HomeMy WebLinkAbout1100 GroganIn Re: Martin Grogan
STATE ETHICS COMMISSION
308 FINANCE BUILDING
HARRISBURG, PENNSYLVANIA 17120
Fite Docket:
X -ref:
Date Decided:
Date Mailed:
Before: Daneen E. Reese, Chair
Austin M. Lee, Vice Chair
Julius Uehlein
Louis W. Fryman
John J. Bolger
Frank M. Brown
Susan Mosites Bicket
96- 028 -C2
Order No. 1 100
12/15/98
12/29/98
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 fig., 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.
Effective December 15, 1998, Act 9 of 1989 was repealed and replaced by
Chapter 11, Act 93 of 1998, which essentially repeats Act 9 of 1989 and provides
for the completion of pending matters under Act 93 of 1998.
This adjudication of the State Ethics Commission is issued under Act 93 of
1998 and 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 Chapter 11 of
Act 93 of 1998. Any person who violates confidentiality of the Ethics Act is guilty of
a misdemeanor subject to a fine of not more than $ 1,000 or imprisonment for not
more than one year. Confidentiality does not preclude discussing this case with an
attorney at law.
Grogan, 96- 028 -C2
Page 2
I. ALLEGATION: That Martin Grogan, a public official /public employee in his
capacity as a real estate tax collector for Moon Township, Allegheny County, violated
Sections 3(a) and 3(f) of the Ethics Law (Act 9 of 1989) when he used the authority
of his office for the private pecuniary benefit of himself and a member of his immediate
family and when he entered into a contract with the governmental body in excess of
$500 without an open and public process by leasing office space for the tax collectors
office in a building owned by him and his brother.
11. FINDINGS:
A. Admitted Pleadings
1. The Investigative Division of the State Ethics Commission received
a signed, sworn complaint alleging that Martin Grogan violated
provisions of the State Ethics Law (Act 9 of 1989).
2. Upon review of the complaint the Investigative Division initiated a
preliminary inquiry on March 29, 1996.
3. The preliminary inquiry was completed within sixty days.
4. On May 28, 1996, a letter was forwarded to Martin Grogan
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. Z 129 438
604.
b. The domestic return receipt bore the signature of M.
Grogan, with a delivery date of June 3, 1996.
5. On October 11, 1996, the Executive Director of the State Ethics
Commission filed an application for a ninety day extension of time
to complete the Investigation.
6. The Commission issued an order on November 4, 1996, .granting
the ninety day extension.
7. On February 18, 1997, the Executive Director of the State Ethics
Commission filed an application for a second ninety -day extension
of time to complete the investigation.
8. The Commission issued an order on February 20, 1997, granting
the ninety day extension.
9. Periodic notice letters were forwarded to Martin Grogan in
accordance with the provisions of the Ethics Law advising him of
the general status of the investigation.
10. The Investigative Complaint was mailed to the Respondent on May
23, 1997.
11. Martin Grogan has served as the elected Tax Collector for Moon
Township, Allegheny county, since 1959.
Grogan, 96- 028 -C2
Page 3
a. Moon Township is a Second Class Township.
12. Grogan's compensation as Tax Collector is set by both Moon
Township and the Moon Area School District.
a. Joint resolutions are adopted by the Moon Township
Supervisors ( "Township "), setting Tax Collector
compensation and expenses for four (4) year periods.
b. _ The Moon Township School Board of Directors ( "School
District ") have approved these resolutions.
c. Included in Grogan's compensation package is an allowance
for office expense reimbursement.
13. Moon Township Resolution #R -14 -1993, adopted February 10,
1993, by the Township and School District, set compensation for
the elected Real Estate Tax Collector covering the period January,
1994, through December, 1997.
a. Approved compensation included a salary of $29,500,00,
verifiable office expenses totaling $21,500.00, and
commission on the receipt of delinquent accounts collected,
tax certifications fees, and Moon Transportation Authority
tax payments.
14. Verifiable office expenses are split between the Township and
School District as follows:
a. Moon Area School District $15,000.00 [sic]
b. Moon Township $ 6,000.00
'15. Moon Township annually sends a check in an amount of
$6,000.00 to the School District to cover its portion of the
expenses.
a. All expenses payments made to the Tax Collector are then
made by the School District.
b. Expense payments are made following submission of
receipts by the tax paper which verify expenses.
16. Verifiable office expenses was [sic] defined in Moon Township
Resolution No. R -14 -1993, as follows:
"Personnel, equipment, materials and supplies, including all
postage, printing books, blanks, forms and bonds. Expense
invoices billed directly to the Township or School District and
those bills for mandated expenses such as Tax Collector's bonds,
tax printing bills and tax postage, etc., shall be deducted from the
Office of the Tax Collector's expenses or reserved for payment
prior to any distribution to said office for items not mandated by
law. Should insufficient funds remain in the expense accounts for
any mandated expense, the expense will then be automatically
Grogan, 96- 028 -C2
Page 4
taken from the Office of the Tax Collector's Township and MASD
Compensation account."
17. Verifiable office expenses under Resolution No. R- 14- 1993, did
not include or reference rental expenses.
18. Section 7, Item 10 of Resolution No. R -14 -1993, provided "the
township will no Longer be responsible for providing office space,
utilities and associated services to the Office of Tax Collector
without cost. The township will endeavor to provide space for this
office at a reasonable cost as a public convenience."
19. Township provided office space was included as part of prior Tax
Collector Compensation Resolutions.
a. Section 7 of Resolution No. R -15 -1989 approved on
February 8, 1989, covering the period of January 1, 1990,
through December 31, 1993, provided:
"Rent for office space and payment of utilities shall be
provided by the township, while the tax collector is solely
responsible for telephone and all consumable supplies."
20. Grogan operated the Tax Collector's Office from the Moon
Township Municipal Building from approximately 1959 until
January, 1994.
a. Moon Township provided Grogan with rent free office space
in the Township building through December 31, 1993.
21. As a result of the passage of Resolution No. R -14 -1993, effective
January 1, 1994, Moon Township no longer provided the Tax
Collector with free office space in the Township building.
a. The Township made Grogan aware of this prior to him
running for re- election in 1993.
b. On May 7, 1991, Gregory Smith, Moon Township Manager,
advised Grogan that at the expiration of Resolution No. R-
15-89, the Township intended to obtain market value rent
for the type of office space occupied by Grogan.
22. :Moon Township would no longer provide office space as it was
running out of useable space in the municipal building located at
1000 Beaver Grade Road, Moon Township, PA.
a. Additional space was needed to accommodate expanding
Township departments.
b. The supervisors decided to obtain another facility to house
certain Township offices due to the space shortage.
23. On December 21, 1992, Moon Township purchased the former
Montour Heights County Club, Cherrington Clubhouse, with the
intent of converting it into a centrally located Township
community service center.
Grogan, 96- 028 -C2
Page 5
a. The supervisors wanted to locate all Township offices, its
Municipal Authority, Solid Waste Department, and library in
the same location for convenience.
24. Between May 7, 1991, through November 10, 1993, there were
ongoing discussions and correspondence between Township
officials and Grogan regarding Grogan occupying space in the
newly acquired Township building.
a. There was a series of correspondence primarily between
Township Manager Gregory Smith and Tax Collector Grogan
regarding these negotiations.
b. On August 19, 1993, Smith sent Grogan a letter offering
space in the new Municipal Building and forwarded a
proposed lease.
25. On November 10, 1993, following Grogan's re- election, Smith
advised Grogan of the rental rates for office space in the new
municipal building.
a. The rate offered was $12.00 per square foot for office
space and $6.00 per square foot for all storage space.
b. 490 square feet was to be allocated for the Tax Collector's
office.
c. Grogan was also advised that since office space would not
be finished before the start of his latest term, the Township
would offer his existing space at $10.00 per square foot
and storage space at $4.00 per . square foot beginning in
January, 1994. .
d. New office space was expected to be completed by May,
1994.
e. A written response was needed by November 12, 1993.
26. Rental fees for office space were part of Moon Township
Resolution No. R -9- 1 enacted January 12, 1994.
a. R -9 -1994 supplemented R -9 -1993.
27. Rental fees for municipal office space set by way of Township
Resolution R- 9- 1994, included rates for both the old and new
Township buildings.
a. Section 12 of R -9 -1994 includes the following rate schedule
applicable to the Real Estate Tax Collector.
Period
01/01/94-04/30/94
05/01/94 - Present
05/01/94 - Present
Building Price /Square
Foot
Old Twp. $10.00
Old Twp. $18.00
New Twp. $12.00
Grogan, 96- 028 -C2
Page 6
b. The $12.00 square foot rate offered Grogan effective May
1, 1994, was the same rate offered to the Municipal
Authority and Earned Income Tax Collector, both of which
located in the new building.
28. During the design phase of the new Township building, Township
officials were unable to reach an agreement with Grogan for office
space.
a. Grogan wanted to stay in the space he was occupying in
the old Township building.
b. Grogan did not want to pay rent at either location.
c. The final design allocated 336.7 square feet of office space
for the Tax Collector's office.
29. Grogan did not locate the tax office in the Township municipal
building.
a. From January 1, 1994, to February 1, 1994, Grogan used
space in the Township Municipal Building.
b. From February, 1994, through the present [sic], Grogan has
operated the Moon Township Tax Office, at 767 Narrows
Run Road, Moon Township.
30. Martin Grogan, his brother Robert Grogan, and their spouses own
th
PA.
e property located at 767 Narrows Run Road, Moon Township,
a. Ownership is recorded in Allegheny County Deed Book,
Volume 4809, pages 293 -296.
b. This is the same property that Grogan has chosen to locate
the tax office.
31. Since February, 1994, Grogan has submitted expenses for
reimbursement which have included rent.
a. The expense items were submitted to the School District for
payment.
b. The expenses submitted included receipts for phone bills,
payroll, miscellaneous office supplies and rental payments.
32. It is the Tax Collector's discretion as to which expenses he will
seek reimbursement for up to the allowable annual amount of
$21,500.00 as set by Resolution R -14- 1993.
a. Annual expenses exceeding $21,500.00 are the
responsibility of the Tax Collector.
33. The payment of expenses for the Real Estate Tax Collector was
handled by the Moon Area School District as set by Resolution R-
14 -1993.
Grogan, 96- 028 -C2
Page 7
34. As part of requests for expense reimbursements Grogan submitted
receipts for rental payments.
a. The receipts were made out to Martin Grogan and reflected
payments in the form of checks in the amount of $500.00
for monthly rental of the property at 769 Narrows Run
Road.
b. Check numbers were not reflected on the receipts.
c. The receipts bear the signature of Robert Grogan.
d. All of the receipts for rent from 1994 through 1996 are
numbered in sequence.
35. Grogan submitted office rental invoices to the Moon School
District on a monthly basis in the amount of $500.00 from
February, 1994, through March, 1996.
a. 1994
Month
January
February
March
April
May
June
July
August
September
October
November
December
b. 1995
January
February
March
:April
May
June
July
August- November
c. 1996
December (1995)
January
February
March***
Amount
None [sic]
$ 500.00
$ 500.00
$ 500.00
$ 500.00
$ 500.00
$ 500.00
$ 500.00
$ 500.00
$ 500.00
$ 500.00
$ 500.00
$5,500.00
$ 500.00
$ 500.00
$ 500.00
$ 500.00
$ 500.00
$ 500.00
$ 500.00
** None
$3,500.00
$ 500.00
$ 500.00
$ 500.00
$ 500,00
$2,000.00
Amount Paid
None
$ 500.00
$ 500.00
$ 500.00
$ 500.00
$ 500.00
$ 500.00
$ 500.00
$ 500.00
$ 0.00*
$ 0.00*
$ 0.00*
[sic] $4,000.00
$ 500.00
$ 500.00
$ 500.00
$ 500.00
$ 500.00
$ 500.00
$ 500.00
None N/A
$3,500.00
$ 500.00
$ 500.00
$ 500.00
$ 500.00
$2,000.00
Receipt No.
N/A
492001
492002
492003
492004
492005
492006
492007
492008
492009
492010
Not Attached
492012
492013
492014
492015
492016
492017
492018
492023
492024
492025
492026
Grogan, 96- 028 -C2
Page 8
Reimbursement payments were not made to Grogan in October,
November and December, 1994, as Grogan had received the
maximum expenses for that year.
Reimbursement for rent was not sought for the period August
through November, 1995, because the total maximum yearly
expenses of $21,500 had been paid by the School District by
August, 1995.
No rent reimbursement was sought after March, 1996.
36. The rental receipts submitted by Martin Grogan to the School
District were not prepared by Robert Grogan.
a. Martin Grogan prepared the receipts for rental payments to
facilitate the receipt of expense money from the School
District during 1994, 1995 and 1996.
If receipts had not been submitted, no rental
reimbursements would have been made.
37. Grogan received the following payments from the School District
for expense reimbursements, including rent.
a. 1994
**
* **
Check No. Date Amount Account Deposited In
32010 04/30/94 $ 8,919.86 Bell Federal Savings & Loan
32521 06/30/94 $ 2,204.41 Bell Federal Savings & Loan
32769 07/31/94 $ 6,874.43 Bell Federal Savings & Loan
33442 09/30/94 $ 3,168.72 Bell Federal Savings & Loan
33860 10/31/94 $ 332.58 Mellon Bank
$21,500.00
b. 1995
35214 02/28/95 $ 5,754.61 Bell Federal Savings & Loan
35504 03/31/95 $ 3,333.25 Bell Federal Savings & Loan
36094 05/31/95 $ 6,376.44 Bell Federal Savings & Loan
36367 06/30/95 $ 3,325.67 Bell Federal Savings & Loan
36909 08/31/95 $ 2.710.02 Ellwood Savings Bank
$21,500.00
c. 1996
38527 01/31/96 $ 3,320.03 Bell Federal Savings & Loan
38805 02/29/96 $ 3,096.33 Mellon Bank
39136 03/31/96 $ 3,098.04 Ellwood Savings Bank
39516 04/30/96 $ 3,350.80 Bell Federal Savings & Loan
04025 07/31/96 $ 8,041.62
04075 08/31/96 $ 593.18
$20,906.82
38. All of the expense reimbursements checks received by Grogan
were deposited into one of three bank accounts.
Grogan, 96- 028 -C2
Page 9
Check Number Bank
32010 Bell Federal Savings & Loan
32521 Bell Federal Savings & Loan
32769 Bell Federal Savings & Loan
33442 Bell Federal Savings & Loan
33860 Mellon Bank
35214 Bell Federal Savings & Loan
35504 Bell Federal Savings & Loan
36094 Bell Federal Savings & Loan
36367 Bell Federal Savings & Loan
36909 Ellwood Savings Bank
38527 Bell Federal Savings & Loan
38805 Mellon Bank
39136 Ellwood Savings Bank
39516 Bell Federal Savings & Loan
39. An affidavit dated May 7, 1997, submitted by Martin Grogan to
the Investigative Division of the State Ethics Commission asserted
that he and his brother along with their wives owned the property
at 767 Narrows Run Road, Coraopolis, PA.
a. The property consists of two (2) apartments on the second
floor and the Tax Collector's office on the first floor.
b. The second floor tenants pay a total of $490 per month
rent while the Tax Collector pays $ 500 per month.
c. The tenants do not have a written lease.
d. A joint account titled Martin T. and Beatrice Grogan and
Robert P. and Jean Grogan is maintained at the First
Western Bank and is used as a rental account.
e. The account is used as the depository for all rent collected
and from which all bills, including taxes, remodeling and
repairs are paid.
40. Martin and Beatrice Grogan maintain an account at Mellon Bank,
Account No. 282 -9728.
a. Beatrice Grogan is the wife of Martin Grogan.
:b. Between July, 1994, and May, 1996, regular payments in
the amount of $ 500.00 were made to Martin Grogan.
c. The checks were all signed by Beatrice Grogan.
41. Checks were issued to Martin Grogan by Beatrice Grogan as
follows:
a.
Check Number Date Posted Amount
1599 07/11/94 $ 500.00
1626 08/08/94 $ 500.00
1637 09/06/94 $ 500.00
1684 11/04/94 $ 500.00
Grogan, 96- 028 -C2
Page 10
12/05/94 $ 500.00
01/09/95 $ 500.00
02/06/95 $ 500.00
03/20/95 $ 500.00
04/10/95 $ 500.00
05/16/95 $ 500.00
06/05/95 $ 500.00
07/10/95 $ 500.00
08/07/95 $ 500.00
09/18/95 $ 500.00
10/11/95 $ 500.00
11/06/95 $ 500.00
12/04/95 $ 500.00
01/08/96 $ 500.00
02/05/96 $ 500.00
03/18/96 $ 500.00
04/08/96 $ 500.00
05/06/96 $ 500.00
TOTAL $11,500.00
Check numbers 1785, 1846, 1916 and 2017 indicated'
"rent" in the memo portion of the check.
42. All of the checks listed [above]. . were deposited into
Account No. 7113649 at First Western Bank.
a. This account is controlled by Martin Grogan, Robert Grogan
and Beatrice Grogan who have signature authority for this
account.
1706
1741
1761
1785*
1804
1837
1846*
1871
1892
1910*
1942
1962
1986
2017*
2045
2060
2076
2101
b. This is the same account as referenced ... [above].
43. Payments from Account No. 7113649 were made in part to pay
expenses on the building at 767 Narrows Run Road owned in part
by Martin Grogan.
Testimony
44. Gregory Smith is the Township manager and secretary /treasurer
for Moon Township, Allegheny County.
a. The elected Tax Collector for Moon Township is a
compensated position paid by both the School District and
Township.
(1) The School District and Township allow the Tax
Collector expenses as per a resolution.
b. Prior to 1994, Grogan was provided office space, free of
rent, in the Moon Township Municipal Building.
c. The Township purchased a building, called "the Community
Service Center," wherein all the offices would be
consolidated, along with water, sewer and other facilities.
Grogan, 96- 028 -C2
Page 11
(1) Officials occupying the building, including Grogan,
would be charged rent based upon a square foot
calculation.
(a) The officials were consulted regarding their needs
for office space.
(b) Rent was contemplated at a rate of $10 to $12 per
square foot.
(2) Grogan did not supply definitive information as to his
office needs in the new building.
(a) The Township allocated more space to Grogan plus
storage space.
(3) When the Township opened the new building in 1994,
Grogan chose to occupy a different office of his
choosing.
(a) Grogan remained in that office through the end of
his term as Tax Collector.
(b) The stated monthly rental was $500.
d. The Tax Collector has the option of choosing where to
locate the Tax Collector's office.
e. The resolution for the compensation of the Tax Collector
was adopted before the election.
45. Martin Grogan was the Tax Collector for the Township and School
District.
a. Any employees in the tax office were paid from the Tax
Collector's expense account.
b. Grogan and his wife maintained several bank accounts
relative to the office of Tax Collector.
(1) The Bell Federal Savings and Loan account was set up
to pay Tax Collector office expenses.
(2) The Ellwood Savings Bank account was used for
deposits that were not immediately needed so that
interest could accrue.
(3) The Mellon Bank account was a "regular" account.
(4) There was a rental account between Grogan and his
brother for rent in First Western, formerly Beaver Trust.
c. Grogan states that he submitted the $500 monthly rental
invoices to the Township and School District to show the
costs of operation of the Tax Collector's office but later
stopped because of a ruling of the State Ethics Commission
Month
Total Expenses
Submitted
Rent
Expenses
minus rent
Year -to -Date
Totals
Jan.
1,986.76
261.67
1,725.09
1,986.76
Feb.
2,682.34
500.00
2,182.34
4,669.10
March
2,334.18
500.00
1,834.18
7,003.28
April
2,199.92
500.00
1,699.92
9,203.20
May
2,204.41
500.00
1,704.41
11,407.61
June
3,553.09
500.00
3,053.09
14,960.70
July
3,321.34
500.00
2,821.34
18,282.04
Aug.
3,168.72
500.00
2,668.72
21,450 76
Sept.
3,325.63
500.00
2,825.63
24,776.39
Oct.
3,100.01
500.00
2,600.01
27, 876.40
Nov.
3,103.07
500.00
2,603.07
30,979.47
Dec.
3,322.10
500.00
2,822.10
34,301.57
Totals
34,301.57
5,761.67
28,539.90
Grogan, 96- 028 -C2
Page 12
and because the expenses exceeded $21,500 so that he
never got paid anyway.
d. The expenses for the office of Tax Collector included
wages, telephone, equipment, and similar items.
(1) The total expenses for 1994 were $34,301.5
(2) The total expenses for 1995 were $38,092.77.
e. Grogan kept the Tax Collector's office in the old municipal
office through January, 1994 and then moved into the
building owned by his brother and himself.
f. The expenses that Grogan was entitled to as Tax Collector
were reimbursable up to a maximum of $21,500 per year.
Grogan received monthly receipts as to rent for the Tax
Collector's office for the period from February, 1994
through March, 1996.
C. Documents
46. Exhibit 2 consists of photocopies of documents relating to
expenses for Grogan as Tax Collector for the calendar year 1994.
g ent for month of January, 1994 paid to Moon Township.
2 Excluding the January, 1994 rental payment, the stated total rent for the Tax
Collector's new office would be $5,500.00.
Month
Total Expenses
Submitted
Rent
Expenses
minus rent
Year -to -Date
Totals
Jan.
3,035.53
500.00
2,535.53
3,035.53
Feb.
2,719.08
500.00
2,219.08
5,754.61
March
3,333.26
500.00
1,834.18
9,087.87
April
3,098.56
500.00
2,598.56
12,186.43
May
3,104.88
500.00
2,604.88
15,291.31
June
3,325.67
500.00
2,825.67
18,616.98
July
3, 336.81
500.00
2,836.81
21,953.79
Aug.
3,095.76
500.00
2,595.76
25,049.55
Sept.
3,324.93
500.00
2,824.93
28,374.48
Oct.
3,300.52
500.00
2,800.52
31,675.00
Nov.
3,097.74
500.00
2,597.74
34,772.74
Dec.
3,320.03
500.00
2,820.03
38,092.77
Totals
38,092.77
6,000.00
32,092.77
Month
Total Expenses
Submitted
Rent
Expenses
minus rent
Year -to -Date
Totals
Jan.
3,096.33
500.00
2,596.33
3,096.33
Feb.
3,098.04
500.00
2,598.04
6,194.37
March'
3,350.00
500.00
2,850.00
9,544.37
April
2,609.12
2, 609.12
12,153.49
May
2,828.58
2,828.58
14,982.07
June
2,603.92
2,603.92
17,585.99
July
2,700.21
2,700.21
20,286.20
Aug.
3,003.76
3,003.76
23,289.96
Sept.
2,741.74
2,741.74
26,031.70
Oct.
2,742.98
2,742.98
28,774.68
Grogan, 96- 028 -C2
Page 13
47. Exhibit 3 consists of photocopies of documents relating to
expenses for Grogan as the Tax Collector for the calendar year
1995.
Admitted Pleadings reflect this monthly rental submitted in 1996.
48. Exhibit 4 consists of photocopies of documents relating to
expenses for Grogan as Tax Collector for the calendar year 1996.
Month
Total Expenses
Submitted
Rent
Expenses
minus rent
Year -to -Date
Totals
Nov.
3,042.48
3,042.48
31,817.16
Dec.
2,858.58
2,858.58
34,675.74
Totals
34,675.74
1,500.00
33,175.74
Grogan, 96- 028 -C2
Page 14
Act 93 of 1998, Chapter 11, §1102.
tnterlineations exist as to Expense Payments sheet for the given month
III. DISCUSSION: Initially we must consider a Motion to Dismiss filed by
Grogan at the hearing. The proffered basis is that the testimony elicited at the hearing
warrants a dismissal. The theory for the Motion compels a denial because if we cannot
reach a result until after the record is reviewed, there can be no basis for granting this
type of motion ab initio. The Motion is accordingly denied. We now will make our
analysis and render a decision on the merits.
At all times relevant to this matter, the Respondent, Martin Grogan, hereinafter
Grogan, was a public official subject to the provisions of the Public Official and
Employee Ethics Act ( "Ethics Act "), Act 9 of 1989, Pamphlet Law 26, 65 P.S. §401,,
,. /Act 93 of 1998, Chapter 11.
The issue is whether Grogan violated Sections 1103(a) and 1103(f) of the
Ethics Act when he leased office space for the. Tax Collector's office in a building
owned by himself, his brother, and their spouses.
Section 1103. Restricted activities.
(a) Conflict of interest. - -No public official or public
employee shall engage in conduct that constitutes a conflict
of interest.
Act 93 of 1998, Chapter 11, §1103(a).
The term "conflict of interest" is defined under the Ethics Act as follows:
Section 1102. 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. The term does not
include an action having a de minimis economic impact or
which affects to the same degree a class consisting of the
general public or a subclass consisting of an industry,
occupation or other group which includes the public official
or public employee, a member of his immediate family or a
business with which he or a member of his immediate
family is associated.
Grogan, 96- 028 -C2
Page 15
Section 1 103(a) of the Ethics Act 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 1 103(f) of the Ethics Act provides:
Section 1103. Restricted activities.
(f) Contract. - -No public official or public employee or
his spouse or child or any business in which the person or
his spouse or child is associated shalt 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.
Act 93 of 1998, Chapter 11, §1103(f).
Section 1 103(f) of the Ethics Act 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.
Having noted the issues and applicable law, we shall now summarize the
relevant facts.
Grogan was the Tax Collector for Moon Township and the Moon Area School
District from 1959 through December 1997. Until January of 1994, Grogan's tax
office was housed in the Township Municipal Building. The School District and
Township through resolutions approved a salary for the Tax Collector plus verifiable
office expenses up to a yearly maximum. Such resolutions are adopted prior to the
election of the Tax Collector, with the compensation and maximum expenses set for
the following term of office. For the years at issue, 1994 through 1996, the salary
was $29,500.00 and the maximum yearly allowance for expenses was $21,500.00
— $15,500.00 paid by the School District and $6,000.00 by the Township.
Although the Township had provided free office space for the Tax Collector's
office, circumstances changed after December 21, 1992, when the Township
Grogan, 96- 028 -C2
Page 16
purchased the former Montour Heights Country Club for the purpose of converting it
into a centrally - located Township Community Service Center, which would house all
Township offices, the Municipal Authority, the Solid Waste Department, and the
library. Ongoing discussions and correspondence occurred between the Township and
Grogan regarding the relocation of the Tax Collector's office into the newly- acquired
building. The Township Manager advised Grogan that at the expiration of the current
resolution, the Township intended to obtain market value rent for the office space
occupied by him as Tax Collector. This notice was given to Grogan prior to his running
for re- election in 1993. The charging of rent for space applied to all officials who
would occupy the new Community Service Center. The Township proposed that
Grogan could occupy space in the new building at $10 to $12 per square foot with
storage space at about $4 per square foot. However, Grogan did not commit to having
the Tax Collector's office relocated into the new building.
In January, 1994, Grogan moved out of the old Township Municipal Building
and relocated the Tax Collector's office into a building that is owned by Grogan, his
brother, and their spouses. From February 1, 1994 through March, 1996, Grogan
included on his monthly expense payments as Tax Collector an item of $500.00 for
rent for the Tax Collector's office. Grogan obtained monthly rental receipts for the Tax
Collector's office in that building. All expenses submitted by Grogan were reimbursed
until he reached the maximum of $21,500.00 for that year. For each of the three,
years in question, Grogan's expenses exceeded $21,500.00, irrespective of rent.:
Grogan stopped submitting the $500.00 monthly rental invoices from April, 1996
through the end of his term.
Grogan asserts that he stopped listing rent because of a ruling of this
Commission and because rent would not be reimbursed since his other expenses
exceeded the $21,500.00 maximum.
Having summarized the above relevant facts, we must now determine whether
the actions of Grogan violated Sections 1103(a) and 1103(f) of the Ethics Act. We
shall first consider an application of Section 1103(a) followed by our analysis of
Section 1103(f) of the Ethics Act.
As to Section 1103(a) of the Ethics Act, there was a use of the authority of
office on the part of Grogan in selecting the building owned by Grogan, his brother;
and their spouses as the new office for the Tax Collector. See, Juliante, Order No.
809. But for the fact that Grogan was Tax Collector, he could not have made the
selection as to where the Tax Collector's office would be relocated.
The only remaining issue is whether there was a private pecuniary benefit that
inured to Grogan, his brother, or their spouses as a result of his use of authority of
office.
The Investigative Division argues that a private pecuniary benefit was received
and advocates for a violation on two separate theories. The first argument is that
Grogan submitted expenses to the School District on a monthly basis which included
rent for the Tax Collector's office. Since Grogan was reimbursed for those expenses
up to $21,500.00, the Investigative Division argues that Grogan received
reimbursement for rent which was a private pecuniary benefit. Second, the
Investigative Division argues that Grogan obtained a private pecuniary benefit because
he reduced his out -of- pocket expenditure for the payment of rent by relocating into the
building owned by Grogan, his brother, and their spouses rather than relocating into
the new Township building or to some other independently -owned building where
Grogan would have an outlay of rental expenses.
Grogan, 96- 028 -C2
Page 17
We are guided in our analysis by McGuire, Order No. 945, reversed on other
grounds, McGuire and Marchitello v SEC, 657 A.2d 1346 (1995). In the cited case,
we had to determine whether McGuire violated Section 3(a) of the Ethics Law as to
the allegation that he received compensation in excess of that which was authorized
in law for an authority board member. We opined that the result under the Ethics Law
would not be dependent upon bookkeeping methods (reviewing accounts from which
compensation was payable) of the governmental body and that an offset method
would be used to determine whether there was_excess compensation (by crediting
underpayments of officer's pay to overpayments of board meeting pay):
In this case, the Investigative Division attempted to identify
particular payments to McGuire as either "meeting pay" or "officer's pay"
based upon the account from which the money was drawn. We do not
feel that it is necessary or prudent to do so. First, it is clear from the
authority meeting minutes that officer's pay in various amounts was
authorized to come from both accounts. Second, conformance to Section
3(a) of the Ethics Law does not hinge upon the particular bookkeeping
methods of the governmental body. Third, even if such an approach had
any validity, there would be overpayments of meeting pay to be offset
against underpayments of officer's pay. Our approach shall simply be to
determine whether a private pecuniary benefit consisting of excess
compensation was received by McGuire.
1d., at 38, 39 (emphasis added).
From the principles in McGuire, we will not decide the rent issue by focusing
upon the early months of each year but rather the whole year for which the annual
expenses are set at a maximum of $21,500.00. Second, we will consider whether
Grogan obtained any private pecuniary benefit as to the rental by offsetting rent
against other expenses that could have been taken within the context of the
$21,500.00 maximum expense allotment that Grogan received in each of the years
1994 through 1996.
When we offset the payments received by Grogan for submitted rental expenses
against other expenses, to which he was entitled, Grogan received $21,500.00 and
no more so that there was no private pecuniary benefit.
Regarding the first argument of the Investigative Division, Grogan's expenses
for the years 1994 through 1996, exclusive of rent, exceeded the maximum of
$21,500.00 to which he was entitled. Thus, whether Grogan did or did not include
rent, the amount of expenses he received would be the same, namely, $21,500.00,
which was Grogan's maximum expense allotment for each calendar -year. In each of
the three years at issue, Grogan received his compensation plus $21,500.00. In each
of the three years, Grogan received nothing more. Therefore, the rentals from 1994
into 1996 made no difference in what Grogan received. Even if we were to focus on
the early months in each year where rent was submitted and reimbursed, the offset
of the rental reimbursement with other expenses would result in Grogan still receiving
only $21,500. Grogan did not obtain any private pecuniary benefit because he was
entitled to be reimbursed for expenses of $21,500.00 in each of those years,
irrespective of rent. The submission for rent by Grogan resulted in no private pecuniary
benefit to Grogan, his spouse, brother, or sister -in -law. Parenthetically, a sister -in -law
is not a member of Grogan's immediate family as that term is defined under the Ethics
Act.
The Investigative Division's second argument is that Grogan, by renting in a
building owned by Grogan, his brother, and their spouses rather than in the new
Grogan, 96- 028 -C2
Page 18
municipal building or some other independently -owned building where Grogan would
have a greater outlay of expenses, reduced his out -of- pocket expenditures and
obtained a private pecuniary benefit.
We recognize that there is a private pecuniary benefit when a public official or
employee uses government personnel, facilities, or equipment for private or business
purposes, so that he would not have to pay such expenses out -of- pocket. See, Freind,
Order No. 800; Rakowsky, Order No. 943; Hessinger, Order No. 931. However, all of
those cases involved situations where the public officials /employees used such offices,
facilities, equipment, or personnel .ate government expense so they did not have to
make such payments themselves. We do not have that situation in the instant matter
because there is no government expenditure from which Grogan could benefit. In this
case, Grogan basically rented from himself, his brother, and their spouses privately to
himself as Tax Collector. The "rent" may be viewed as a gift from Grogan, his brother,
or their spouses to himself as Tax Collector. Nowhere did Grogan use government
equipment facilities, equipment, or personnel to reduce or eliminate his own out -of-
pocket expenses. What we essentially have in this case is a fiction as to rent, certainly
as to the School District and Township which did not give any reimbursement over
$21,500.00 if rent is considered. No matter how this case is viewed, the end result
is the same - Grogan received his compensation and the maximum expense
reimbursement, $21,500.00, irrespective of rent. Since Grogan received no more than to which he was entitled, there was no private pecuniary benefit.
Accordingly, we find no violation of Section 1 103(a) of the Ethics Act when
Grogan as Tax Collector relocated his office into a building owned by himself, his
brother, and their spouses in that there was no private pecuniary benefit.
We shall now consider whether Grogan's actions violated Section 1103(f) of the
Ethics Act regarding the relocation of the Tax Collector's office from the former
municipal building into the building that is owned by Grogan, his brother, and their
spouses.
As to Section 1103(f) of the Ethics Act, in order to establish a violation, there
must be a contract between the public official, spouse, child, or business with which
associated, and his governmental body of $500.00 or more, which was not done
through an open and public process. We see the issue in this case as whether there
was in fact a contract.
The record establishes that Grogan relocated the Tax Collector's office in
February, 1994 to a building that was owned by himself, his brother, and their
spouses. There was no written lease agreement. Grogan included a $500.00 monthly
fee on his expense reports to the Township and School District. Grogan's spouse
wrote checks in the amount of $500.00 from one of the Tax Collector's bank
accounts to Grogan as monthly rental payments. Grogan obtained monthly receipts in
the amount of $500.00 for rent.
While acknowledging that there are documents such as checks and receipts
relating to the Tax Collector's office in the building owned by Grogan, his brother, and
their spouses, we do not find that there was a contract for rent. There was no
consideration for office space by the Tax Collector's office in the building . owned by
Grogan, his brother, and their spouses. Just as in our analysis of Section 1103(a)
above, Grogan did not receive any private pecuniary benefit, that is, financial gain, as
to the rental of this property because he reached the maximum $21,500.00 in each
year, regardless of whether rent was listed as an expense. Hence, what we have is a
payment of $500.00 by Grogan from himself to himself, his brother, and their
spouses. Contracting by a brother or sister -in -law of a public official is not even within
Grogan, 96- 028 -C2
Page 19
the prohibition of Section 1 103(f) of the Ethics Act. Based upon these very unique
facts and circumstances, we do not believe that a contract existed in that there was
no value for a contract.
Since there was no contract in this case but merely circular payments from
Grogan to himself, his brother, and their spouses, we find no violation of Section
1103(f) of the Ethics Act.
IV. CONCLUSIONS OF LAW:
1. Grogan, as a real estate Tax Collector in Moon Township, Allegheny County,
was a public official /employee subject to the provisions of the Ethics Law.
2. Grogan did not violate Section 1103(a) of the Ethics Act when he relocated the
Tax Collector's office into a building owned by himself, his brother, and their
spouses in that no private pecuniary benefit was obtained.
3. Grogan did not violate Section 1103(f) of the Ethics Act as to the relocation of
the Tax Collector's office into a building owned by himself, his brother, and
their spouses in that no contract existed for the rental of the Tax Collector's,
office.
In Re: Martin Grogan
ORDER NO. 1100
File Docket: 96- 028 -C2
Date Decided: 12/15/98
Date Mailed: 12/29/98
1. Martin Grogan, as a real estate Tax Collector in Moon Township, Allegheny
County, did not violate Section 1103(a) of the Ethics Act when he relocated the
Tax Collector's office into a building owned by himself, his brother, and their
spouses in that no private pecuniary benefit was obtained.
2. Grogan did not violate Section 1103(f) of the Ethics Act as to the relocation of
the Tax Collector's office into a building owned by himself, his brother, and
their spouses in that no contract existed for the rental of the Tax Collector's
office.
BY THE COMMISSION,
s A 6 a
DANEEN E. REESE, CHAIR