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HomeMy WebLinkAbout84-520 PaparelliMr. Joseph D. Paparelli, Esquire Court House Square 148 Adams Avenue Scranton, Pennsylvania 18503 Dear Mr. Paparelli: Mading Address STATE ETHICS COMMISSION P.O. BOX 1 179 HARRISBURG, PA 17108 TELEPHONE: 1717) 783 -1610 February 2, 1984 ADVICE OF COUNSEL 84 -520 RE: Valley View School District; Non - Profit Sports Organization This responds to your letter of November 17, 1983, in which you, as Attorney for Mr. Louis Vitella, requested advice from the State Ethics Commission. Issue: You ask what restrictions are imposed upon Mr. Vitella as a result of his concurrent service as a School Board member who does chairs a non - profit organization which sponsors a holiday basketball tournament. Facts: Mr. Vitella was recently elected to the School Board of the Valley View School District, and was sworn in as School Director during the first week of December. Mr. Vitella also holds the position of Chairman of a non - profit organization which runs a holiday basketball tournament featuring several school districts, including the Valley View School District. In this regard, some of Mr. Vitella self- imposed duties'include attending all games so as to be available to work out immediate problems, arranging for staffing the tournament, contracting various schools to facilitate their participation in the tournament, and obtaining sponsors for production and operation of the tournament. You indicate that Mr. Vitella, in addition to the time and energy he spends on the tournament, also incurs out of pocket expenses for which he is not reimbursed. He does, however, receive a fee of $50 for his services. You note that, at the time this School District committed itself to participating in the tournament, Mr. Vitella was not yet a member of the School Board. State Ethics Commission • 308 Finance Building • Harrisburg, Pennsylvania Mr. Joseph D. Paparelli, Esquire February 2, 1984 Page 2 Mr. Vitella is concerned that his continued receipt of the 550 fee constitutes a conflict of interest between his position as Chairman of the Tournament and School Board Director for the Valley View School District, a participant in the Tournament. You indicate that he would like to continue in both capacities, and that he would abstain from any school board vote regarding the tournament. Discussion: As an elected Director in the Valley School District, Mr. Vitella comes within the def inition of "public official" as that term is defined in the Ethics Act. See 65 P.S. 402. As such, his conduct must conform to the requirements of the Ethics Act. One of the pertinent provisions of the Ethics Act is Section 3(c), which states: (c) No public official or public employee or a member of his immediate family or any business in which the person or a member of the person's immediate family is a director, officer, owner or holder of stock exceeding 5% of the equity at fair market value of the business shall enter into any contract valued at $500 or more with a governmental body unless the contract has been awarded through an open and public process, including prior public notice and subsequent public disclosure of all proposals considered and contracts awarded. Any contract made in violation of this subsection shall be voidable by a court of competent jurisdiction if the suit is commenced within 90 days of making of the contract. 65 P.S. 403(c). While the provisions of Section 3(c) of the Ethics Act regulate, to some degree, the conduct of a public official and a business in which he serves as an officer, or in this case a Chairman, we must determine first and foremost, whether the non- profit organization which Mr. Vitella serves is a "business" as that term is defined in the Ethics Act. A "business" is defined in the Ethics Act as follows: "Business." Any corporation, partnership, sole proprietorship, firm, enterprise, franchise, association, organization, self - employed individual, holding company, joint stock company, receivership, trust or any legal entity organized for profit. 65 P.s. 40 From this definition, it is clear that Mr. Vitella's organization, because it is not an entity organized for profit, cannot be considered a "business" as that term is used in the Ethics Act or in Section 3(c) in particular. Thus, the requirements of Section 3(c) would not be applicable if the District does or wishes to contract with the organization. It is also important to note that, in this case, Mr. Vitella does not receive an excess of $500, and thus his "contract" with the School District would not come under the requirements of Section 3(c) open and public process. Mr. Joseph D. Paparelli, Esquire February 2, 1984 Page 3 Although Section 3(c) of the Ethics Act is not applicable to this situation, there are other provisions of the Ethics Act that must be reviewed in order to guide Mr. Vitella's conduct under the Act. Specifically, the provisions of Section 3(a) as set forth below, should be reviewed: (a) No public official or public employee shall use his public office or any confidential information received through his holding public office to obtain financial gain other than compensation provided by law for himself, a member of his immediate family, or a business with which he is associated. 65 P.S. 403(a). Section 3(a) of the Ethics Act applies to Mr. Vitella's conduct as a public official vis -a -vis a "busines with which he is associated" as that term is defined in the Ethics Act as follows: "Business with which he is associated." Any business in which the person or a member of the person's immediate family is a director, officer, owner, employee or holder of stock. 65 P.S. 402. The sports organization as set forth above, is a non - profit entity and should not be considered a "business" in general, and thus, Section 3(a) would not be applicable. However, we must also consider that the general purpose of the Ethics Act as set forth in Section 1 of the Act, is to insure that the financial interests of the holders of or candidates for public office present neither a conflict nor the appearance of a conflict with the public trust. Even if the sports organization is not an entity organized for profit and may not be a "business" with which Mr. Vitella is "associated" as defined in the Ethics Act, it is clear that if the organization continues to exist and provides services to the School District, Mr. Vitella would have a financial interest, though minimal, in this outcome because of his status as Chairman of the organization. Accordingly, even though the organization is not a "business ", Mr. Vitella would be in a position, as a School Board Director, to influence the Valley View School District's decisions to continue, renew, or re- negotiate any contract with the organization. Such a continuation, renewal, or re- negotiation might have an effect upon Mr. Vitella's status as Chairman, his reimbursement, or possibly as an employee of the organization. Therefore, under the requirement of Section 1 of the Ethics Act which does not appear to be restricted in its application by reference to a "business" as is Section 3(c) or Section 3(a), we must conclude that Mr. Vitella should not partici pate in any of the School District's decisions vis -a -vis the sports organization. See Grove, 83 -013, where the Commission indicated the fact that a corporation is a non - profit entity does not preclude the possibility that an official may be required, under Section 1 of the Ethics Act, to abstain from participating in those discretionary decisions and matters presented by the organization to the entity on which the official serves. Mr. Joseph D. Paparelli, Esquire February 2, 1984 Page 4 Thus, in this case, in order to achieve the goal of assuring the public that the financial interests of public officials present neither a conflict nor an appearance of a conflict with the public trust, Mr. Vitella should not participate in the decisions of the School District, discussions of the District, or official action of the District with respect to the sports organization or the tournament. Otherwise, there are no restrictions under the Ethics Act in his continuing to serve as Chairman of the sports organization while at the same time serving as a School Board Director. With regard to your specific question of whether the $50 fee which Mr. Vitella receives for his services vis -a -vis the sports organization presents a problem, there is no problem with his accepting same as long as as Mr. Vitella abstains from any school district decision to award him the fee. Conclusion: Because the sports organization is a non - profit entity, neither Section 3(a) or Section 3(c) of the Ethics Act would be applicable or restrict or preclude Mr. Vitella from continuing his role with the sports organization. However, Mr. Vitella should abstain from official votes, discussions, etc. on the District's decisions relative to the sports organization and tournament, in order to comply with Section 1 of the Ethics Act. There are no other restrictions under the Ethics Act upon Mr. Vitella's receiving a fee for his services, or upon Mr. Vitella's concurrent service as Chairman of the sports organization and as a School Board Director for the Valley View School District. Pursuant to Section 7(9)(ii), this 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, providing the requestor 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 request that the full Commission review this Advice. A personal appearance before the Commission will be scheduled and a formal Opinion from the Commission will be issued. Any such appeal must be made, in writing, to the Commission within 15 days of service of this Advice pursuant to 51 Pa. Code 2.12. CW /rdp Sincerely, Sandra S. Chri General Couns i an son