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HomeMy WebLinkAbout135-SL The Big SandBoxPHONE: 717 -783 -1610 STATE ETHICS COMMISSION TOLL FREE: 1 -800- 932 -0936 FINANCE BUILDING 613 NORTH STREET, ROOM 309 HARRISBURG, PA 17120 -0400 In Re: The Big SandBox, File Docket: 18-007 -L Respondent X -ref: Order No. 135-SL Date Decided: 6/28/18 Date Mailed: 7/5/18 Before: Nicholas A. Colafella, Chair Mary R. Corrigan, Vice Chair Roger Nick Melanie DePalma Monique Myatt Galloway Michael A. Schwartz Shelley Y. Simms FACSIMILE: 717-787-0806 WEBSITE: www.ethics.pa.gov This is a final adjudication of the State Ethics Commission as to the alleged delinquency and/or deficiency of expense repport s) required to be filed pursuant to Pennsylvania's lobbying disclosure law, 65 Pa.C.S. � 13A01 et se q., hereinafter referred to as the "Lobbying Disclosure Law." The Investigative Division initiated these proceedings by filing with the State Ethics Commission and serving upon Respondent The Big SandBox (hereinafter also referred to as "Respondent ") a Notice of Alleged Noncompliance. A Stipulation of Findings and a Consent Agreement were subsequently submitted by the parties to the Commission for consideration. The Stipulated Findings are set forth as the Findings in this Order. The Consent Agreement has been approved. Effective January 1, 2017, the Pennsylvania Department of State ( "Department of State ") increased the thresholds under 65 Pa.C.S. § 13A06 for registration under 65 Pa.C.S. § 13A04 and the threshold for reporting under 65 Pa.C.S. § 13A05(d) from $2,500.00 to $3,000.00. In 2018 the Lobbying Disclosure Law was amended by Act 2 of 2018, which amendments were not in effect during the time period under review in this matter. References in this adjudication and Order to provisions of the Lobbying Disclosure Law and penalties authorized by the Lobbying Disclosure Law are to those that were in effect during the relevant time period. As of April 16, 2018, the Department of State will not accept paper registrations or expense reports. ALLEGED NONCOMPLIANCE: That Respondent, in its capacity as a principal registered with the Department of State pursuant to the Lobbying Disclosure Law (65 Pa.C.S. § 13A04), neggli ently failed to tlmel file a quarterly expense report pursuant to 65 Pa.C.S. § 13A�5 for the fourth (4 quarter of 207. II. FINDINGS: Respondent is The Big SandBox ( "Respondent ") and is a registered principal as that term is defined by the Lobbying Disclosure Law, Act 134 of 2006, 65 Pa.C.S. § 1 3A01, et seq. The Big SandBox, 18 -007-L Page a. Respondent initially registered as a principal with the Department of State on October 30, 2015, for the registration period January 1, 2015, through December 31, 2016. b. Respondent's registration statement indicates that lobbying commenced on August 31, 2015. 2. Respondent filed a principal registration statement with the Pennsylvania Department of State forthe registration period January 1, 2017, through December 31, 2018. a. By registering with the Department of State, Respondent consented to receive service of notices, other official mailings, or process at the address listed on the registration statement. b. Respondent was assigned the principal registration number "P43100." C. In filing its principal registration, Respondent identified its registered mailing address as: 1315 Walnut Suite 320 Philadelphia, PA 19107 3. The Lobbying Disclosure Law, specifically 65 Pa.C.S. § 13A04, states the following regarding the registration of an entity as a principal: § 13A04. Registration a. General rule. -- Unless excluded under section 13A06 (relating to exemption from registration and reporting), a lobbyist, lobbying firm or a principal must register with the department within ten days of acting in any capacity as a lobbyist, lobbying firm or principal. Registration shall be biennial and shall begin January 1, 2007. b. Principals and lobbying firms. -- 1. A principal or lobbying firm required to register under subsection (a) shall file a single registration statement setting forth the following information wit department: i. Name. ii. Permanent address. iii. Daytime telephone number. iv. E -mail address, if available. V. Name and nature of business. vi. Name, registration number and acronym of any affiliated political action committees. vii. Name and permanent business address of each individual who will for economic consideration engage in lobbying on behalf of the principal or lobbying firm. viii. Registration number when available. d. Amendments.-- The BigSandB�ox, 18 -007 -L Page 3 1. If there is a change of information required for the registration statement under subsection (b }(1) or (2) or (c), an amended registration statement shall be filledd with the department within 14 days after the change occurs. 2. When there is a change in information required for the registration statement under subsection (b)(3), an amended registration statement shall be filed with the department within 14 days of the end of the year in which the change occurs. 65 Pa.C.S. § 13A04(a), (b)(1), (d). 4. In addition to the Lobbying Disclosure Law, the duly promulgated Regulations provide further information in relation to registration periods an cf reporting periods: § 51.3. Registration periods and reporting periods. a. Registration under section 13A04 of the act (relating to registration) shall be biennial. The first registration period which commenced January 1, 2007, continues through December 31, 2008. Subsequent registrations shall commence on January 1 of each odd numbered year. 51 Pa. Code § 51.3(a). 5. Section 13A05 of the Lobbying Disclosure Law sets forth, in part, the following requirements for the contents of quarterly reporting forms filed by principals. § 13A05. Reporting (a) General rule. -- A registered principal shall, under oath or affirmation, fife quarterly expense reports with the department no later than 30 days after the last day of the quarter. (b) Content. -- (1) Each expense report must list the names and registration numbers when available of all lobbyists by whom lobbying is conducted on behalf of the principal and the general subject matter or issue being lobbied. (2) Each expense report shall include the total costs of all lobbying for the period. The total shall include all office expenses, personnel ex Tenses, expenditures related to gifts, hospitality, transportation and lodging to State officials or employees, and any other lobbying costs. The total amount reported under this paragraph shall be allocated in its entirety among the following categories: (i) The costs for gifts, hospitality, transportation and lodging given to or provided to State officials or employees or their immediate families. (ii) The costs for direct communication. (iii) The costs for indirect communication. The B10 SandBox, 18 -007 -L Page (iv) Expenses required to be reported under this subsection shall be allocated to one of the three categories fisted under this section and shall not be included in more than one category. 65 Pa.C.S. § 13A05(a), (b)(1) -(2). 6. In addition to the Lobbying Disclosure Law, the duly promulgated Regulations provide further instructions in relation to registration periods ancf reporting periods: § 51.3. Registration periods and reporting periods. (b) Reporting under section 13A05 of the act (relating to reporting) shall be quarterly within each calendar year: for January through March; April through June; July through September; and October through December. Quarterly expense reports shall be filed on or before the 30th day after the quarterly reporting period ends. 51 Pa. Code § 51.3(b). 7. As a registered principal, Respondent is required to file with the Department of Mate either a quarterly expense report or a statement of failure to meet the reporting threshold for each quarter it has been registered as a principal, by no later than the 30«' day after each quarterl reporting period has ended. 65 Pa.C.S. § 13A05(a), (d); 51 Pa. Code § 55.1 (d T 8. Section 13A05 of the Lobbying Disclosure Law additionally sets forth the threshold with regard to reporting expenditures: (d) Thresholds for reporting. - -An expense report required under this section shall be filed when total expenses for lobbyingg exceed [$3,000] fora registered principal in a reporting penod. In a reporting period in which total expenses are [$3,000] or less, a statement to that effect shall be filed. 65 Pa.C.S. § 13A05(d). 9. Section 13A03 of the Lobbying Disclosure Law defines the following terms: "Lobbying." An effort to influence legislative action or administrative action in this Commonwealth. The term includes: 1 direct or indirect communication; 2 office expenses; and 3 providing any gift, hospitality, transportation or lodging to a State official or employee for the purpose of advancing the interest of the lobbyist or principal. "Legislative action." An action taken by a State official or employee involving the preparation, research, drafting, introduction, consideration, modification, amendment, approval, passage, enactment, tabling, postponement, defeat or rejection of: 1 legislation; 2 legislative motions; 3 a veto by the Governor; or The Big SandBox, 18 -007 -L Page (4) confirmation of appointments by the Governor or appointments to public boards or commissions by a member of the General Assembly. "Legislation." Bills, resolutions, amendments and nominations pending or proposed in either the Senate or the House of Representatives. The term includes any other matter which may become the subject of action by either chamber of the General Assembly. "Direct communication." An effort, whether written, oral or by any other medium, made by a lobbyist or principal, directed to a State official or employee, the purpose or foreseeable effect of which is to influence legislative action or administrative action. The term may include personnel expenses and office expenses. 65 Pa.C.S. § 13A03. 10. (As a registered principal, Respondent is required to file with the Department of State either a quarterly expense report or a statement of failure to meet the reporting threshold for each quarter it has been registered as a principal, by no later than the 30th day after each quarterly reporting period has ended. 65 Pa.C.S. § 13A05(a), (d); 51 Pa. Code § 55.1(d)], a. Respondent did not file a timely fourth (4th) quarter 2017 expense report by January 31, 2018. 11. The Regulations promulgated under the Lobbying Disclosure Law specifically provide the following in relation to a delinquent filing: § 51.4. Delinquency. (a) A registration statement or report required to be filed under section 13A04 or 13A05 of the act (relating to registration; and reporting) is delinquent if not received by the Department on the date due as follows: (1) Hard copy filings must be received by 5 p.m. in the office. For quarterly expense reports, from 5 .m. until '12 a.m. midnight, a hard copy filing may be filed with the Department's designee. The filing location and the Department's designee will be on the Department's web site. (2) Electronic filings may be filed until 12 a.m. midnight. (b) A failure to timely file a registration statement, a quarterly expense report, a separate expense report, a notice of termination or an amendment to one of these filings constitutes a failure to register or report as required by the act; delinquency continues until the filing is received by the Department in proper form. 51 Pa. Code § 51.4(a) -(b). 12. [In relation] to the filing requirements of quarterly expense reports, the Regulations read, in part: § 55.1. Quarterly expense reports. The 1319 ia SandBox, 18 -007 -L Page 6 (a) A quarterly expense report is required to be filed as set forth in this section when the total lobbying expenses of a registered principal, registered lobbying firm or registered lobbyist lobbying, on the principal's behalf, together, exceed [$3,000] in a quarterly reporting period. The threshold of [$3,000] includes any economic consideration paid by a principal to a lobbying firm or lobbyist for lobbying. Individuals exempt under section 13A06 of the act (relating to exemption from registration and reporting) need not register or report. (b) For a quarterly reporting period in which the total lobbying expenses of a registered principal, registered lobbyin firm or registered lobbyist lobbying on the principal's behalf, together, are $3,000] or less, a statement to that effect shall be filed with the Department y checking the appropriate block on the quarterly expense report form. (d) The principal shall file a quarterly expense report or statement of failure to meet the reporting threshold on or before the 30th day after the quarterly reporting period ends. (g) A quarterly expense report of a principal required to be registered under the act must include at least the following information: (3) The total costs of all lobbying for the period. The total must include all office expenses, personnel expenses, expenditures related to gifts, hospitality, transportation and lodging to State officials or employees, and any other lobbying costs. (i) The total amount reported under this paragraph shall be allocated in its entirety among the following categories: (A) The costs for gifts, hospitality, transportation and lodging given to or provided to State officials or employees or their immediate families. (B) The costs for direct communication. (C) The costs for indirect communication. (ii) Registrants shall use a good faith effort to allocate expenses required to be reported under this subsection to one of the three categories listed herein. A given expense may not be included in more than one category.... 51 Pa. Code § 55.1(a), (b), (d), (g)(3)(i)-(ii). 13. By Warning Notice letter dated March 2, 2018, Petitioner attempted to serve Respondent with notice in accordance with Section 13A09 of the Lobbying Disclosure Law and Section 63.4(1) of the Lobbying Disclosure Regulations of the specific allegations that Respondent failed to file a quarterly expense report for the fourth (4th) quarter of 2017. The Big SandBox, 18 -007 -t_ Page a. Said Warning Notice was mailed to: The Big SandBox 1315 Walnut Suite 320 Philadelphia, PA 19107 b. This is the same address as listed on Respondent's principal registration statement. G. By submitting the principal registration statement, Respondent consented to receipt of service of notices, other official mailings or process, at the address listed on the registration statement. See, Paragraph 2(a) above). d. The Warning Notice was not returned as undeliverable. 14. Said Warning Notice letter set forth the nature of the alleged noncompliance and the administrative and criminal penalties for failing to file. 15. Said Warning Notice letter provided Respondent an opportunity to cure the alleged noncompliance and avoid the institution of these proceedings as to alleged noncompliance by filing a quarterly expense report for the time period covering the fourth (4 h) quarter of 2017 with the Department of State within thirty (30) days from the mailing date of the Warning Notice letter. 16. The Chief of the Division of Campaign Finance and Lobbying Disclosure for the Commonwealth of Pennsylvania - Department of State conducted a search of the Department of State's records, and, as of April 23, 2018, no fourth (4th) quarter 2017 expense report was found to have been filed with the Department of State for The Big SandBox. a. Respondent subsequently filed its fourth (4th) quarter 2017 expense report [submitted May 15, 20181 with the Department of State. 17, The Lobbying Disclosure Law provides for civil and criminal penalties for failing to comply with the re istration statement filing and quarter) expense reporting requirements thereoY. Specifically, the Lobbying Disclosure Law provides that: a. Negligent failure to register or report, as required by the Law, is punishable by an administrative enalty not exceeding $50.00 for each late day. 65 Pa.C.S. § 13A09(c)(1� 18. The delinquent period is calculated from the first date the fourth (4th) quarter 2017 expense report was delinquent (January 31, 2018) until, for the purposes of this Settlement, April 25, 2018, [the date the Notice of Alleged Noncompliance was filed], said period being 84 days. 19. As of the date of [the Consent] Agreement [May 25, 2018], Respondent has filed all outstanding quarterly expense reports for the quarters that said entity was registered as a principal with the Pennsylvania Department of State. Ill. DISCUSSION: In the instant matter, the alleged noncompliance is that Respondent, as a principal registered with the Pennsylvania Department of State ( "Department of State ") pursuant to the Lobbying Disclosure Law, negligently failed to timely file a quarterly expense report ThendBox, 18 -007 -L Page 8 pursuant to 65 Pa.C.S. § 13A05 for the fourth quarter of 2017. As noted above, the parties have submitted a Consent Agreement and Stipulation of Findings. The parties' Stipulated Findings are set forth above as the Findings of this Commission. We shall now summarize the relevant facts as contained therein. Respondent initially registered as a principal with the Department of State on October 30, 2015, for the registration period January 1, 2015, through December 31, 2016. Respondent's registration statement indicated that lobbying commenced on August 31, 2015. Per the Department of State's web site, Respondent registered as a principal with the Department of State for the registration period January 1, 2017, through December 31, 2018, on March 16, 2017. Respondent was assigned the principal registration number "P43100." Pursuant to Section 13A05 of the Lobbying Disclosure Law, 65 Pa.C.S. § 13A05, and Section 51.3 of the Lobbying Disclosure Regulations, 51 Pa. Code § 51.3, expense reports are filed on a quarterly basis. When a registered principal's total expenses for lobbyingg exceed $3,000 for a reporting periodlquarter, the principal is required to file a quarterly expense report with the Department of State by no later than 30 days after the last day of such quarter. For a reporting period in which total expenses are $3,000 or less, a statement to that effect must be filed by the principal. Thus, a registered principal must file either a quarterly expense report or a statement of failure to meet the reporting threshold by no later than the 30th day after each quarterly reporting period ends. 51 Pa. Code § 55.1(d). Having renewed its principal registration on March 16, 2017, for the re istration period January 1, 2017, through December 31, 2018, Respondent was required to file a quarterly expense report for the fourth quarter of 2017. Respondent failed to file a quarterly expense report for the fourth quarter of 2017 by the filing deadline. Failure to timely file a quarterly expense report constitutes a failure to report as required by the Lobbying Disclosure Law, and the delinquency continues until the filing is received by the Department of State in proper form. 51 Pa. Code § 51.4(b). By Warning Notice letter dated March 2, 2018, Respondent was served with notice of the alleged noncompliance in accordance with Section 63.4(1) of the Lobbying Disclosure Regulations, 51 Pa. Code § 63.4(1). The Warning Notice letter provided Respondent an opportunity to cure the alleged noncompliance and avoid the institution of these proceedings b filing a quarterly expense report for the fourth quarter of 2017 with the Department of Stae within thirty (30) days of the mailing date of the Warning Notice letter. As of April 23, 2018, no fourth quarter 2017 expense report was found to have been filed with the Department of State for Respondent. Respondent has now submitted a quarterly expense report for the fourth quarter of 2017. Negligent failure to register or report as required by the Lobbying Disclosure Law is punishable by an administrative penalty of up to $50.00 for each late day. 65 Pa.C.S. § 13A09(c)(1). Per the Consent Agreement and Stipulation of Findings, the parties are in agreement that Respondent's expense report for the fourth quarter of 2017 was 84 days delinquent. The Big SandBox, 18 -007 -L Page Having highlighted the Stipulated Findings and issues before us, we shall now apply the Lobbying Disclosure Law to determine the proper disposition of this case. The parties' Consent Agreement sets forth a proposed resolution of the allegations as follows: 3. The Investigative Division will recommend the following conclusions in relation to the above deficiencies: a. That Respondent, in its capacity as a Principal registered with the Pennsylvania Department of State pursuant [to] the Pennsylvania Lobbying Disclosure Law (65 Pa.C.S. § 13A04), failed to time) file a Quarterly Expense Report pursuant to 65 Pa.C.S. § 13A05, for the fourth (4t) quarter of 2017; b. That the transgression(s) of the Lobbying Disclosure Law outlined in paragraph (a) above [islare] deemed to be negligent in nature; and G. For the purposes of this Consent Agreement, Respondent was deficient in filing its fourth (41h quarter of 2017 Expense Report by a total of 84 days, calculated as set forth below: i. On March 2, 2018, a Warning Notice regarding the delinquent quarterly expense report was sent to Respondent via First Class Unites States Mail; ii. Respondent did not file the outstanding Quarterly Expense Report for the fourth (49 quarter of 2017 within the stated cure period; iii. Respondent has properly filed all outstanding Expense Reports. The delinquent period for purposes of this Consent Agreement is calculated from the first date the fourth (4th) quarter of 2017 Expense Report was delinquent (January 31, 2018) until the filing date of the Notice of Alleged Noncompliance (April 25, 2018). Respondent agrees to pay the sum of $1,460.00 in settlement of this matter to be paid as follows: Pursuant to Section 13A09(c)(1) of the Lobbying Disclosure Law, 65 Pa.C.S. § 13A09(c)(1), Respondent agrees to pay an administrative penallty in the amount O$15.00] per day during the delinquent period as outlined above for a total amount of $1,260.00 (84 days x $15.00 per diem), which shall be made payable to the Commonwealth of Pennsylvania and forwarded to the Pennsylvania State Ethics Commission within 30 days of the adjudication in this matter. Respondent also agrees to pay $200.00, made payable The B_. ig SandBox, 18 -007 -L Page 10 to the Pennsylvania State Ethics Commission. Said payment represents a portion of the costs associated with this matter. Said payment shall be made within 30 days of the adjudication in this matter. The Investigative Division will recommend that the State Ethics Commission take no further action in this matter, impose no further sanctions, and make no specific recommendations to any law enforcement or other authority to take action in this matter as to either Respondent, or any individual or representative of Respondent. Such, however, does not prohibit the Commission from initiating appropriate enforcement actions in the event of Respondent's allure to comply with this agreement or the Commission's Order or cooperating with any other authority who may so choose to review this matter further. Consent Agreement, at 1 -2. In considering the Consent Agreement and Stipulation of Findings, we agree with the parties that Respondent as a registered principal failed to timely file a quarterly expense report with the Department of State for the fourth quarter of 2017 as required by Section 13A05 of the Lobbying Disclosure Law. Accordingly, we hold that Respondent as a registered principal failed to timely file a quarterly expense report with the Department of State for the fourth quarter of 2017 as required by Section 13A05 of the Lobbying Disclosure Law. We accept the recommendation of the parties for a determination that the transgression of the Lobbying Disclosure Law outlined immediately above is deemed to be negligent in nature. The parties have agreed that Respondent was 84 days delinquent in filing its quarterly expense report for the fourth quarter of 2017. As part of the Consent Agreement, Respondent agreed to pay an administrative penalty in the amount of $1,260.00 (84 days x $150 per day), payable to the Commonwealth of Pennsylvania and forwarded to this Commission within thirty days of the adjudication in this matter. Respondent also agreed to pay $200.00 to this Commission, representing a portion of the costs associated with this matter, to be made payable to the Pennsylvania State Ethics Commission and forwarded to this Commission within thirty days of the adjudication in this matter. We determine that the Consent Agreement submitted by the parties sets forth a proper disposition for this case, based upon our review as reflected in the above analysis and the totality of the facts and circumstances. Accordingly, we approve the Consent Agreement that has been submitted by the parties. This Commission hereby levies one administrative penalty against Respondent The Big SandBox in the amount of $1,260.00 for its delinquent quarterly expense report for the fourth quarter of 2017. Additionally, per the Consent Agreement of the parties, Respondent is directed to ppay the amount of $200.00, representing a portion of the costs associated with this matter, to be made payable to the Pennsylvania State Ethics Commission. To the extent it has not already done so, Respondent The Big SandBox is directed to pay the aforesaid administrative penalty in the amount of $1,260.00 to be made payable The Biq SandBox, 18 -007 -L Page to the Commonwealth of Pennsylvania and forwarded to this Commission by no later than the thirtieth (30th) day after the mailing date of this adjudication and Order. To the extent it has not already done so, Respondent The Big SandBox is directed to pay the aforesaid additional amount of $200.00 to be made payable to the Pennsylvania State Ethics Commission and forwarded to this Commission by no later than the thirtieth (301') day after the mailing date of this adjudication and Order. Noncompliance will result in the institution of an order enforcement action. IV, CONCLUSIONS OF LAW: 1. As a principal registered with the Pennsylvania Department of State ( "Department of State ") under principal registration number "P43100," The Big SandBox has been subject to the reporting requirements of Section 13A05 of Pennsylvania's lobbying disclosure law ('Lobbying Disclosure Law "), 65 Pa.C.S. § 13A05. 2. The Big SandBox, in its capacity as a principal registered with the Department of State, failed to timely file a quarterly expense report with the Department of State for the fourth quarter of 2017 as required by Section 13A05 of the Lobbying Disclosure Law, 65 Pa.C.S. § 13A05. 3. The transgression of the Lobbying Disclosure Law outlined 'in paragraph 2 immediately above is deemed to be negligent in nature. 4. The prerequisite service of a warning notice in accordance with Section 63.4(1) of the Lobbying Disclosure Regulations, 51 Pa. Code § 63.4(1), was satisfied. 5. Based upon the totality of the circumstances in this case, the imposition of an administrative penalty in the amount of $1,260.00 (84 days x $15.00 per day) and the payment to this Commission in the amount of $200.00, representing a portion of the costs associated with this matter, are warranted. In Re: The Big SandBox, File Docket: 18 -007 -L Respondent, Date Decided: 6128118 Date Mailed: 715/18 ORDER NO. 135 -SL 1. The Big SandBox, in its capacity as a principal registered with the Pennsylvania Department of State ( "Department of State ") under principal registration number "P43100," failed to timely file a quarterly expense report with the Department of State for the fourth quarter of 20'17 as required by Section 13A05 of PennsyIvania's lobbying disclosure law ( "Lobbying Disclosure Law "), 65 Pa.C.S. § 13A05. 2. The transgression of the Lobbying Disclosure Law outlined in paragraph 1 immediately above is deemed to a negligent in nature. 3. This Commission hereby levies one administrative penalty against The Big Sand Box in the amount of $1,260.00 for its delinquent quarterly expense report for the fourth quarter of 2017. 4. To the extent it has not already done so, The Big SandBox is directed to pay the aforesaid administrative penalty in the amount of $1,260.00 to be made payable to the Commonwealth of Pennsylvania and forwarded to the Pennsylvania State Ethics Commission by no later than the thirtieth (30th) day after the mailing date of this Order. 5. To the extent it has not already done so, The Big SandBox is directed to pay the additional amount of $200.00, representing a portion of the costs associated with this matter, to be made payable to the Pennsylvania State Ethics Commission and forwarded to the Pennsylvania State Ethics Commission by no later than the thirtieth (30th) day after the mailing date of this Order. 6. Non - compliance with Paragraph 4 or 5 of this Order will result in the Commission initiating appropriate enforcement action(s). qY THE COMMISSION, �c o as o a e Na, Chair