HomeMy WebLinkAbout1636-2 Street
In Re: John Street, : File Docket: 11-010
Respondent : X-ref: Order No. 1636-2
: Date Decided: 6/17/14
: Date Mailed: 7/15/14
Before: John J. Bolger, Chair
Nicholas A. Colafella, Vice Chair
Raquel K. Bergen
Mark R. Corrigan
Roger Nick
Kathryn Streeter Lewis
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 allegation(s). Upon completion of its investigation, the
Investigative Division issued and served upon Respondent a Findings Report identified as
an “Investigative Complaint.” An Answer was filed and a hearing was held. On April 24,
2014, this Commission initially decided this matter. On May 8, 2014, Order No. 1636 was
issued to the parties. The Investigative Division requested reconsideration, and this
Commission granted reconsideration to retain jurisdiction in order to consider arguments
as to whether there had been a material error of law or fact. Oral argument was held. The
record is complete.
I. ALLEGATIONS:
That John Street, a public official/public employee in his capacity as a
Commissioner and Chairman of the Philadelphia Housing Authority violated Sections
*
1103(a), 1103(f), and 1104(a) of the State Ethics Act (Act 93 of 1998) when he used the
authority of his public position for the private pecuniary benefit of a member of his
immediate family and/or a business with which a member of his immediate family is
associated by participating in discussions and actions of the Housing Authority Board of
Commissioners resulting in resolutions being adopted to award contracts to Wolf Block
Schorr & Solis-Cohen, LLP (“Wolf Block”), a law firm that employed his son for services to
be provided by his son; when he participated in the decisions of the Board to adopt
resolutions awarding contracts to a business with which a member of his immediate family
*
is associated in excess of $500 without an open and public process; and when he failed
to file a Statement of Financial Interests for the calendar years 2006 and 2010.
*\[The Investigative Division has exercised its prosecutorial discretion to nol pros the allegation under Section
1103(f) of the Ethics Act (see, Discussion, infra).\]
II. FINDINGS:
A. Stipulations and/or Pleadings
Street, 11-010
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1. The Investigative Division of the State Ethics Commission received a signed, sworn
complaint alleging that John Street violated provisions of the State Ethics Act (Act
93 of 1998).
2. Upon review of the complaint the Investigative Division initiated a preliminary
inquiry on May 18, 2011.
3. The preliminary inquiry was completed within sixty days.
4. On July 15, 2011, a letter was forwarded to John Street by the Investigative Division
of the State Ethics Commission informing him that a complaint against him was
received by the Investigative Division and that a full investigation was being
commenced.
a. Said letter was forwarded by certified mail, no. 7009 2250 0000 3821 8696.
b. The domestic return receipt bore the signature of John Street, with a delivery
date of July 18, 2011.
5. On August 31, 2011, the Investigative Division of the State Ethics Commission filed
an application for a ninety day extension of time to complete the investigation.
6. The Commission issued an Order on September 27, 2011, granting the ninety day
extension.
7. On January 10, 2012, the Investigative Division of the State Ethics Commission
filed an application for a second ninety day extension of time to complete the
investigation.
8. The Commission issued an Order on January 30, 2012, granting the ninety day
extension.
9. Periodic notice letters were forwarded to John Street in accordance with the
provisions of the Ethics Act advising him of the general status of the investigation.
10. The Investigative Complaint/Findings Report was mailed to the Respondent on
June 28, 2012.
11. John Street served as a Commissioner with the Philadelphia Housing Authority
(“PHA”) from on or around April 19, 2004, until on or around March 4, 2011.
a. Street served as the Chairman of the PHA during his tenure on the PHA.
b. Street previously served as a Commissioner with the PHA from 1993 until
1998.
1. Street resigned from the PHA Board to seek the office of Mayor.
12. Street held elected office with the City of Philadelphia serving as a Member of
Council and later as Mayor.
a. Street served as Mayor of Philadelphia from January 2000 until January
2008.
b. Street served on City Council for the City of Philadelphia from January 1980
until December 1998.
Street, 11-010
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13. The PHA was established by Resolution by the Philadelphia City Council and
approved by the Mayor of Philadelphia on August 26, 1937, in accordance with the
Housing Authorities Act, \[Act\] No. 265 approved by the Pennsylvania General
Assembly on May 28, 1937.
14. The PHA was established to provide for the erection of dwellings for families of low
income that will provide work opportunities for many persons now unemployed and
will further stimulate general business activities.
15. Funding for the PHA is provided primarily by the U.S. Department of Housing and
Urban Development (“HUD”).
16. The By-Laws of the PHA (HUD) first adopted on March 11, 1939, identified the
Authority as the PHA.
a. Article II includes officer positions of Chairman, Vice-Chairman, Secretary,
Assistant Secretary, Treasurer and Assistant Treasurer.
1. Section 2 of Article II defined the Chairman as the Executive Head of
the Authority.
17. A five-Member Board of Commissioners (“Board”) governs the PHA.
a. Appointments to the PHA Board are made pursuant to Section 5 of the
Housing Authorities Act.
b. Section 5 of the Housing Authorities Act provides that for Cities of the First
Class (Philadelphia), the Mayor shall appoint two members, the City
Controller shall appoint two members, and the four members, thus
appointed, shall select a fifth member of such Authority.
c. The Commissioners serve staggered terms.
18. The order of business at the Regular Meetings of the PHA Board of Commissioners
includes the approval of minutes of the previous meeting and the approval of
Resolutions identified in agendas given to the Commissioners.
a. Votes were recorded as “Ayes” and “Nays.”
1. All abstentions during a vote are recorded and specifically noted in
the minutes.
19. Meeting agendas describing meeting topics to be discussed are provided to the
PHA Commissioners a few days before each Regular Board meeting.
a. The agendas identify Resolutions the PHA Board of Commissioners would
be voting on.
20. Street was generally provided with an agenda when he attended Pre-Board
Meetings with PHA Resident Leaders.
a. The Pre-Board Meetings were usually held a few days before the Regular
Board Meetings.
b. Street was normally the only PHA Commissioner who attended the Pre-
Board Meetings.
Street, 11-010
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c. At the Pre-Board Meetings PHA Resident Leaders would identify their
concerns and issues.
21. Street as the Chairman of the PHA would preside over the PHA Board of
Commissioner Meetings.
a. Street would identify every Resolution the PHA Commissioners would be
voting on at the meetings.
b. Street would call meetings to order and would declare when Resolutions
were adopted after votes were taken by the PHA Commissioners.
22. Since at least 1994, the PHA Executive Director has been authorized to execute
contracts without Board approval.
a. From 1994 to 1998, amendments to the PHA By-Laws have been made by
the PHA Board regarding the issuance of contracts without Board approval.
b. Street was a Member of the Board and voted to approve the amendments.
23. On July 21, 1994, the PHA Board of Commissioners approved Resolution No. 9201
authorizing delegation of authority of the Board of Commissioners to the Executive
Director to conclude and execute contracts in amount not to exceed Fifty Thousand
dollars ($50,000.00) without the prior approval of the Board of Commissioners.
a. Under this Resolution, the Executive Director did not have the authority to
execute contracts and applications for funding submitted to federal, state,
local and private agencies in amount not to exceed Fifty Thousand Dollars
($50,000.00) without prior Board approval.
b. The Resolution was approved by the PHA Board of Commissioners by a 5-0
vote.
1. John Street was a PHA Commissioner and voted in favor of this
Resolution.
24. On June 23, 1998, the PHA Board of Commissioners approved Resolution No.
10246 authorizing delegation of the authority of the Board of Commissioners to the
Executive Director to conclude and execute contracts in amount not to exceed One
Hundred Thousand Dollars ($100,000.00) without prior approval of the Board of
Commissioners.
a. This Resolution modified and superseded Resolution No. 9201 dated July
21, 1994.
b. The Resolution was approved by the PHA Board of Commissioners by a 5-0
vote.
1. John Street was a PHA Commissioner and voted in favor of this
Resolution.
25. On May 21, 1998, a Resolution was approved by the PHA Board of Commissioners
authorizing the Executive Director and the Contracting officer to negotiate and
conclude contract modifications up to and including $150,000.00.
a. No contract was permitted to be modified in an amount greater than
$150,000.00 without the approval of the PHA Board of Commissioners.
Street, 11-010
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26. As a result of the Resolutions approved by the Board in 1994 and 1998, the PHA
revised \[its\] Procurement Policy on April 16, 2002.
27. The revised Procurement Policy included under General Provisions the Purpose as
follows:
The purpose of this Statement of procurement Policy is to:
provide for the fair and equitable treatment of all persons or
firms involved in purchasing by PHA; assure that supplies,
services, and construction are procured efficiently, effectively,
and at the most favorable prices available to PHA; promote
competition in contracting; provide safeguards for maintaining
a procurement system of quality and integrity; and assure that
PHA purchasing \[sic\] are in full compliance with applicable
Federal standards, HUD regulations, and State and local laws.
Exhibit ID 8-1.
28. The Revised PHA Procurement Policy provided for Board of Commissioners’
approval of contract actions of $100,000 or more.
a. All contracts where the base contract amount or any amount or any option
exceeds One Hundred Thousand Dollars ($100,000) are required to be pre-
approved by the Board of Commissioners. In addition, all contract
modifications in excess of One Hundred Fifty Thousand Dollars ($150,000)
require pre-approval by the Board of Commissioners.
29. As a result of the 2002 revisions, no contract over $100,000 or contract
modifications in excess of $150,000 was to be entered into by the PHA without the
approval of the PHA Commissioners.
30. The PHA Procurement Policy in Article IX includes a code of conduct provision,
Ethics in Public Contracting-PHA Conduct.
a. The code of conduct included a Conflict of Interest provision which provided
that no employee, officer or agent of PHA shall participate directly or
indirectly in the selection or in the award or administration of any contract if a
conflict, real or apparent, would be involved. Such conflict would arise when
a financial or other interest in a firm selected for award is held by:
1. An employee, officer or agent involved in making the award;
2. His/her relative including father, mother, spouse, brother, sister or
child including “half” or “step”;
3. His/her partner; or
4. An organization which employs, is negotiating to employ, or has
arrangement concerning prospective employment of any of the above.
b. While Respondent stipulates to Fact Findings 30 - 30a above, Respondent
does not stipulate that he was bound by such Policy. (Tr. at 12).
31. The Procurement Policy of the PHA included Competitive Proposals which were
used when entering into contracts with law firms.
Street, 11-010
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a. Solicitations issued by the PHA would require Request for Proposals (“RFP”)
that would clearly identify the relative importance of price and other
evaluation factors, including the weight given to each technical factor and
subfactor.
b. Negotiations would be conducted with offerors who submit proposals
determined to have a reasonable chance of being selected for award, based
on evaluation against the technical and price factors as specified in the RFP.
c. Offerors shall not be directed to reduce their proposal prices to a specific
amount in order to be considered for award. A common deadline (Best and
Final Offer or BAFO) shall be established for receipt of proposal revisions
based on negotiations.
32. As the Mayor of Philadelphia, John Street was familiar with the Public Official and
Employee Ethics Act (“Ethics Act”), 65 Pa.C.S. § 1101 et seq., and the restrictions
placed upon the Mayor on the hiring of family members.
a. Street was cognizant of the Ethics Act and conflict of interest issues since
serving as a public official in Pennsylvania since 1980 in various capacities
that included serving as PHA Commissioner from 1993 until 1998.
b. \[Redacted due to the confidentiality requirements of the Ethics Act.\]
33. Sharif Street is the son of John Street.
a. Sharif T. Street is an attorney having graduated from the University of
Pennsylvania Law School in 1999.
1. Sharif Street was admitted to the Pennsylvania Bar in July 2000.
34. Sharif Street was employed by the law firm Wolf Block beginning in or about
January 2000.
a. Sharif Street was employed by Wolf Block as an Associate Attorney until on
or around March 4, 2008.
35. The law firm of Wolf Block had been doing legal work for the PHA since the 1990’s
and predated Sharif Street’s employment with the firm.
36. As an Associate Attorney for Wolf Block, Sharif Street was paid an annual salary.
a. Sharif Street did not receive any bonuses for the work he performed for Wolf
Block.
37. The Contracting Office of the PHA advertised Solicitations for RFP for various types
of legal services.
a. Wolf Block submitted responses to at least one of the PHA RFPs.
b. Alan Kessler, a Partner at Wolf Block had primary responsibility for
responding to the RFPs.
38. Wolf Block’s RFPs were sent to the attention of the PHA Contracting Officer.
a. Shuri Hamilton served as the Contracting Officer for the PHA from 2005
through 2008.
Street, 11-010
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39. After the RFPs were submitted for legal services, PHA Senior Staff would establish
Review Committees for the purpose of rating and scoring RFPs submitted by the
various law firms.
a. Following completion of the reviews, the Review Committee would submit
evaluations and recommendations to the PHA Commissioners and the
Contracting Officer.
b. RFPs submitted by law firms would not be reviewed by the PHA Board of
Commissioners.
40. One week prior to each PHA Board meeting, Commissioners, including John Street,
would be provided with an agenda of what was to be discussed at the meeting.
a. The agenda would identify every Resolution the PHA Commissioners would
be voting at that particular meeting.
b. The Resolutions would identify every law firm that was being recommended
to receive a legal contract.
41. Resolutions relating to legal contracts submitted to the PHA Board for approval
would identify the law firms to be selected.
42. Wolf Block received payments from the PHA for services rendered under Contract
No. 003598 (003598B) as outlined below.
Contract Invoice Invoice Payment Payment of Total
No. No. Date Date Services Overall
that were Payments
Performed made to
by Sharif Wolf Block
Street
003598B 843731 2/29/2008 8/25/2008 $305.50 $1,715.50
003598B 843735 2/29/2008 8/25/2008 $1,103.50 $22,199.62
$1,409.00 $23,915.12
43. The Philadelphia Housing Authority paid $30.5 million for outside legal services
provided by 15 law firms during the period of April 2007 through August 2010.
44. Sharif T. Street, Esq. was assigned to the Real Estate Practice Group and the
Government Relations Practice Group of Wolf Block.
45. The PHA Board of Commissioners made the final decision as to what law firms were
going to receive contracts by voting on Resolutions at the Regular Board
**
Meetings.
a. This was in accordance with PHA Procurement Policy that all contracts over
**
$100,000 had to be approved by the PHA Commission.
b. The approvals would be based on recommendations and evaluations of the
**
Review Committee.
46. Board Members were not aware of Street’s need to abstain on matters involving
Wolf Block.
Street, 11-010
Page 8
47. Street’s hourly rate as an Associate and Contract Attorney ranged from $185.00 to
$265.00 per hour.
48. John Street, as a public official in his official capacity as the Chairman and
Commissioner of the PHA, was annually required to file a Statement of Financial
st
Interests (“SFI”) form by May 1 containing information for the prior calendar year.
49. Street was required to file \[the\] SFI for calendar years 2006, 2007, 2008, 2009,
2010 and 2011 as a Member of the PHA.
50. Street did not file SFIs for calendar years 2006 and 2010 with the PHA.
a. Street did file \[an\] SFI with the City of Philadelphia for the 2006 calendar
year in his capacity as Mayor.
51. Street filed \[SFIs\] with the PHA for calendar years 2007, 2008, 2009 and 2011,
as follows:
a. Calendar Year: 2007
Filed: No date on SEC-1 REV. 01/08
b. Calendar Year: (2008)-Nothing Listed
Filed: 9/23/10 on SEC-1 REV. 01/10
c. Calendar Year: 2009
Filed: 9/23/10 on SEC-1 REV. 01/10
d. Calendar Year: 2011
Filed: 4/26/12 on SEC-1 REV. 01/12
**\[Fact Findings 45-45b above consist of the admitted averments of Paragraphs 51-51b of the Investigative
Complaint. Respondent admitted these averments in his Answer to the Investigative Complaint. At the hearing,
Respondent made a motion to amend his Answer to deny the averments. (Tr. at 13). The Investigative Division
did not object to the motion being made, but stated that it was this Commission’s ultimate decision whether or
not that would be feasible under law. (Tr. at 13-14). Respondent’s motion is denied because Respondent’s
admissions in his Answer are binding “judicial admissions.” See, Bartholomew v. State Ethics Commission, 795
A.2d 1073 (Pa. Cmwlth. 2002). However, our decision in this case does not hinge upon Fact Findings 45-45b.\]
B. Testimony
52. Heather McCreary (“McCreary”) is employed as the Executive Vice President of
Supply Chain Management for the PHA, having been employed by the PHA since
December 16, 2012.
a. McCreary did not work for the PHA in 2007.
b. McCreary’s job duties include responsibility for the procurement and
contracts department(s) of PHA.
c. PHA contracting procedures include the following steps for services or
products in excess of $100,000.00:
(1) The identification of a need by a unit within the PHA;
(2) Preparation by the user department of a Statement of Work,
independent cost estimate, and request for services ensuring that
funding is available for the project;
Street, 11-010
Page 9
(3) Confirmation by the PHA’s finance organization that funding is
available;
(4) Preparation by McCreary’s department of a “solicitation package”
followed by advertisement for the solicitation;
(5) Selection of a bid review committee based upon subject matter
expertise;
(6) Review of proposals by McCreary’s department for satisfaction of
minimum requirements;
(7) Distribution of proposals to review committee;
(8) Independent review of proposals by review committee, which
weighs/scores the proposals and recommends proposal(s) to the PHA
Board;
(9) Approval of a Resolution by the PHA Board to proceed with
contracting; and
(10) Execution of contract(s) with the approved supplier(s).
d. Contracts for greater than $100,000.00 must go before the PHA Board for
approval.
e. A contract that is in excess of $100,000.00 cannot be entered into by the
PHA without a Resolution.
f. HUD regulations require PHA Board approval for a contract of $100,000.00
or more, and that particular requirement would have been in effect in 2007.
g. PHA Commissioners do not execute contracts for services.
h. ID 28-1 – ID 28-2 consists of PHA Resolution No. 11154 (“Resolution No.
11154”). (See, Fact Finding 70).
i. ID 29-1 – ID-29-19 consists of PHA Contract No. 003598B with attachments,
which corresponds to Resolution No. 11154. (See, Fact Findings 73 – 73a).
53. Leigh Ann Poltrock (“Poltrock”) is an attorney with the law firm of Pepper
Hamilton in Pittsburgh, Pennsylvania.
a. Poltrock served as PHA’s General Counsel for litigation from the beginning
of October 2003 through December 23, 2005.
b. Prior to her departure from PHA, Poltrock attended a PHA Board meeting at
which a Resolution for legal service contracts came up for a vote by the PHA
Board, which Resolution included Wolf Block.
1. At this meeting, Poltrock was sitting next to Carl Greene (“Greene”)
and John Street was sitting to Greene’s right, such that all three were
sitting together within a three-foot area.
2. At this meeting, Poltrock leaned over to Greene and stated that Wolf
Block was in “this one,” meaning the Resolution, and “He can’t vote
on this,” whereupon Greene nodded his head and leaned over to
John Street and said, “You can’t vote on this one. Wolf Block is in
here.” (Tr. at 72, 78-79).
3. When Greene made the above statement to him, John Street was
doing something with his Blackberry but nodded his head.
Street, 11-010
Page 10
4. John Street called for the vote on this Resolution and also voted in
favor of this Resolution.
C. Documents
54. ID 3-1 - ID 3-14 consists of the PHA By-laws (“By-laws”) adopted March 11, 1939.
a. Article II, Section 1 of the By-laws provides:
Section 1. General. The officers of the Authority shall be a
Chairman, Vice-Chairman, Secretary, Assistant Secretary,
Treasurer and Assistant Treasurer, all of whom shall be
Members of the Authority.
ID 3-2.
b. Article II, Section 2 of the By-laws provides, in part:
Section 2. Chairman. The Chairman shall be the executive
head of the Authority. He shall preside at all meetings of the
Authority. Except as otherwise authorized by resolution of the
Authority, the Chairman shall sign all contracts, deeds and
other instruments made by the Authority. …
ID 3-2 – ID 3-3.
c. Article VIII of the By-laws provides, in part:
….
Section 2. Additional Requirements. In addition to the
statutory requirements for the making and letting of contracts,
the Authority may, by Resolution, prescribe the manner in
which contracts shall be made and let: Provided, however,
That no such Resolution shall conflict with any governing
statute.
ID 3-13 – ID 3-14.
55. ID 5-1 - ID 5-2 consists of a PHA Resolution approved by the PHA Board on April
28, 1998, which provides, in part:
The Board of Commissioners hereby delegates to the
Executive Director authority to conclude and execute contracts
in an amount not to exceed One Hundred Thousand Dollars
($100,000.00) for Professional Services without the prior
approval of the Board of Commissioners; subject to
compliance with any applicable competitive procurement
requirements approved by the Board, and/or competitive
procurements of the U.S. Department of Housing and Urban
Development, and, if applicable, state law.
ID 5-1.
56. ID 6-1 consists of a PHA Resolution approved by the PHA Board on May 21, 1998,
which provides, in part:
Street, 11-010
Page 11
1. The Contracting Officer shall be charged with the
negotiations and implementation of all Contract Modifications
according to PHA’s procedure (CPP-534), up to and including
the amount of $150,000.00 without gaining Board of
Commissioner approval.
2. The Contracting Officer shall be charged with the
negotiations of all contract modifications that are greater than
$150,000.00 in value according to PHA’s procedure (CPP-
534), but prior to implementation, the Contracting Officer,
through the Executive Director, shall gain Board of
Commissioner approval via the Recommendation of Award
Process. No contract shall be modified in an amount greater
than $150,000.00 without said approval.
ID 6-1.
57. ID 7-1 - ID 7-2 consists of PHA Resolution No. 10246 adopted by the PHA Board on
June 23, 1998, which provides, in part:
The Board of Commissioners hereby delegates to the
Executive Director authority to conclude and execute contracts
in an amount not to exceed One Hundred Thousand Dollars
($100,000.00) without the prior approval of the Board of
Commissioners; subject to compliance with any applicable
competitive procurement requirements approved by the Board,
and/or competitive procurement of the U.S. Department of
Housing and Urban Development, and, if applicable, state law.
ID 7-1.
58. ID 8-1 – 8-12 consists of the Procurement Policy that is referenced in Fact Findings
30 – 30b.
a. The Procurement Policy was approved by the PHA Board of Commissioners
on September 25, 1991, and revised on April 28, 1998.
b. The Procurement Policy provides that pre-approval of the PHA Board of
Commissioners is required for all contracts where the base contract amount
or any option exceeds $100,000.00 and for all contract modifications in
excess of $150,000.00. ID 8-2.
c. The Procurement Policy provides, in part:
IX. ETHICS IN PUBLIC CONTRACTING – PHA CONDUCT
A. GENERAL
PHA shall adhere to the following code of conduct, consistent
with applicable State or local law.
B. CONFLICT OF INTEREST
No employee, officer or agent of PHA shall participate directly
or indirectly in the selection or in the award or administration of
any contract if a conflict, real or apparent, would be involved.
Street, 11-010
Page 12
Such conflict would arise when a financial or other interest in a
firm selected for award is held by:
1. An employee, officer or agent involved in making the
award;
2. His/her relative including father, mother, spouse,
brother, sister or child including “half” or “step”;
3. His/her partner; or,
4. An organization which employs, is negotiating to
employ, or has an arrangement concerning prospective
employment of any of the above.
….
ID 8-11 – ID 8-12.
59. ID 10-1 – ID 10-2 consists of PHA Resolution No. 11017 (“Resolution No. 11017”),
which was adopted unanimously by the PHA Board on December 16, 2004.
a. Commissioner/Mayor John F. Street, Chairman of the PHA, voted to approve
Resolution No. 11017.
b. Resolution No. 11017 authorized the PHA Executive Director to conclude
and execute contracts with five law firms, including Wolf Block, to provide
real estate legal counsel services for the PHA Real Estate Development
Department.
c. Resolution No. 11017 stated that the maximum amount recommended to be
paid by the PHA to Wolf Block, under a contract providing for a two-year
base period and three potential one-year option periods, was $5,000,000.00.
ID 10-1.
1. Per Resolution No. 11017, the maximum amount recommended to be
paid by the PHA to each of the four other law firms was less, with the
next highest amount being a maximum of $3,750,000.00. ID 10-1 -
10-2.
60. ID 11-1 – ID-11-14 consists of Contract No. P-003281-B with attachment(s),
between the PHA and Wolf Block for real estate development legal counsel
services.
a. Contract No. P-003281-B was authorized by Resolution No. 11017.
b. Contract No. P-003281-B is dated January 11, 2005.
c. Contract No. P-003281-B became effective no later than January 11, 2005,
and was for an initial contract term of two years, with PHA having the option
to renew the contract for additional terms of three one-year periods, not to
exceed a total of five years.
d. The total contract value of Contract No. P-003281-B was not to exceed
$5,000,000.00. ID 11-3.
Street, 11-010
Page 13
61. ID 14-1 – ID 14-2 consists of PHA Resolution No. 11042 (“Resolution No. 11042”)
adopted unanimously by the PHA Board on March 29, 2005.
a. Commissioner/Mayor John F. Street, Chairman of the PHA, voted to approve
Resolution No. 11042.
b. Resolution No. 11042 authorized the PHA Executive Director to conclude
and execute contracts with three law firms, including Wolf Block, to provide
real estate title review work.
c. Resolution No. 11042 stated that the maximum amount recommended to be
paid by the PHA to each firm, including Wolf Block, under contracts
providing for a two-year base period and two potential one-year option
periods, was $400,000.00. ID 14-1.
62. ID 15-1 – ID-15-4 consists of Contract No. 3423C with attachment(s), between the
PHA and Wolf Block for real estate title review work.
a. Contract No. 3423C is dated April 22, 2005.
b. Contract No. 3423C was for an initial contract term of two years, with PHA
having the option to renew the contract for additional terms of two one-year
periods.
c. The total contract value of Contract No. 3423C was not to exceed
$400,000.00. ID 15-1.
63. ID 18-1 – ID 18-2 consists of PHA Resolution No. 11060 (“Resolution No. 11060”)
adopted unanimously by the PHA Board on June 16, 2005.
a. Commissioner/Mayor John F. Street, Chairman of the PHA, voted to approve
Resolution No. 11060.
b. Resolution No. 11060 authorized the PHA Executive Director to conclude
and execute contracts with seven law firms, including Wolf Block, to provide
labor and employment law legal services.
c. Resolution No. 11060 stated that the maximum amount recommended to be
paid by the PHA to Wolf Block and three other law firms, under contracts
providing for a two-year base period and three potential option periods, was
$4,500,000.00 each. ID 18-1 - 18-2.
1. Per Resolution No. 11060, the maximum amount recommended to be
paid by the PHA to each of the remaining three law firms was
$550,000.00. ID 18-1 - 18-2.
64. ID 19-1 – ID-19-19 consists of Contract No. 003459-D with attachment(s), between
the PHA and Wolf Block for labor and employment law legal services.
a. Contract No. 003459-D was authorized by Resolution No. 11060.
b. Contract No. 003459-D is dated July 1, 2005.
c. Contract No. 003459-D became effective no later than July 1, 2005, and was
for an initial contract term of two years, with PHA having the option to renew
the contract for additional terms of three one-year periods.
Street, 11-010
Page 14
d. The total contract amount of Contract No. 003459-D was not to exceed
$4,500,000.00. ID 19-2, ID 19-4.
1. PHA could determine to provide additional funding to this contract. ID
19-2.
65. ID 22-1 – ID 22-2 consists of PHA Resolution No. 11073 (“Resolution No. 11073”)
adopted unanimously by the PHA Board on September 15, 2005.
a. Commissioner/Mayor John F. Street, Chairman of the PHA, voted to approve
Resolution No. 11073.
b. Resolution No. 11073 authorized the PHA Executive Director to conclude
and execute contracts with three law firms, including Wolf Block, to provide
general legal services.
c. Resolution No. 11073 stated that the maximum amount recommended to be
paid by the PHA to Wolf Block, under a contract providing for a two-year
base period and three potential option periods, was $7,500,000.00. ID 22-2.
1. Per Resolution No. 11073, the maximum amount recommended to be
paid by the PHA to the two other law firms was less, with the next
highest amount being a maximum of $5,000,000.00. ID 22-2.
66. ID 23-1 – ID-23-17 consists of Contract No. 003486A with attachment(s), between
the PHA and Wolf Block for general legal services.
a. Contract No. 003486A was authorized by Resolution No. 11073.
b. Contract No. 003486A is dated October 14, 2005.
c. Contract No. 003486A became effective no later than October 14, 2005, and
was for an initial contract term of two years, with PHA having the option to
renew the contract for additional terms of three one-year periods.
d. The total contract amount of Contract No.003486A was not to exceed
$7,500,000.00. ID 23-2, ID 23-4.
1. PHA could determine to provide additional funding to this contract. ID
23-2.
67. ID 22-3 – ID 22-5 consists of PHA Resolution No. 11084 (“Resolution No. 11084”)
adopted unanimously by the PHA Board on October 24, 2005.
a. Commissioner/Mayor John F. Street, Chairman of the PHA, voted to approve
Resolution No. 11084.
b. Resolution No. 11084 authorized the PHA Executive Director to conclude
and execute contracts with nine law firms, including Wolf Block, to provide
regulatory and administrative legal services.
c. Resolution No. 11084 stated that the maximum amount recommended to be
paid by the PHA to Wolf Block and five other law firms, under contracts
providing for a two-year base period and three potential option periods, was
$5,000,000.00 each. ID 22-4.
Street, 11-010
Page 15
1. Per Resolution No. 11084, the maximum amount recommended to be
paid by the PHA to each of the three remaining law firms was
$2,500,000.00. ID 22-4.
68. ID 24-1 – ID-24-19 consists of Contract No. 003486H with attachment(s), between
the PHA and Wolf Block for regulatory and administrative legal services.
a. Contract No. 003486H was authorized by Resolution No. 11084.
b. Contract No. 003486H is dated December 29, 2005.
c. Contract No. 003486H became effective no later than December 29, 2005,
and was for an initial contract term of two years, with PHA having the option
to renew the contract for additional terms of three one-year periods.
d. The total contract amount of Contract No.003486H was not to exceed
$5,000,000.00. ID 24-2, ID 24-4.
1. PHA could determine to provide additional funding to this contract. ID
24-2.
69. ID 25-1 consists of PHA Resolution No. 11065 (“Resolution No. 11065”) adopted
unanimously by the PHA Board on September 15, 2005.
a. Commissioner/Mayor John F. Street, Chairman of the PHA, voted to approve
Resolution No. 11065.
b. Resolution No. 11065 authorized the PHA Executive Director to conclude
and execute Contract Modification No. 3 to Contract No. P-003000 between
the PHA and Wolf Block, to allow for additional compensation to Wolf Block
in the amount of $1,100,000.00.
c. Resolution No. 11065 stated that there were two prior contract modifications
to Contract No. P-003000, which had added an additional $300,000.00 for a
contract total of $4,425,000.00.
1. With the third modification authorized by Resolution No. 11065, the
contract total of Contract No. P-003000 was increased to
$5,525,000.00.
70. ID 28-1 – ID 28-2 consists of PHA Resolution No. 11154 (“Resolution No. 11154”)
adopted unanimously by the PHA Board on January 31, 2007. ID 28-1 – ID 28-2;
ID 29-1).
a. Commissioner/Mayor John F. Street, Chairman of the PHA, voted to approve
Resolution No. 11154.
b. Resolution No. 11154 authorized the PHA Executive Director to conclude
and execute contracts with thirteen law firms, including Wolf Block, to
provide general legal services.
c. Resolution No. 11154 stated that the maximum amount recommended to be
paid by the PHA to Wolf Block and four other law firms, under contracts
providing for a two-year base period and three potential option periods, was
$7,500,000.00 each. ID 28-2.
Street, 11-010
Page 16
1. Per Resolution No. 11154, the maximum amount recommended to be
paid by the PHA to each of the remaining law firms was less, with the
next highest amount being a maximum of $5,000,000.00. ID 28-2.
d. Resolution No. 11154 states, in part:
BE IT RESOLVED
, by and for The Philadelphia
Housing Authority, that the Executive Director is hereby
authorized to conclude and to execute contracts with
Wolf Block Schorr and Solis-Cohen, LLP, Ballard Spahr
Andrews & Ingersoll, LLP, Duane Morris, LLP,
Schnader Harris Segal & Lewis, Hangley Aronchick
Segal & Pudlin, Flaster Greenberg, P.C., Fox
Rothschild, LLP, Cozen O’Connor, Law Office of Denise
Smyler, Cohen & Grigsby, P.C., Kelly, Monaco and
Naples, Kolber, Freeman & Randazzo and Booth &
Tucker LLP for the provision of general legal services.
BE IT FURTHER RESOLVED
, that (1) the
recommended contractor(s) comply with all terms
required by the solicitation: (2) the contract is subject to
approval by PHA’s funding source before a contract
shall exist; (3) no contract shall exist until signed by the
Executive Director; and (4) if PHA and the offeror have
not mutually agreed on the terms of a contract within
forty-five (45) days of the next regularly scheduled
Board meeting, then this resolution shall be void and
the authority of the Executive Director shall cease.
ID 28-2.
71. Commissioner/Mayor John F. Street, Chairman of the PHA, presided over the PHA
Regular Meeting on January 31, 2007. ID 28-3.
72. January 31, 2007, falls within the time period that this Commission may review in
this matter pursuant to Section 1108(m) of the Ethics Act, 65 Pa.C.S. § 1108(m).
(See, Fact Finding 76).
73. ID 29-1 – ID-29-19 consists of Contract No. 003598B with attachment(s), between
the PHA and Wolf Block for general legal services.
a. Contract No. 003598B was authorized by Resolution No. 11154.
b. Contract No. 003598B is dated April 10, 2007.
c. Contract No. 003598B became effective no later than April 10, 2007, and
was for an initial contract term of two years, with PHA having the option to
renew the contract for additional terms of three one-year periods.
d. The total contract amount of Contract No. 003598B was not to exceed
$7,500,000.00. ID 29-2, ID 29-4.
1. PHA could determine to provide additional funding to this contract. ID
29-2.
Street, 11-010
Page 17
e. The attachments to Contract No. 003598B set forth the hourly rates to be
charged by Wolf Block for the work performed by various categories of
attorneys as well as paralegals.
1. For the initial contract term of two years, the hourly rates to be
charged by Wolf Block under Contract No. 003598B were as follows:
Senior partner, $320;
Partner, $285;
Associate, $235;
Partner for services at administrative hearings, municipal court and
arbitrations ($50,000 and under), $275;
Associate for services at administrative hearings, municipal court and
arbitrations ($50,000 and under), $225; and
Paralegal, $130.
2. For the first one-year option period available under Contract No.
003598B, the hourly rates to be charged by Wolf Block were as
follows:
Senior partner, $330;
Partner, $295;
Associate, $245;
Partner for services at administrative hearings, municipal court and
arbitrations ($50,000 and under), $285;
Associate for services at administrative hearings, municipal court and
arbitrations ($50,000 and under), $230; and
Paralegal, $135.
3. For the second one-year option period available under Contract No.
003598B, the hourly rates to be charged by Wolf Block were as
follows:
Senior partner, $335;
Partner, $300;
Associate, $255;
Partner for services at administrative hearings, municipal court and
arbitrations ($50,000 and under), $285;
Associate for services at administrative hearings, municipal court and
arbitrations ($50,000 and under), $235; and
Paralegal, $140.
Street, 11-010
Page 18
4. For the third one-year option period available under Contract No.
003598B, the hourly rates to be charged by Wolf Block were as
follows:
Senior partner, $340;
Partner, $305;
Associate, $260;
Partner for services at administrative hearings, municipal court and
arbitrations ($50,000 and under), $290;
Associate for services at administrative hearings, municipal court and
arbitrations ($50,000 and under), $240; and
Paralegal, $145.
74. ID 30-1 – ID 30-3 consists of billing information for invoices submitted to the PHA
by Wolf Block under various contracts.
75. During the time period that this Commission may review in this matter pursuant to
Section 1108(m) of the Ethics Act, 65 Pa.C.S. § 1108(m), Respondent John Street
had knowledge of the restrictions and requirements of Sections 1103(a) and 1103(j)
of the Ethics Act, 65 Pa.C.S. §§ 1103(a), 1103(j). (ID 31; Fact Finding 76).
a. During the time period that this Commission may review in this matter
pursuant to Section 1108(m) of the Ethics Act, 65 Pa.C.S. § 1108(m), and
specifically on January 31, 2007, when he voted to approve Resolution No.
11154, Respondent Street had knowledge that, pursuant to Section 1103(a)
of the Ethics Act, he would be prohibited from using the authority of public
office for the private pecuniary benefit of his son or his son’s employer. 65
Pa.C.S. §§ 1103(a), 1102. (ID 31; Fact Findings 75, 76).
D. Other Findings
76. The time period that this Commission may review in this matter, pursuant to Section
1108(m) of the Ethics Act, 65 Pa.C.S. § 1108(m), is from July 15, 2006 forward.
(See, 65 Pa.C.S. §§ 1108(c), (m); 51 Pa. Code §§ 11.3; 21.3(c), 21.5(b); Fact
Finding 4; Cagno, Order 1204; Cook, Order 1203).
77. The evidence of record in this case does not include contracts between the PHA
and law firms other than Wolf Block that were entered into under the authorization
of Resolution No. 11154, or the hourly rates or total amounts ultimately
charged/received by other law firms under such contracts.
III. DISCUSSION:
As a Commissioner of the Philadelphia Housing Authority (“PHA”) from on or around
April 19, 2004, until on or around March 4, 2011, Respondent John Street (hereinafter also
referred to as “Respondent,” “Respondent Street,” and “Street”) 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 as set forth in the Investigative Complaint/Findings Report are that
Respondent Street violated Sections 1103(a), 1103(f), and 1104(a) of the Ethics Act when
he, as a Commissioner and Chairman of the PHA: (1) used the authority of his public
Street, 11-010
Page 19
position for the private pecuniary benefit of a member of his immediate family and/or a
business with which a member of his immediate family is associated by participating in
discussions and actions of the PHA Board of Commissioners (“Board”) resulting in
resolutions being adopted to award contracts to Wolf Block Schorr & Solis-Cohen, LLP
(“Wolf Block”), a law firm that employed his son for services to be provided by his son; (2)
when he participated in the decisions of the Board to adopt resolutions awarding contracts
to a business with which a member of his immediate family is associated in excess of $500
without an open and public process; and (3) when he failed to file a Statement of Financial
Interests (“SFI”) for the calendar years 2006 and 2010.
The Investigative Division has exercised its prosecutorial discretion to nol pros the
allegation under Section 1103(f) of the Ethics Act. (Tr. at 10). 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.
Per the Pennsylvania Supreme Court’s decision in Kistler v. State Ethics
Commission, 610 Pa. 516, 22 A.3d 223 (2011), in order to violate Section 1103(a) of the
Ethics Act, a public official/public employee:
… must act in such a way as to put his \[office/public position\]
to the purpose of obtaining for himself a private pecuniary
Street, 11-010
Page 20
benefit. Such directed action implies awareness on the part of
the \[public official/public employee\] of the potential pecuniary
benefit as well as the motivation to obtain that benefit for
himself.
Kistler, supra, 610 Pa. at 523, 22 A.3d at 227. To violate Section 1103(a) of the Ethics
Act, a public official/public employee “must be consciously aware of a private pecuniary
benefit for himself, his family, or his business, and then must take action in the form of one
or more specific steps to attain that benefit.” Id., 610 Pa. at 528, 22 A.3d at 231.
The above statutory definition of the term "conflict" or "conflict of interest" contains
two exclusions, referred to herein as the "de minimis exclusion" and the "class/subclass
exclusion."
The de minimis exclusion precludes a finding of conflict of interest as to an action
having a de minimis (insignificant) economic impact. Thus, when a matter that would
otherwise constitute a conflict of interest under the Ethics Act would have an insignificant
economic impact, a conflict would not exist and Section 1103(a) of the Ethics Act would not
be implicated. See, Kolb, Order 1322; Schweinsburg, Order 900.
In order for the class/subclass exclusion to apply, two criteria must be met: (1) the
affected public official/public employee, immediate family member, or business with which
the public official/public employee or immediate family member is associated must be a
member of a class consisting of the general public or a true subclass consisting of more
than one member; and (2) the public official/public employee, immediate family member, or
business with which the public official/public employee or immediate family member is
associated must be affected "to the same degree" (in no way differently) than the other
members of the class/subclass. 65 Pa.C.S. § 1102; see, Kablack, Opinion 02-003;
Rubenstein, Opinion 01-007. The first criterion of the exclusion is satisfied where the
members of the proposed subclass are similarly situated as the result of relevant shared
characteristics. The second criterion of the exclusion is satisfied where the
individual/business in question and the other members of the class/subclass are
reasonably affected to the same degree by the proposed action. Kablack, supra.
Section 1104(a) of the Ethics Act provides that each public official/public employee
must file an SFI for the preceding calendar year, each year that he holds the position and
the year after he leaves it:
§ 1104. Statement of financial interests required to be filed
(a) Public official or public employee.--
Each
public official of the Commonwealth shall file a statement of
financial interests for the preceding calendar year with the
commission no later than May 1 of each year that he holds
such a position and of the year after he leaves such a position.
Each public employee and public official of the Commonwealth
shall file a statement of financial interests for the preceding
calendar year with the department, agency, body or bureau in
which he is employed or to which he is appointed or elected no
later than May 1 of each year that he holds such a position
and of the year after he leaves such a position. Any other
public employee or public official shall file a statement of
financial interests with the governing authority of the political
subdivision by which he is employed or within which he is
appointed or elected no later than May 1 of each year that he
holds such a position and of the year after he leaves such a
position. Persons who are full-time or part-time solicitors for
Street, 11-010
Page 21
political subdivisions are required to file under this section.
65 Pa.C.S. § 1104(a).
We shall now summarize the relevant facts.
Respondent Street served as a PHA Commissioner from on or around April 19,
2004, until on or around March 4, 2011. Respondent previously served as a
Commissioner with the PHA from 1993 until 1998.
Respondent also served as Mayor of Philadelphia from January 2000 until January
2008. Respondent served on the Philadelphia City Council from January 1980 until
December 1998.
The PHA is governed by a five-Member Board of Commissioners (“Board”).
Respondent served as the Chairman of the PHA during his tenure on the PHA. As
Chairman of the PHA, Respondent was an officer of the PHA.
Since at least 2002, all PHA legal service contracts have required pre-approval of
the PHA Board when the base contract amount or any option exceeded $100,000.00. Pre-
approval of the PHA Board has also been required for all contract modifications in excess
of $150,000.00. The PHA legal service contracts have been awarded through a
competitive proposal process, which included a solicitation and a bid review process by an
internal committee which did not include the Respondent, and resulted in the submission
to the PHA Board of the evaluations and recommendations of the bid review committee
and a proposed Resolution for Board approval. Such Resolutions have authorized the PHA
Executive Director to conclude and execute contracts with the recommended law firm(s).
As Chairman of the PHA, Respondent presided over PHA Board meetings.
Respondent knew in advance of the PHA Board meetings what Resolutions the Board
would be voting on. The Resolutions identified every law firm that was being
recommended to receive a legal contract. At the PHA Board meetings, Respondent would
identify every Resolution the PHA Commissioners would be voting on and would declare
when Resolutions were adopted after votes were taken by the PHA Commissioners.
From in or about January 2000 until on or around March 4, 2008, Respondent’s son,
Sharif Street, was employed by the law firm of Wolf Block. During the time period under
review in this case, Sharif Street was an Associate Attorney with Wolf Block and was paid
an annual salary. Sharif Street did not receive any bonuses for the work he performed for
Wolf Block.
Wolf Block did legal work for the PHA since the 1990’s. The evidence before this
Commission includes numerous Resolutions approved by the PHA Board, including
Respondent, which authorized contracting to occur between the PHA and Wolf Block.
However, only one such Resolution, PHA Resolution No. 11154 (“Resolution No. 11154”),
was approved by the PHA Board during the time period that this Commission may review
in this matter pursuant to the five-year statute of limitations provision at Section 1108(m) of
the Ethics Act, 65 Pa.C.S. § 1108(m).
Resolution No. 11154 (ID 28-1 – ID 28-2) was adopted unanimously by the PHA
Board on January 31, 2007. Respondent voted to approve Resolution No. 11154.
Resolution No. 11154 authorized the PHA Executive Director to conclude and execute
contracts with thirteen law firms, including Wolf Block, to provide general legal services.
Resolution No. 11154 stated that the maximum amount recommended to be paid by the
PHA to Wolf Block and four other law firms, under contracts providing for a two-year base
period and three potential option periods, was $7,500,000.00 each. ID 28-2. Per
Resolution No. 11154, the maximum amount recommended to be paid by the PHA to each
Street, 11-010
Page 22
of the remaining law firms was less, with the next highest amount being a maximum of
$5,000,000.00. ID 28-2.
Resolution No. 11154 states, in part:
BE IT RESOLVED
, by and for The Philadelphia Housing
Authority, that the Executive Director is hereby authorized to
conclude and to execute contracts with Wolf Block Schorr and
Solis-Cohen, LLP, Ballard Spahr Andrews & Ingersoll, LLP,
Duane Morris, LLP, Schnader Harris Segal & Lewis, Hangley
Aronchick Segal & Pudlin, Flaster Greenberg, P.C., Fox
Rothschild, LLP, Cozen O’Connor, Law Office of Denise
Smyler, Cohen & Grigsby, P.C., Kelly, Monaco and Naples,
Kolber, Freeman & Randazzo and Booth & Tucker LLP for the
provision of general legal services.
BE IT FURTHER RESOLVED
, that (1) the recommended
contractor(s) comply with all terms required by the solicitation:
(2) the contract is subject to approval by PHA’s funding source
before a contract shall exist; (3) no contract shall exist until
signed by the Executive Director; and (4) if PHA and the
offeror have not mutually agreed on the terms of a contract
within forty-five (45) days of the next regularly scheduled
Board meeting, then this resolution shall be void and the
authority of the Executive Director shall cease.
ID 28-2.
Pursuant to Resolution No. 11154, the PHA and Wolf Block entered into Contract
No. 003598B for general legal services (ID 29-1 – ID-29-19). Contract No. 003598B is
dated April 10, 2007. Contract No. 003598B became effective no later than April 10, 2007,
and was for an initial contract term of two years, with PHA having the option to renew the
contract for additional terms of three one-year periods. The total contract amount of
Contract No. 003598B was not to exceed $7,500,000.00, although PHA could determine to
provide additional funding to this contract.
The attachments to Contract No. 003598B set forth the hourly rates to be charged
by Wolf Block for the work performed by various categories of attorneys as well as
paralegals, which hourly rates are detailed at Fact Findings 73 e(1)-(4).
Wolf Block received from the PHA payments totaling $23,915.12 for services
rendered under Contract No. 003598B. Of that amount, $1,409.00 was for services
performed by Sharif Street.
On January 31, 2007, when he voted to approve Resolution No. 11154, Respondent
Street knew that, pursuant to Section 1103(a) of the Ethics Act, he was prohibited from
using the authority of his public office for the private pecuniary benefit of his son or his
son’s employer. 65 Pa.C.S. §§ 1103(a), 1102. (ID 31; Fact Findings 75-75a, 76).
Additionally, at least as early as 2005, Respondent was specifically told that he could not
vote to approve a Resolution authorizing contracting between the PHA and Wolf Block,
whereupon Respondent nodded his head and voted anyway. (Fact Findings 53-53 b(4)).
During the period of April 2007 through August 2010, the PHA paid $30.5 million for
outside legal services provided by 15 law firms.
With regard to Respondent’s SFIs, in his capacity as a Commissioner of the PHA,
Respondent was required to file the SFI form for calendar years 2006, 2007, 2008, 2009,
Street, 11-010
Page 23
2010 and 2011. Respondent did not file SFIs for calendar years 2006 and 2010 with the
PHA. Respondent did file an SFI with the City of Philadelphia for the 2006 calendar year
in his capacity as Mayor.
Having summarized the above relevant facts, we must now determine whether the
actions of Respondent violated Section 1103(a) of the Ethics Act. As we apply the facts to
the allegations, due process requires that we not depart from the allegations. Pennsy v.
Department of State, 594 A.2d 845 (Pa. Cmwlth. 1991). A violation of the Ethics Act must
be based upon clear and convincing proof. 65 Pa.C.S. § 1108(g). Clear and convincing
proof is “so ‘clear, direct, weighty, and convincing as to enable the trier of fact to come to a
clear conviction, without hesitance, of the truth of the precise facts in issue.’” In Re:
Charles E.D.M., 550 Pa. 595, 601, 708 A.2d 88, 91 (1998) (Citation omitted).
In considering the evidence, it is clear that Respondent used the authority of his
public office as a PHA Commissioner when he voted on January 31, 2007, to approve
Resolution No. 11154. At the time Respondent cast this vote, he knew that, pursuant to
Section 1103(a) of the Ethics Act, he was prohibited from using the authority of his public
office for the private pecuniary benefit of his son or his son’s employer. 65 Pa.C.S. §§
1103(a), 1102. (ID 31; Fact Findings 75-75a, 76). Respondent knew that Wolf Block was
among the law firms listed in Resolution No. 11154 to potentially receive a contract for
legal services with the PHA. There is little if any doubt that Respondent knew that Wolf
Block was his son’s employer. Looking at these facts from a non-legal perspective, one
could easily conclude that it was improper for Respondent to have voted to approve
Resolution No. 11154.
We recognize the public concern that may arise when a public official’s conduct
appears to constitute a conflict of interest, but a conflict of interest is not found due to the
applicability of one or more of the aforesaid statutory exclusions. However, we are duty-
bound to apply the Ethics Act as promulgated, and we may only find a violation based
upon clear and convincing proof. While this Commission does not condone Respondent’s
conduct, Respondent argues—and we are constrained to agree—that the class/subclass
exclusion is applicable in this case, and therefore we are precluded from finding a violation
of Section 1103(a) of the Ethics Act.
The first criterion of the class/subclass exclusion is established in this case
because, based upon the evidence, Wolf Block was a member of a subclass of five law
firms (hereinafter also referred to as “the Five Law Firms”) that: (1) were seeking to
contract with the PHA to provide general legal services; and (2) were recommended by
PHA bid review committees/staff for PHA contracts to provide such services for a two-year
base period and three potential option periods at a maximum contract cost of
$7,500,000.00 per firm.
The second criterion of the class/subclass exclusion is established because the
Five Law Firms were affected to the same degree by Resolution No. 11154. Specifically,
Resolution No. 11154 authorized the PHA Executive Director to conclude and execute
contracts with the Five Law Firms for a two-year base period and three potential option
periods at a maximum contract cost of $7,500,000.00 per firm. At the time Respondent
voted to approve Resolution No. 11154, the proposed contracts had not been finalized.
Resolution No. 11154 advanced all five of the Five Law Firms to the next step in the
contracting process. As to each of the Five Law Firms, a contract would not exist unless it
was approved by PHA’s funding source, contract terms were agreed upon within a defined
time frame, and the contract was signed by the PHA Executive Director.
Because Wolf Block was a member of a subclass consisting of the Five Law Firms
and was affected by Resolution No. 11154 to the same degree as the other members of
the subclass, we are constrained to find that the class/subclass exclusion is applicable in
this case.
Street, 11-010
Page 24
We hold that Respondent Street did not violate Section 1103(a) of the Ethics Act,
65 Pa.C.S. § 1103(a), when he, as a Commissioner and Chairman of the PHA, participated
in actions of the PHA Board to approve PHA Resolution No. 11154, authorizing the PHA to
engage in a contractual relationship with Wolf Block, a law firm that employed his son,
because his actions affected to the same degree a subclass of five law firms including
Wolf Block that were seeking to provide legal services to the PHA.
Based upon our above holding, there is no need to address Respondent’s
1
remaining arguments as to the Section 1103(a) allegation.
As for Respondent’s SFIs, we hold that Respondent Street violated Section 1104(a)
of the Ethics Act, 65 Pa.C.S. § 1104(a), when he, as a Commissioner and Chairman of the
PHA, failed to file SFIs with the PHA for calendar years 2006 and 2010. To the extent he
has not already done so, Respondent Street is directed to file complete and accurate SFIs
for calendar years 2006 and 2010 with the PHA, through this Commission, by no later than
th
the thirtieth (30) day after the mailing date of this adjudication and Order. Non-
compliance will result in the institution of an order enforcement action.
IV.CONCLUSIONS OF LAW:
1. As a Commissioner of the Philadelphia Housing Authority (“PHA”) from on or
around April 19, 2004, until on or around March 4, 2011, Respondent John Street
(“Street”) 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. Street did not violate Section 1103(a) of the Ethics Act, 65 Pa.C.S. § 1103(a), when
he, as a Commissioner and Chairman of the PHA, participated in actions of the
PHA Board to approve PHA Resolution No. 11154, authorizing the PHA to engage
in a contractual relationship with Wolf Block Schorr & Solis-Cohen, LLP (“Wolf
Block”), a law firm that employed his son, because his actions affected to the same
degree a subclass of five law firms including Wolf Block that were seeking to
provide legal services to the PHA.
3. Street violated Section 1104(a) of the Ethics Act, 65 Pa.C.S. § 1104(a), when he, as
a Commissioner and Chairman of the PHA, failed to file Statements of Financial
Interests with the PHA for calendar years 2006 and 2010.
1
Respondent also argues that: (1) the evidence does not meet the Kistler standard
for knowledge and motivation on the part of Respondent such that he put his office
at a purpose of obtaining a private pecuniary benefit for his son or Wolf Block; (2)
there is no evidence as to what Respondent’s knowledge was, and in particular, no
evidence Respondent knew his son worked at Wolf Block; (3) there is no evidence
that Wolf Block did not do the work or was not entitled to payment; (4) the evidence
does not show whether a profit was made by Wolf Block; (5) the de minimis
exclusion is applicable because: (a) Contract No. 003598B had a de minimis
economic impact on PHA, Wolf Block, and Sharif Street; (b) the $23,915.12 paid by
PHA to Wolf Block under Contract No. 003598B was eight one hundredths of one
percent (.08%) of the amount (in excess of $30 million) spent by PHA on outside
legal services from 2007-2010 and was miniscule in proportion to PHA’s total
annual budget; (c) there was no adverse impact on the PHA from Respondent’s
action; and (d) Sharif Street billed $1,409.00 under Contract No. 003598B and did
not receive individual bonuses as a result of his work at Wolf Block during the
contract period; (6) Resolution No. 11154 merely authorized the PHA Executive
Director to negotiate and conclude contracts; and (7) Respondent did not cast the
deciding vote to approve Resolution No. 11154.
In Re: John Street, : File Docket: 11-010
Respondent : Date Decided: 6/17/14
: Date Mailed: 7/15/14
ORDER NO. 1636-2
1. While this Commission does not condone the conduct at issue in this case, given
the applicability of a statutory exclusion, this Commission is constrained to hold that
as a Commissioner and Chairman of the Philadelphia Housing Authority (“PHA”),
John Street (“Street”) did not violate Section 1103(a) of the Public Official and
Employee Ethics Act (“Ethics Act”), 65 Pa.C.S. § 1103(a), when he, as a
Commissioner and Chairman of the PHA, participated in actions of the PHA Board
to approve PHA Resolution No. 11154, authorizing the PHA to engage in a
contractual relationship with Wolf Block Schorr & Solis-Cohen, LLP (“Wolf Block”),
a law firm that employed his son, because his actions affected to the same degree a
subclass of five law firms including Wolf Block that were seeking to provide legal
services to the PHA.
2. Street violated Section 1104(a) of the Ethics Act, 65 Pa.C.S. § 1104(a), when he, as
a Commissioner and Chairman of the PHA, failed to file Statements of Financial
Interests with the PHA for calendar years 2006 and 2010.
3. To the extent he has not already done so, Street is directed to file complete and
accurate Statements of Financial Interests for calendar years 2006 and 2010 with
th
the PHA, through this Commission, by no later than the thirtieth (30) day after the
mailing date of this Order.
4. Non-compliance with this Order will result in the institution of an Order enforcement
action.
BY THE COMMISSION,
___________________________
Nicholas A. Colafella, Vice Chair
Chair John J. Bolger and Commissioner Roger Nick dissent.
Commissioner Maria Feeley did not participate in this matter.
In re: Street, No. 1636-2 Date: July 15, 2014
DISSENTING OPINION
I dissent from the Majority Opinion in this matter.
The ban on use of public office for a private pecuniary gain for the public official
himself or immediate family is at the heart of the Ethics Act. To allow a class/subclass to
be created that does not currently exist creates the opportunity to circumvent this essential
provision.
John J. Bolger, Chair
In re: Street, No. 1636-2 Date: July 15, 2014
DISSENTING OPINION
I dissent from the Majority Opinion in this matter.
The Investigative Division argues that for the class/subclass exclusion to be
applicable, the class/subclass must exist prior to the action in question. I agree.
Otherwise, a public official could vote to award a contract to his own company if a similar
contract is awarded to another company, thereby creating a “class/subclass.” The
Investigative Division cites legislative debate, indicating legislative intent, that the
class/subclass is intended to provide an exclusion for a public official who votes on a
matter which involves an existing class of individuals or entities.
The Investigative Division also argues that case law, in particular the
Commonwealth Court decision in Russell v. State Ethics Commission, concluded that
“…for the class/subclass exception to apply, the underlying action that the public official or
public employee desires to take must be a legal action. This exception does not make an
otherwise illegal action legal.” Id., 987 A.2d 835, 841 (Pa. Cmwlth. 2009), allocatur
denied, 607 Pa. 708, 4 A.3d 1056 (2010). The ban on use of public office for a private
pecuniary gain for the public official himself or immediate family is at the heart of the Ethics
Act. To allow a class/subclass to be created that does not currently exist creates the
opportunity to circumvent this essential provision.
For these reasons I dissent from the Majority Opinion in this matter.
Commissioner Roger Nick