Loading...
HomeMy WebLinkAbout19-555 GeorgeadisPHONE: 717-783-1610 STATE ETHICS COMMISSION FACSIMILE: 717-787-0806 TOLL FREE: 1-800-932-0936 FINANCE BUILDING WEBSITE: www.ethics.pa.gov 613 NORTH STREET, ROOM 309 HARRISBURG, PA 17120-0400 ADVICE OF COUNSEL December 20, 2019 To the Requester: Mr. Socrates J. Georgeadis, Esquire Georgeadis Setley 19-555 Dear Mr. Georgeadis: This responds to your letter dated November 19, 2019, by which you requested an advisory from the Pennsylvania State Ethics Commission ("Commission"). Issue: Whether the Public Official and Employee Ethics Act ("Ethics Act"), 65 Pa�S. § 1101 et seer.., would impose prohibitions or restrictions upon the Berks County Treasurer with regard to participating as a Member of the Berks County Retirement Board in matters ertaining to a Request for Proposal that would seek proposals from various selected financial services and advisory companies, including The Monteverde Group, LLC, to manage the Berks County Employees' Retirement Trust Fund, where the daughter of the Berks County Treasurer Is married to an employee of The Monteverde Group, LLC. Facts: You request an advisory from the Commission on behalf of A. Dennis A-Ua—ms ("Mr. Adams"). You have submitted facts, the material portion of which may be fairly summarized as follows. Mr. Adams is the Treasurer of Berks County ("County"), Pennsylvania. In his capacity as the County Treasurer, Mr. Adams serves as a Member of the Berks County Retirement Board ("County Retirement Board"), which administers the Berks County Retirement System ("County Retirement System"). The Berks County Employees' Retirement Trust Fund ("County Retirement Fund") holds the assets of the County Retirement System in trust. All monies and securities in the County Retirement Fund are in the custody of the County Treasurer for safekeeping. The County Retirement Fund is currently managed by a financial services and advisory company named "SEI Investments " Company(-'SEI"). As of October 28, 2019, the County Retirement Fund had a value in excess of $465 million. SEI charges annual fees totaling approximately $1.4 million to manage the County Retirement Fund. The County Retirement Board is in the process of preparing a Request for Proposal that would seek proposals from various selected financial services and advisory companies, including one named "The Monteverde Group, LLC" Geor eadis, 19-555 ecem 5er 2 0, 2019 Page 2 ("Monteverde"), to manage the County Retirement Fund. Mr. Adams' daughter is married to Ryan Duchak (Mr. Duchak"), who is employed with Monteverde. Based upon the above submitted facts, you pose the following questions: (1) Whether including Monteverde in the Request for Proposal process would constitute a conflict of interest for Mr. Adams under Section 1103(a) of the Ethics Act; (2) Whether Mr. Adams' son-in-law, Mr. Duchak, would be considered to be Mr. Adams' "child" for purposes of Section 1103(f) of the Ethics Act (pertaining to contracting and (3) What would Mr. Adams' responsibilities be pursuant to Section 11030) of the Ethics Act (pertaining to voting conflicts). Discussion: It is initiall noted that pursuant to Sections 1107(10) and 1107(11) of he 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 trut fully discllosed all of the material facts. As the County Treasurerla Member of the County Retirement Board, Mr. Adams is a public official subject to the provisions of the Ethics Act. Sections 1103(a) and 11030) of the Ethics Act provide: § 1103. Restricted activities (a) Conflict of interest. --No public official or public employee shall engage in conduct that constitutes a conflict of interest. 0) Voting conflict. --Where voting conflicts are not otherwise addressed by the Constitution of Pennsylvania or by any law, rule, regulation, order or ordinance, the following procedure shall be employed. Any public official or public employee who in the discharge of his official duties would be required to vote on a matter that would result in a conflict of interest shall abstain from voting and, prior to the vote being taken, publicly announce and disclose the nature of his interest as a public record in a written memorandum filed with the person responsible for recording the minutes of the meeting at which the vote is taken, provided that whenever a governing body would be unable to take any action on a matter before it because the number of members of the body required to abstain from voting under the provisions of this section makes the majority or other legally required vote of approval unattainable, then such members shall be permitted to vote if disclosures are made as otherwise provided herein. In the case of a three -member governing body of a political subdivision, where one member has abstained from voting as a result of a conflict of interest and the remaining two members of the governing body have cast opposing votes, the member who has abstained shall be Geor eadis, 19-555 December 20, 2019 Page 3 permitted to vote to break the tie vote if disclosure is made as otherwise provided herein. 65 Pa.C.S. §§ 1103(a), 0). The following terms related to Section 1103(a) are defined in the Ethics Act as follows: § 1102. Definitions "Conflict" or "conflict of interest." Use by a public official or public employyee 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. "Authority of office or employment." The actual power provided by law, the exercise of which is necessary to the performance of duties and responsibilities unique to a particular public office or position of public employment. "Immediate family." A parent, spouse, child, brother or sister. "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. "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 has a financial interest. 65 Pa.C.S. § 1102. Subject to the statutory exclusions to the Ethics Act's definition of the term "conflict" or "conflict of interest," 65 Pa.C.S. § 1102, a public official/public employee is prohibited from using the authority of public officelemployment or confidential information received byy holding such a public position for the private pecuniary benefit of the public officiallpublic employee himself, any member of his immediate family, or a business with which he or a member of his immediate family is associated. The use of authority of office is not limited merely to voting, but extends to any use of authority of office including, but not limited to, discussing, conferring with others, and lobbying for a particular result. Juliante, Order 809. Georgeadis�, 19-555 ecD ember 20, 2019 Page 4 In each instance of a conflict of interest, a public official/public employee would be required to abstain from participation, which would include voting unless one of the statutory exceptions of Section 11030) of the Ethics Act would be applicable. Additionally, the disclosure requirements of Section 11030) of the Ethics Act would have to be satisfied in the event of a voting conflict. Section 1103(f) of the Ethics Act, pertaining to contracting, provides as follows: § 1103. Restricted activities (f) Contract. --No public official or public employee or his spouse or child or any business in which the person or his spouse or child is associated shall enter into any contract valued at $500 or more with the governmental body with which the public official or public employee is associated or any subcontract valued at $500 or more with any person who has been awarded a contract with the governmental body with which the public official or public employee is associated, 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. In such a case, the public official or public empployee shall not have any supervisory or overall responsibility for the implementation or administration of the contract. Any contract or subcontract made in violation of this subsection shall be voidable by a court of competent jurisdiction if the suit is commenced within 90 days of the making of the contract or subcontract. 65 Pa.C.S. § 1103(f). The Regulations of the State Ethics Commission define the term "child" as follows: Child — The term includes adopted and biological children. 51 Pa. Code § 11.1. Having established the above general principles, your specific questions shall now be considered. In response to your first question, you are advised as follows. Subject to the statutory exclusions to the definition of "conflict" or "conflict of interest" as set forth in Section 1102 of the Ethics Act, 65 Pa.C.S. § 1102, pursuant to Section 1103(a) of the Ethics Act, Mr. Adams would have a conflict of interest as the County Treasurer/a Member of the County Retirement Board in matters that would financially impact him, a member of his immediate family, or a business with which he or a member ofhisimmediate family is associated. Mr. Adams' daughter is a member of his "immediate family" as that term is defined in the Ethics Act. Mr. Adams' son-in-law, Mr. Duchak, is not a member of his "immediate family" as that term is defined in the Ethics Act. Cf., Pulice v. State Ethics Commission, 713, A.2d 161 (Pa. Cmwlth. 1998), allocatur denied, 557 Pa. 642, 732 A.2d 1211 1998 (Holding that a relative not encompassedby the family relationships listed in the Ethics Act's definition of the term "immediate famif "—in that case, a son -in -law —would not be considered a member of immediate family . Therefore, a financial impact upon Mr. Adams' son-in-law/his son-in- law's employer, onteverde, would not in and of itself form the basis of a conflict of interest for Mr. Adams. Geor eadis, 19-555 ecem er 2 0, 2019 Page 5 Absent some basis for a conflict of interest such as a private pecuniary benefit to Mr. Adams, a member of his immediate family, or a business with which he or a member of his immediate family is associated, Mr. Adams would not have a conflict of interest as the County Treasurerla Member of the County Retirement Board in matter(s) pertaining to a Request for Proposal that would seek proposals from various selected financial services and advisory companies, including Monteverde, to manage the County Retirement Fund. In response to your second question, you are advised that Mr. Duchak is not Mr. Adams' "child as that term is defined by the Regulations of the State Ethics Commission, and therefore, Mr. Duchak would not be considered to be Mr. Adams' "child" for purposes of Section 1103(f) of the Ethics Act. Your third question is general and has been addressed above to the extent that it can be addressed. 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. Specifically not addressed herein is the applicability of the County Code or the County Pension Law. Conclusion. Based upon the submitted facts that: (1) A. Dennis Adams ("Mr. Adams") is1he Treasurer of Berks County ("County"), Pennsylvania; (2) in his capacity as the County Treasurer, Mr. Adams serves as a Member of the Berks County Retirement Board ("County Retirement Board"), which administers the Berks County Retirement System ("County Retirement System"); (3) the Berks County Employees' Retirement Trust Fund ("Countyy, Retirement Fund") holds the assets of the County Retirement System in trust; (4) all monies and securities in the County Retirement Fund are in the custody of the County Treasurer for safekeeping: (5) the County Retirement Fund is currently mans ed b a financial services and advisory company named "SEI Investments Company""SEI'; (6) as of October 28, 2019, the County Retirement Fund had a value in excess of $465 million; (7) SEI charges annual fees totaling a roximatel $1.4 million to manage the County Retirement Fund; (8 the County Retirement B and is in the process of preparing a Request for Proposal that would seek proposals from various selected financial services and advisory companies, including one named "The Monteverde Group, LLC" ("Monteverde"), to manage the County Retirement Fund; and (9) Mr. Adams' daughter is married to Ryan Duchak ("Mr. Duchak"), who is employed with Monteverde, you are advised as follows. As the County Treasurerla Member of the County Retirement Board, Mr. Adams is a public official subject to the provisions of the Public Official and Employee Ethics Act (`Ethics Act"), 65 a.C.S. 1101 et sue. Subject to the statutory exclusions to the definition of "conflict" or "conflict of interest as set forth in Section 1102 of the Ethics Act, 65 Pa.C.S. § 1102, pursuant to Section 1103(a) of the Ethics Act, Mr. Adams would have a conflict of interest as the County Treasurerla Member of the County Retirement Board in matters that would financially impact him: a member of his immediate family, or a business with which he or a member of his immediate famil is associated. Mr. Adams' daughter is a member of his "immediate family" as that erm is defined in the Ethics Act. Mr. Adams' son-in-law, Mr. Duchak, is not a member of his "immediate family" as that term is defined in the Ethics Act. Therefore, a financial impact upon Mr. Adams' son-in-law/his son-in-law's employer, Monteverde, would not in and of itself form the basis of a conflict of interest for Mr. Adams. Absent some basis for a conflict of interest such as a private pecuniary benefit to Mr. Adams, a member of his immediate family, or a business with which he or a member of his immediate family is associated, Mr. Adams would not have a conflict of Geor eadis, 19-555 ecem er 20, 2019 Page 6 interest as the County Treasurerla Member of the County Retirement Board in matter(s) pertaining to a Request for Proposal that would seek proposals from various selected financial services and advisory companies, including Monteverde, to manage the County Retirement Fund. Mr. Duchak is not Mr. Adams' "child" as that term is defined by the Regulations of the State Ethics Commission, and therefore, Mr. Duchak would not be considered to be Mr. Adams' "child" for purposes of Section 1103(f) of the Ethics Act (pertaining to contracting). 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 actuall received at the Commission within thirty (30) days of the date otT►s viceursuant to 51 Pa. Code § 13.2(h). The appeal may be receivedpat 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