HomeMy WebLinkAbout923 BelliIn Re: John Belli
STATE ETHICS COMMISSION
308 FINANCE BUILDING
HARRISBURG, PENNSYLVANIA 17120
: File Docket: 93- 002 -C2
: Date Decided: 02/17/94
: Date Mailed: 02/24/94
Before: James M. Howley, Chair
Dennis C. Harrington
Roy W. Wilt
Austin M. Lee
Joseph W. Marshall, III
The State Ethics Commission received a complaint regarding
possible violation of the State Ethics Act, Act 9 of 1989, 6
S401 et se g. Written notice, of the specific allegation(s) was
served at the commencement of the investigation. A Findings Report
was issued and served, upon completion of the investigation, which
constituted the Complaint by the Investigation Division. An Answer
was not filed and a hearing was held. The record is complete. This
adjudication of the Commission is hereby issued which sets forth
the individual Allegations, Findings of Fact, Discussion,
Conclusions of Law and Order.
This adjudication is final and will be made available as a
public document fifteen days after issuance. However,
reconsideration may be requested which will defer public release of
this adjudication pending action on the request by the Commission.
A request for reconsideration, however, does not affect the
finality of this adjudication. A reconsideration request must be
received at this Commission within fifteen days of issuance and
must include a detailed explanation of the reasons as to why
reconsideration should be granted in conformity with 51 Pa. Code
S21.29(b).
The files in this case will remain confidential in accordance
with Act 9 of 1989, 65 P.S. S408(h) during the fifteen day period
and no one unless the right to challenge this Order is waived, may
violate confidentiality by releasing, discussing or circulating
this Order. However, confidentiality does not preclude discussing
this case with an attorney at law.
Any person who violates confidentiality of the Ethics Act is
guilty of a misdemeanor ot more than fine more
S409(e�
or imprisonment
Belli, 93- 002 -C2
Page 2
I. ALLEGATION:
That John Belli, a member of the Burrell School District,
Westmoreland County, violated the following provisions of the State
Ethics Act (Act 9 of 1989), when his firm, Corporate Security
contracted with the school district to provide equipment to monitor
fire alarms and thermostats without an open and public process, and
when he participated in Board actions to pay fees to his firm for
the monitoring services.
Section 3. Restricted Activities.
(a) No public official or public
employee shall engage in conduct that
constitutes a conflict of interest. 65 P.S.
5403(a).
Section 3. Restricted activities.
(f) 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 employee 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
P.S. S403(f)
II. FINDINGS:
1. John Belli served as a Burrell School District Board member
from September, 1985, until March 10, 1993.
a. Belli resigned his position at the .March 10, 1993, board
Be_, 93- 002 -C2
Page 3
meeting.
b. Belli resigned his position following the release of an
audit report by the Department of Auditor General which
questioned
a n d to remove himself from potential conflicts. a
2. Belli's principal employment since approximately 1984 has been
in the private security field focusing on security, fire and
surveillance systems for business and residence.
3. Since 1984, Belli has been involved with the following
corporations either as a principal /owner or employee.
a. Corporate Security; Inc. - - =sole incbrporator 1/84 to
3/86.
b. Guardian Protective Services, salesman, 3/26/86 to 1/90.
c. Corporate Security employee, 5/90 to 12/90.
d. Corporate Group Ltd. incorporator, 7 /15/91 to present.
4. Articles of Incorporation on file with the Pennsylvania
Department of State include corporate papers for Corporate
Security Inc. (Hereinafter referred to as C.S.I.).
a. Incorporation date is January 4, 1984.
b. Sole incorporator is John G. Belli; 2678 Elaine Drive,
Lower Burrell, 15068.
c. The purpose of the corporation is to sell, install,
and /or service security systems for commercial and
residential use and any and all other lawful activities
for which a corporation may be incorporated.
d. Business location is listed as 400 Penn Hills Mall,
Pittsburgh, PA 15235.
5. Corporate Security Inc., was purchased by Guardian Protection
Services Inc., around March 26, 1986, for the price of
$39,400.00.
a. Guardian took over ownership of all CSI assets owned as
used in the operation of CSI alarm security business.
b. Belli retained the business name Corporate Security Inc.
6. Belli was employed by Guardian Protective Services as a
salesman from March 26, 1986, until January, 1990.
Belli 93- 002 -C2
Page 4
a. Belli was not using the business name Corporate Security
Inc., when employed by Guardian Protective Service.
b. Belli had a two year non - compete clause as a condition of
employment with Guardian.
c. Belli's -two year non - compete clause was in effect from
January, 1990, until January, 1992.
d. Belli was prohibited from directly or indirectly owning
or operating any similar business in Allegheny,
Westmoreland, or any contiguous county thereto.
7. Belli approached Charles Birk, owner of D. B. Zimmerman, Inc.,
seeking employment around April, 1990.
a. D. B. Zimmerman, Inc., was a security guard business in
the Pittsburgh, PA area.
b. Charles Birk was a long time friend of Belli.
8. Belli discussed his need for employment and his non - compete
clause imposed by Guardian Protective Services.
9. Birk made Corporate Security Inc., a subsidiary of D. B.
Zimmerman, Inc.
a. Legal requirements prohibit a corporation from being a
subsidiary of another corporation.
b. Corporate Security was formed to circumvent this legal
requirement.
10. Corporate Security was established around May, 1990.
a. It was established to offer the same services formerly
offered by Corporate Security Inc.
11. Belli operated Corporate Security as an employee of D. B
Zimmerman Inc., from May, 1990, through December, 1990.
a. Birk was experiencing health problems and wanted to get
out of the security business.
b. Belli was still bound by his two year non - compete
agreement with Guardian at this time.
12. In approximately January, 1991, Belli approached Attorney
Charles Steele seeking, advice on how he could continue in
business, working around his non - compete clause with'Guardian.
Belli 93- 002 -C2
Page 5
a. Charles Steele's law firm of Steele & Hoffman, 422 Frick
Building, Pittsburgh, PA 15219, was employed by the
Burrell School District as it's Solicitor at this time.
13. Following this meeting, Belli formed Corporate Group Limited.
14. Articles of Incorporation were filed with the Pennsylvania
Department firm, St State,
and b Hoffman, Elaine on McGuirk, behalf an
of associate
law ,
Ltd.
a. Incorporation date is July 15, 1991.
b. Sole incorporator is John G. Belli; 2678 Elaine Drive,
Lower Burrell, PA 15068.
c. The principal activity of the business is to be dealing
in security systems and communications.
d. Business address is listed as 168 Westbrook Road, Lower
Burrell, PA 15068.
15. Corporate Group L.T.D. was formed to operate the business
formerly known as Corporate Security Inc.
a. C.S.I. is still a legally recognized corporation in the
Commonwealth of PA.
16. Belli made Corporate Security a subsidiary of Corporate Group
Limited. Corporate Security has operated officially in this
manner since July 15, 1991.
a. Corporate Security was operated unofficially in this
manner from January, 1991, until July 15, 1991.
17. Belli operated Corporate Security without D. B. Zimmerman
Inc., during 1991.
a. D.B. Zimmerman, operating as Corporate Security,
transacted business with the school district.
18. Belli purchased Corporate Security from Charles D/B/A, D.
B. Zimmerman Inc., for $15, 000 g January, anuary
a. No formal sales agreement was prepared but a judgment
note was entered into between Belli and Birk for the
purchase.
19. During the initial start -up of- Corporate Security, Corporate
Group L.T.D., Belli's home address, 2678 Elaine Drive, Lower
Burrell, PA., was used as a business address.
mall, 93- 002 -C2
Page 6
20. Westmoreland County records include the deed for the property
known as 2678 Elaine Drive, Lower Burrell, PA.
a. Deed Book Volume 2239, page 218, contains a deed dated
February 4, 1977. This deed is for a property which was
transferred from David Lee Delitskus and Diane E.
Delitskus, his wife to John G. Belli, and Barbara L.
Belli, his wife.
21. Business records of the Corporate Group L.T.D., include
installment payments made to D. B. Zimmerman from Corporate
Security, Corporate Group L.T.D.'s Mellon Bank account #179-
6400 on the following occasions for the purchase of corporate
security.
a .
to Check Number Amount
2/26/92 103 $ 757.32
3/26/92 137 769.66
4/28/92 184 754.30
5/31/92 229 752.10
6/30/92 290 742.12
7/26/92 338 739.65
8/24/92 380 733.28
9/27/92 412 723.63
10/31/92 441 720.54
11/29/92 495 711.40
12/29/92 554 707.77
1992 Total $8,111.77
1/26/93 596 $ 701.40
2/26/93 633 688.29
4/2/93 701 687.64
4/29/93 757 680.48
6/3/93 821 682.32
7/1/93 870 668.15
7/30/93 928 663.22
9/1/93 1010 656.84
1993 Total $5,428.34
22. During the initial start-up of Corporate Security and
Corporate Group L.T.D., Belli routinely used the business
names of Corporate Security and Corporate Security, Inc.
a. Corporate Security Inc., was not an operating business
during that time.
b. Belli continued to use old CSI stationery until October,
1990, when new stationery was purchased and received
payments in the name of Corporate Security Inc.
Belli 93- 002 -C2
Page 7
23. Statements Financial include the following filings for John Belli:
l
School l Dis tri ct Dis
a. Calendar year: 1989
Filed: 5/1/90 on Sec Form 1/90
Creditors: Mellon Bank, 8.75%
Direct /Indirect Income: C.S.I.
Financial Interest in any business: C.S.I.
Owner /President
All other financial interests: None
b. Calendar year: 1990
Filed: 3/11/91 on Sec Form 1/91
Creditors: None
Direct /Indirect Income: Corporate Security
Office Directorship Employment in any business:
Corporate Security - owner
Financial Interest in any business: Owner, P.O. Box
1800, Pittsburgh, PA
c. Calendar year: 1991
Filed: 4/24/91 on Sec Form 1/92
Real Estate Interest: Home at 2678 Elaine Dr., Lower
Burrell, PA
Creditors: Mellon Bank 8.75%
Direct /Indirect Income: Corporate Security
Office Directorship or Employment in any business:
Corporate Security President
Financial Interest in any business: Corporate Security,
stockholder
No percentage of stock interest is listed.
24. During
nanc t ia l rests years
eflect that he is ,thel Statements
ownerof Co
F Corporate
Financial
Security Inc.
a. For calendar year 1991, Belli indicates that he is a
President and stockholder of Corporate Security.
25. By August, 1990, the district was experiencing problems with
the fire alarms at the high school.
a. Normal fire drills could not be conducted without the
system overheating.
b. Superintendent, John George, viewed, this as a necessity
repair, categorizing it as a matter of student safety.
26. During the
rise in vandalism year, School
nd break - ins at it's school
had
Belli, 93- 002 -C2
Page 8
a. Paint and bleachers were tossed into the pool.
b. No security system existed for the pool area at that
time.
27. Around August, 1990, informal discussions took place during an
Executive Session of the school board of directors regarding
the recurring problems with the high school's fire alarms.
a. John Belli was present for these discussions.
b. Board member John Fick requested that Belli look into the
problem.
c. Superintendent John George also made a similar request of
Belli.
d. No board action was taken to approve Belli looking into
the problems with the fire alarm systems.
(1) Belli asserts approval was given during the
executive session.
(2) Board members have no recollection of this action.
28. During August or early September, 1990, Belli, D /B /A Corporate
Security, inspected and repaired the fire -alarm system at the
high school.
a. Belli was a board member at this time.
b. Corporate Security Inc., was not an operating business at
this time.
c. Belli worked for Corporate Security, a division of D. B.
Zimmerman Inc.
29. Belli reported back to the school board byway of letter dated
September 5, 1990, from Corporate Security Inc.; 2678 Elaine
Drive, Lower Burrell, PA., 15068; to John George; Burrell
School District Superintendent.
a. The letter reflects Belli's name in typewritten form but
not his signature.
b. This letter was on Corporate Security stationery.
c. The Corporate Security Inc., address used is the same
address as Belli's personal residence. (Refer to Finding
#20).
jimall 93- 002 -C2
Page 9
d. Belli prepared the letter personally.
e. The letter indicates that Belli sent servicemen to the found that
high st em was 1n working order, but could They
the last for only
he syst
several more months, up to a year.
f. The current system did not meet Pennsylvania Life Safety
Code changes effective May,
g. Systems that were not up to code were to be replaced when
there was any of the following conditions:
(1) A failure of the system.
(2) An addition to the system.
(3) When a system needed repair.
h. Belli indicated that it appeared Burrell's situation met
all three.
i. The letter indicates that John Zadell contacted Honeywell
for a quote to repair the system. They quoted
approximately $100,000.00, plus monitoring fees, and an
additional $9600.00 to tie the district's other schools
into the system.
(1) These figures were quoted to the board by
superintendent John George
Belli indicated that e labor when 1 he inspected t ared
$250.00 worth of free
repaired the alarm system.
k. Belli proposed that he would at no cost to the district
install the necessary dialer, panel, and power supplies
to monitor the fire alarms and the necessary equipment
and st This would in part the schools o Burrell up low
to
temperature.
code. _
1. Belli would only charge a competitive fee for monitoring.
30. Belli determined which repairs and equipment were needed.
a. The board acted on Belli's recommendations.
31. John Zadell is employed by the Burrell School District as a
maintenance employee.
j
Belli, 93- 002 -C2
Page 10
a. Zadell informally contacted Honeywell Corporation
inquiring about needed repairs to the systems.
b. Honeywell did not provide any cost estimate or bid for
the needed repairs or system monitoring to Zadell.
32. Belli, D /B /A Corporate Security Inc., did not provide written
quotes to the Burrell School District for monitoring fees
involving the system.
a. Belli asserts that during the executive session of
September, 1990, board meeting, he verbally advised board
members of the monitoring fee and service contract and
the costs therein.
33. Belli's proposal was included as part of the Board members
meeting minute packet for their September 12, 1990, meeting.
a. Packets are distributed to Board members approximately
one week prior to their meeting.
34. Minutes of the Burrell School Board include action authorizing
Corporate Security Inc., to install new fire alarms and low
temperature sensors at the district's school.
a. Minutes of the September 12, 1990 meeting, read in part
that: "Mr. Jansen informed the Board (members) that they
had each received a copy of a letter from Corporate
Security explaining some of the faults of the electronic
system. He asked the Board for authorization to permit
Corporate Security to install necessary equipment to
monitor fire alarms and low temperature thermostats in
all buildings at no cost to the district.
Mr. Collodi made a motion, seconded by Mr. Meredith, that
the Board permit Corporate Security to install equipment
to monitor fire alarms and low temperature thermostats in
all of the buildings at no cost to the district."
Roll call: Fick, Marinelli, Mantz, Collodi,
Meredith, Seinera, Kotecki, Kristof. All
voted yes.
Mr. Belli abstained.
35. Attached to the minutes from the board's September 12, 1990,
meeting is a memorandum to the Board of School Directors from
John Belli dated September 12, 1990.
a. The memorandum lists John Belli's reason for abstaining
on the vote for Corporate Security to install monitoring
J1i, 93- 002 -C2
Page 11
equipment for fire alarms and low temperature thermostats
at no cost to the district.
b. The nature ofBi's cnf is listed as Belli being
an employee o f Corporate
c. The memorandum is signed by John Belli.
36. Belli's conflict f ate interest
he the owner of t Corpo r rate
1990, does not
Security as was listed on his Statement of Financial Interests
for calendar year 1990. (Refer to Finding #23b
37. Board action to permit Corporate Security
monitoring fees l t he
equipment did not include any approval
be paid to corporate security.
a. The monitoring fees were referenced oi the
to eDtember 5,
1990, correspondence from Belli, provided packets. (Refer to
member as part of their meeting p
Finding #29).
38. Belli's /Corporate Security Inc., proposal was the only one
brought before the Burrell School Board for consideration.
a. No other proposals were solicited.
b. There was no advertising seeking proposals or quotes.
the
39. On July 31, 1990, Attorney Matthe issued a, tial
law firm of Steele & Hoffman,
Solicitor's Opinion to the Burrell School Board to answer
relevant requirements imposed by the Ethics law in connection
with the Burrell School District contracting with persons or
entities with which a public official of the district or a
member of his immediate family is associated.
a. Hoffman's Opinion indicated that "it is permissible for
the employer of a school director to enter into a
contract with the district, provided that the bidding or
quotation process is not established to that employers
unique advantage.. In the event the school
directors
t ors
employer bids upon or provides a quotatio
contract with the district, the school director -is
prohibited from providing to his /her employer any
confidential information. The school director should
refrain from any participation in the deliberations of
the district or the school board regarding any proposed
contract with his /her employer;' should disclose his /her
votinassociation to PP W such
any contract should
betweenal abstain district and
voting
Belli, 93- 002 -C2
Page 12
his /her employer. Prior to the approval of any agreement
between the district and the affiliated business, the
prospect of such contract must be announced in sufficient
time for a reasonable competitor to be able to prepare
and submit a proposal /applications filed. Finally, any
such agreement and any other quotations or proposals
considered must be publicly disclosed."
40. Hoffman's Solicitor's Opinion was based on the criteria that
John Belli was an employee of Corporate Security Inc., a
subsidiary of D. B. Zimmerman, Inc., and that Belli would not
profit in any manner from the dealings with the district.
(Refer to Findings #12 and #14 which indicate that the Steele -
Hoffman firm discussed the matter with Belli prior to filing
the incorporation papers.)
a. No reference was made to the D. B. Zimmerman Company in
Belli's letter to the board dated September 5, 1990.
(Reference Finding #29).
41. Financial records of the Burrell School District include
invoices to the district for work performed by
C.S.I. /Corporate Security and subsequent payments made.
Individual payments frequently cover multiple invoices.
a. Check number 1616 dated February 13, 1991, in the amount
of $4,980.00 was issued to C.S.I., 2678 Elaine Drive,
Lower Burrell, PA. The back of the check is endorsed
C.S.Z., John G. Belli, self - owner, account number 229-
2713 at Mellon Bank.
This check was to cover C.S.Z. invoices dated 1/3/91,
1/15/91, and 1/28/91. All invoices are signed off by
Thomas Jansen, Business Manager. - Invoices are for
monitoring fees, wiring and motion detectors for the
pool, labor for UL Radionics, digital dialers, and remote
school programming.
b. Check #2293, dated June 14, 1991, in the amount of
$1,116.00, was issued to Corporate Security, 2678 Elaine
Drive, Lower Burrell, PA. The back of the check is
endorsed by John Belli, self- owner, Corporate Security,
account number 229 -2713.
This check was to cover invoices dated 2/28/91 and 5/5/91
for monitoring fees, the installation of security keys at
the Middle School and service contracts.
c. Check #2617, dated August 15, 1991, in the amount of
$786.00, was issued to Corporate Security, P.O. Box
18001, Pittsburgh. Back of the check is endorsed
Belli, 93- 002 -C2
Page 13
Corporate Security, John Belli, self - owner, account
number 229 -2713.
This e p d J un e e 28 , was for monitoringtfeese for June, July
dated
and August, 1991.
d. Check #3637, dated 12/13/91, in the amount of $786.00,
was issued to Corporate Security, P.O. Box 18001,
Pittsburgh. The back of the check is endorsed Corporate
Security, John Belli, self - owner, account number 229 -
2713.
This check was to cover a Corporate Security invoice
dated October 9, 1991, for monitoring fees October,
November, December, 1991. Thomas Jansen, November 26
indicated it was approved by
1991.
was
e. Check #4073, dated 2/14/92, the amount fOffice,0,1330
issued to Corporate Security Accounting
Fifth Avenue, New Kensington, PA. The back of the check
is endorsed Corporate Security, account number 179 -6400.
John Belli's signature does not appear on this check.
The check was issued to cover invoices dated January 2,
1992, for monitoring fees. Also, an invoice dated
January 2, 1992, was for a service contract in the
amount of $2,450.00. The Service Contract is for the
maintenance of all fire alarms and low temperature
reporting systems in all schools. Maintenance of the
burglar alarm at the high school is also included. The
Service Contract indicates the total cost $2,450.00 is
being donated to the district.
Check #4657, dated 5/28/92, in the amount of $795.00,
issued to Corporate Security Accounting Office, 1330
Fifth Avenue, New Kensington, PA. The backside of this
check contains no endorsement. It was processed through
Mellon Bank at the Giant Eagle, New Kensington Branch
#871. This check was to cover Corporate Security invoice
dated April 2, 1992, for monitoring fees.
42. Corporate Security and Corporate tl School District. totalling $9258.00, from the Burrell
a. Of this amount, $4,590.00 was for equipment relating to
the swimming pool.
b. Belli asserts that his letter of 9/05/90 indicated that
the only equipment that would be donated was for the fire
Belli, 93- 002 -C2
Page 14
alarms and low temperature sensors.
43. The additional equipment charges were for materials used as
part of the installation of a security system at the high
school pool.
a. The work regarding the pool was a separate project not
related to the fire alarms.
b. Belli asserts that at an executive session of the board,
in January, 1991, he was authorized to do the work by the
District Superintendent and Solicitor because the damage
to the pool was considered an emergency, and the amount
to install the alarms would not reach the $10, bid
requirements.
(1) Belli asserts that the matter was brought up by
board members John Fick and Charles Meredith.
c. No bids were obtained.
44. Mellon Bank account number 229 -2713, is the personal checking
account for John G. Belli and his wife Barbara Belli.
a. John G. Belli and Barbara Belli are signatories on this
• account.
45. Mellon Bank account number 197 -6400, is the business checking
account for Corporate Security, Corporate Group L.T.D.
a. John G. Belli is sole signatory on this account.
46. John Belli's facsimile signature appears on the front of all
checks made payable to C.S.I. by the Burrell School District.
47. John Belli, D /B /A Corporate Security, ceased invoicing the
Burrell School District for monitoring fees in the middle part
of 1992, after questions were raised regarding the propriety
of the payments
a. To date, no additional bills were submitted for
monitoring fees.
b. Since the review by the Department of Auditor General in
June, 1992, Belli has continued to monitor and service
the alarm systems at no charge to the district.
48. The Burrell School District Board took action on the routine
payment of bills on a monthly "basis.
a. Bill lists are provided to Board members as part of their
Belli, 93- 002 -C2
Page 15
monthly meeting packets.
b. These packets are distributed at least one week prior to
the Board voting on the bills.
(1) On occasions, bill lists are provided to Board
members the night of the meeting.
c. Bill lists are voted on in their entirety.
d. Monthly bill lists contain upwards of a 150
disbursements.
e. Bills are itemized on a computer generated printout by
check number, listing the vendor, a brief description of
the item, and the amount of the disbursement.
49. Minutes of the Burrell ate Securit /C S I.� totalling n $9,258.00
were Payments to Corporate
Y
were approved as follows:
a.
ate Check # Amount
2/13/91 1616 $4,980.00
9/11/91 2617 786.00
8/14/91 2293 1,116.00
1/15/92 3637 786.00
3/11/92 4073 795.00
6/10/92 4657 795.00
$9,258.00
b. Belli participated in approving payments of bills after
consulting with the school district solicitor's, Charles
Steele and Philip McCalister who advised that it was
appropriate to vote on . payment of routine bills.
(1) McCalister was personally unaware that Belli had
purchased Corporate Security but knew that Belli
was an employee.
c. Votes to approve bill listings were unanimous.
50. Meeting minutes referenced in Finding #49 do not reflect any
discussions questioning the payments made to Corporate
Security /C.S.I.
51. Board members did not recall payments being made to Corporate
Security Inc., until an audit was conducted by the State
Auditor General's Office in August, 1992.
e li, 93- 002 -C2
Page 16
52. Attorney Philip McCalister issued a Solicitor's Opinion dated
June 30, 1992, regarding the district conducting business with
a company with which a Board member is affiliated.
a. McCalister's Opinion was issued to address questions
raised by the State Auditor General's Office after Belli
did business with the school district.
b. McCalister's Opinion states "it is impermissible for a
director, as a private person to directly engage in a
business transaction with the district; however, it is
permissible for the employer of a school director to
enter into a contract with the district provided that
the bidding of quotation process is not established to
that employers unique advantage. In the event the school
directors employer bids upon or provides a quotation for
any contract with the district, the school director is
prohibited from providing his or her employer any
confidential information. The school director should
refrain from any participation in the deliberations of
the district or the school board any proposed contract
with his /her employer, should disclose her /her
association with such employer and should abstain on
voting to approve any contract between the district and
his /her employer. Prior to the approval of any agreement
between the district and the affiliated business,
prospect of such contract must be announced in sufficient
time for a reasonable competitor to be able to prepare
and submit a proposal /application. Furthermore, any
other quotations or proposals to serve must be publicly
disclosed. Finally the director is not required to
abstain from voting to approve the routine payments of
bills that include bills for services contracted in
accordance with the Ethics Act.
53. Belli forwarded payments to D. B. Zimmerman Inc., from his
personal checking account, (Mellon Bank Account #229- 2713), on
the following occasions:
a.
Date Check Number Amount
02/27/91 1859 $ 5600.00
07/30/91 -2277 6900.00
10/30/91 2522 6700.00
b. Belli asserts that these payments were for fees collected
by him for security services and included the payments he
received from the Burrell School District. (Refer to
Finding #41).
Belli 93- 002 -C2
Page 17
54. Payments made to Corporate Security in 1992, by the Burrell
School District were deposited in the business checking
account of Corporate Security, Corporate Group L.T.D., Mellon
Bank account number 179 -6400.
a. These payments totalled $1590.00. (Refer to Finding
#42).
b. This amount was not forwarded to D. B. Zimmerman Inc.
55. Business als used as part Corporate f the installs for
maters ion work performed at
the district's schools.
a. Materials used were obtained from Alarmex Distributors,
Suite 104, Parkway Center, Pittsburgh, PA 15220, and Omni
Electric, 228 Davidson Street, Tarentum, PA 15084.
56. Corporate Security was invoiced followinmex for
materials used
at the Burrell schools on the g
Invoice # Date - Materials Cost
1603 Undated 1/4 x 18 Ballhanger $ 16.94
1/2 x 24 Masonry
1900 12/05/90 Temp -A -Lert 84.60
Shld JKT Wire 44.29
Str JKT Wire 137.00
1987 12/11/90 Brn Control 24.90
3976 12/29/90 Super Quad 5050 147.00
1045 T Brn 13.65
2809 01/03/91 Power Supply 108.00
Battery Backup 59.60
2048 01/31/91 MDC 32 DL 1015.00
1589 02/05/91 1/4 x 5 21.88
1689 02/11/91 MDC 16CD 220.50
MPI 30 35.90
MPI 11 12.50
60106 02/27/91 1045TB 13.3
Total: $1990.87
57. Corporate Security obtained wire and wire molds from Omni -
Electric.
a. Individual invoices are unavailable.
b. The costs to Corporate Security Inc., include:
150 ft. metal wire mold
15 wire mold boxes
250 ft. metal clad Mc cable
$150.00
45.00
125.00
Belli, 93- 002 -C2
Page 18
III. DISCUSSION:
1000 ft communication cable
Tax
Total
1990 Donation
Service above
1991 Materials and
1992 Materials and
1993 Monitoring
58. Corporate Security Inc., also installed used equipment in the
Burrell Schools.
a. Belli took in on trade the systems major component part
at $6,000.00.
59. Belli provided the following summary expenses which were
incurred and income received by Corporate Security as part of
their dealings with the Burrell School District:
and beyond donation
labor
labor
Total expenses
1990 donation $8,186.74
Burrell payments 9.258.00
Total credits $17,444.74
62.50
22.75
$405.25
$8,186.74
1,009.12
9,115.82
1,458.08
300.00
$20,009.76
Loss to Corporate Security Inc. $ 2,625.02
60. Belli's donation in 1990 included all materials and labor
required to bring Burrell School's fire alarms only in
compliance and applicable codes as cited in his September 5,
1990, letter to the district. .(Refer to Finding #29).
a. Payments Burrell School District $ 9,258.00
b. Loss, as asserted by Belli $10,751.76
(includes 1990 donation of $8,167.74)
61. Belli acted upon the advice and information received from the
school district solicitor and did not intend to violate the
Ethics Act.
a. Belli offered discounted prices to the school and
incurred some loss as a result of his work for the school
district.
As a member of the Burrell School District, Westmoreland
County, John Belli, hereinafter Belli, was a public official as
that term is defined under Act 9 of 1989. 65 P.S. 5402. As such,
his conduct is subject to the provisions of the Ethics Law and the
Be_li, 93- 002 -C2
Page 19
restrictions therein are applicable to him.
Initially, it is noted that Section 9 of Act 9 of June 26,
1989 provides, in part, as follows:
This amendatory act shall not apply to
violations committed prior to the effective
date of this act, and causes of action
initiated for such violations shall be
governed by the prior law, which is continued
in effect for that purpose as if this act were
not in force. For the purposes of this
section, a violation was committed prior to
the effective date of this act if any elements
of the violation occurred prior thereto.
Since the occurrences in this case transpired after the
effective date of Act 9 (June 26, 1989), we must apply
provisions of Act 9 to determine whether the Ethics Act was
violated.
of Act 9 of 1989 quoted above, a public
not engage in conduct that constitutes a
of interest" is defined under Act 9 of 1989
Under Section 3(a)
official /employee shall
conflict of interest.
The term "conflict
as follows:
Section 2. Definitions
"Conflict" or "conflict of interest."
Use by a public official or public employee 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. "Conflict" or "conflict
of interest" 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 or his immediate family or
a business with which he or a member of his
immediate family is associated. 65 P.S. S402.
Belli, 93- 002 -C2
Page 20
In addition, Section -3(f) of Act 9 of 1989 specifically
provides in part that no public official /employee or spouse or
child or business with which he or the spouse or child is
associated may enter into a contract with his governmental body
valued at five hundred dollars or more or.any subcontract valued at
five hundred dollars or more with any person who has been awarded
a contract with the governmental body with which the public
official /employee is associated unless the contract is awarded
through an open and public process including prior public notice
and subsequent public disclosure.
The issue before us is whether Belli as a Burrell School
District Board Member in Westmoreland County violated either the
conflict provision or contracting provision of Act 9 of 1989
regarding the allegation that he participated in board actions to
pay fees to Corporate Security, a business with which he was
associated, which contracted with the school district without an
open and public process.
Belli served as a Burrell School District Board Member from
September 1985 until March 1993. In a private capacity, Belli's
principal employment is in the area of security fire and
surveillance systems for businesses and residences. From 1984 to
the present, Belli has been involved as a principal /owner or
employee in the following corporations /businesses: Corporate
Security Inc. (CSI), Guardian Protective Services, Corporate
Security and Corporate Group Ltd. In March 1986 Belli sold CSI to
Guardian Protective Services by transferring all of CSI assets but
retained the CSI business name. Belli at that time became employed
by Guardian Protective Services -as a salesman until January 1990.
Belli was subject to a two year non- compete clause as a condition
of employment with Guardian which ran from January 1990- until
January 1992. Around April 1990, Belli sought employment with D.B.
Zimmerman Inc. which was owned by Charles Birk who was a friend of
Belli. Corporate Security was formed in May, 1990 to offer the
same services as offered by CSI. Belli operated Corporate Security
as an employee of D. B. Zimmerman Inc. from May 1990 until December
1990. Since Belli was still bound by the non - compete clause, he
contacted an attorney to seek advice on how he could work around
his non - compete clause. As a result of such advice, Belli formed
Corporate Group Ltd. to operate the business formerly known as CSI
which continued to have a corporate existence. Belli made
Corporate Security a subsidiar of Corporate Group Ltd. Corporate
Security was subsequently purchased by Belli from Charles Birk in
January 1992. During the start -up of Corporate Security or
Corporate Group Ltd., Belli used his home address as a business
address as well as the names Corporate Security or CSI.
During Belli's tenure as a Burrell School District Board
Member, the district experienced problems in August of 1990 with
the fire alarms at the high school. 'After informal discussions
Belli, 93- 002 -C2
Page 21
occurred in executive session of
alarms and vandalism, one of the
that Belli look into the problem
was taken by the board.
the school board about the fire
school board members suggested
although no formal board action
During August and September of 1990 Belli, D /B /A Corporate
Security, inspected and repaired the fire alarm system at the high
school. Thereafter Belli reported back to the school board using
Corporate Security stationery and the CSI address which was his
personal residence. In the report, Belli indicated that servicemen
were sent to repair the fire alarm system, that the system did not
meet Pennsylvania Code requirements, and that the system would only
last for a few more months. After Belli reported that Honeywell
quoted a repair to the system of $100,000 plus monitoring fees plus
an additional $9,600 to tie into the other district schools, Belli
indicated that he provided $250 of free labor to inspect and repair
the system and that he at no cost to the district would install the
necessary dialer, panel and power supplies to monitor the fire
alarms and thermostats to monitor the schools for low temperature.
After Belli determined which repairs and equipment were needed, the
board acted upon Belli's recommendation. Parenthetically, it
appears that Honeywell was merely informally contacted and never
provided any cost estimate or bid for the needed repairs or system
monitoring.
Belli, D /B /A Corp. (CSI) , never provided written quotes to the
school district for the monitoring fees involving the system. The
proposal which was submitted for the September 1990 meeting of the
school district related to the installation of new fire alarms and
low temperature sensors at the school district. The school board
authorized such action as reflected in the minutes with Belli
abstaining. At that meeting, Belli submitted a memorandum setting
forth the reasons for his abstention which listed him as an
employee of Corporate Security. The memorandum did not reflect
that Belli was owner of Corporate Security as was listed in his
Financial Interests Statement (FIS). The CSI proposal submitted by
Belli was the only one brought before the school board; no other
proposals were solicited nor was there any advertising for
proposals or quotes. The board action did not include any approval
as to monitoring fees.
On July 31, 1990 the solicitor to the board issued a non -
confidential opinion regarding the district contracting with
persons or entities with which a school district official is
associated. The opinion reflected that it was permissible to
engage in such contracting with the employer of a school district
director provided that there was no unique advantage to the
employer, provided there was no confidential information, provided
the school director refrained from any participation regarding the
proposed contract, provided disclosure was made of the employment,
provided there was abstention as to the approval of the contract,
elli, 93- 002 -C2
Page 22
provided the prospect of the contract prior to approval of
agreement would have to be announced to provide reasonable time for
a competitor to prepare and submit a proposal and finally provided
such agreements and proposals were publicly disclosed.
Various services were performed under the contract for the
school district by CSI /Corporate Security as to which invoices were
sent and payments received, the details of which are set forth in
Fact Finding 41. Corporate Security and CSI received payments
totalling $9,258 from the Burrell School District as to the
contract. Fact Finding 42.
John Belli, D /B /A Corporate Security, ceased sending invoices
to the school district for monitoring fees in mid -1992 after
questions were raised regarding the propriety of such payments.
From that time to date, no additional bills have been submitted for
monitoring fees.
As to the process by the school board for paying invoices,
payments are made on a monthly basis through bill lists submitted
to the board members usually one week prior to the board voting on
the bills. The school board votes on the bill lists as a package
which usually contains approximately 150 dispersements. The
minutes of the school board do confirm payments of $9,258 to
Corporate Security /CSI as reflected in Fact Finding 49. The votes
to approve the Corporate Security /CSI bills were made unanimously.
In June 30, 1992 a solicitor's opinion was issued regarding
the business conducted between the school district and the business
with which a school board member was affiliated. The opinion was
issued so as to address questions raised by the State Auditor
General's Office concerning such business activity. The Solicitor
opined that a director as a private person could not directly
engage in business transactions with the district and the employer
of a school director would be permitted to contract with the
district provided: there is no unique advantage in the bidding
process, there is no confidential information utilized, there is an
abstention by the school director as to participation coupled with
the necessary disclosures, there is an abstention by the school
director in voting to approve the contract, the prospect of such
contract is announced prior to the approval of agreement so as to
provide a competitor reasonable time to prepare and submit a
proposal, and any -other quotations or proposals received are to be
publicly_disclosed. Lastly, solicitor was of the opinion that the
director was not required to abstain from voting to approve the
routine payment of bills that included bills for the contract of
services.
The record does reflect that Belli issued payments to D.B.
Zimmerman Inc. which Belli claims were payments for fees collected
by him for security services or as payments he received from the
Belli, 93 +002 -C2
Page 23
school district.
receive $4,590
Zimmerman Inc.
Fact Finding 53. Corporate Security in 1992 did
in payments which were not forwarded to D.B.
Fact Findings 42a, 54.
The business records of Corporate Security include invoices
for materials used as part of the installation work performed at
the school district. Corporate Security was invoiced by Alarmex in
the amount of $1,990.87 for materials used at the school. In
addition, Corporate Security obtained materials from Omni- Electric
in the amount of $405.25 as to which invoices are unavailable. CSI
also installed used equipment in the school district which was a
major component of the system valued at $6,000.
Belli asserts that Corporate Security received •$17,444.74 in
credits as to the school district project, but had expenses of
$20,009.76 with a net loss of $2,625.02. Further, Belli asserts
that he made a donation in 1990 of services amounting to $8,167.74
thereby increasing his total loss to $10,751.76.
In applying the provisions of Section 3(a), the conflict
provision, and Section 3(f), the contracting provision, we do not
find a violation of 3(a), but we do find a violation of Section
3(f). As to Section 3(a) of Act 9 of 1989, in order to sustain a
violation, we must have evidence of record that Belli used the
authority of office and that such use of authority of office
resulted in a private pecuniary benefit to either him or business
with which he was associated. The term business with which he is
associated is defined under the Ethics Law as follows:
Section 2. Definitions
"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 P.S. 5402.
Clearly CSI and Corporate Security are businesses with which Belli
was, associated. However, a review of the findings in this case
does not establish a requisite use of authority of office on the
part of Belli. In particular, at the time that the contract was
awarded at the September 12, 1990 meeting of the board, Belli
specifically abstained in such action and filed a memorandum as to
his conflict of interest. The only other possible action taken by
Belli as a school board member was voting on a list of bills which
included invoices from Corporate Security /CSI. However, it is
noted that said invoices were included within lists of bills and it
appears that such bills were not contested. This Commission has
held as far back as Krushinski, Order 168, that a public
e111, 93- 002 -C2
Page 24
official /employee did not violate the Ethics Law when he voted to
approve routine non - contested bills of a business with which he was
associated. From the record before us we do not see the element of
a use of authority of office by Belli and on that basis we find no
violation of Section 3(a) of Act 9 of 1989. Given the above, we
need not address the question of whether a private pecuniary
benefit was received by Belli or a business with which he was
associated.
Turning to the matter of the contracting provision, Section
3(f), we do find a violation. In this case, Corporate Security or
CSI were businesses with which Belli was associated. In addition
Belli through those businesses entered into a contract with his
governmental body, the Burrell School District, which was over $500
and was not awarded through an open and public process. Such
action was violative of Section 3(f) of Act 9 of 1989. Our
decision is in accord with Katz, Order 885 where we held that a
county commissioner violated Section 3(f) of Act 9 of 1989
regarding the award of a contract, in excess of $500 and without an
open and public process, by his governmental body for the
construction of a conservation district building to a business with
which his son was associated. See also Molnar, Order 888.
The Ethics Law empowers the Commission to impose restitution
in cases where a financial gain has been obtained in contravention
of Act 9 of 1989. 65 PS 407(13). We also are directed by the
Ethics Law to impose a penalty equal to three times the financial
gain. 65 PS 409(c). In this case, giving due consideration to all
of the facts and circumstances, we believe that a repayment of
$750.00 to the Burrell School District is warranted. Accordingly,
Belli is directed within thirty days of the date of issuance of
this Order to forward a check or payment in the amount of $750.00
through this Commission to Burrell School District. Through such
action, Belli will remove himself from a conflict of interest in
this case. Hence, compliance with the foregoing will result in the
closing of this case with no further action by this Commission.
Failure to comply will result in a directive to institute an order
enforcement action.
IV. CONCLUSIONS OF LAW:
1. John Belli, as a member of the Burrell School District, was a
public official subject to the provisions of Act 9 of 1989.
2. Belli did not violate Section 3(a) of Act 9 of 1989 in that he
did not participate in the award of a contract from the school
district to a business with which he was associated.
3. Belli violated Section 3(f) of Act 9 of 1989 when the school
district entered into a contract with a business with which
Belli,, 93- 002 -C2
Page 25
Belli was associated which contract was in excess of $500 and
was not awarded through an open and public process.
In Re: John Belli
ORDER NO. 923
File Docket: 93- 002 -C2
Date Decided: 02/17/94
Date Mailed: 02/24/94
1. John Belli, as a member of the Burrell School District, did
not violate Section 3(a) of Act 9 of 1989 in that he did not
participate in the award of a contract from the school
district to a business with which he was associated.
2. Belli violated Section 3(f) of Act 9 of 1989 when the school
district entered into a contract with a business with which
Belli was associated which contract was in excess of $500 and
was not awarded through an open and public process.
3. Belli is directed within thirty days of the date of issuance
of this Order to forward a check or payment in the amount of
$750.00 through this Commission to Burrell School District.
a. Compliance with the foregoing will result in the closing
of this case with no further action by this Commission.
b. Failure to comply will result in a directive to institute
an order enforcement action.
BY THE COMMISSION,
JAMES M. HOWL R