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HomeMy WebLinkAbout1082 GrimoneIn Re: Michael Grimone STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 File Docket: X -ref: Date Decided: Date Mailed: Before: Daneen E. Reese, Chair Austin M. Lee, Vice Chair Allan M. Kluger Monsignor Joseph G. Quinn Boyd E. Wolff Julius Uehlein Louis W. Fryman 96- 090 -C2 Order No. 1082 7/24/98 8/7/98 This is a final adjudication of the State Ethics Commission. Procedurally, the Investigative Division of the State Ethics Commission conducted an investigation regarding a possible violation of the Public Official and Employee Ethics Law, Act 9 of 1989, P.L. 26, 65 P.S. §401 It seq., by the above - named Respondent: At the commencement of its investigation, the Investigative Division served upon Respondent written notice of the specific allegation(s). Upon completion of its investigation, the Investigative Division issued and served upon Respondent a Findings Report identified as an "Investigative Complaint." An Answer was filed and a hearing was held. The record is complete. This adjudication of the State Ethics Commission will be made available as a public document thirty days after the mailing date noted above. However, reconsideration may be requested. Any reconsideration request must be received at this Commission within thirty days of the mailing date and must include a detailed explanation of the reasons as to why reconsideration should be granted in conformity with 51 Pa. Code §21.29(b). A request for reconsideration will not affect the finality of this adjudication but will defer its public release pending action on the request by the Commission. The files in this case will remain confidential in accordance with Act 9 of 1989, 65 P.S. §408(h). Any person who violates confidentiality of the Ethics Law is guilty of a misdemeanor subject to a fine of not more than $1,000 or imprisonment for not more than one year, 65 P.S. §409(e). Confidentiality does not preclude discussing this case with an attorney at law. Grimone, 96- 090 -C2 Page 2 I. ALLEGATION: That Michael Grimone, a public official in his capacity as a Superintendent of the Cameron County School District, violated the following provisions of the State Ethics Act (Act 9 of 1989) when he used the authority of his office and confidential information received through his public office for the private pecuniary benefit of himself and /or a member of his immediate family and /or a business with which he and /or a member of his immediate family is associated by participating in actions and /or decisions, including but not limited to, recommending and approving contracts be awarded to and /or purchases be made from a business controlled by members of his immediate family; when he authorized payments to that business; and when he disclosed confidential information to his brother in relation thereto. Section 3. Restricted Activities (a) No public official or public employee shall engage in conduct that constitutes a conflict of interest. 65 P.S. §403(a). 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 of his immediate family or a business with which he or a member of his immediate family is associated. 65 P.S. § 402. II. FINDINGS: A. Admitted Pleadings 1. The Investigative Division initiated a preliminary inquiry on December 18, 1996. 2. The preliminary inquiry was completed within sixty days. 3. On February 14, 1997, a letter was forwarded to Michael Grimone, by the Executive Director of the State Ethics Commission informing him that a complaint against him was received by the Investigative Division and that a full investigation was being commenced. a. Said letter was forwarded by certified mail, no. P 487 031 786. b. The domestic return receipt bore the signature of Michael D. Grimone, with a delivery date of February 19, 1997. Grimone, 96- 090 -C2 Page 3 4. On May 1, 1997, the Executive Director of the State Ethics Commission filed an application for a ninety day extension of time to complete the Investigation. 5. The Commission issued an order on May 29, 1997, granting the ninety day extension. 6. Periodic notice letters were forwarded to Michael Grimone in accordance with the provisions of the Ethics Law advising him of the general status of the investigation. 7. The Investigative Complaint was mailed to the Respondent on November 7, 1997. 8. Michael Grimone served as the acting Superintendent of Schools for the Cameron County School District from August 2, 1993 to August 16, 1993 and Superintendent from August 16, 1993 until his retirement on January 4, 1997. 9. In late 1993 the Cameron County School Board decided to renovate the Woodland Elementary School to comply with the Americans with Disability Act. 10. The Cameron County School Board on January 13, 1994, approved a maximum project cost of $7,200,000.00 for the Capital Improvement Project for the Woodland Elementary School. a. The monies were for construction, alterations and equipment for the addition to the Woodland Elementary School. b. The board authorized the issuance of General Obligation Bonds in the aggregate principle amount of $7,000,000.00 to finance the construction project. 11. The Cameron County School District entered into an agreement with the architectural firm of Creal, Hyde & Larson, 217 Liberty Street, Warren, PA 16365 on December 17, 1993, for alterations and additions to the Woodland Elementary School. 12. On January 31, 1994, the Cameron County School Board approved the architect agreement with Creal, Hyde & Larson Architects for the renovations to the Woodland Elementary School. 13. Creal, Hyde & Larson Architects was charged with securing bids for all the project contract areas. a. The School Board was required to approve all bids recommended by Hyde. 14. Linn Hyde, of Creal, Hyde & Larson was the lead architect for the renovation project. a. Hyde was required to prepare the specifications for bid areas, conditions of the contract, legal ads and instructions for the bidders. Grimone, 96- 090 -C2 Page 4 b. Hyde was required to have the ads published and supervise the bid openings and make recommendations to the School Board for a vote to award contracts. 15. Architect Linn Hyde broke the project down into project areas for competitive bidding purposes. a. Hyde followed bid guidelines set forth by the Pennsylvania Department of Education and Public School Code, particularly the requirement that any item in excess of $ 10,000.00 was subject to the competitive sealed bid limit of the Public School Code. 16. All project areas with anticipated costs in excess of $10,000.00 were to be submitted to the School Board for consideration and approval. 17. Superintendent Michael Grimone served as the liaison between Creel, Hyde & Larson Architects and the Cameron County School Board. a. Grimone actively oversaw the project, having frequent contact with architect Linn Hyde. b. Grimone served on the building committee which had oversight responsibility for the project. 18. At a special meeting of the Cameron County School Board on January 31, 1994, a resolution was unanimously approved setting a maximum project cost of $7,200,000.00. 19. On February 10, 1994, the School Board unanimously voted to appoint a committee to review information on construction managers for the School renovation project. a. The committee consisted of board members Singer and Callahan and Superintendent Grimone. 20. On April 14, 1994, the board approved contracts with William Smith as project manager and Lobar, Inc., as value engineer. a. Grimone participated in the review of applicants for these positions. 21. Bid information for the Woodland School was discussed by Linn Hyde with the board on September 26, 1994. a. Bids had been advertised for the construction phase of the project. b. The bids received for construction exceeded estimated costs and were tabled for additional consideration. 22. During the board meeting of November 10, 1994, the board was advised that advertisements for bids for the construction /renovation were to be published on November 11, 1994, and a bid opening would be held on December 14, 1994. 23. On December 15, 1994, the School Board awarded... [certain] bids for the construction renovation project. Grimone, 96- 090 -C2 Page 5 24. On November 6, 1995, Grimone reported to the board that bid opening for removable fixtures would be held on November 7, 1995. a. Bid specifications for these removable fixtures were developed by architect Linn Hyde. 25. The renovation of the School included plans to furnish the classrooms with television monitors. a. The televisions were to be considered part of the removable fixtures part of the project. b. Linn Hyde did not develop the bid specifications for the purchase of the televisions. 26. Every portion of the construction /renovation project for the Woodland School project which was put out for bid was approved by the board, with the exception of the televisions for the classrooms. a. All of the bid specifications, with the exception of those regarding the television monitors, were prepared by Linn Hyde and approved by the board. 27. On or about July 21, 1995, Michael Grimone contacted Pierce- Phelps, Inc., • Harrisburg, Pennsylvania, to obtain pricing for Zenith televisions. a. Pierce - Phelps, Inc.,. had a cooperative purchase agreement with the Commonwealth of Pennsylvania for Zenith Electronics and accessory products. b. All school districts and intermediate units in the Commonwealth are able to purchase Zenith electronics in any quantity through a state contract between the Commonwealth of Pennsylvania and Pierce - Phelps, Inc. 28. Grimone received price quotes from Pierce - Phelps effective July 21, 1995, for Zenith televisions: a. Zenith SR 2568S b. Zenith SR 2573D 29. School board secretary Judith Lupino published the bid specifications for the televisions. a. This occurred after Grimone obtained price quotes from Pierce - Phelps. b. Grimone provided the specifications to Lupino. c. Lupino advertised the bid specifications for the [40] televisions. (1) The Cameron County Echo is a local paper, published once a week, with limited circulation. (2) The St. Mary's Daily Express is a daily paper circulated in Elk and Cameron. Counties. Grimone, 96- 090 -C2 Page 6 (3) The notice sought bids for 40 - 1996 Zenith SR 2568S televisions or 40 - 1996 Zenith SR 2573D televisions. 30. The Cameron County School District's protocol when seeking bids is as follows: a. The School District advertises in the Cameron County Echo. b. The newspaper ad lists the date and time when bids are due. c. Two or more School District officials must attend the bid opening. d. Any company that placed a bid is allowed to attend the bid opening. e. The lowest bidder must meet the requirements of the bid specifications. 31. Cameron County School District's policy was to contact local vendors for bids. 32. The Big "G" Department Store, 37 East Fourth Street, Emporium, PA, was owned by William Grimone. a. William Grimone is the brother of Michael Grimone. b. The Big "G" store was owned by William Grimone. 33. The School District received bids for the televisions from three local vendors. a. Big "G" Department Store, Emporium, PA. b. Western Auto Store, Emporium, PA. c. Radaelli's T.V., St. Mary's, PA. 34. Western Auto of Emporium, PA, submitted a bid by fax to the Cameron County School District. 35. Radaelli's of St. Mary's, PA, submitted a bid by mail to Cameron County School District. a. Radaelli's is a large television supplier located approximately twenty (20) miles from Emporium. 36. Big "G" Department Store of Emporium, PA, submitted a bid to the Cameron County School District. 37. Bid openings for the televisions occurred on August 17, 1995, at the Cameron County School District. a. Superintendent Michael Grimone was not present during the bid openings. b. District policy required that two district officials be present for bid openings. Grimone, 96- 090 -C2 Page 7 38. Lupino submitted the bid sheet to Grimone on August 17, 1995, upon his return to the office. 39. On August 18, 1995, at 1:44 p.m., Judith Lupino faxed seven pages of [bid] documents to Mark McCormick of Creal, Hyde & Larson from Cameron County School District. 40. On September 1, 1995, Linn Hyde also notified Big "G", Western Auto, Radaelli's and Pierce - Phelps that Big "G" was being recommended to receive the contract. 41. The bid was never submitted by Grimone to the board for approval. 42. The board had never authorized the purchase of televisions from Big "G ". a. The television purchase from Big "G" was the only aspect of the School renovation /construction project that was not submitted to the board for approval. 43. The number of calls between William and Michael Grimone increased during the time period when the bid specifications were being developed. 44. Grimone placed telephone calls to Hyde while he (Grimone) was on vacation. 45. The Cameron County School District also purchased other products from the Big "G" Department Store prior to July, including a camcorder and televisions. 46. The School District requires purchase orders for such purchases. a. Superintendent Grimone, Business Manager Kathy Glasl and Secretary Judy Lupino were authorized to sign and issue purchase orders. b. Superintendent Grimone was not required to sign every purchase order. c. Grimone or GIasI could sign purchase orders along with a requesting school principal. Both did not need to sign them. 47. The payment to Big "G" [for the purchase in 1994] was approved for payment by the School Board. 48. In June of 1994 the Cameron County School District received a $5,850 allocation from the Pennsylvania Department of Education as part of the Drug Free Schools and Communities Act of 1986 (DFSCA). a. Michael Grimone submitted the grant request in his capacity as school superintendent. 49. The application for the grant provides a breakdown of items requested for the grant allocation. 50. Grimone appointed a committee consisting of himself, school principals Clyde Moate and Timothy Kinsler and guidance counselors Matthew Zoschg and William Floyd to determine the use of the allocated DFSCA grant money. Grimone, 96- 090 -C2 Page 8 51. Floyd informed Superintendent Grimone that Big "G" offered the lowest price for VCR - Camcorder with the features he wanted. 52. This was in excess of the $900.00 allocated for equipment as part of the DFSCA grant. 53. School district policy required a purchase order for this purchase. 54. Grimone did not check the contract prices through Pierce - Phelps. B. Testimony 55. Judith Lupino is Secretary to the Superintendent and School Board of the Cameron County School District. a. When a renovation to Woodland Elementary School was planned, the various aspects of the project went out for bids. (1) Lupino received and held the bids for the opening dates and logged the opened bids. (2) The School Architect Linn Hyde generally sent out information to bidders and solicited bids from them. (a) The bids for the televisions at the Woodland School were processed differently. (i) Grimone asked Lupino to type and send out the bid specifications. a) Grimone specified the quantity, models and brand. (ii) Lupino sent copies of the specifications to two newspapers, the Cameron County Echo and Daily Press and to two local television dealers, Western Auto and Big "G." a) Grimone told Lupino to send the bid specifications to the two local vendors, which Lupino did by FAX transmission on July 28, 1995. b) Grimone gave Lupino instructions as to the information for the newspaper notice which ran on or about August 1, 1995. (iii) The deadline for the bids was August 16, 1995. (b) Bids were opened at the School after the deadline for submission. (1) Lupino was the only person present when she opened the bids for the televisions. (c) The situation as to the television bids was unusual. (d) Lupino presented the television bids to Grimone. Grimone. 96- 090 -C2 Page 9 (e) Grimone gave to Lupino a State quote from Pierce - Phelps as to the televisions. (i) Lupino did not have that information until Grimone gave it to her. (f) Grimone told Lupino to send the bid sheet to the architect. (g) As to the State quote, Grimone told Lupino that he believed there was an additional shipping charge. (i) Lupino put a question mark after the State quote. (h) The difference between the Big "G" and the State quote was one dollar for each model television. (1) All bids were sealed under the control of Lupino except for the State quote given to her by Grimone. (3) For the award of a bid, the Administration would make a recommendation to the School Board. (a) As to the television bids, the minutes of the School Board do not reflect any approval by the Board. (i) There is a letter from the architect to Big "G" stating that its bid was accepted. (ii) Lupino attended all School Board meetings during the relevant time period and there was no School Board approval as to the televisions. (4) The superintendent usually made the decision as to what specific non - routine items would be on the agenda for the School Board meetings. (5) During the pendency of the television bid process, there were telephone calls between Grimone and his brother William Grimone but Lupino does not know the substance of the conversations. 56. Kathy GIasI is the Business Manager of the Cameron County School District. a. Purchases for the School District are done through a bid or quote process. (1) The process used depends upon the amount of money involved. (a) Bids require advertising in newspapers for three weeks. (b) Quotes involve calling at least three people for prices. b. Obtaining quotes or bids normally goes through the board secretary who is contacted by the superintendent. c. In a bid process, the lowest bidder is usually selected unless the bid does not meet the specifications. Grimone, 96- 090 -C2 Page 10 d. With certain exceptions, the superintendent generally makes the recommendation to the School Board as to which bid to select. e. For bids over $10,000, the School Board authorizes the bid process, considers the recommendation and approves the final bid. f. The School Board approves all bills and invoices. g. Once a vendor is awarded a bid and the merchandise is received, payment is authorized. (1) Usually the vendor will send an invoice indicating that the merchandise has been delivered. (2) If an item is not bid, the School District will usually send a purchase order to the vendor. h. For items under $10,000, the superintendent along with the building principal, the board secretary or Glasl may approve a purchase order. i. Payment to a vendor should not occur before the School Board gives approval. j. Glasl first became aware of the televisions when she received an invoice. (1) GIasI received a letter from Linn Hyde to pay $12,560 to Big "G ". (a) The architect's notification was the trigger for GIasI to make payment. (b) Glasl called Hyde to ask if the televisions were at the School. (i) Hyde told Glasl that the televisions were in a secure warehouse. (ii) Glasl sent a letter to PNC Bank authorizing payment to Big "G" for the televisions. k. Six Zenith receiver /monitors and six VCRs were purchased from Big "G" in 1994. (1) The purchase order was co- signed by Glasl and Grimone. I. Grimone's initials on an invoice indicated an approval for the invoice to be paid. m. It is the typical procedure that merchandise from a vendor be in the possession of the School District before payment is approved. n. The proposal to purchase a VCR /camcorder for the School for $900 would require obtaining quotes. (1) No purchase order was completed for that purchase which totaled $946. Grimone, 96- 090 -C2 Page 11 (a) A purchase order should have been made under School District procedure. (2) Since the money to purchase the VCR /camcorder was from a drug and alcohol grant, a completion report had to be submitted. (a) Grimone signed the report certifying to its accuracy. o. Glasl probably talked to Grimone as to whether it was alright to pay the invoice for the VCR /camcorder. p. The School Board in approving invoices for payment reviews the list of invoices and approves the total amount for all bills. q. If there were no purchase order for an item, Glasl would go to Grimone for approval to make payment. 57. Clyde Moate is an elementary teacher at the Cameron County School District. a. Moate was involved as to televisions for the School project. (1) Moate made an assessment as to the number of televisions needed. (2) Moate told Grimone that the televisions should have large screens so that all students in the classroom could see. (3) Moate did not recommend any make or model televisions. b. As to the cooperative purchase plan that Grimone showed to Moate, he (Moate) thought it was a state listing of available products. c. Moate delegated the purchase of a camcorder to William Floyd, the guidance counselor. 58. Bill Smith was the construction manager for the Cameron County School District Woodland project. a. Smith reported to Grimone as part of his functions on the project. b. As to the televisions for Woodland, Smith played no role in the specifications, review of proposals, selection of make /models or recommendations. c. There was secured storage on the School project within the construction trailers. d. When the televisions were delivered, they were placed in one School room. 59. Linn Hyde was a partner in Creal, Hyde & Larsen ( "the Firm ") that acted as the architect for the School project. a. Hyde was the principal in charge of the School project for the Firm. Grimone, 96- 090 -C2 Page 12 (1) Grimone as superintendent had a very intense interest as to everything that happened with the School project. (2) The Firm put together bid documents for the different contract areas as to the Woodland School project. (a) When bids were submitted, Hyde would review and make recommendations to the School Board as to which bids should be accepted. (b) Hyde prepared the bids for all 16 to 18 contract areas of the School project except for the televisions. (3) Grimone approached Hyde as to the televisions, and indicated that he (Grimone) was knowledgeable in the area and was willing to take an active role in the acquisition of the televisions. (a) Hyde played no role in drafting the bid for the 40 televisions. (4) Bid specifications usually had an "or equal" clause which allowed bidders to substitute items of similar nature and quality. (5) Hyde first saw the bids for the televisions the day or the day after the bids were opened at the School. (a) Hyde first saw the Pierce - Phelps sheet when the television bids were sent by FAX to his office. (i) Hyde did not approach Pierce - Phelps for such information. (6) Hyde had a conversation with Grimone about the television bids. (a) As to the bid from Western Auto containing equivalent GoldStar televisions, Grimone commented that they were not equivalent models. (i) As a result of the conversation, Hyde's state of mind was that GoldStar was of a lesser quality than Zenith. (b) Grimone raised the issue with Hyde as to whether shipping was included for the Pierce - Phelps State quote. (c) The Western Auto bid was excluded based upon Grimone's representations. b. Hyde approved the invoice for the televisions based upon a statement from Grimone that the televisions were in town. (1) Grimone told Hyde that Big "G" had the televisions in its warehouse on November 13, 1995: (a) The televisions were not shipped until November 18, 1995. (b) Hyde would not have recommended payment if the televisions had not already been received. Grimone, 96- 090 -C2 Page 13 (2) Grimone talked to Hyde about the Big "G" invoice in the context that the School District was behind in bills which should be paid. (3) In another telephone conversation, Grimone talked to Hyde about getting bills processed. (a) The Big "G" bill was specifically mentioned by Grimone. (4) The Big "G" bill was paid more expeditiously than bills from other vendors. c. Grimone never told Hyde that Big "G" was owned by his brother. d. As to the School project items, such as sports equipment, desks, and file cabinets, the Firm prepared the bidding. e. The purchase of the televisions was the only contract that was in the complete control of the School. f. Grimone made the decision as to the purchase of the televisions for the School District. (1) Hyde then wrote a letter to the School District recommending the award of the contract to Big "G." 60. Kimberly Clark is employed as an order desk correspondent at Pierce - Phelps. a. Pierce - Phelps sells to the Commonwealth and local governments. b. Pierce - Phelps has a cooperative plan whereby school districts could buy smaller quantities. (1) A catalogue containing items and prices was sent to intermediate units but school districts could receive such information. (a) The catalogue is not available to the general public. (2) For larger purchases, a lower price (than the catalogue) could be obtained. c. For purchases of more than 25 televisions, there would be no shipping charge. d. Free shipping, where applicable, would be conveyed to a person making an inquiry by telephone. 61. Linda R. Reid is a co -owner of Western Auto in Emporium, Pennsylvania. a. Reid submitted a bid to sell 40 televisions to the School District, even though her store did not carry Zenith. (1) Reid talked to her supplier about the bid, who informed her that GoldStar bought Zenith and could supply GoldStar televisions that were comparable in features. Grimone, 96- 090 -C2 Page 14 (2) The bid by Reid informed the School District about the relationship between Zenith and GoldStar and also that the bid with GoldStar televisions was equivalent to Zenith. (3) There was no additional charge for shipping in the bid. 62. Tim Sheridan had worked for Zenith when the company began direct marketing of its products. a. Sheridan had a particular territory to cover for Zenith which included Emporium. b. More sales by a dealer enabled the dealer to obtain lower purchase prices from Zenith. c. Retail Zenith dealers who wanted to submit bids could contact Sheridan for prices. d. In the summer of 1995, Sheridan had contact with Big "G" about an order for Zenith televisions. (1) Sheridan talked to William Grimone about 40 televisions for a school. (a) William Grimone informed Sheridan of the specific models of Zenith televisions he wanted. (b) Sheridan was able to bring down the cost of the televisions. (c) When William Grimone stated that he could get a better price from Pierce - Phelps, Sheridan contacted his boss to see if their price could be lowered. (d) After Sheridan's boss told him about "phone blitz" discounts, Sheridan tried to get that for William Grimone. (2) Before William Grimone bought the 40 televisions from Zenith, he was not a stocking dealer who could obtain lower purchase prices. (3) The order to buy the televisions from Zenith was placed on November 7, 1995. (a) An invoice reflects that the 40 televisions were billed and shipped on November 18, 1995. (b) Big "G" was charged $287 per set for the 40 televisions. (4) The discussions Sheridan had with William Grimone about the Zenith televisions occurred before August 1, 1995. 63. Kristine Umble worked in the Big "G" Department Store from 1990 until June, 1996 when the store was closed. a. William Grimone was in charge of decisions at the store. b. In 1995, Big "G" only carried Zenith televisions. Grimone, 96- 090 -C2 Page 15 c. After Big "G" got the bid for supplying 40 televisions for the School project, the delivery truck with the 40 televisions came to the store but was sent to the School. d. Grimone talked to William Grimone by telephone usually once or twice a week. (1) There were conversations about bids but Umble, hearing only one side of the conversation, did not know the particulars. 64. William Floyd is the guidance counselor at Cameron County School District. a. Floyd was involved with the Drug -Free Schools and Community Act grant. (1) A group of people, including Grimone, met to determine what programs could be developed as to the grant. (2) The School District was allocated $5,858. (3) A camcorder purchase was considered for the elementary school. (a) Floyd was designated to look at camcorders. (1) Floyd found the camcorder he wanted at Big "G." a) The camcorder purchase was $946 which was more than the $900 allocation. b) Kathy GIasI would not authorize the extra $46. c) Floyd had a conversation with Grimone who gave approval to spend the extra $46. b. The camcorder was purchased by the School District from Big "G" for $ 946. 65. Mark Tempest was a special investigator for the State Ethics Commission assigned to the Grimone case. a. Grimone agreed to and gave a sworn statement to Tempest. (1) Grimone knew that Pierce - Phelps was offering the 40 televisions with free shipping. (2) As to why William Grimone's bid was a dollar Tess than Pierce - Phelps, Grimone responded that it was a coincidence. 66. Grimone is the former superintendent of the Cameron County School District. a. A committee of two principals and two guidance counselors decided to purchase a camcorder from drug /alcohol grant monies. Grimone, 96- 090 -C2 Page 16 (1) Floyd contacted and informed Grimone that the price for the camcorder and accessories came to $946 but only $900 was allocated. (a) Grimone asserts that he did not authorize Floyd to buy the camcorder for $946. (b) Grimone states he told Floyd to see Kathy GIasI to get authority to make the expenditure. b. As to the purchase of six VCRs and six televisions by the School District, Grimone was in charge but did not seek the actual quote. c. Grimone asserts that he first learned that Big "G" got the television bid from Linn Hyde. (1) Grimone states that when William Grimone called him about getting paid for the televisions, he (Grimone) stated that he did not handle that. (2) Grimone asserts that he did not discuss the Pierce - Phelps State quotes with his brother William Grimone. d. Grimone knew that the School District purchased items from Big "G." e. As to the bids for the 40 televisions, Grimone knew that if the bid for GoldStar were eliminated, Big "G" would be the next Lowest bidder. f. The specifications for the 40 televisions with two Zenith model numbers came from Grimone. Grimone disagrees. with Hyde's testimony that Grimone told Hyde that the televisions had been actually received. (1) Grimone states that he questioned Kathy Glasl as to why she paid for the televisions before they were received. h. When Grimone showed the Pierce - Phelps catalogue containing Zenith televisions to Moate, Grimone knew that Big "G" carried Zenith. g. 67. William Grimone is the brother of Grimone and the former owner of the Big "G" Department Store. a. In 1995 the School District was soliciting bids for 40 televisions. (1) Tim Sheridan was called to get information about Zenith televisions so that Big "G" could submit a bid. (2) Big "G" submitted a bid and received the contract to supply 40 televisions to the School District. b. After William Grimone ordered the televisions through Tim Sheridan, other calls were made to get a better price. c. Big "G" was having financial difficulties for several years before it closed. Grimone, 96- 090 -C2 Page 17 d. William Grimone states that no one told him what the bid price was from Pierce - Phelps. e. As to why Big "G" bid the two Zenith model televisions at $1 Tess than a large volume business like Pierce - Phelps, William Grimone asserts that the other bidders wanted a bigger mark -up. (1) William Grimone received the maximum profit on the sale of the 40 televisions with the School District in terms of his purchase price and his submission of the winning bid. 68. J. Michael Mouk is a special investigator for the Auditor General. a. Mouk conducted investigative activities as to the purchase of the 40 televisions by the Cameron County School District. (1) Although Grimone initially stated he had nothing to do with the purchase of the 40 televisions, he later admitted he was instrumental in the purchase. C. Documents 69. Exhibit ID 2 are photocopies of minutes of the Board of the Cameron County School District from January 13, 1994 to April 1, 1996. a. The minutes do not contain any authorization from the Board to Grimone as to the purchase of the 40 televisions. 70. Exhibit ID 5 are photocopies of documents relating to a Drug -Free School and Communities Act of 1986 grant to the Cameron County School District in the amount of $5,858 for the 1994/1995 year. a. $900 of the fund was allocated for a VCR - camcorder. b. Big "G" by invoice of June 17, 1995 sold a camcorder with accessories to the School District in the amount of $946. (1) The School District issued a check, No. 017035 dated June 30, 1995 in the amount of $946 to Big "G." 71. Exhibit ID 6 consists of photocopies of the requests for bids sent by FAX transmission from the School District to Western Auto Parts and Big "G" on July 28, 1995. a. The specification sheet requested bids on 40 1996 Zenith televisions model SR 2568S or SR 2573D. b. The quoted prices were to include shipping and delivery. c. The deadline for bid submission was August 16, 1995 at 10:00 a.m. 72. Exhibit ID 7 are photocopies of bids received by the Cameron County School District for 40 televisions as to the Woodland Elementary project. Grimone, 96- 090 -C2 Page 18 a. Western Auto submitted a bid dated August 10, 1995 using GoldStar televisions GCT -25155 at $292 and GCT - 25565 at $244, noting that GoldStar was equivalent to Zenith which is owned by GoldStar. b. Radaelli submitted a bid with the Zenith SR 2568S at $325 and SR 2573D at $350. c. The Big "G" bid dated August 1, 1995 offered the Zenith SR 2568S at $314 and SR 2573D at $344. d. The Pierce - Phelps listing for the Zenith SR 2568S was $315 and for the SR 2573D was $345 as of July 21, 1995. 73. Exhibit ID 14 is in part a photocopy of a letter from the architectural firm to Grimone dated September 1, 1995 which recites that the firm recommends to the School District to offer a contract to Big "G" for 40 Zenith televisions, model 2568S at a unit price of $314 for a total contract price of $12,560. 74. Exhibit ID 15 is in part a photocopy of a letter from the architectural firm to Big "G," Pierce - Phelps, Western Auto and Radaelli's advising that the firm recommended to the School Board to offer a contract to Big "G "- for the purchase of 40 televisions at a unit price of $314. 75. Exhibit ID 20 reflects that Big "G" was initially invoiced $11,880 for 40 Zenith SR 2568S televisions which was reduced by a "phone blitz" credit of $400 so that Big "G's" price was $11,480. a. Big "G" made a profit of $1,080 on the sale of the 40 televisions to the School District. III. DISCUSSION: At all times relevant to this matter, the Respondent, hereinafter Grimone, was a public employee subject to the provisions of the Public Official and Employee Ethics Law ( "Ethics Law "), Act 9 of 1989, Pamphlet Law 26, 65 P.S. §401, el seq. The allegations are that Grimone violated Section 3(a) of Act 9 of 1989 by using the authority of office or confidential information for the private pecuniary benefit of a business with which his brother is associated by participating in actions as to contracts or purchases by the school district from that business, by authorizing payments to that business, and by disclosing confidential information to his brother. Pursuant to Section 3(a) of the Ethics Law quoted above, a public official /public employee is prohibited from engaging in conduct that constitutes a conflict of interest. The term "conflict" is defined in the Ethics Law as quoted above. Having noted the issues and applicable law, we shall now summarize the relevant facts. When the Cameron County School Board ( "Board ") decided to renovate the Woodland Elementary School ( "School "), it entered into an agreement with the architectural firm of Creal, Hyde & Larson ( "the Firm ") for the School project. The Firm was charged with securing bids for all project areas. In particular, the Firm was required to prepare specifications for bid areas, conditions of contracts, legal ads and instructions for bidders. The Firm divided the project, which had an estimated cost of Grimone, 96- 090 -C2 Page 19 $7.2 million, into approximately 16 to 18 contract areas. Whenever any contract was in excess of $10,000, it had to be submitted to the Board for consideration and approval. One particular aspect of the School renovation project was the purchase of 40 televisions for the classrooms. Although the Firm was to handle all aspects of the School project, Grimone approached Linn Hyde, the lead architect of the Firm, and indicated that he (Grimone) was knowledgeable about televisions and was willing to take an active role in the acquisition of the televisions for the School project. Hyde agreed and Grimone proceeded to direct Judy Lupino, his secretary and secretary of the Board, to advertise and distribute the bid specifications which he (Grimone) prepared for the 40 televisions. In preparing the bid specifications, Grimone left out the standard "or equal" clause which allowed bidders to substitute items of comparable quality. Grimone contacted Pierce - Phelps, a Zenith distributer which supplied televisions to the Commonwealth and political subdivisions through a cooperative purchase agreement. Grimone inquired about two Zenith models, SR 2568S and SR 2573D. Pierce - Phelps gave Grimone prices of $315 and $345 respectively for each of the two units. Grimone was aware that when over 25 units were purchased, no shipping would be charged by Pierce - Phelps. Grimone directed Judy Lupino to send the bid specifications for 40 Zenith televisions to local dealers including Western Auto and Big "G," a business owned by Grimone's brother, William. In addition, Grimone directed Lupino to advertise for bids in local newspapers with a submission deadline of August 16, 1995. After the bid deadline passed, Lupino opened the bids. In addition to Pierce - Phelps, there were three bidders: Western Auto, Radaelli's, and Big "G." The particulars of the bid submissions are as follows. Western Auto submitted a bid for two GoldStar television models at $292 and $244 per set, noting that GoldStar is equivalent to Zenith which is owned by GoldStar. The bid by Radaelli offered to sell Zenith SR 2568S at $325 and SR 2573D at $350 per set. The Pierce - Phelps listing was $315 for Zenith SR 2568S and $345 for Zenith SR 2573D. The bid by Big "G" was $314 for Zenith SR 2568S and $344 for Zenith SR 2573D. Grimone directed Lupino to send the bids to Hyde at the Firm. In a telephone conversation with Hyde, Grimone convinced him that GoldStar televisions were of lesser quality than Zenith. Grimone raised questions as to whether the price from Pierce - Phelps would include shipping. Whereas the Pierce - Phelps price for model SR 2573D was $345 per unit, the bid of Big "G" was $344. Similarly, whereas the price of Pierce - Phelps for model SR 2568S was $315, the bid by Big "G" was for $314. Thereafter, the Firm sent a letter informing Pierce - Phelps and the three bidders that it was recommending to the Board to award the contract to Big "G" to supply the 40 televisions, Zenith Model SR 2568S, at a unit price of $314 to the School District. Hyde sent a letter to Grimone for submission to the Board with the Firm's recommendation that the Board offer the contract to Big "G" for supplying the 40 televisions for the School project. Although Hyde sent the letter, he testified that the decision to award the contract to Big "G" was in fact made by Grimone. Further, even though the purchase of the televisions involved a contract in excess of $10,000 which required Board approval, the matter was never submitted to the Board by Grimone. During the period of the advertisement for bids for the 40 Zenith televisions, there were a number of telephone calls between Grimone and his brother William, the owner of Big "G." The fact that several calls were made was confirmed both by Lupino as well as by Christine Umble, who worked at Big "G." Although Lupino could not give any specifics of the conversations other than that they were between Grimone and Grimone, 96- 090 -C2 Page 20 William Grimone, Umble recalled that the conversations related to bids. However, hearing only bits and one side of the conversations, Umble could not provide specifics as to exactly what was said between Grimone and William Grimone. Before the 40 televisions were delivered to the School, Grimone was active in obtaining the Firm's approval (for payment) of the televisions and expediting payment, even though it was School District policy that payment not be approved until the merchandise was actually received. Hyde approved the invoice for the televisions based upon a statement from Grimone that the televisions were in Big "G's" warehouse on November 13, 1995. In fact, the televisions were not shipped from Zenith to Big "G" until November 18, 1995. Hyde would not have taken such action in recommending payment if he knew that the televisions had not been received. In another subsequent telephone conversation, Grimone talked to Hyde about getting bills processed in general and specifically as to Big "G" for the televisions. The Big "G" bill was paid more expeditiously than bills from other vendors in the School District. Lastly, as to the purchase of the 40 televisions, Grimone asserts that he had nothing to do with that aspect of the School project, even though he admitted to an investigator for the Auditor General that he was instrumental in the purchase of those televisions. There were other purchases by the School District from Big "G." When the School District received a Drug -Free Schools and Community Act grant in the amount of $5,858, a committee was formed by Grimone, which included himself and others, for the purpose of determining what programs could be developed from the grant. One of the items selected for purchase was a camcorder, which had an allocation of $900. William Floyd, the school guidance counselor, was designated to look at camcorders. Floyd found the camcorder he wanted at Big "G" but the cost was $946, which was $46 over the allocation. Kathy GIasI, the School District business manager, would not authorize the extra $46. Floyd had a conversation with Grimone, who gave the approval to spend the extra $46 so that the camcorder could be purchased from Big "G." Grimone denies that he gave the approval to Floyd and asserts that he told Floyd to see Glasl to obtain the approval for the expenditure. In 1994, the School District purchased six VCR's /televisions from Big "G." Grimone was in charge of the purchase but apparently was not involved in the selection of Big "G" as the vendor for those products. Grimone co- signed the purchase order so that the transaction could be effectuated. Having summarized the above relevant facts, we must now determine whether the actions of Grimone violated Section 3(a) of Act 9 of 1989. The parties, the Investigative Division and Grimone, have filed briefs in support of their positions. Grimone in his Brief relies on his testimony, argues for no violation primarily on the theory of no use of office. In addition, Grimone also argues the de minimis exception to conflict. Finally, as to the purchase of the six VCR /televisions, Grimone asserts that his involvement constituted a ministerial or perfunctory action. The Investigative Division advocates for violations of Section 3(a) as to the three separate purchases by the school district from Big "G," a violation as to confidentiality, restitution, treble penalty, and referral. The Investigative Division relies upon disinterested witnesses whose testimony contradicts that of Grimone in the material aspects of the case, particularly in the areas of actions by Grimone as to the purchase of the 40 televisions and the camcorder. Grimone, 96- 090 -C2 Page 21 Section 3(a) of the Ethics Law prohibits a public official /public employee from using the authority of public office /employment or confidential information received by holding such a public position for the private pecuniary benefit of the public official /public employee himself, a member of his immediate family, or a business with which he or a member of his immediate family is associated. In order to establish a violation of Section 3(a) of Act 9 of 1989, the following are requisite: a public official or public employee, a use of authority of office or confidential information, a private pecuniary benefit, and the private pecuniary benefit inuring to the public official /employee or a member of the immediate family or a business with which the public official /employee or immediate family member is associated. We will now examine each of these elements in the context of the facts of record. First, Michael Grimone, for the relevant time period, was a public employee given his position as superintendent of the School District. Rakowksy, Order No. 943. Second, there were numerous instances of uses of authority of office by Grimone as to the purchase of the 40 Zenith televisions. Use of authority of office under the Ethics Law involves the actual power held by a public official /employee, which is necessary to the performance of duties and responsibilities of that particular public position. See, Juliante, Order 809; 65 P.S. 402. But for the fact that Grimone was the superintendent, he could not have taken the bidding away from the Firm as to the purchase of the 40 Zenith televisions for the School District. But for the fact that Grimone was the superintendent, he could not have established the bid specifications for the 40 Zenith televisions, the only brand carried by his brother's store. But for the fact that Grimone was the superintendent, he could not have omitted the standard "or equal" clause in the bid specifications which would have allowed bidders to substitute items of comparable quality. But for the fact that Grimone was the superintendent, he could not have obtained the state bid book of Pierce - Phelps, which was not available to the general public. But for the fact that Grimone was the superintendent, he could not have prevailed upon Linn Hyde of the Firm as to the award of the contract to Big "G" for the 40 Zenith televisions. But for the fact that Grimone was the superintendent, he could not have obtained approval of the payment of said televisions from the Firm, even though the televisions had not at that point been delivered to the School District. But for the fact that Grimone was the superintendent, he could not have expedited payment for the 40 Zenith televisions to Big "G" which payment occurred more quickly than for other vendors of the School District. But for the fact that Grimone was the superintendent, he could not have bypassed Board approval for the contract of the 40 Zenith televisions which was in excess of $10,000 and therefore required review and approval by the Board. Third, there was a private pecuniary benefit that was obtained in this case. Since Big "G" purchased the 40 Zenith televisions for $1 1,480, and sold those units to the School District at a contract price of $12,560, a profit of $1,080 was made by Big "G." Lastly, the private pecuniary benefit in this case inured to Big "G," which was a business that was owned by a member of Grimone's immediate family. The facts reflect that William Grimone is Grimone's brother and further that he owned the Big "G" department store. Hence, the private pecuniary benefit inured to a business with which a member of Grimone's immediate family was associated. 65 P.S. 402. Grimone violated Section 3(a) of the Ethics Law when he participated in the purchase of 40 televisions by the School District for the private pecuniary benefit of a business with which his brother was associated. Grimone, 96- 090 -C2 Page 22 As to the purchase of the camcorder by the School District from Big "G," Grimone as a public employee used the authority of office as to that transaction. The facts reflect that only $900 was allocated for the purchase. When GIasI would not authorize the expenditure of $946, which was the selling price of the camcorder by Big "G," Floyd, the guidance counselor, contacted Grimone who gave the approval to spend more than the allocated amount. But for the fact that Grimone was the superintendent, the camcorder could not have been purchased from Big "G." Clearly, such action was a use of authority of office. That use of authority of office resulted in a private pecuniary benefit consisting of the profit that Big "G" made on the sale of the camcorder to the School District. Lastly, that private pecuniary benefit inured to Big "G," a business with which a member of Grimone's immediate family was associated. Grimone violated Section 3(a) of the Ethics Law when he participated in the purchase of a camcorder by the School District for the private pecuniary benefit of a business with which his brother was associated. The argument by Grimone that this is a de minimis matter as only involving $46 fails. The point is that Grimone gave the authorization to expend the additional money so that the camcorder could be purchased. Hence, we are dealing with a $946 purchase, not $46. That action by Grimone was not de minimis. Schweinsberq, Order 900. We find a technical violation when Grimone co- signed a purchase order to purchase six VCR's /televisions from Big "G" in 1994. The use of authority of office in signing the purchase order enabled the sale of the VCR's /televisions to the School District by Big "G," the business owned by Grimone's brother. That use of authority of office was for the private pecuniary benefit of that business. Hence, a technical violation of Section 3(a) of the Ethics Law occurred through such action by Grimone. As to the purchases by the School District from Big "G" during Grimone's tenure as superintendent, the record establishes that there were instances where Grimone took action such as signing purchase orders or processing payment to Big "G." For the reasons noted above, such actions by Grimone were uses of authority of office which resulted in a private pecuniary benefit to Big "G," a business with which a member of his immediate family was associated. Grimone violated Section 3(a) of the Ethics Law when he authorized payment as to purchases by the School District for the private pecuniary benefit of a business with which his brother was associated. Lastly, we must consider the allegation concerning the disclosure of confidential information by Grimone to his brother regarding the bidding process for the 40 televisions. The Investigative Division argues that a confidentiality violation occurred based upon the statutory definition of "confidential information," 65 P.S. 402, coupled with all of the circumstantial evidence in this case. Grimone in his Brief asserts that there is no violation based upon the argument that the Investigative Division did not meet its burden of proof by clear and convincing evidence. In reviewing this record we are disconcerted that as to the two separate Zenith model televisions, both bids of Big "G" were exactly $1 less than Pierce - Phelps under the state contract. The Big "G" bids of $314 and $344 for the two respective models were not round numbers, as for example $310 and $340. Further, the $1 difference occurred as to two separate models. It strains the bounds of credulity for us to accept that it was mere coincidence that each of these two bids was $1 less than Pierce - Phelps so that Big "G" would be certain to be awarded the bid while at the same time maximize its profit. The bids were the highest they could be while remaining the low bid. The mathematical probability of such an occurrence happening for two different bids, without Big "G" having the benefit of the state bid price is quite small in our estimation. Grimone, 96- 090 -C2 Page 23 However, we are required to apply a clear and convincing standard of proof in adjudicating this matter. 64 P.S. 408(g). Only Grimone and his brother, William from Big "G," were privy to their conversations. Grimone's secretary, Judy Lupino, testified that there were conversations between the two. In addition, Christine Umble, who worked at Big "G," testified that William Grimone of Big "G" was talking to Grimone about quotes but Umble could not hear the specifics, hearing only parts and one side of the conversations. Therefore, the proof is lacking as to the specifics of the conversations between Grimone and his brother, William, regarding the bids for the 40 televisions as to the School District. We are constrained to find that Grimone did not violate Section 3(a) as to the disclosure of confidential information to his brother regarding the submission of bids to the School District for supplying 40 televisions due to a lack of clear and convincing proof. Turning to the matter of restitution, Section 7(13) of Act 9 of 1989, 65 P.S. §407(13), specifically empowers this Commission to impose restitution in those instances where a public official /public employee has obtained a financial gain in violation of the Ethics Law. In this case, since it has been determined that a financial gain has been obtained in violation of the Ethics Law, restitution is warranted. The facts reflect a discernible profit of $1,080 as to the purchase of the 40 Zenith televisions. Accordingly, Grimone is directed within 30 days of the date of mailing of this Order to make payment through this Commission to the Cameron County School District in the amount of $1,080. Non - compliance will result in the institution of an order enforcement action. We will exercise our discretion in not imposing a treble penalty in this case. Holvey v. SEC, Memorandum Opinion of Commonwealth Court filed at 815 CD 1997, on February 13, 1998. IV. CONCLUSIONS OF LAW: 1. Grimone, as Superintendent of the Cameron County School District, was a public employee subject to the provisions of Act 9 of 1989. 2. Grimone violated Section 3(a) of the Ethics Law when he participated in the purchase of 40 televisions by the School District for the private pecuniary benefit of a business with which his brother was associated. 3. Grimone violated Section 3(a) of the Ethics Law when he authorized the purchase of a camcorder for the School District which resulted in a private pecuniary benefit to a business with which his brother was associated. 4. A technical violation of Section 3(a) of the Ethics Law occurred when Grimone co- signed a purchase order for the purchase of six VCR's /televisions by the School District from a business with which his brother was associated. 5. Grimone violated Section 3(a) of the Ethics Law when he authorized payment as to purchases by the School District from a business with which his brother was associated. 6. Grimone did not violate Section 3(a) as to the disclosure of confidential information to his brother regarding the submission of bids to the School District for supplying 40 televisions due to a lack of clear and convincing proof. In Re: Michael Grimone ORDER NO. 1082 1. Grimone, as Superintendent of the Cameron County School District, violated Section 3(a) of Act 9 of 1989 of the Ethics Law when he participated in the purchase of 40 televisions by the School District for the private pecuniary benefit of a business with which his brother was associated. 2. Grimone violated Section 3(a) of the Ethics Law when he authorized the purchase of a camcorder for the School District which resulted in a private pecuniary benefit to a business with which his brother was associated. 3. A technical violation of Section 3(a) of the Ethics Law occurred when Grimone co- signed a purchase order for the purchase of six VCR's /televisions by the School District from a business with which his brother was associated. 4. Grimone violated Section 3(a) of the Ethics Law when he authorized payment as to purchases by the School District from a business with which his brother was associated. 5. Grimone did not violate Section 3(a) as to the disclosure of confidential information to his brother regarding the submission of bids to the School District for supplying 40 televisions due to a lack of clear and convincing proof. 6. Grimone is directed to make payment of $1080 through this Commission to the Cameron School District within 30 days of the date of mailing of this order. Failure to comply will result in the institution of an order enforcement action. BY THE COMMISSION, DANEEN E. REESE, CHAIR Zkytik4)6 alAg File Docket: 96- 090 -C2 Date Decided: 7/24/98 Date Mailed: 8/7/98