HomeMy WebLinkAbout15-503 Kovach
ADVICE OF COUNSEL
February 10, 2015
Peter D. Kovach, Esquire
3919 Emil Ridge Drive
Mechanicsburg, PA 17050
15-503
Dear Mr. Kovach:
This responds to your undated letter postmarked December 15, 2014, received
December 16, 2014, by which you requested an advisory from the Pennsylvania State
Ethics Commission.
Issue:
Whether the Public Official and Employee Ethics Act (“Ethics Act”), 65
Pa.C.S. § 1101 et seq., would require a Senior Prosecutor in Charge for the
Pennsylvania Department of State to disclose on his Statement(s) of Financial Interests
payments made to his wife which are deposited into the joint checking account he holds
with his wife, where such payments are made for his wife to purchase gift cards on
behalf of buyers pursuant to a fundraising program in which his wife’s employer is a
participant.
Facts:
You request an advisory from the Pennsylvania State Ethics Commission
based upon submitted facts that may be fairly summarized as follows.
You are employed as a Senior Prosecutor in Charge with the Bureau of
Professional and Occupational Affairs within the Pennsylvania Department of State.
You state that in your capacity as a Commonwealth employee, you complete
Statements of Financial Interests.
Your wife is employed as a teacher at Hampden Elementary School (the
“Elementary School”) within the Cumberland Valley School District. Since 2009, the
Elementary School has participated in a voluntary charitable fundraising effort through a
Giant Food Stores (“Giant”) program named “Cash for Causes” (the “Program”).
Pursuant to the Program, a community organization may purchase Program gift cards
from Giant at a five percent discount off the face value of the Program gift cards. The
community organization must order the Program gift cards from Giant through the
community organization’s contact person/authorized purchaser. The community
organization may then sell the Program gift cards to buyers for full face value, with the
five percent difference being utilized for the community organization’s own purposes or
for donation to a third-party charitable organization.
Kovach, 15-503
February 10, 2015
Page 2
Money raised by the Elementary School by selling Program gift cards is donated
in the name of the Elementary School, and donations have been made to the American
Cancer Society’s Relay for Life and the Cystic Fibrosis Foundation. You state that the
annual accumulated difference between the purchase price of the Program gift cards
and the “resale” price is relatively minor. You further state that the total estimated
donation amount for 2014 was approximately $400.
During a given calendar year, there may be at least one buyer other than you
and your wife who purchases Program gift cards with a discount or face value in excess
of $1,300. The Elementary School does not have a checking account solely for
transactions related to Program gift cards, and buyers of Program gift cards have
historically made payments via cash or check to the Elementary School’s contact
person/authorized purchaser for the Program.
Your wife began serving as the Elementary School’s contact person/authorized
purchaser for the Program following the end of the 2013/2014 school year. In the
aforesaid capacity, your wife deposits payments made to her by buyers of Program gift
cards into the private, non-interest bearing joint checking account (the “Joint Checking
Account”) held in both of your names. Your wife then consolidates the buyers’
payments into one payment for submission to Giant, and the Program gift cards are
distributed to the buyers when the Program gift cards are received.
Based upon the above submitted facts, you pose the following questions:
(1) Whether the payments for Program gift cards deposited into the Joint
Checking Account should be disclosed as a direct or indirect source of
income on your Statement(s) of Financial Interests or otherwise disclosed
at any place on your Statement(s) of Financial Interests or on any other
State Ethics Commission forms; and
(2) If you would be required to disclose the aforesaid payments for Program
gift cards, whether the disclosure requirement would be triggered via a
calculation of the sum of the face values of the Program gift cards or the
discounted purchase price actually charged by Giant.
Discussion:
It is initially noted that pursuant to Sections 1107(10) and 1107(11) of
the Ethics Act, 65 Pa.C.S. §§ 1107(10), (11), advisories are issued to the requester
based upon the facts that the requester has submitted. In issuing the advisory based
upon the facts that the requester has submitted, the Commission does not engage in an
independent investigation of the facts, nor does it speculate as to facts that have not
been submitted. It is the burden of the requester to truthfully disclose all of the material
facts relevant to the inquiry. 65 Pa.C.S. §§ 1107(10), (11). An advisory only affords a
defense to the extent the requester has truthfully disclosed all of the material facts.
Preliminarily, it is noted that the submitted facts do not include an official position
description for your position as a Senior Prosecutor in Charge for the Pennsylvania
Department of State. This Advice assumes, without deciding, that in your capacity as a
Senior Prosecutor in Charge for the Pennsylvania Department of State, you are a public
employee subject to the Ethics Act, including the requirements for filing Statements of
Financial Interests.
Section 1104 of the Ethics Act provides:
§ 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
Kovach, 15-503
February 10, 2015
Page 3
financial interests for the preceding calendar year with the
commission no later than May 1 of each year that he holds
such a position and of the year after he leaves such a
position. Each public employee and public official of the
Commonwealth shall file a statement of financial interests for
the preceding calendar year with the department, agency,
body or bureau in which he is employed or to which he is
appointed or elected no later than May 1 of each year that
he holds such a position and of the year after he leaves such
a position. Any other public employee or public official shall
file a statement of financial interests with the governing
authority of the political subdivision by which he is employed
or within which he is appointed or elected no later than May
1 of each year that he holds such a position and of the year
after he leaves such a position. Persons who are full-time or
part-time solicitors for political subdivisions are required to
file under this section.
65 Pa.C.S. § 1104 (a).
Section 1105 of the Ethics Act sets forth the substantive disclosure requirements
for Statements of Financial Interests. Section 1105(b) provides, in pertinent part, as
follows:
§ 1105. Statement of financial interests
(b) Required information.--
The statement shall
include the following information for the prior calendar year
with regard to the person required to file the statement:
. . . .
(5) The name and address of any
direct or indirect source of income totaling in
the aggregate $1,300 or more. However, this
provision shall not be construed to require the
divulgence of confidential information protected
by statute or existing professional codes of
ethics or common law privileges.
65 Pa.C.S. § 1105(b)(5).
The Ethics Act defines the term “income” as follows:
§ 1102. Definitions
"Income."
Any money or thing of value received or
to be received as a claim on future services or in recognition
of services rendered in the past, whether in the form of a
payment, fee, salary, expense, allowance, forbearance,
forgiveness, interest, dividend, royalty, rent, capital gain,
reward, severance payment, proceeds from the sale of a
financial interest in a corporation, professional corporation,
partnership or other entity resulting from termination or
withdrawal therefrom upon assumption of public office or
employment or any other form of recompense or any
combination thereof. The term refers to gross income and
includes prize winnings and tax-exempt income. The term
does not include gifts, governmentally mandated payments
Kovach, 15-503
February 10, 2015
Page 4
or benefits, retirement, pension or annuity payments funded
totally by contributions of the public official or employee, or
miscellaneous, incidental income of minor dependent
children.
65 Pa.C.S. § 1102.
In applying the above provisions of the Ethics Act to your inquiry, you are advised
as follows.
In response to your first question, based upon the submitted facts—and in
particular the submitted facts that payments for Program gift cards are made to your
wife, who essentially “holds” the payments in the Joint Checking Account in order to
consolidate the payments to purchase Program gift cards for distribution to the buyers—
you are advised that the aforesaid payments for Program gift cards deposited into the
Joint Checking Account would not fall under the Ethics Act’s definition of the term
“income” for purposes of financial disclosure under the Ethics Act. Therefore, under the
submitted facts, you are advised that the Ethics Act would not require you to disclose
the aforesaid payments for Program gift cards deposited into the Joint Checking
Account on your Statement(s) of Financial Interests or other form(s).
Your second question need not be addressed given the answer to your first
question.
The propriety of the proposed conduct has only been addressed under the Ethics
Act; the applicability of any other statute, code, ordinance, regulation or other code of
conduct other than the Ethics Act has not been considered in that they do not involve an
interpretation of the Ethics Act.
Conclusion:
Based upon the submitted facts that: (1) you are employed as a
Senior Prosecutor in Charge with the Bureau of Professional and Occupational Affairs
within the Pennsylvania Department of State; (2) in your capacity as a Commonwealth
employee, you complete Statements of Financial Interests; (3) your wife is employed as
a teacher at Hampden Elementary School (the “Elementary School”) within the
Cumberland Valley School District; (4) since 2009, the Elementary School has
participated in a voluntary charitable fundraising effort through a Giant Food Stores
(“Giant”) program named “Cash for Causes” (the “Program”); (5) pursuant to the
Program, a community organization may purchase Program gift cards from Giant at a
five percent discount off the face value of the Program gift cards; (6) the community
organization must order the Program gift cards from Giant through the community
organization’s contact person/authorized purchaser; (7) the community organization
may then sell the Program gift cards to buyers for full face value, with the five percent
difference being utilized for the community organization’s own purposes or for donation
to a third-party charitable organization; (8) money raised by the Elementary School by
selling Program gift cards is donated in the name of the Elementary School, and
donations have been made to the American Cancer Society’s Relay for Life and the
Cystic Fibrosis Foundation; (9) the annual accumulated difference between the
purchase price of the Program gift cards and the “resale” price is relatively minor; (10)
the total estimated donation amount for 2014 was approximately $400; (11) during a
given calendar year, there may be at least one buyer other than you and your wife who
purchases Program gift cards with a discount or face value in excess of $1,300; (12)
the Elementary School does not have a checking account solely for transactions related
to Program gift cards, and buyers of Program gift cards have historically made
payments via cash or check to the Elementary School’s contact person/authorized
purchaser for the Program; (13) your wife began serving as the Elementary School’s
contact person/authorized purchaser for the Program following the end of the
2013/2014 school year; (14) in the aforesaid capacity, your wife deposits payments
made to her by buyers of Program gift cards into the private, non-interest bearing joint
Kovach, 15-503
February 10, 2015
Page 5
checking account (the “Joint Checking Account”) held in both of your names; and (15)
your wife then consolidates the buyers’ payments into one payment for submission to
Giant, and the Program gift cards are distributed to the buyers when the Program gift
cards are received, you are advised as follows.
This Advice assumes, without deciding, that in your capacity as a Senior
Prosecutor in Charge for the Pennsylvania Department of State, you are a public
employee subject to the provisions of the Public Official and Employee Ethics Act
(“Ethics Act”), 65 Pa.C.S. § 1101 et seq., including the requirements for filing Statements
of Financial Interests. Based upon the submitted facts—and in particular the submitted
facts that payments for Program gift cards are made to your wife, who essentially
“holds” the payments in the Joint Checking Account in order to consolidate the
payments to purchase Program gift cards for distribution to the buyers—you are advised
that the aforesaid payments for Program gift cards deposited into the Joint Checking
Account would not fall under the Ethics Act’s definition of the term “income” for
purposes of financial disclosure under the Ethics Act. Therefore, under the submitted
facts, you are advised that the Ethics Act would not require you to disclose the aforesaid
payments for Program gift cards deposited into the Joint Checking Account on your
Statement(s) of Financial Interests or other form(s). Lastly, the propriety of the
proposed conduct has only been addressed under the Ethics Act.
Pursuant to Section 1107(11) of the Ethics Act, an Advice is a complete defense
in any enforcement proceeding initiated by the Commission, and evidence of good faith
conduct in any other civil or criminal proceeding, provided the requester has disclosed
truthfully all the material facts and committed the acts complained of in reliance on the
Advice given.
This letter is a public record and will be made available as such
.
Finally, if you disagree with this Advice or if you have any
reason to challenge same, you may appeal the Advice to the full
Commission. A personal appearance before the Commission will be
scheduled and a formal Opinion will be issued by the Commission.
Any such appeal must be in writing and must be actually
received at the Commission within thirty (30) days of the date of this
Advice pursuant to 51 Pa. Code § 13.2(h). The appeal may be
received at the Commission by hand delivery, United States mail,
delivery service, or by FAX transmission (717-787-0806). Failure to
file such an appeal at the Commission within thirty (30) days may
result in the dismissal of the appeal.
Sincerely,
Robin M. Hittie
Chief Counsel