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HomeMy WebLinkAbout82-596 TongeMr. Donald F.- Tonge, C.P.A. 818 Welsh Street P.O. Box 698 Chester, PA 19016 Mailing Address: STATE ETHICS COMMISSION P.O. BOX 1 179 HARRISBURG, PA 17108 TELEPHONE: (717) 783 -1610 December 13, 1982 ADVICE OF COUNSEL 82 -596 RE: Reporting of Gifts; Legal Defense Fund Dear Mr. Tonge: This responds to your letter of November 12, 1982, in which you, in your capacity as Chairman and Treasurer of a legal defense fund established to benefit Mr. Nicholas F. Catania, requested advice from the Ethics Commission. Issue: You ask how a public official who receives gifts from a blind trust should report those gifts on his Financial Interest Statement if the amount of those gifts is not divulged to him. Facts: You, a Certified Public Accountant, are Chairman and Treasurer of a legal defense fund established for the beneift of Nicholas F. Catania, a County Councilman in Delaware County. In this capacity you receive contributions which are used to defray Mr. Castania's legal expenses. Such contribution are delivered directly to you, and you hold them in trust for Mr. Catania. The names of the contributors and the amounts of the individual contributions have not and will not be disclosed to Mr. Catania and the amounts paid to the attorney for Mr. Catania will also not be divulged. Accordingly, we are to assume that Mr. Catania does not receive information on the amounts received or expended on the blind trust. In the alternative, you have requested advice on facts varying slightly from those above. That is, you ask whether, if Mr. Catania is made aware of at least the sum of the gifts donated to the fund that is expended upon his attorney fees, he may report only that which he actually knows was received as a gift by the fund as apposed to that which was actually received by the fund. Discussion: The Ethics Act, at 65 P.S. §405(b)(6) requires a public official to include on his Financial Interest Statement information with regard to gifts valued in the aggregate of $200 or more. Such information includes the name and address of the donor, and the value and circumstances of the gift. State Ethics Commission • 308 Finance Building • Harrisburg, Pennsylvania Mr. Donald F. Tonge, C.P.A. December 13, 1982 Page 2 Even though Mr. Catania may never see or touch the funds in the trust, the trust is, in effect, a gift to Mr. Catania. It is more than probable, especially from the facts you set forth in the letter, that the trust contains at least $200 or more for Mr. Catania. In this regard, Mr. Catania technically receives a gift, which should, therefore, be reported as a gift. His Financial Statement should include the name of the fund, its purpose, the name of the director, and the amount in the fund if that amount can be discerned by Mr. Catania through due diligence. With regard to the set of varied facts, the amount actually disbursed, i.e., 20,000, would be included in the reported net amount of the fund, and so it is not necessary to report actual disbursements while for convenience salce it is understandable that it would be easier to keep track of yearly disbursements as opposed to yearly accretions to the fund where unused funds are carried over from year to year, the more desirable solution would be to report the whole sume in the fund each year, or at least the amount received into the fund for the reporting year. Simply stated, the amount of disbursements from the fund are not as important to report as the amount of input to the fund, i.e., the amount of the gifts received by Mr. Catania in the form of the fund. See Ostrander, 80 -699. Conclusion: The impact of this advice is simply that Mr. Catania, because he receives gifts via the legal defense fund, is responsible for reporting either the entire amount (if in excess of $200) of the fund from year to year or at least the amount received (if in excess or $200) into the fund from year to year, not inlcuding unused amounts carried over from year to year. With regard to disbursements, which amounts would necessarily be contained in the reported net amount of the fund, it,is possible not to disburse any funds during the course of the year and so, if Mr. Catania were to report on a disbursement basis, there would be nothing to report. In light of this, therefore, and in keeping with the spirit of the Ethics Act, Mr. Catania should report at least the amount of the gifts in excess of $200 received into the fund each year because he is, in effect, receiving those gifts whether they are used or whether he has any contact with them. 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. Mr. Donald F. Tonge, C.P.A. December 13, 1982 Page 3 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 Sinjerely, /i , Sandra S. Ch7stianson General Counsel