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HomeMy WebLinkAbout1143 WaltersIn Re: Lonny Walters 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 Julius Uehlein John J. Bolger Frank M. Brown Susan Mosites Bicket 98- 055 -C2 Order No. 1 143 11/22/99 12/7/99 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 ei seq., by the above - named Respondent. At the commencement of its investigation, the Investigative Division served upon Respondent written notice of the specific allegations. Upon completion of its investigation, the Investigative Division issued and served upon Respondent a Findings Report identified as an "Investigative Complaint." An Answer was not filed and a hearing was waived. The record is complete. Effective December 15, 1998, Act 9 of 1989 was replaced by the Public Official and Employee Ethics. Act ( "Ethics Act "), Act 93 of 1998, Chapter 11, 65 Pa.C.S. §1101 mac,., which essentially repeats Act 9 of 1989 and provides for the completion of pending matters under that Act. 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 the Ethics Act. 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. Walters, 98- 055 -C2 Page 2 1. ALLEGATION: That Lonny Walters, a public official /public employee, in his capacity as the President of Jefferson Borough, Greene County, violated Section 1103(a) and 1 103(f) of the Ethics Act (Act 9 of 1989) when he contracted with his governmental body without any open and public process including prior public notice and subsequent public disclosure of all proposals considered and contracts awarded by contracting with the borough, in excess of $500 for snow removal in from 1994 through 1997, and when he participated in approving payments to himself. I1. FINDINGS: 1. The Investigative Division of the State Ethics Commission received information alleging that Lonny Walters violated provisions of the State Ethics Act (Act 9 of 1989). 2. Upon review of the information the Investigative Division initiated a preliminary inquiry on July 23, 1998. 3. The preliminary inquiry was completed within sixty days. 4. On September 22, 1998, a letter was forwarded to Lonny Walters, 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. Z 041 456 145. b. The domestic return receipt bore the signature of Cindy Walters, with a delivery date of September 24, 1998. 5. On January 19, 1999, 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 February 26, 1999, granting the ninety day extension. 7. Periodic notice letters were forwarded to Lonny Walters in accordance with the provisions of the Ethics Law advising him of the general status of the investigation. 8. The Investigative Complaint was mailed to the Respondent on September 14, 1999. 9. Lonny R. Walters served as a Jefferson Borough Councilman from January 1982 until December 31, 1997. a. Walters served as the president of borough council from January 1990 until December 31, 1997. 10. Walters is the owner /operator of Lonny R. Walters, Welding and Fabricating, P.O. Box 241, Jefferson, PA 15344. a. Walters performs contracting type work, including snow removal and street maintenance. Walters, 98- 055 -C2 Page 3 11. Jefferson Borough does not have a road crew to maintain borough streets or alleys. a. Jefferson Borough does not have any heavy equipment to maintain borough streets and alleys. b. Jefferson Borough hires private contractors for all work. 12. Jefferson Borough has nine streets and six alleys which are maintained by private contractors. a. The amount of time required to maintain and remove snow from the borough streets is approximately equal to the amount of time required to maintain and plow the borough alleys. 13. Snow removal, maintenance, and repairs on borough streets are paid for from the borough Highway Aid Fund. 14. Snow removal, maintenance, and repairs on borough alleys are paid for from the borough General Fund. 15. Jefferson Borough has contracted with Wafters since the early 1980's through December 1997 for snow removal, street maintenance, and general repairs. a. Walters began performing work for the borough prior to serving on borough council and continued until his term on council expired in December 1997. b. Walters has continued to work for the borough after his term expired in December 1997. 16. Jefferson Borough also utilized the services of Gerald M. Bailey from approximately 1981 to 1995. a. Bailey was the owner /operator of BMG Construction during this time frame. b. Bailey primarily performed snow removal for Jefferson Borough. c. Bailey occasionally performed general maintenance type work for the borough. 17. In 1996 Bailey obtained employment with Jefferson Township as a machine operator /laborer and ceased contracting with the township. a. Bailey sold his construction business upon gaining employment with Jefferson Township. 18. Neither Walters nor Bailey had a written contract with the borough for road maintenance and snow removal. a. Mutual understandings existed between Walters and Bailey and the borough that their companies would be utilized for road repairs and snow removal. b. Rates for various services were not discussed or agreed upon. Walters, 98- 055 -C2 Page 4 c. Bills were approved for payment by council upon receipt. 19. Services performed by Walters and Bailey for the borough were not put out for bid by borough council. a. Both Bailey and Walters were selected as a result of their location in the borough. 20. Jefferson Borough council used Walters' services as a matter of convenience and believed it to be a cost saving measure. a. Borough council members believed Walters' fees were reasonable and felt utilizing Walters was a good financial arrangement for the borough. b. No other individuals or businesses in the borough owned the necessary equipment to perform the services. 21. Council would inform Walters at monthly meetings of the need to address repairs or road maintenance issues. a. Walters occasionally informed borough council about repairs or maintenance needed. b. No formal vote was taken for Walters to address maintenance. 22. Walters rates for snowplowing are $35.00 /hour but increased to $40.00 per hour if salt or ashes were spread. a. The rates charged for road maintenance varied depending on the job and the types of equipment needed. 23. Walters was compensated by Jefferson Borough from the General Fund and the Jefferson Borough Highway Aid Fund for services performed. 24. When billing the borough, Walters would submit two invoices to Jefferson Borough in regard to snow removal. a. One invoice was submitted for payment from the Highway Aid Fund for plowing of streets and one invoice was submitted for payment from the General Fund for plowing of alleys. 25. While serving as the President of Jefferson Borough Council from 1994 to 1997, Walters billed and was paid by Jefferson Borough from the General Fund for services associated with snow removal and road maintenance and repair borough streets as follows: 1994 Date Amount Paid Check # 01/94 $ 725.00 1888 01/94 360.00 1891 02/94 875.00 1903 03/94 1830.00 1925 03/94 605.00 1933 04/94 445.00 1943 Walters, 98- 055 -C2 Page 5 Total: 01/95 01/95 03/01/95 03/20/95 04/01/95 04/01/95 04/20/95 05/01/95 05/15/95 06/01/95 06/08/95 07/01/95 07/15/95 07/15/95 08/01/95 08/01/95 04/94 1252.00 04/94 735.00 05/94 945.00 05/94 765.00 06/94 1275.00 06/94 665.00 06/94 1280.00 07/94 475.00 08/94 1780.00 09/94 540.00 08/94 725.00 09/94 865.00 09/94 615.00 09/94 1645.00 10/94 350.00 10/94 245.00 11/94 1870.00 11/94 1450.00 12/94 1275.00 12/94 725.00 12/94 670.00 $ 24,987.00 a. 1994 invoices were unavailable for review. 1995 Invoice Date Description Amount Repair /replace $750.00 street signs Repair pipe 945.00 Remove snow,ash 685.00 Snow removal 645.00 and salting Clean drain 735.00 and ditches Work on 2260.00 Monongahela St. Snow removal/ 1295.00 salting Work on drains 1675.00 Clean drain/ 1250.00 replace pipe Clean ditches/ 850.00 remove debris Finish 1175.00 Monongahela St./ add stone Replace storm 1475.00 sewer -lst % Repair /replace 375.00 street signs Repair road/ 1125.00 spray weeds Replace storm 1750.00 sewer -2nd % Clean ditches/ 820.00 haul debris Work on storm 1850.00 1948 1949 1960 1964 1973 1977 1981 1995 2004 2009 2010 2020 2022 2024 2034 2039 2050 2054 2063 2067 2070 Date Paid 01/02/95 01/14/95 02/06/95 03/06/95 03/27/95 04/01/95 04/01/95 04/24/95 05/01/95 05/18/95 06/01/95 06/10/95 07/03/95 07/03/95 07/20/95 08/01/95 08/07/95 Check# 2079 2084 2100 2116 2123 2137 2134 2143 2154 2156 2166 2170 2186 2182 2188 2200 2202 Walters, 98- 055 -C2 Page 6 08/10/95 10/01/95 10/01/95 11/01/95 12/01/95 12/01/95 Total: 1996 Invoice Date 01/96 02/96 03/96 04/01/96 04/01/96 04/96 05/96 06/96 06/01/96 07/01/96 08/01/96 08/01/96 08/01/96 10/01/96 11/01/96 12/01/96 12/01/96 12/01/96 Total: 1997 Invoice Date 02/01/97 03/97 03/97 03/97 04/97 04/97 sewer Replace street 300.00 signs Clean ditches/ 725.00 haul debris Replace signs 350.00 Work on berms 670.00 Dig up drain 1255.00 Snow removal/ 615.00 salting $23,575.00 Description Amount Snow removal $1845.00 Snow removal 1250.00 Remove snow 475.00 Spread gravel 75.00 Fill in berms 1220.00 Snow removal 375.00 Clean ditch/ 1200.00 replace pipe Haul to 400.00 landfill Clean drains 550.00 Clean up berms 1240.00 Repair /replace 250.00 street signs • Clear brush 140.00 Mon. St. Opening 719.00 Monongahela St. Clear weeds/ 575.00 spray killer Clean ditches/ 675.00 haul debris Clear away 500.00 intersections Repair /replace 325.00 street signs Finish 1150.00 Monongahela St. Snow rem /spread 450.00 anti -skid $13,414.00 Description Amount Snow removal/ $350.00 ashing Repair /replace 375.00 signs Open drain 350.00 Snow Removal/ 450.00 ashing Remove snow/ 610.00 repair sign Clean out 425.00 08/15/95 10/02/95 10/16/95 11/03/95 12/04/95 12/15/95 Date Paid 01/02/96 02/05/96 03/08/96 04/01/96 04/01/96 05/06/96 06/07/96 06/14/96 07/01/96 08/01/96 08/01/96 08/26/96 10/01/96 11/04/96 12/02/96 12/17/96 12/20/96 Date Paid 02/03/97 03/03/97 03/24/97 04/04/97 04/24/97 2205 2224 2226 2235 2247 2252 Check # 2262 2281 2304 2315 2317 2315 2327 2340 2341 2350 2334 2363 2363 2368 2391 2406 2418 2420 2422 Check # 2457 2468* 2475 2477 2488* 2494 Walters, 98- 055 -C2 Page 7 05/01/97 06/01/97 07/97 07/97 08/97 08/97 08/15/97 09/01/97 10/01/97 10/10/97 11/97 12/97 12/97 12/97 12/97 Total: 01/03/94 02/01/94 03/18/94 04/08/94 06/13/94 07/01/94 08/15/94 09/06/94 10/03/94 drains Clean berms 965.00 Lay /replace 1445.00 gravel Clean sidewalks /450.00 curbs Spray weed 745.00 killer Clean sidewalks /420.00 curbs Weed removal/ 1220.00 haul trees Repair /replace 575.00 signs Replace drain/ 1425.00 gravel Spread gravel 615.00 Clean ditches 475.00 Repair 2 holes 1145.00 in road Replace drain 1125.00 pipe and stone Clean ditches/ 830.00 haul debris Snow removal/ 560.00 ashing Replace poles/ 685.00 signs $15,240.00 *Checks not provided. Check numbers obtained from invoices reviewed. 26. Walters was paid a total of $77,216.00 between January 1994 and December 1997 by Jefferson Borough for snow removal and road maintenance and repair issues from the borough General Fund. 27. While serving as the President of Jefferson Borough Council from 1994 to 1997, Walters billed and was paid by Jefferson Borough from the Highway Aid Fund for services associated with snow removal and road maintenance and repair as follows: 1994 Date Check Amount $320.00 $475.00 $270.00 $735.00 $320.00 $650.00 $335.00 $840.00 $350.00 Check # 1032 1034 1036 1038 1039 1040 1041 1042 1043 05/05/97 06/02/97 07/01/97 07/14/97 08/01/97 08/04/97 08/18/97 10/01/97 11/03/97 12/01/97 12/01/97 12/17/97 12/29/97 2508 2523 2538 2540 2550 2551 2556 2566 2582 2585 2594 2608 2611 2614 2616 Budget Item # Type of Work 433 Street signs and marking 432 Snow and ice removal 433 Street signs and marking 432 Snow and ice removal 436 Storm sewers and drains 438 Maintenance and repair roads and bridges 436 Storm sewers and drains 436 Storm sewers and drains 433 Street signs and marking Walters, 98- 055 -C2 Page 8 11/02/94 $925.00 12/01/94 $1,245.00 Total: $6,465.00 1995 Data Check Amount 02/17/95 $ 745.00 03/06/95 $ 645.00 04/01/95 $2,125.00 05/01/95 $ 800.00 06/01/95 $ 775.00 06/12/95 $ 480.00 07/03/95 $ 375.00 07/20/95 $1,750.00 08/15/95 $ 300.00 09/01/95 $ 835.00 10/01/95 $ 725.00 10/01/95 $ 350.00 11/06/95 $ 890.00 Total: $10,795.00 1996 Date Check Amount 02/05/96 $ 825.00 04/08/96 $ 425.00 05/08/96 $1,200.00 07/01/96 $ 250.00 10/07/96 $ 725.00 Total: $3,425.00 1997 1044 436 Storm sewers and drains 1045 438 Maintenance and repair roads and bridges Check # 1047 1049 1052 1054 1055 431 1056 436 1057 433 1058 436 1059 433 1061 438 1062 438 1063 433 1064 431 Budget Item # Type of Work 432 432 436 438 Snow and ice removal Snow and ice removal Storm sewers and drains Maintenance and repair roads and bridges C l e a n i n g g streets and gutters Storm sewers and drains Street signs and markings Storm sewers and drains Street signs and markings Maintenance and repair roads and bridges Maintenance and repair roads and bridges Street signs and marking C l c a n i n g streets and gutters Check # Budget Item # Type of Work 1067 1076 1077 432 Snow and ice removal 432 Snow and ice removal 438 Maintenance and repair roads and bridges 1078 433 Street signs and markings 1079 438 Maintenance and repair roads and bridges Walters, 98- 055 -C2 Page 9 Date Check Amount 02/03/97 03/03/97 03/03/97 04/07/97 $ 350.00 $ 375.00 $ 225.00 $ 820.00 09/02/97 $ 575.00 11/03/97 $ 620.00 12/01/97 $ 850.00 12/01/97 $ 525.00 Total: $4,340.00 Total 1994 - $ 31,452.00 1995 - $ 34,370.00 1996 - $ 16,839.00 1997 - $ 19, 580.00 $102,241.00 Check # Budget Item # Type of Work 1080 432 Snow and ice removal 1081 432 Snow and ice removal 1082 434 Street lighting 1083 436 Storm sewers and drains 1090 438 Maintenance and repair roads and bridges 1091 436 Storm sewers and drains 1093 436 Storm sewers and drains 1094 433 Street signs and markings 28. Walters was paid a total of $25,025.00 between January 1994 and December 1997 by Jefferson Borough for snow removal and road maintenance and repair issues from the borough Highway Aid Fund. 29. Walters was paid a total of $102,241.00 for services performed in the time frame of 1994 through 1997 from the Jefferson Borough General Fund and Highway Aid Fund as follows: General Fund $24,987.00 $23,575.00 $13,414.00 $15.240.00 Highway Fund $ 6,465.00 $10,795.00 $ 3,425.00 $ 4,340.00 $77,216.00 $25,025.00 30. Walters did not participate in the voting to pay the bill lists of Jefferson Borough. a. Walters voted only if a tie - breaker vote was needed. b. Monthly bill lists were generally unanimously approved. 31. As Council President, Walters has signature authority over the Jefferson Borough General Fund and Highway Aid Fund. a. Council Vice President and Secretary /Treasurer also hold signature authority. 32. The signatures of the council president and secretary /treasurer are required on checks issued from the General Fund and the Highway Aid Fund. a. Council Vice President can sign checks in the President's absence. 33. Cynthia Walters is the Borough Secretary/Treasurer. a. Cynthia Walters is the spouse of Lonny Walters. Walters, 98- 055 -C2 Page 10 b. Cynthia Walters has been the Secretary/Treasurer since 1987. 34. Cynthia Walters signed all checks payable to Lonny Walters, in her position as secretary/treasurer. 35. Lonny Walters signed the checks issued to him from the General Fund and the Highway aid Fund in his capacity as President of Jefferson Borough Council (Reference Findings #'s 25 and 27), with the exceptions as noted: Date Check # Total Account Authorized by 09/08/97 1090 $575.00 Highway Aid Robert Lutz/ Cynthia Walters 11/03/97 1091 $620.00 Highway Aid Robert Lutz/ Cynthia Walters 12/01/97 1093 $850.00 Highway Aid Robert Lutz/ Cynthia Walters 12/01/97 1094 $525.00 Highway Aid Robert Lutz/ Cynthia Walters Total: $2,570.00 a. 1994 checks from the Borough General Fund and the Highway Aid Fund have been destroyed. b. Authorizing signatures on 1994 checks issued to Walters are undeterminable. 36.. Walters did not receive from Jefferson Borough any IRS Form 1099 - Miscellaneous documenting payment made to Walters for services performed from 1994 through 1997. a. An IRS Form 1099 - Miscellaneous is to be provided by the borough to independent contractors who are paid $600.00 or more for fees, commissions, or other forms of compensation and are not employees of the borough. b. A Form 1099 - Miscellaneous is the information return used most often by small businesses. 37. Walters did not report payments received from Jefferson Borough on his Schedule C (Form 1040), Profit or Loss From Business, for years 1994, 1995, 1996, and 1997. 38. Walters did not report payments from Jefferson Borough to his business in any way on his income tax returns for years 1994, 1995, 1996, and 1997. 39. Walters reported gross receipts and profit on his Schedule C (Form 1040), Profit or Loss From Business, for the years 1994 through 1997. a. The gross receipts reported by Walters did not include amounts paid by Jefferson Township. 40. The percentage of profit received by Walters from gross receipts reported for years 1994 through 1997 is listed below: Walters. 98- 055 -C2 Page 11 Year % of profit from gross receipts 1994 32.75 1995 19.02 1996 15.65 1997 6.58 41. Walters' percentage of profit from gross receipts reported in years 1994, 1995, 1996, and 1997 resulted in the following profit: Profit from gross receipts Year Amount Paid from Jefferson Borough 1994 $31,452.00 $10,301.00 1995 $34,370.00 $ 6,537.00 1996 $16,839.00 $ 2,635.00 1997 $19,580.00 $ 1.288.00 Total: $102,243.00 $20,761.00 42. The Auditor General of the Commonwealth of Pennsylvania conducted an audit of the Jefferson Borough Liquid Fuels Fund (Highway Aid Fund) for 1994 and 1995 and questioned payments made from that fund to Walters. a. The Auditor General determined that payments from the Liquid Fuels Fund totaling $17,260.00 in 1994 and 1995 to Walters violated Section 1404 of the borough code regarding borough officials' interests in any purchase made, contract entered, or money expended by the borough of more than $1,000.00 in any calendar year. b. It was recommended in the report that the Department of Transportation review the matter and make a determination if any or all of the $17,260.00 should be reimbursed to the Liquid Fuels Tax Fund. 43. On October 1, 1998, correspondence was sent to Cynthia Walters from the Commonwealth of Pennsylvania Department of Transportation, Bureau of Municipal Services, indicating that Jefferson Borough was required to reimburse the Liquid Fuels Tax Fund in the amount of $17,260.00. a. The Bureau of Municipal Services requested a copy of the deposit ticket as proof of reimbursement. 44. Cynthia Walters deposited $17,260.00 from the Jefferson Borough General Fund to the borough liquid fuels tax fund. a. The transfer was made without vote of borough council. 45. On January 13, 1999, Cynthia Walters received correspondence from the Bureau of Municipal Services verifying the receipt of the deposit ticket dated January 7, 1999, to the Liquid Fuels Tax Fund in the amount of $17,260.00. a. Payment was made from the township's general fund account. 46. Walters filed Statements of Financial Interests for calendar years 1994 and 1995. Walters, 98- 055 -C2 Page 12 a. Walters filed Statements of Financial Interests on February 6, 1995, for calendar year 1994 and on February 1, 1996, for the 1995 calendar year. b. Walters disclosed receiving income from Jefferson Borough on his Statements of Financial Interests for calendar years 1994 and 1995. c. Walters failed to disclose his office, directorship, or employment in any business on his Statement of Financial Interests for calendar year 1994. 47. Lonny Walters entered into contracts with Jefferson Borough from 1994 through 1997 for road maintenance and snow removal without public bidding and disclosure of bids received. 48. Walters signed checks as council president issued to his contracting president. 49. Walters' actions resulted in a private pecuniary benefit of $20,761.00. III. DISCUSSION: At all times relevant to this matter, the Respondent, Lonny Walters, hereinafter Walters, has been 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, et sea. as codified by Act 93 of 1998, Chapter 11, 65 Pa.C.S. §1101, seq. The issue is whether Walters violated Sections 1103(a) and 1103(f) of the Ethics Act as to the allegations that he contracted with his governmental body without an open and public process as to contracts of $500 or more for snow removal and road maintenance from 1994 through 1997, and when he used the authority of office by participating in making payments to himself for providing such services. Section 1 103. Restricted activities. (a) Conflict of interest. - -No public official or public employee shall engage in conduct that constitutes a conflict of interest. 65 Pa.C.S. §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 Walters, 98- 055 -C2 Page 13 65 Pa.C.S. §1102. business with which he or a member of his immediate family is associated. 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 imposes certain restrictions as to contracting. 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 shall enter into any contract valued at $500 or more with the governmental body with which the public official or public employee is associated or any subcontract valued at $500 or more with any person who has been awarded a contract with the governmental body with which the public official or public employee is associated, unless the contract has been awarded through an open and public process, including prior public notice and subsequent public disclosure of all proposals considered and contracts awarded. In such a case, the public official or public employee shall not have any supervisory or overall responsibility for the implementation or administration of the contract. Any contract or subcontract made in violation of this subsection shall be voidable by a court of competent jurisdiction if the suit is commenced within 90 days of the making of the contract or subcontract. 65 Pa.C.S. §1103(f). Section 1103(f) 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. Walters served as a Jefferson Borough Councilman from January, 1982 through December, 1997 and as Council President from January, 1990 through December, 1997. In a private capacity Walters is the owner of Lonny R. Walters Welding and Fabricating which does contracting work including snow removal and street maintenance. Walters, 98- 055 -C2 Page 14 Since Jefferson Borough neither has a road crew nor heavy equipment to maintain its streets, private contractors are hired. Jefferson Borough contracted with Walters for snow removal, street maintenance, and general repairs -prior to, during and after his service on Council. Walters and another contractor, who did similar type work for the Borough, did not have written contracts with the Borough to perform their services. Walters and the other contractor were selected based upon considerations of their location in the Borough, convenience and cost savings. Mutual understandings existed that the Borough would utilize their services. Rates for such work were never discussed and such services were not advertised for bids by Borough Council. After services were performed, bills were submitted for payment. As to the bill lists which were submitted to Jefferson Borough Council, Walters generally did not participate in voting to pay such bills. Walters voted only if a tiebreaker vote were needed. Monthly bill lists typically were unanimously approved. As Council President, Walters had signature authority on Borough checks issued from the General Fund and Highway Aid Fund from which disbursements were made to pay for his services. With few exceptions, Walters as President of Council signed the checks from the two Borough funds that were issued to himself for the services that he performed for the Borough. Walters charged the Borough $35 -40 an hour for snow plowing with the rates for road maintenance varying depending upon the job and type of equipment involved. Fact Findings 25 through 29 detail the services provided to the Borough by Walters in terms of the dates, amounts paid, check numbers, and in some instances the services that were performed. In the four year period from 1994 through 1997, Walters received gross receipts totaling $102,241 for his services to the Borough. Based upon a profit percentage of the gross receipts, it appears that Walters made a total profit of $20,761 from 1994 through 1997 in performing the services for the Borough. Walters did not receive any IRS Form 1099 from Jefferson Borough for the services that he performed from 1994 through 1997. Walters did not report payments received from the Borough on his Federal Income Tax Form 1040 - Schedule C for the years 1994 through 1997. Thus, Walters did not report such income from Jefferson Borough on his income tax returns for the above four year period. In an Auditor General's audit of the Jefferson Borough Liquid Fuels Fund for 1994 and 1995, it was determined that the payments to Walters violated the Borough Code regarding his interest in Borough contracts. The Auditor General recommended that PennDOT review the matter and make a determination if any of the $17,260 from the Liquid Fuels Tax Fund should be reimbursed. After PennDOT determined that Jefferson Borough was required to reimburse the Liquid Fuels Tax Fund, a transfer of $17,260 was made to the Liquid Fuels Tax Fund from the Borough's General Fund. In summary, Walters entered into contracts with Jefferson Borough from 1994 through 1997 for road and maintenance and snow removal without an open and public process and signed checks as Council President in payment to himself for such services which resulted in a private pecuniary benefit to him of $20,761. Having summarized the above relevant facts, we must now determine whether the actions of Walters violated Section(s) 1 103(a) and 1103(f) of the Ethics Act. The Investigative Division by letter dated November 19, 1999 advocates for violations of Sections 1103(a) and (f), the payment of restitution in the amount of $17,260 and the referral to the Internal Revenue Service. Walters, 98- 055 -C2 Page 15 As to Section 1103(a) of the Ethics Act, there were uses of authority of office on the part of Walters as to the snow removal and road maintenance work. Walters signed checks as Council President payable to himself for the snow removal and road repair services that he performed on behalf of the Borough. Such actions constituted uses of authority of office. See, Juliante, Order 809. The uses of authority of office of Walters resulted in private pecuniary benefits as to the profits he made in performing the services for the Borough. Lastly, that private pecuniary benefit inured to Walters himself. Accordingly, Walters violated Section 1 103(a) of the Ethics Act when he as a Council member used the authority of office for a private pecuniary benefit as to payments to himself for performing snow removal and road maintenance services for the Borough. Regarding Section 1103(f) of the Ethics Act, the findings reflect that there was not an open and public process as to the contracts which were awarded to Walters from the Borough to perform the snow removal and road repair services. In that such contracts were $500 or more, such contracts should have been awarded through an open and public process. Accordingly, Walters violated Section 1103(f) of the Ethics Act when he entered into contracts to perform snow removal and road repair services to the Borough when such contracts were $500 or more and were not awarded through an open and public process. Section 1107(13) of the Ethics Act specifically empowers this Commission to impose restitution in those instances where a public official /employee has obtained a financial gain in violation of the Ethics Act. In this case we believe that restitution is appropriate given the violations of Sections 1103(a) and (f) of the Ethics Act. Accordingly, Walters is directed to make payment through this Commission to Jefferson Borough in the amount of $17,260 within 30 days of the date of mailing of this Order. Non - compliance will result in the institution of an order enforcement action. In that the record reflects that Walters did not report the income that he received as to the services he provided to the Borough, we shall forward this matter to the IRS for review and appropriate action. IV. CONCLUSIONS OF LAW: 1. Lonny Walters, as the President of Jefferson Borough, Greene County, was a public official subject to the provisions of Act 9 of 1989 as codified by Act 93 of 1998. 2. Walters violated Section 1103(a) of the Ethics Act when he used the authority of office for a private pecuniary benefit to himself as to payments he received for providing snow removal and road maintenance services for the Borough. 3. Walters violated Section 1103(f) of the Ethics Act when he entered into contracts to perform snow removal and road repair services to the Borough when such contracts were $500 or more and were not awarded through an open and public process. In Re: Lonny Walters File Docket: 98- 055 -C2 Date Decided: 11/22/99 Date Mailed: 12/7/99 ORDER NO. 1143 1. Lonny Walters, as the President of Jefferson Borough, Greene County, violated Section 1 103(a) of the Ethics Act when he used the authority of office for a private pecuniary benefit to himself as to payments he received for providing snow removal and road maintenance services for the Borough. 2 Walters violated Section 1103(f) of the Ethics Act when he entered into contracts to perform snow removal and road repair services to the Borough when such contracts were $500 or more and were not awarded through an open and public process. 3. Walters is directed to make payment through this Commission to Jefferson Borough in the amount of $17,260 within 30 days of the date of mailing of this Order. Non - compliance will result in the institution of an order enforcement action. 4. In that the record reflects that Walters did not report the income that he received as to the services he provided to the Borough, we shall forward this matter to the IRS for review and appropriate action. BY THE COMMISSION, u u a DANEEN E. REESE, CHAIR Commissioner John J. Bolger dissents as to the imposition of restitution.