was not formally signed/executed. c. Total payment due to Gentile Enterprises, Inc. for property leased at the 270 Sharon Road location has remained consistent in the amount of $10,800.00 monthly since at least September 1, 2001. 1. The monthly amount due was based on the lower of two market rent evaluations obtained by Gentile as a result of improvements made to structures at the 270 Sharon Road property location. d. Minutes for meetings held by the KAC Board of Directors between 2006 and 2011 reflect no presentation, discussion, or vote to approve leases with Gentile Enterprises, Inc. for property located at 270 Sharon Road, Greenville, Pennsylvania. 25. Minutes of KAC annual meetings consistently document the KAC Board granting the Executive Director and his appointed officers the power to execute any Gentile, 11-026 Page 7 agreements or contract in developing and securing facilities to house the programs of the KAC and/or providing transportation for such programs. a. Gentile served as the Executive Director of the KAC and as a Member and President of the KAC Board at all times from at least 2006 through 2011. b. Robert Gentile served as the Director of Operations of the KAC and as a Member and Vice-President of the KAC Board at all times from at least 2006 through 2011. 26. As a result of the success experienced by the KAC in relation to the services provided to adjudicated youth, the KAC began providing alternative education program services at its 270 Sharon Road, Greenville, Pennsylvania location for Local Educational Agencies. a. Alternative education programs provide alternative approaches to providing instruction to students who have difficulty in the traditional educational/learning environment. b. A common goal of alternative education programs is to help at-risk and/or disruptive students to grow academically, behaviorally, and socially. 1. Alternative education programs often include individual academic instruction and behavior modification counseling in alternative learning. c. The KAC began providing alternative education program services during or about 1994. 27. In or about early spring 1996, the Gentiles began searching for additional property suitable for expansion of the KAC mission as related to its child residential facility program and its alternative education program. a. The potential number of county adjudicated youth, as well as the potential number of alternative education program students at the KAC, was limited at that time to actual space available at the property located at 270 Sharon Road, Greenville, PA 16125. 28. Reynolds School District (“RSD”) owned property located at 425 South Good Hope Road, Greenville, PA 16125 during the period of time that Gentile Enterprises, Inc. was searching for additional property for expansion of the KAC. a. RSD had previously operated West Salem Elementary School at the 425 South Good Hope Road Location. 29. Gentile Enterprises, Inc. ultimately expressed interest in and pursued the purchase of the property at the 425 South Good Hope Road, Greenville, Pennsylvania, location and structures thereon from RSD. a. Gentile Enterprises, Inc. pursued the purchase for the purpose of acquiring additional space to house increasing numbers of county adjudicated youth as well as increasing space available for growing numbers of students for potential placement in the KAC Alternative Education Program by participating school districts. Gentile, 11-026 Page 8 30. The sale of the property from RSD to Gentile Enterprises, Inc., was authorized pursuant to RSD Resolution as well as by an Order of the Mercer County Court of Common Pleas. a. The Resolution was adopted by the RSD Board of Directors at its regularly scheduled May 15, 1996, legislative meeting. b. Mercer County Common Pleas Court Order No. 1996-2266 was entered with the Mercer County Prothonotary’s Office on August 7, 1996. c. Gentile Enterprises, Inc. purchased the property located at 425 South Good Hope Road, Greenville, Pennsylvania, and structures contained thereon effective August 13, 1996, for the sum of $225,101.00. 1. The deed for the purchase was recorded in the Mercer County Recorder’s Office at 96 DR 15424 on October 21, 1996. 31. Gentile Enterprises, Inc., transferred ownership of the property at 425 South Good Hope Road, Greenville, Pennsylvania, to Gentile, James T. Gentile, and Robert Gentile as individuals immediately following the recording of the deed for the purchase. 32. Gentile, James T. Gentile, Robert S. Gentile, Matthew Gentile, and Karen Gentile ultimately formed a partnership titled “Gentile Enterprises” in relation to ownership of the property located at 425 South Good Hope Road, Greenville, PA 16125. a. Gentile served as a partner in Gentile Enterprises at all times during the life of the entity. 33. Gentile Enterprises is currently registered as a domestic fictitious name entity with the Pennsylvania Department of State Corporation Bureau. a. The Application for Fictitious Name filed for Gentile Enterprises documented Gentile, James T. Gentile, and Robert Gentile as individuals interested in the entity. 34. Ownership interest of the property located at 425 South Good Hope Road, Greenville, Pennsylvania, remained with Gentile Enterprises from about October 1996 until approximately May 2001, when Gentile Enterprises morphed into Gentile Enterprises, LLC. a. The creation of Gentile Enterprises, LLC was initiated for tax and accounting purposes. b. Gentile Enterprises, LLC has no employees. 35. Gentile Enterprises, LLC is registered as a domestic limited liability company with the Pennsylvania Department of State Corporation Bureau. a. The Certificate of Organization filed for Gentile Enterprises, LLC, documented Gentile, Robert Gentile, and James T. Gentile as the company organizers. 1. Gentile, Robert Gentile, and James T. Gentile signed the Certificate of Organization on May 2, 2001. Gentile, 11-026 Page 9 36. Gentile has served as a member of Gentile Enterprises, LLC’s governing body/Board of Directors since the company’s inception in 2001. a. Gentile has consistently served as the President of Gentile Enterprises, LLC. b. The remaining members of the company and/or Board of Directors have consistently been composed of members of Gentile’s immediate family and include his wife and sons. 37. Gentile and his spouse (combined) and Gentile’s four sons each maintain an equal ownership percentage of Gentile Enterprises, LLC. 38. Gentile Enterprises, LLC renovated the existing structures at 425 South Good Hope Road, Greenville, Pennsylvania, to suit the expansion needs of the programs in operation at the KAC. a. The facility at the 425 South Good Hope Road, Greenville, Pennsylvania, location was named the Keystone Education Center (“KEC”). 1. The KEC represented an expansion of the KAC and its existing programs. 2. A separate name was given to the facility at the 425 South Good Hope Road, Greenville, Pennsylvania, location to distinguish the 425 South Good Hope Road location from the 270 Sharon Road location. b. The KEC facility opened in or about the fall of 1996. 39. The KEC currently leases the property at the 425 South Good Hope Road, Greenville, Pennsylvania, location from Gentile Enterprises, LLC. a. The KEC has entered into an annual lease with Gentile Enterprises/Gentile Enterprises, LLC, for use of the property and structures at the 425 South Good Hope Road, Greenville, Pennsylvania, location dating back to at least November 1996. 1. Lease terms and clauses were materially identical to those of leases executed between the KAC and Gentile Enterprises, Inc. with the exception of actual term dates and monthly lease payments due. b. Total payment due to Gentile Enterprises/Gentile Enterprises, LLC for property leased at the 425 South Good Hope Road location has remained consistent in the amount of $9,285.00 monthly since at least July 1, 1999. 1. The $9,285.00 monthly amount due was based on a fair market rent evaluation obtained by Gentile from J. R. Mirizio Real Estate as of May 14, 1999. aa. An evaluation conducted by Trucco Agency, Inc. as of June 1, 1999, identified the fair market rental value of the property at $9,639.00 monthly. 40. The KAC effectively operated from both 270 Sharon Road, Greenville, Pennsylvania, and 425 South Good Hope Road, Greenville, Pennsylvania, after the opening of the KEC facility/campus. Gentile, 11-026 Page 10 a. Both the KAC and KEC provided residential services for adjudicated youth as well as alternative education program services from the 270 Sharon Road and 425 South Good Hope Road locations. b. Gentile and his immediate family members maintained ownership interests in the applicable property and structures located at 270 Sharon Road, Greenville, Pennsylvania, and 425 South Good Hope Road, Greenville, Pennsylvania, through Gentile Enterprises, Inc. and Gentile Enterprises/Gentile Enterprises, LLC at all times from at least September 1993 and August 1996 respectively to the present. 41. The concept of a charter school to potentially service at-risk youth from various school districts located within Mercer County gained popularity with various Mercer County school district administrators in or about late 1996. a. The Pennsylvania Charter School Law had not yet been enacted at the time that the charter school concept was being considered by the district administrators. 42. The initial inquiry into the establishment of a charter school in the Greenville area was proposed by Dr. Patricia Homer, the then Superintendent of Greenville Area School District (“GASD”). a. Homer ultimately contacted Maddox Stokes, Superintendent of Reynolds School District (“RSD”) at that time, to assess his position in relation to possible establishment of a charter school within the Greenville area. 1. Stokes was supportive of the concept to establish a charter school in the area for potential at-risk youth. 43. Homer, Stokes, and various other district administrators discussed and ultimately approached the KAC, specifically Gentile and his family, regarding their interest in establishing a charter school in the Greenville area. a. The decision to approach Gentile and his family was primarily based upon the Gentiles having two facilities in operation at the time, existing staff and infrastructure in place, and experience working with at-risk youth. b. Homer and Stokes subsequently met with Gentile and proposed the charter school concept and Gentile’s operation/management of the proposed charter school. c. Gentile and his family were supportive in relation to the establishment and operation of a charter school. 44. A Founding Coalition and Founding Management Team composed of administrators from GASD, RSD, and the KAC were formed after the determination was made to pursue the development of a charter school. a. The Founding Coalition was composed of Homer, Stokes, and Gentile. b. The Founding Management Team was composed of the following individuals: 1. Stephen K. Ross, Greenville High School Principal; 2. Sandra J. Rakar, Greenville East Elementary School Principal; Gentile, 11-026 Page 11 3. Joseph A. Torok, Jr., Reynolds School District Principal; and 4. Michael Gentile, Keystone Education Center Director. 45. Members of the Founding Coalition and Founding Management Team had the responsibility of conducting necessary research and developing operational guidelines for establishment of the charter school. a. Members of the Founding Coalition and/or Founding Management Team met on various occasions to report progress and information discovered in relation to formation of the charter school. 46. A charter school application was ultimately submitted to the Pennsylvania Department of Education, the GASD Board of Directors, and the RSD Board of Directors for consideration. a. Gentile and Michael Gentile were only peripherally involved in the research, development, and generation of the charter school application ultimately submitted for consideration. 1. Gentile and Michael Gentile had no specific/practical knowledge of public school educational requirements, procedures, etc. b. The majority of the research for the charter school was completed by individuals from the districts involved. 1. At the time of the research, the Charter School Law had not yet been ratified. 47. The final revision of the KECCS charter school application included a table of contents which included sections on School Design, Needs Assessment, Description of Founding/Management Team, Finance and Facility, Implementation and Administration, and an Appendix. a. Specifically documented within the School Design, Needs Assessment, and Description of Founding/Management Team sections, among other information, was the following: 1. The KECCS was to provide an alternative for at-risk students who need individualized attention not afforded in the traditional school setting; 2. The KECCS was to expand upon an already existing Alternative Education Program operated by the KAC; 3. The KECCS was to operate at the current location of the KEC with five additional classrooms available at the KAC to be utilized if needed; 4. The identification of Founding Coalition and Founding Management Team members. aa. Gentile was specifically identified as the President of the KAC in relation to his involvement as a Founding Coalition member. Gentile, 11-026 Page 12 5. The KECCS was to operate under the corporate umbrella of the KAC with administrative and fiscal operations centralized at the KAC location and program planning and school operations housed at the KEC location (the former West Salem Elementary School); and 6. Upon approval of charter school status, the KECCS Board of Trustees was to be appointed to a one year term and consist of administrative representatives from RSD, GASD, and the KAC. b. Specifically documented within the Finance and Facility section, among other information, was the following: 1. The KEC operated an Alternative Education Program for the Mercer County School Districts at that time from property located at 425 South Good Hope Road, Greenville, PA 16125 and as such securing a facility and start-up costs for the KECCS were not necessary; 2. The KEC had an existing lease agreement with Gentile Enterprises on the facility and land which was renewable annually on a perpetual basis; and 3. The property was to be leased at fair market value based on appraisals from two state certified appraisers. c. Specifically documented in the Appendix, among other information, was Gentile’s personal resume. 1. Gentile’s personal resume documented Gentile as the President and Founder of the KAC. 48. The initial KECCS Board of Trustees consisted of Gentile, Homer, and Stokes as the members of the Founding Coalition. a. The KECCS Board of Trustees was to consist of a representative of the KAC and the applicable superintendents of GASD and RSD. b. The Board of Trustees was eventually increased to five Members on or about February 18, 1999, to include a parent representative and community representative. 1. The new positions on the Board were not actually filled until May 12, 1999. 49. Responsibilities of the Board of Trustees were specifically documented in the KECCS charter school application and included, among others, the following: a. Provision of direction and guidance to the KECCS staff. b. Approval of the KECCS annual budget. 1. Funds allotted for payment of property rental costs were specifically accounted for in the KECCS annual budget under Object No. 2600- Operation & Maintenance of Plant Services, Item No. 400-Purchased Property Services, Line Item No. 440-Rentals, Subsection 441-Rental of Land and Buildings. Gentile, 11-026 Page 13 50. The KECCS did not have an independent set of By-Laws to assist in providing direction for KECCS operations. a. The charter school application indicated that the school By-Laws were attached to the application as Appendix E. 1. By-Laws attached to the charter school application were titled “Keystone Adolescent Center, Inc. By-Laws.” aa. The attached By-Laws bore the seal of the KAC. bb. The attached By-Laws were signed by Gentile as the President of the KAC Board of Directors and by Robert Gentile as the Secretary of the KAC Board of Directors. cc. The only material difference in the KAC By-Laws and By-Laws presented as KECCS By-Laws was information regarding the name, principal place of business, and the purpose. 2. The attached By-Laws documented that the KECCS was to operate under the corporate umbrella of the KAC. 51. The KECCS charter school application was approved by the GASD Board at the June 16, 1997, regular Board meeting via 7-0 unanimous vote with two Board Members absent. a. Minutes of the June 11, 1997, Board workshop meeting document Gentile and Mike Gentile providing an explanation of the charter school application prior to the vote. 52. The application for the establishment of the KECCS was submitted to RSD for consideration on or about June 18, 1997. a. The KECCS charter school application was approved by the RSD Board at the June 18, 1997, regular Board meeting via 9-0 unanimous vote. 53. The application for the establishment of the KECCS was submitted to the Pennsylvania Department of Education for review on or about June 24, 1997. a. The Charter School Application Review Checklist associated with the KECCS was reviewed by a representative of the Pennsylvania Department of Education on June 30, 1997. b. Documented in handwriting on the Review Checklist was, “Recommended For Approval 6/30 DB” and “expanded Alt. Ed. Program.” c. The Charter School Record Fact Sheet documented a proposed start date of August 26, 1997, for the KECCS. d. The completed application for the KECCS was submitted to the Pennsylvania Department of Education approximately five days after ratification of the Charter School Law. 54. The KECCS Board of Trustees was granted a Charter from the Commonwealth of Pennsylvania to operate a public charter school located at 425 South Good Hope Road, Greenville, PA 16125 for the period commencing on July 1, 1997, and ending Gentile, 11-026 Page 14 on June 30, 2002, pursuant to approval granted at a public meeting by the GASD Board of Directors on June 16, 1997, and approval granted by the RSD Board of Directors on June 18, 1997. a. The Charter was signed by Brian Scott (Board President) and Lynda Holm (Board Secretary) on July 9, 1997, as representatives of GASD. b. The Charter was signed by Ralph Jones (Board President) and Cheryl Goodemote (Board Secretary) on July 9, 1997, as representatives of RSD. c. The Charter was signed by Gentile in his position as President of the KECCS Board of Trustees on behalf of the KECCS. d. The Charter was signed by Michael Gentile in his position as Secretary of the KECCS Board of Trustees on behalf of the KECCS. 55. The initial Charter approved in June 1997 to operate the KECCS was for a duration of five years. a. The Charter was eligible for perpetual renewal of additional five year periods. 1. Renewal of the Charter for any additional periods required approval by the Boards of Directors of the sponsoring school districts (e.g., GASD and RSD). 56. Upon approval of the KECCS Charter, Gentile and members of his immediate family assumed positions of employment with the KECCS and/or served as officers on the Board of Trustees as identified below: NamePositionOffice Gentile Executive Director President-Board of Trustees Michael Gentile Chief Executive Officer Secretary-Board of Trustees Robert Gentile Director of Personnel None James T. Gentile Director of Finance Treasurer-Board of Trustees Matt Gentile Special Services Coordinator None a. Michael Gentile’s position with the KECCS underwent various changes in title as shown below: 1. Director of Education (effective at a minimum as of opening of KECCS). 2. Chief Administrative Officer (effective January 20, 1999). 3. Chief Executive Officer (effective May 13, 2004). b. Michael Gentile serves as the Board Secretary but is not an actual voting Board Member. c. James T. Gentile serves as the Board Treasurer but is not an actual voting Board Member. Gentile, 11-026 Page 15 57. Gentile and members of his immediate family entered into employment positions with the KECCS which were similar in nature to their respective positions at the KAC or were related to work performed by the individuals in relation to establishment of the KECCS. a. Upon the opening of the KECCS, Gentile and members of his immediate family began receiving two separate salaries from their respective employment positions with the KAC and KECCS. 58. The KECCS officially opened on August 26, 1997. a. All KECCS educational operations were initially housed at the 425 South Good Hope Road property location. b. Administrative operations for the KECCS have consistently been maintained at the 270 Sharon Road property location. 59. An addendum to the existing lease between Gentile Enterprises/Gentile Enterprises, LLC and the KEC regarding property use at the 425 South Good Hope Road location was created to cover the July 1997 through June 1998 time frame as a result of the KECCS utilizing a percentage of the property for its operation. a. The purpose of the Addendum was to document the percentage of the rent due as documented in the lease which was to be paid to Gentile Enterprises/Gentile Enterprises, LLC from the KECCS for property/facility use. 1. The percentage was determined via a formula developed by James T. Gentile based upon children hours of use per year. b. The Addendum to the lease for the property located at 425 South Good Hope Road required the KECCS to pay fifty percent (50%) of the rent due for the property to Gentile Enterprises/Gentile Enterprises, LLC. 1. The KECCS was required to pay $3,250.00 monthly to Gentile Enterprises/Gentile Enterprises, LLC of the $6,500.00 total monthly rent due at that time for the 425 South Good Hope Road property. 2. The remaining $3,250.00 monthly was required to be paid to Gentile Enterprises/Gentile Enterprises, LLC by the KEC. 60. The signature page of the lease bore signatures of representatives from Gentile Enterprises/Gentile Enterprises, LLC; the KECCS; and the KAC. a. Gentile signed the lease in a dual capacity as the President of the KAC Board of Directors as well as the President of the KECCS Board of Trustees. b. Michael Gentile signed the lease in the capacity as the Secretary of the KECCS. c. James T. Gentile signed the lease in the capacity as the Secretary of Gentile Enterprises/Gentile Enterprises, LLC. d. Robert Gentile signed the lease in the capacity as the Vice-President of Gentile Enterprises/Gentile Enterprises, LLC. Gentile, 11-026 Page 16 e. Thomas Bonaquist signed the lease in the capacity as the Secretary of the KAC. f. The KECCS has consistently utilized property located at 425 South Good Hope Road for educational operations from at least August 26, 1997, to the present. 61. All subsequent leases enacted between Gentile Enterprises/Gentile Enterprises, LLC and the KEC for use of property located at 425 South Good Hope Road included an addendum detailing the percentage of the monthly rent due to Gentile Enterprises/Gentile Enterprises, LLC to be paid by the KECCS. a. Leases were specifically entered into on an annual basis between Gentile Enterprises/Gentile Enterprises, LLC and the KEC. 62. Leases between the KECCS and Gentile Enterprises/Gentile Enterprises, LLC from at least the 2006-2007 through 2011-2012 school years were enacted without formal presentation to the KECCS Board for consideration or approval. a. Leases enacted between the KECCS and Gentile Enterprises/Gentile Enterprises, LLC were not presented to the Board for consideration or approval due to no changes being made to the terms of the leases or the monthly payments due during the applicable school years. b. The KECCS has utilized property located at 270 Sharon Road for educational operations from at least the 1998-1999 school year to the present. c. The only KECCS Board Member to sign the lease was Gentile. 1. Gentile, signing the lease, assured that businesses with which he is associated, Gentle Enterprises/Gentile Enterprises, LLC, would receive rent payments. 63. The number of students enrolled at the KECCS ultimately resulted in the use of property at both the 270 Sharon Road location and the property located at 425 South Good Hope Road. a. Property at 425 South Good Hope Road was subsequently utilized for high school grade students (ninth through twelfth grade). b. Property at the 270 Sharon Road location was utilized for middle school grade students (seventh and eighth grade). 64. An Addendum to the existing lease between Gentile Enterprises, Inc. and the KAC regarding property use at the 270 Sharon Road location was enacted effective July 1, 1998, for the July 1998 through June 1999 time frame as a result of the KECCS utilizing a percentage of the property for its operation. a. The purpose of the Addendum was to document the percentage of the rent due as documented in the lease which was to be paid to Gentile Enterprises, Inc. from the KECCS for property/facility use. 1. The percentage was determined via a formula developed by James T. Gentile based upon children hours of use per year. Gentile, 11-026 Page 17 b. The Addendum to the lease for the property located at 270 Sharon Road called for the KECCS to provide an allocation of forty percent (40%) of the rent due for the property to Gentile Enterprises, Inc. 1. The KECCS was required to pay $2,533.00 monthly to Gentile Enterprise, Inc. of the total $6,333.00 monthly rent due at that time for the 270 Sharon Road property. 2. The remaining $3,800.00 monthly was required to be paid to Gentile Enterprises, Inc. by the KAC. 65. The signature page of the lease included signatures of representatives from Gentile Enterprises, Inc.; the KECCS; and the KAC. a. Gentile signed the lease in a dual capacity as the President of the KAC Board of Directors as well as the President of the KECCS Board of Trustees. b. Michael Gentile signed the lease in his capacity as the Secretary of the KECCS. c. James T. Gentile signed the lease in the capacity as the Secretary of Gentile Enterprises, Inc. d. Robert Gentile signed the lease in the capacity as the Vice-President of Gentile Enterprises, Inc. e. Thomas Bonaquist signed the lease in the capacity as the Secretary of the KAC. 66. All subsequent leases enacted between Gentile Enterprises Inc. and the KAC for use of property located at 270 Sharon Road included an addendum detailing the percentage of the monthly rent due to Gentile Enterprises, Inc. to be paid by the KECCS. a. The subsequent leases were entered into on an annual basis. 67. All leases between the KECCS and Gentile Enterprises, Inc. from at least the 2006- 2007 through 2011-2012 school years were enacted without formal presentation to the KECCS Board for consideration or approval. a. Leases enacted between the KECCS and Gentile Enterprises, Inc. were not presented to the Board for consideration or approval due to the fact that no changes were made in regard to conditions of the leases or the monthly payments due during the applicable school years. 68. The KECCS approved a conflict of interest policy at its regular meeting on June 18, 2009. a. The policy was approved by a 3 to 0 vote with Gentile present and voting. b. The purpose of the conflict of interest policy is defined in Article I as follows: The purpose of the conflict of interest policy is to protect this tax-exempt organization’s Keystone Education Center Charter School interest when it is contemplating entering into a transaction or arrangement that might benefit Gentile, 11-026 Page 18 the private interest of an officer or director of the Keystone Education Center Charter School or might result in a possible excess benefit transaction. This policy is intended to supplement but not replace any applicable state and federal laws governing conflict of interest applicable to nonprofit organization. c. Article II, Definitions of the Policy includes, in part, the following: A person has financial interest if the person has, directly or indirectly, through business, investment, or family: An ownership or investment interest in any entity with which the Keystone Education Center Charter School has a transaction or arrangement; A compensation arrangement with the Keystone Education Center Charter School or with any entity with which the Keystone Education Center Charter School has a transaction or arrangement; or A potential ownership or investment interest in, or compensation arrangement with, any entity or individual with which the Keystone Education Center Charter School is negotiating a transaction or arrangement. d. Article IV provides that any possible conflict of interest of a Director be disclosed to other Board Members and be made part of record. e. Article V required the abstention by a Director from any vote or the use of personal influence on matters where a conflict of interests could arise. f. Article V includes the definition of “conflict of interest”: The term “conflict of interest” includes, without limitation, the reasonable possibility that the matter involves an arrangement to provide compensation or any financial or tangible benefit or payment, directly or indirectly, to a Director or any other “disqualified person.” In the event that there is a question whether a conflict exists, the issue shall be determined by majority vote of the Directors other than the affected Director (which shall consist of at least two Directors) present and voting. Any Director with a possible conflict, shall refrain from discussion or vote on the conflict, and shall not use personal influence on the matter or be physically present in the room at the time that a vote is taken on the conflict. A matter does not involve a “conflict of interest” merely because a Director of the Foundation serves on the board of another non-profit organization that will be giving a grant to, or receiving a grant from, the foundation. 69. Gentile continued to be involved in leases between businesses with which he is associated and the KECCS after the passage of the conflict of interest policy. 70. Lease information regarding payment due to Gentile Enterprises/Gentile Enterprises, LLC and Gentile Enterprises, Inc. for the 2012-2013 school year was presented and approved by the KECCS Board via unanimous vote at the June 14, 2012, regular KECCS Board meeting. Gentile, 11-026 Page 19 a. Minutes of the June 14, 2012, regular KECCS Board meeting specifically identify the monthly lease payments due to Gentile Enterprises, Inc. ($4,320.00) and Gentile Enterprises/Gentile Enterprises, LLC ($6,500.00). b. Neither Gentile nor any members of Gentile’s immediate family were voting Members of the KECCS Board at that time. 71. The KECCS fiscal school year runs from July 1st to June 30th annually. a. Expenses and revenues regarding operation of the KECCS are estimated for each fiscal school year and are documented in the form of an annual budget. 72. The creation of the preliminary annual budget is accomplished through a collaborative effort of multiple KECCS representatives including Gentile, James T. Gentile, Michael Gentile and various other KECCS administrative personnel. a. Members of the KECCS Board of Trustees are not involved in the actual creation/development of the preliminary budget and the figures included therein. 1. The role of the KECCS Board of Trustees is to review the preliminary budget presented, approval of the preliminary budget, and subsequent approval of the final budget. b. The annual budget ultimately enacted must be approved by the Board of Trustees after a required period of availability for any desired public review. 73. Minutes of the KECCS Board meetings consistently document the Board’s approval of the KECCS budget from the 2006-2007 school year through the 2012-2013 school year. a. The KECCS Board routinely approved the preliminary/proposed budget at the regularly scheduled May Board meeting and the final budget at the regularly scheduled June Board meeting with the exception of the 2011-2012 school year. 1. The 2011-2012 KECCS budget was approved at the September 8, 2011, regular Board meeting. aa. Minutes of the September 8, 2011, regular Board meeting document the motion to approve the 2011-2012 budget having passed via 4-0 unanimous vote with no abstentions cast. 1. Minutes of the September 8, 2011, meeting document only three Board Members present at the meeting. 2. The minutes document no late arrival of any Board Member. 74. Amounts budgeted by the KECCS for payment of monthly rent to Gentile Enterprises, Inc. and Gentile Enterprises/Gentile Enterprises, LLC for the KECCS’s use of property at 270 Sharon Road and 425 South Good Hope Road are documented within the KECCS annual General Fund Budget. 75. Gentile, as a KECCS Board Member, consistently participated in votes of the KECCS Board to approve the annual budget for the 2006-2007 through the 2009- Gentile, 11-026 Page 20 2010 KECCS school years which included, among other items, the budgeting of funds for lease payments due to Gentile Enterprises, Inc. and Gentile Enterprises/Gentile Enterprises, LLC for use of property located at 270 Sharon Road, Greenville, Pennsylvania, and 425 South Good Hope Road, Greenville, Pennsylvania. a. Gentile voted in favor of approving both the preliminary/proposed KECCS budgets and the KECCS final budgets for the 2006-2007, 2007-2008, 2008- 2009, and 2009-2010 school years with the singular exception of the 2006- 2007 KECCS proposed budget. 1. Gentile was absent from the May 11, 2006, Board meeting at which the proposed 2006-2007 KECCS budget was approved. b. Minutes of the June 12, 2008, regular Board meeting document the motion to approve the 2008-2009 budget having passed via 4-0 unanimous vote. 1. Minutes of the June 12, 2008, meeting document all five Board Members present at the meeting. 2. The minutes note no early departure of any Board Member from the meeting. 3. No abstention by Gentile is noted in the minutes. c. Gentile no longer served as a Member of the KECCS Board after January 14, 2010. 76. Gentile consistently signed the annual KECCS PDE-2028 – Final General Fund Budget report submitted to the PDE for the 2006-2007, 2007-2008, 2008-2009, and 2009-2010 school years in his capacity as the President of the KECCS Board. a. Gentile signed the 2006-2007 KECCS PDE-2028 Final General Fund Budget Report on June 22, 2006. b. Gentile signed the 2007-2008 KECCS PDE-2028 Final General Fund Budget Report on June 22, 2007. c. Gentile signed the 2008-2009 KECCS PDE-2028 Final General Fund Budget Report on June 12, 2008. d. Gentile signed the 2009-2010 KECCS PDE-2028 Final General Fund Budget Report on June 18, 2009. 77. From 1997 through the present, Gentile Enterprises/Gentile Enterprises, LLC and/or Gentile Enterprises, Inc. have entered into a total of thirty-one separate leases with the KEC and/or the KAC respectively include Addendums requiring a percentage of the total monthly rent due to be paid by the KECCS for use of property leased to the KEC and/or KAC. 78. Until the 2010-2013 [sic] school year lease, Gentile and his immediate family members approved and executed the leases with each entity involved with the lease agreements (e.g., Gentile Enterprises, Inc. or Gentile Enterprises/Gentile Enterprises, LLC; the KAC/KEC; and the KECCS). Gentile, 11-026 Page 21 a. Gentile continued to sign the two lease agreements effective from July 1, 2010, through June 30, 2012, as the President of the KECCS Board of Trustees even though Gentile had resigned from the Board effective January 14, 2010. 1. Gentile voluntarily stepped down as the KECCS Board President and as a Member of the KECCS Board following the performance report of the Pennsylvania Department of the Auditor General. aa. The recommendation was made by the Department of the Auditor General due to potential concerns of related party transactions as a result of Gentile serving on the KECCS Board and businesses with which Gentile was associated receiving rental payment from the KECCS. 2. Gentile remained employed as the KECCS Executive Director after voluntarily stepping down from the KECCS Board of Trustees. 3. Gentile signed the lease agreements effective for the July 1, 2012, through June 30, 2013, school year, as a representative of the KECCS. b. Only the July 1, 2012, through June 30, 2013, lease agreements were presented to Todd Hedderick for signature. 1. Hedderick replaced Gentile as the KAC representative on the KECCS Board of Trustees effective at the conclusion of the January 14, 2010, meeting. aa. Hedderick is employed as one of two Directors of Operations at the KAC. 2. Hedderick has served as the President of the KECCS Board of Trustees since his appointment. aa. Hedderick’s appointment to the Board was made even though there was a lack of a quorum of Board Members at the meeting. 1. Only two Members of the five Member Board were present and voted regarding Hedderick’s appointment to the Board. 79. The KECCS issues separate payment to Gentile Enterprises, Inc. and Gentile Enterprises/Gentile Enterprises, LLC on a monthly basis totaling $10,820.00 for use of the properties at 270 Sharon Road and 425 South Good Hope Road respectively. a. The total KECCS monthly lease amount due to Gentile Enterprises, Inc. and Gentile Enterprises/Gentile Enterprises, LLC has remained at $10,820.00 since at least September 2005. 80. From January 2007 through May 2012, Gentile Enterprises, Inc. and Gentile Enterprises/Gentile Enterprises, LLC have each received sixty-six (66) checks from the KECCS General Fund totaling $285,120.00 and $429,000.00 respectively for leasing of property at 270 Sharon Road and 425 South Good Hope Road to the KECCS. Gentile, 11-026 Page 22 81. Gentile voted as a Member of the KECCS Board of Trustees to approve KECCS bi- monthly bill lists a minimum of sixteen times on which lease payments to Gentile Enterprises, Inc. and Gentile Enterprises/Gentile Enterprises, LLC [appeared]. 82. Article IV(e) § 437 of the Pennsylvania School Code requires the conduction of annual audits of Pennsylvania school districts/public schools. a. Audit reports representative of audits completed are submitted to the applicable district’s Board of Directors. 83. Charter schools within the Commonwealth of Pennsylvania are required to complete an Annual Report in accordance with the Charter School Law. a. Section 17-1719-A of the Charter School Law mandates contents of applications which include, among other requirements, the financial plan for the charter school and the provisions which will be made for auditing the school under Section 437. 84. The KECCS currently utilizes the services of Black, Bashor, & Porsch, LLP, Certified Public Accountants for completion of its annual audit. 85. Annual audits conducted by Black, Bashor, & Porsch, LLP, from at least the 2005- 2006 school year through the 2009-2010 school year have consistently contained documentation of “Related Party Transactions” within the “Notes” section of the audit reports. 86. The Department of the Auditor General, Bureau of School Audits examines the records of school districts, intermediate units, and area vocational-technical schools in order to establish, among other issues, whether school districts received the state subsidies and reimbursements to which they were entitled, and whether state laws and regulations were followed. a. Auditing of charter schools falls within the jurisdiction of the Department of the Auditor General. 87. The first audit of the KECCS by the Department of the Auditor General, complete with findings and responses from KECCS administration, was distributed by the Department of the Auditor General on or about December 9, 2010. a. The audit conducted by the Department of the Auditor General at the KECCS encompassed the scope of the 2005-2006, 2006-2007, and 2007- 2008 school/fiscal years. 88. Although the Department of the Auditor General determined that the KECCS was in compliance with multiple requirements falling within the audit scope, the Department also determined that the KECCS was not in compliance with some applicable state laws. a. Five specific concerns/findings were reported in the Performance Audit Report presented by the Department of the Auditor General, including possible related party transactions involving Gentile’s simultaneous employment as the KECCS Executive Director, service as the President of the KECCS Board of Trustees, service as the President of the KAC with which the KECCS shares building space, and President of Gentile Enterprises which rents classroom space to the KECCS. Gentile, 11-026 Page 23 89. The Management Response issued by the KECCS in relation to the identification of the related party transactions included, in part, the following: a. The KAC and the KECCS were family run businesses “from day one.” b. The operation of the KAC and KECCS by the Gentile family was known from the very beginning and Keystone continues to provide an alternative school for at-risk students run by the Gentile family. c. Act 92 [sic] of 1998 was passed after the Gentile family had already started the KECCS. 1. Act 93 of 1998 was incorrectly cited as Act 92 of 1998. III.DISCUSSION: As a Member and President of the Board of Directors (“Board”) of the Keystone Education Center Charter School (“Charter School”) from approximately July 9, 1997, to January 14, 2010, and as the Executive Director of the Charter School from approximately July 9, 1997, to the present, Respondent James Gentile, hereinafter also referred to as “Respondent,” “Respondent Gentile,” and “Gentile,” has been a public official/public employee subject to the provisions of the Public Official and Employee Ethics Act (“Ethics Act”), 65 Pa.C.S. § 1101 et seq. See, Eiben, Opinion 04-002. The allegations are that Gentile violated Section1103(a) of the Ethics Act: (1) when he used the authority of his public position for the private pecuniary benefit of himself, members of his immediate family and/or businesses with which he and members of his immediate family are associated, including but not limited to participating in discussions and actions of the Charter School Board to approve rental payments to Gentile Enterprises, Inc./Gentile Enterprises, a business with which he and/or members of his immediate family are associated; and (2) when he signed leases for classroom space from Gentile Enterprises, Inc. as both President of the Charter School Board and as President of the Keystone Adolescent Center. 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 Gentile, 11-026 Page 24 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. Gentile is the President of Gentile Enterprises, Inc., a privately owned and operated for-profit corporation which has existed since at least 1993. The current ownership of Gentile Enterprises, Inc. is divided among Gentile, his spouse Karen, and his sons Robert, James T., Michael, and Matthew as detailed in Fact Finding 15. The percentages of Gentile Enterprises, Inc. owned by individual Gentile family members have remained consistent over the life of the entity. In or about April 1993, Gentile Enterprises, Inc. sought to obtain property for the operation of what was to become the Keystone Adolescent Center, Inc. (the “Adolescent Center”). Gentile Enterprises, Inc. ultimately purchased land and an existing structure located at 270 Sharon Road, Greenville, Pennsylvania (the “Sharon Road Location”). The Adolescent Center was incorporated on June 7, 1993, to serve as a privately owned, non- profit, residential group home for at-risk court adjudicated and/or county agency adjudicated youth. Gentile has served as a Member and President of the Adolescent Center’s Board of Directors and been employed by the Adolescent Center since 1993. The Adolescent Center has entered into an annual lease with Gentile Enterprises, Inc. for use of the property and structure(s) at the Sharon Road Location since August 1993. As a result of the success experienced by the Adolescent Center in relation to the services provided to adjudicated youth, the Adolescent Center began providing alternative education program services for Local Educational Agencies at the Sharon Road Location during or around 1994. In or about early spring 1996, a search began for additional property suitable for expansion of the Adolescent Center’s residential facility program and alternative education program. Effective August 13, 1996, Gentile Enterprises, Inc. purchased land and structures located at 425 South Good Hope Road, Greenville, Pennsylvania (the “South Good Hope Road Location”). Immediately following the recording of the deed for the purchase in October 1996, Gentile Enterprises, Inc. transferred ownership of the South Good Hope Road Location to Gentile, James T. Gentile, and Robert Gentile as individuals. Ownership of the South Good Hope Road Location subsequently passed to Gentile Enterprises LLC (“Gentile Enterprises”), which was initially a partnership formed by Gentile and members of his immediate family. Each of Gentile’s four sons has an ownership interest in Gentile Enterprises that is equal to the combined ownership interest of Gentile and his spouse. Gentile has served as a member of Gentile Enterprises’ governing body/Board of Directors since 2001. Gentile, 11-026 Page 25 The facility at the South Good Hope Road Location opened in or about the fall of 1996, and it was named the “Keystone Education Center” (“Education Center”). Since at least November 1996, the Education Center has entered into an annual lease with Gentile Enterprises for use of the South Good Hope Road Location. The Adolescent Center effectively operated from both the Sharon Road and South Good Hope Road Locations after the opening of the Education Center facility/campus. In or about late 1996, the concept of a charter school to potentially serve at-risk youth from various school districts located within Mercer County, Pennsylvania, gained popularity with some school district administrators. The Superintendents of the Greenville Area School District and the Reynolds School District and various other school district administrators subsequently approached Gentile and his family regarding their interest in establishing and operating a charter school in the Greenville area. The decision to approach Gentile and his family was primarily based upon the Gentiles having two facilities in operation at the time, existing staff and infrastructure in place, and experience working with at-risk youth. Gentile and his family were supportive in relation to the establishment and operation of a charter school. An application (“Application”) for the Charter School was ultimately submitted to and approved by the Pennsylvania Department of Education, the Greenville Area School District School Board, and the Reynolds School District School Board. The Application provided, in pertinent part, that the Charter School was to provide an alternative for at-risk students who need individualized attention not afforded in the traditional school setting and was to expand upon an already existing alternative education program operated by the Adolescent Center. The Application further provided that the Charter School was to operate under the corporate umbrella of the Adolescent Center, with administrative and fiscal operations centralized at the Sharon Road Location and program planning and school operations housed at the South Good Hope Road Location. The Charter School officially opened on August 26, 1997. Gentile served as a Member and President of the Charter School Board from approximately July 9, 1997, to January 14, 2010. Gentile has also served as the Executive Director of the Charter School from approximately July 9, 1997, to the present. All Charter School educational operations were initially housed at the South Good Hope Road Location. As a result of the Charter School using a percentage of the South Good Hope Road Location for its operation, an addendum to the existing lease between Gentile Enterprises and the Education Center regarding the use of such Location was created. The addendum to the lease covered July 1997 through June 1998 and required the Charter School to pay 50% of the monthly rent due for the South Good Hope Road Location to Gentile Enterprises. All subsequent annual leases enacted between Gentile Enterprises and the Education Center for use of the South Good Hope Road Location included an addendum detailing the percentage of the monthly rent due to Gentile Enterprises which was to be paid by the Charter School. The number of students enrolled at the Charter School ultimately resulted in the use of the Sharon Road Location for middle school grade students and the South Good Hope Road Location for high school grade students. As a result of the Charter School using a percentage of the Sharon Road Location for its operation, an addendum to the existing lease between Gentile Enterprises, Inc. and the Adolescent Center regarding the use of such Location was created. The addendum to the lease covered July 1998 through June 1999 and required the Charter School to pay 40% of the monthly rent due for the Sharon Road Location to Gentile Enterprises, Inc. All subsequent annual leases enacted between Gentile Enterprises, Inc. and the Adolescent Center for use of the Sharon Road Location Gentile, 11-026 Page 26 included an addendum detailing the percentage of the monthly rent due to Gentile Enterprises, Inc. which was to be paid by the Charter School. From at least the 2006-2007 through 2011-2012 school years, leases between the Charter School and Gentile Enterprises and leases between the Charter School and Gentile Enterprises, Inc. were enacted without formal presentation to the Charter School Board for consideration or approval due to the fact that no changes were made with regard to the terms or conditions of such leases or the monthly payments due during the applicable school years. Gentile and his immediate family members approved and executed the leases with each entity involved with the lease agreements between the Charter School and Gentile Enterprises and between the Charter School and Gentile Enterprises, Inc., and Gentile continued to sign the lease agreements effective from July 1, 2010, through June 30, 2012, as the President of the Charter School Board, even though he had resigned from the Board effective January 14, 2010. Gentile remained employed as the Executive Director of the Charter School after voluntarily stepping down from the Charter School Board, and he signed the lease agreements effective for the July 1, 2012, through June 30, 2013, school year, as a representative of the Charter School. Gentile consistently participated in votes of the Charter School Board to approve annual budgets for the 2006-2007 through the 2009-2010 school years which included funds for lease payments due to Gentile Enterprises, Inc. and Gentile Enterprises for use of the Sharon Road and South Good Hope Road Locations, respectively. Since at least September 2005, the Charter School has paid Gentile Enterprises, Inc. and Gentile Enterprises a combined amount of $10,820.00 per month for use of the Sharon Road and South Good Hope Road Locations. From January 2007 through May 2012, Gentile Enterprises, Inc. received 66 checks from the Charter School General Fund, totaling $285,120.00, for leasing the Sharon Road Location to the Charter School. During the same time period, Gentile Enterprises received 66 checks from the Charter School General Fund, totaling $429,000.00, for leasing the South Good Hope Road Location to the Charter School. As a Member of the Charter School Board, Gentile voted a minimum of sixteen times to approve bi-monthly bill lists which included lease payments to Gentile Enterprises, Inc. and Gentile Enterprises. 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 Gentile, as Executive Director and Member of the Board of Directors of the Keystone Education Center Charter School, used the authority of his public position when he participated in discussions and actions of the Charter School Board to approve rental payments to Gentile Enterprises, Inc./Gentile Enterprises, a business with which he and/or members of his immediate family are associated; Gentile, 11-026 Page 27 and when he signed leases for classroom space from Gentile Enterprises, Inc. as both President of the Charter School Board of Directors and as President of the Keystone Adolescent Center. 4. Gentile agrees to make payment in the amount of $7,000.00 in settlement of this matter as follows: a. $6,000.00 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 matter, payable by certified check or money order made payable to the Pennsylvania State Ethics Commission. 5. Gentile agrees to not accept any reimbursement, compensation or other payment from the Keystone Education Center Charter School 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. We accept the recommendation of the parties for a finding that a violation of Section 1103(a) of the Ethics Act occurred when Gentile, as Executive Director and a Member of the Board of the Charter School, used the authority of his public position when he participated in discussions and actions of the Charter School Board to approve rental payments to Gentile Enterprises, Inc./Gentile Enterprises, a business with which he and/or members of his immediate family are associated; and when he signed leases for classroom space from Gentile Enterprises, Inc. as both President of the Charter School Board and as President of the Adolescent Center. Gentile is the President of Gentile Enterprises, Inc., which is owned by Gentile, his spouse Karen, and his sons Robert, James T., Michael, and Matthew. Gentile Enterprises, Inc. purchased the Sharon Road Location in 1993. Gentile, his spouse, and his four sons have ownership interests in Gentile Enterprises, and Gentile has served as a member of Gentile Enterprises’ governing body/Board of Directors since 2001. Gentile Enterprises, Inc. purchased the South Good Gentile, 11-026 Page 28 Hope Road Location in 1996, but ownership of the property ultimately passed to Gentile Enterprises. Since 1993 Gentile has served as a Member and President of the Board of Directors of the Adolescent Center. Since August 1993, the Adolescent Center has entered into an annual lease with Gentile Enterprises, Inc. for use of the Sharon Road Location. The Education Center, a facility/campus of the Adolescent Center, has entered into an annual lease with Gentile Enterprises for use of the South Good Hope Road Location since at least November 1996. As a result of the Charter School utilizing portions of both the Sharon Road and South Good Hope Road Locations for its operation, addendums to the leases between Gentile Enterprises, Inc. and the Adolescent Center and between Gentile Enterprises and the Education Center were created which required the Charter School to pay a certain percentage of the rent due for each Location. From at least the 2006-2007 through 2011- 2012 school years, leases between the Charter School and Gentile Enterprises and leases between the Charter School and Gentile Enterprises, Inc. were enacted without formal presentation to the Charter School Board for consideration or approval. Gentile and his immediate family members approved and executed the leases with each entity involved with the lease agreements between the Charter School and Gentile Enterprises and between the Charter School and Gentile Enterprises, Inc., and Gentile continued to sign the lease agreements effective from July 1, 2010, through June 30, 2012, as the President of the Charter School Board, even though he had resigned from the Board effective January 14, 2010. From January 2007 through May 2012, Gentile Enterprises, Inc. received 66 checks from the Charter School General Fund, totaling $285,120.00, for leasing the Sharon Road Location to the Charter School. During the same time period, Gentile Enterprises received 66 checks from the Charter School General Fund, totaling $429,000.00, for leasing the South Good Hope Road Location to the Charter School. As a Member of the Charter School Board, Gentile voted a minimum of sixteen times to approve bi-monthly bill lists which included lease payments to Gentile Enterprises, Inc. and Gentile Enterprises. 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 Gentile, as Executive Director and a Member of the Board of the Charter School, used the authority of his public position when he participated in discussions and actions of the Charter School Board to approve rental payments to Gentile Enterprises, Inc./Gentile Enterprises, a business with which he and/or members of his immediate family are associated; and when he signed leases for classroom space from Gentile Enterprises, Inc. as both President of the Charter School Board and as President of the Adolescent Center. As part of the Consent Agreement, Gentile has agreed to make payment in the amount of $7,000.00 in settlement of this matter payable as follows: (1) $6,000.00 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 (2) $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. Gentile has agreed to not accept any reimbursement, compensation, or other payment from the Charter School representing a full or partial reimbursement of the amount paid in the settlement of this matter. Gentile, 11-026 Page 29 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, Gentile is directed to make payment in the amount of $7,000.00 payable as follows: (1) $6,000.00 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 (2) $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, Gentile is directed to not accept any reimbursement, compensation or other payment from the Charter School 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 and President of the Board of Directors (“Board”) of the Keystone Education Center Charter School (“Charter School”) from approximately July 9, 1997, to January 14, 2010, and as the Executive Director of the Charter School from approximately July 9, 1997, to the present, James Gentile (“Gentile”) has been a public official/public employee 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 Gentile, as Executive Director and a Member of the Board of the Charter School, used the authority of his public position when he participated in discussions and actions of the Charter School Board to approve rental payments to Gentile Enterprises, Inc./Gentile Enterprises, a business with which he and/or members of his immediate family are associated; and when he signed leases for classroom space from Gentile Enterprises, Inc. as both President of the Charter School Board and as President of the Keystone Adolescent Center, Inc. In Re: James Gentile, : File Docket: 11-026 Respondent : Date Decided: 1/28/13 : Date Mailed: 2/21/13 ORDER NO. 1616 1. A violation of Section 1103(a) of the Public Official and Employee Ethics Act, 65 Pa.C.S. § 1103(a), occurred when James Gentile (“Gentile”), as Executive Director and a Member of the Board of Directors (“Board”) of the Keystone Education Center Charter School (“Charter School”), used the authority of his public position when he participated in discussions and actions of the Charter School Board to approve rental payments to Gentile Enterprises, Inc./Gentile Enterprises, a business with which he and/or members of his immediate family are associated; and when he signed leases for classroom space from Gentile Enterprises, Inc. as both President of the Charter School Board and as President of the Keystone Adolescent Center, Inc. 2. Per the Consent Agreement of the parties, Gentile is directed to make payment in the amount of $7,000.00 payable as follows: (a) $6,000.00 payable to The Commonwealth of Pennsylvania and forwarded to the Pennsylvania State Ethics th Commission by no 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 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. 3. Per the Consent Agreement of the parties, Gentile is further directed to not accept any reimbursement, compensation or other payment from the Charter School 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, ___________________________ John J. Bolger, Chair