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HomeMy WebLinkAbout1085 HoffmanIn Re: Earl B. Hoffman, Sr. 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 97- 030 -C2 Order No. 1085 7/23/98 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 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 waived. The record is complete. A Consent Agreement was submitted by the parties to the Commission for consideration which was subsequently approved. 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. Hoffman. 97- 030 -C2 Page 2 I. ALLEGATION: That Earl B. Hoffman, Sr., a public official in his capacity as a Supervisor for West Hanover Township, Dauphin County, violated Sections 3(a), 3(f) and 4(a) of the Ethics Law when he used the authority of his office for the private pecuniary benefit of himself and /or a business with which he is associated when he arranged to have a vehicle sold to the township by his car dealership, Hoffman Ford, through a third party; and when he participated in actions of the board to approve payments to Hoffman Ford for the sale of a car and repairs to township vehicles; and when he failed to file a Statement of Financial Interests for the 1995 calendar year by May 1, 1996. II. FINDINGS: 1. Earl B. Hoffman, Sr., has served as a supervisor for West Hanover Township, Dauphin County, since January, 1996. 2. Earl B. Hoffman, Sr., is associated with the business known as Hoffman Ford Sales, Inc. a. The business has been incorporated since January 3, 1956. b. The type of business includes selling new and used automobiles and repairing vehicles. 3. Hoffman Ford Sales has had a business relationship with West Hanover Township for many years. In September or October of 1996, the West Hanover Township Supervisors discussed the idea of purchasing a vehicle for use by township employees. a. It had been a standard procedure that whenever township employees used their own personal vehicles for township business, they were reimbursed for their mileage. b. There was a consensus among the Board of Supervisors that it would be cheaper for the township to have a township vehicle for the employees instead of paying for mileage. c. Earl Hoffman, Sr., participated in these discussions. 5. During the West Hanover Township Board of Supervisors' Meeting of October 7, 1996, discussions took place regarding the purchase of an automobile. a. Chairman of the Board of Supervisors Neil Shatto, Jr., discussed the possibility of purchasing a used Ford Escort Station Wagon, or a used Ford Escort. 1. This was based on his prior discussion with Earl Hoffman. b. If the price for the vehicle was between $4,000 and $10,000, the Second Class Township Code mandated that the township did not have to obtain bids, but must obtain quotes. Hoffman, 97- 030 -C2 Page 3 1. If the amount of purchase for the vehicle was under $4,000, the purchase could be made without quotes or bids, according to the Second Class Township Code. c. Shatto asked for Hoffman's assistance in purchasing a used vehicle for under $4,000 due to Hoffman's experience as a car dealer. d. Hoffman was asked to look into prices and advise the board. 6. During the West Hanover Township Board of Supervisors' meeting on November 18, 1996, the supervisors had discussions, along with the solicitor, regarding the purchase of a used vehicle for the township. a. Hoffman informed the other supervisors he was working on securing a Ford Escort station wagon which would be housed at the township office and used by township staff when conducting inspections. 7. During the November 18, 1996, board meeting, Solicitor Carl Wass discussed with the supervisors the possibility of a conflict of interest in purchasing vehicles from Hoffman, and stated that such a procedure could become an issue with the Ethics Commission. 8. Wass gave an opinion to the supervisors that a way of avoiding a conflict of interest for Hoffman would be to use a third party so the vehicle still could be sold to the township. a. A written legal opinion was never provided on this issue by Solicitor Wass. 9. Phyllis M. Ernst was the owner of a 1990 Ford Escort 4 door LX purchased from Hoffman Ford Sales, Inc., on November 21, 1989. a. The Vehicle Identification Number (VIN) was IFAPP9596LW169923. b. Ernst is a cousin of Hoffman Ford Sales Manager Edward Catalone. 10. On November 13, 1996, Phyllis Ernest purchased a used 1996 Ford Escort LX from Hoffman Ford Sales at a price of $ 13,705. a. Ernest received an allowance of $3,442.1 1 for the trade in of her 1990 Ford Escort 4 door LX (VIN No. 1FAPP9596LW169923). b. Ernest paid a total of $10,269.89 after receiving an allowance for her trade -in. 11. On November 21, 1996, the assignment of title for the 1990 Ford Escort (VIN No. IFAPP9596LW169923) was listed as Hoffman Ford Sales, Inc. a. The odometer disclosure statement confirmed mileage to 70,096 on the 1990 Ford Escort when it was traded in by Ernest. Hoffman, 97- 030 -C2 Page 4 12. The National Automobile Dealers Association (NADA) Official Used car Guide for November, 1996, indicated that an average retail value of a 1990 Ford Escort 4 door LX was $3,600. a. The value was based on an Escort being in good condition with low to average mileage. 13. Sometime between November 21, 1996, and November 26, 1996, Hoffman Ford Sales Manager Ed Catalone contacted Roger Cackovic of R.J. Cackovic Auto Sales on making arrangements to sell and deliver a 1990 Ford Escort (VIN No. 1FAPP9596LW169923) to West Hanover Township. '14. Catalone informed Cackovic that Hoffman Ford wanted to use Cackovic's car dealership as a third party in selling the 1990 Ford Escort to the township. a. Cackovic was a former salesman for Hoffman Ford Sales. b. Catalone advised Cackovic that the vehicle could not be directly sold to the township by Hoffman Ford because it would be a conflict of interest for Earl B. Hoffman, Sr. c. Catalone was directed to contact Cackovic by Earl B. Hoffman, Sr. 15. On or about November 26, 1996, an agreement of sale was entered into between Hoffman Ford Land, Inc., and R.J. Cackovic for a 1990 Ford Escort (VIN No. 1FAPP9596LW169923). a. The agreement was not dated. b. R.J. Cackovic Sales and Service was listed as the buyer. c. The price of the vehicle was $3,995.00. 16. On November 26,' 1996, re- assignment of title for the 1990 Ford Escort (VIN No. 1 FAPP9596LW169923) from Hoffman Ford Sales to R.J. Cackovic Auto Sales was filed with the Pa. Department of Transportation. a. The mileage reading on the vehicle when the title was reassigned was 70,096. 17. On December 4, 1996, West Hanover Township entered into a sales agreement with R.J. Cackovic, Inc., Auto Sales for the 1990 Ford Escort 4 door LX (VIN No. 1 FAPP9596LW169923) in the amount of $3,995.00. a. The mileage of the vehicle when purchased was 70,096. b. The total contract price was $3,995.00 which included $3,980.00 for the purchase price and $15.00 for the license, title and registration fees. c. The vehicle was sold to the township on "as is" basis and with no warranty. Hoffman, 97- 030 -C2 Page 5 18. Roger Cackovic of R.J. Cackovic Auto Sales signed the contract as the issuing agent for the sale of the vehicle. a. West Hanover Township Secretary/Treasurer Gail Martin signed the contract as the authorized representative for West Hanover Township. 19. Roger Cackovic never met with or discussed the sale of a vehicle with any of the West Hanover Township supervisors. a. Ed Catalone of Hoffman Ford, acting on instructions from Earl Hoffman regarding the acquisition of a vehicle for the township, handled all the arrangements which included delivering the vehicle to the township. b. Cackovic never saw the 1990 Ford Escort, and the vehicle was never on his car lot. c. Cackovic made no profit on the sale of the vehicle. 20. At the West Hanover Township Board of Supervisors' meeting of December 2, 1996, Hoffman advised the other supervisors he had made arrangements to have a Ford Escort wagon delivered to the township through Roger Cackovic Auto Sales. 21. On December 16, 1996, the West Hanover Township Board of Supervisors voted to approve bill listings which included a payment to R.J. Cackovic in the amount of $3,995. a. The motion to approve the payment of the vouchers was approved by a 4 to 0 vote with Hoffman abstaining. b. The reason for Hoffman's abstention was not specifically set forth in formal written form in the township meeting minutes. 22. West Hanover Township issued check no. 20149 to the order of R.J. Cackovic, Inc., Auto Sales in the amount of $3,995.00 on December 18, 1996. 23. R.J. Cackovic Auto Sales made a payment to Hoffman Ford for the 1990 Ford Escort on January 6, 1997. a. Cackovic issued check no. 17965 to the order of Hoffman Fordland in the amount of $3,995 on January 6, 1997, for payment of the vehicle sold to West Hanover Township. 24. Township officials relied on Earl Hoffman to use the facilities of Hoffman Ford Sales to obtain a used vehicle, as they had done repeatedly in the past. 25. As a result of the 1990 Ford Escort's continual mechanical problems, a decision eventually was made by the West Hanover Township personnel to discontinue using the vehicle. a. The vehicle was not used after July 24, 1997. Hoffman, 97- 030 -C2 Page 6 26. On July 31, 1997, Hoffman submitted a letter to the West Hanover Township Supervisors detailing his involvement in the sale of the 1990 Ford Escort to the township. The letter states in part, Hoffman's position that the purchase of the vehicle was structured in a manner suggested by the township solicitor, and that the Board of Supervisors at all times had knowledge of the actions taken by Hoffman and others to complete the purchase of the vehicle to the township. a. If a complaint was being made that he made a gross profit of $552.89 over the amount of the trade -in, Hoffman was reimbursing the township a check in the amount of $552.89. 1 This amount represents the difference between what the township was charged for the vehicle ($3,995.00), and the amount Phyliss Ernst was credited on the trade -in ($3,442.1 1). 27. A payment was made to West Hanover Township by Earl Hoffman in the amount of $552.89 on July 30, 1997. a. Check No. 3288 drawn on an account Hoffman has with Mellon Bank was issued in the amount of $552.89. b. The check was deposited into a separate township account at Fulton Bank on November 1, 1997. c. The payment to the township made by Hoffman occurred less than thirty (30) days after Hoffman had been notified of the investigation by the State Ethics Commission. 28. Earl B. Hoffman, Sr., actions as a West Hanover Township Supervisor resulted in a private pecuniary benefit for himself and /or Hoffman Ford. a. Earl B. Hoffman and /or Hoffman Ford received a profit of $552.89 as a result of the sale of the 1990 Ford Escort to the township. (See Finding Nos. 10, 17, 22 and 23). 29. After being notified of an investigation by the State Ethics Commission, Hoffman made a payment to West Hanover Township on July 31, 1997, in an amount of $552.89 representing the difference between the amount given on the trade -in of the vehicle ($3,442.11) and the sale price ($3,995.00) to the township. III. DISCUSSION: At all times relevant to this matter, the Respondent, Earl B. Hoffman, Sr., hereinafter Hoffman, has been a public official 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,. The allegations are that Hoffman, as a Supervisor for West Hanover Township, Dauphin County, violated Sections 3(a), 3(f) and 4(a) of the Ethics Law when he arranged to have a vehicle sold to the township by his car dealership, Hoffman Ford, through a third party; when he participated in actions of the Board to approve payments to Hoffman Ford for the sale of a car and repairs to township vehicles; and when he failed to file a Statement of Financial Interests for the 1995 calendar year. Hoffman, 97- 030 -C2 Page 7 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). 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 of interest" is defined under Act 9 of 1989 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 of his immediate family or a business with which he or a member of his immediate family is associated. 65 P.S. §402. Section 3(f) of the Ethics Law imposes certain restrictions as to contracting. Section 3(f) of Act 9 of 1989 provides: 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. Hoffman, 97- 030 -C2 Page 8 65 P.S. §403(f). Section 4. Statement of financial interests required to be filed (a) Each public official of the Commonwealth shall file a statement of financial interests for the preceding calendar year with the commission no later than May 1 of each year that he holds such a position and of the year after he leaves such a position. Each public employee and public official of the Commonwealth shall file a statement of financial interests for the preceding calendar year with the department, agency, body or bureau in which he is employed or to which he is appointed or elected no later than May 1 of each year that he holds such a position and of the year after he leaves such a position. Any other public employee or public official shall file a statement of financial interests with the governing authority of the political subdivision by which he is employed or within which he is appointed or elected no later than May 1 of each year that he holds such a position and of the year after he leaves such a position. Persons who are full -time or part-time solicitors for political subdivisions are required to file under this section. 65 P.S. §404(a). 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, any member of his immediate family, or a business with which he or a member of his immediate family is associated. Section 3(f) of Act 9 of 1989 specifically provides in part that no public official /public 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 /public employee is associated unless the contract is awarded through an open and public process including prior public notice and subsequent public disclosure. Section 4(a) of the Ethics Law quoted above requires that each public official /public employee must file a Statement of Financial Interests for the preceding calendar year, each year that he holds the position and the year after he leaves it. Having noted the issues and applicable law, we shall now summarize the relevant facts. Hoffman has served as a Supervisor in West Hanover Township since 1996. In a private capacity, Hoffman is associated with Hoffman Ford Sales, Inc. which has had a business relationship with West Hanover Township for many years. In the fall of 1996, the Township Board of Supervisors discussed the possibility of purchasing a vehicle for Township employees who were using their personal vehicles for Township business and receiving reimbursement. The Chairman of the Hoffman, 97- 030 -C2 Page 9 Board discussed the possibility of purchasing a used Ford Escort for less than $4,000, thereby alleviating the need for obtaining quotes or bids under the Second Class Township Code. Due to Hoffman's experience as a car dealer, he was asked by the Chairman of the Board for his assistance in purchasing a used vehicle. The Township officials relied on Hoffman to use the facilities of Hoffman Ford Sales, a business with which he is associated, to obtain a used vehicle as had been done in the past. At a November 1996 Board meeting, the Solicitor informed the Supervisors of a possible conflict on the part of Hoffman if a vehicle were purchased from Hoffman Ford. Without providing any written legal opinion, the Solicitor suggested that a conflict could be avoided if Hoffman would use a third party to sell a vehicle to the Township. In November 1996, an individual purchased a vehicle from Hoffman Ford Sales after trading in a .1990 Ford Escort for which an allowance of $3,442.11 was given. The NADA Official Used Car Guide reflected an average retail value of that model at $3,600. At Hoffman's direction, the Hoffman Ford Sales Manager contacted R.J. Cackovic Auto Sales to make arrangements to sell that 1990 Ford Escort to West Hanover Township. The Sales Manager indicated to Cackovic that Hoffman Ford wanted to use Cackovic's car dealership as a third party because the vehicle could not be directly sold to the Township due to a conflict of interest on the part of Hoffman. Subsequently, an agreement of sale was entered into between Hoffman Ford and Cackovic for the 1990 Ford Escort at a price of $3,995. West Hanover Township then entered into a sales agreement with Cackovic to purchase the same 1990 Ford Escort for $3,995. The agreement was signed by the issuing agent at Cackovic and by the Secretary- Treasurer of the Township. Cackovic never saw the 1990 Ford Escort and made no profit on the sale. At a December 1996 meeting of the Township Board of Supervisors, Hoffman advised the other Supervisors that he had made arrangements to have the 1990 Ford Escort delivered to the Township through Cackovic Auto Sales. The Township Board voted to approve a bill listing which included a payment to Cackovic in the amount of $3,995. Hoffman abstained on that vote. West Hanover Township issued a check to Cackovic Auto Sales in the amount of $3,995 and Cackovic in turn made payment to Hoffman Ford. The private pecuniary benefit to Hoffman or Hoffman Ford amounted to $552.89. Hoffman submitted a letter dated July 31, 1997 to the Board of Supervisors detailing his involvement as to the sale of the 1990 Ford Escort to the Township. Hoffman stated that the transaction was structured in manner proposed by the Township Solicitor. Hoffman further indicated that if there would be any complaint that he made a profit of $552.89, he would reimburse the Township. Hoffman had paid $552.89 to the Township on July 30, 1997, which was within 30 days of the investigative notice. Having summarized the above relevant facts, we must now determine whether the actions of Earl B. Hoffman violated Section(s) 3(a), 3(f) and 4(a) of Act 9 of 1989. In applying the above provisions of Section 3(a) of the Ethics Law, Hoffman used the authority of office as a Township Supervisor. But for the fact that Hoffman was a Supervisor, he would not have been in a position to make a selection of a 1990 Ford Escort at Hoffman Ford as the vehicle that would be purchased by the Township. That use of authority of office resulted in a private pecuniary benefit which has been Hoffman, 97- 030 -C2 Page 10 stipulated to be the $552.89 profit received by Hoffman or Hoffman Ford. Lastly, that private pecuniary benefit inured to Hoffman or Hoffman Ford. The parties have stipulated that Hoffman Ford Sales, Inc. is a business with which Hoffman is associated. See, 65 P.S. 402. As to this particular sale, the facts reflect that it was the Chairman of the Board who asked Hoffman for his assistance in purchasing a used vehicle. The Township officials relied on Hoffman to use the facilities of Hoffman Ford Sales, Inc. to obtain a used vehicle. After the Solicitor noted a possible conflict if a vehicle were purchased from Hoffman, he suggested that a third party be used so that the vehicle could be sold to the Township. Accordingly, based upon the above circumstances, we find a technical violation of Section 3(a) of Act 9 of 1989 when Hoffman used the authority of office to obtain a private pecuniary benefit for himself or Hoffman Ford, a business with which he is associated, by engaging in transactions to use a third party auto sales business in order to purchase a vehicle from Hoffman Ford for the Township. As to the allegations of violations of Section 3(a) (participation in Board actions to approve payment to Hoffman Ford), Section 3(f) and Section 4(a) of Act 9 of 1989, the parties in the Consent Agreement have not stipulated to any violations. Since it appears that the Investigative Division is not seeking to prosecute the Respondent as to those allegations as part of the Consent Agreement process, we do not see the need to address such issues. The parties have stipulated to a payment of $552.89 from Hoffman to the Township, which was made on July 30, 1997. Further, as part of that Consent Agreement, Hoffman agrees to file a Statement of Financial Interests for the calendar year 1995 which is to be filed within 30 days of the acceptance of the Consent Agreement. Accordingly, Hoffman is directed to file a Statement of Financial Interests within 30 days of the mailing date of this Order. Compliance with the foregoing will result in the closing of this case with no further action. Noncompliance with the above will result in the institution of an order enforcement action. Lastly, as noted above, the parties have filed a Stipulation of Findings and Consent Agreement which sets forth a proposed resolution of the allegations. We believe that the Consent Agreement is the proper disposition for this case based upon our review as reflected in the above analysis and the totality of the facts and circumstances. IV. CONCLUSIONS OF LAW: 1. Earl B. Hoffman, as Supervisor for West Hanover Township in Dauphin County, is a public official subject to the provisions of Act 9 of 1989. 2. A technical violation of Section 3(a) of Act 9 of 1989 occurred when Hoffman used the authority of office to obtain a private pecuniary benefit for himself or Hoffman Ford, a business with which he is associated, by engaging in transactions to use a third party auto sales business in order to purchase a vehicle from Hoffman Ford for the Township. 3. The private pecuniary benefit received by Hoffman or Hoffman Ford, a business with which he is associated, amounted to $ 552.89 which has been repaid to West Hanover Township. In Re: Hoffman File Docket: 97- 030 -C2 Date Decided: 7/23/98 Date Mailed: 8/7/98 ORDER NO. 1085 1. Earl B. Hoffman, as Supervisor for West Hanover Township in Dauphin County, technically violated Section 3(a) when he used the authority of office to obtain a private pecuniary benefit for himself or Hoffman Ford, a business with which he is associated, by engaging in transactions to use a third party auto sales business in order to purchase a vehicle from Hoffman Ford for the Township. 2. As per the Consent Agreement of the parties, Hoffman is directed to file a Statement of Financial Interests for the 1995 calendar year within 30 days of the date of the mailing of this Order. Compliance with the foregoing will result in the closing of this case with no further action. Noncompliance will result in the institution of an order enforcement action. BY THE COMMISSION, e&s,,u6 DANEEN E. REESE, CHAIR