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HomeMy WebLinkAbout981 FriendBefore: STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 In Re: Douglas Friend File Docket: 94- 057 -C2 Date Decided: 08/03/95 Date Mailed: 08/14/95 Daneen E. Reese, Chair Austin M. Lee, Vice Chair Roy W. Wilt Allan M. Kluger John R. Showers Rev. Joseph G. Quinn Boyd E. Wolff The Investigative Division of the State Ethics Commission conducted an investigation regarding a possible violation of the State Ethics Law, Act 9 of 1989, P.L. 26, 65 P.S. §401 et seq. Written notice of the specific allegation(s) was served at the commencement of the investigation. A Findings Report was issued and served upon completion of the investigation which constituted the Complaint by the Investigation Division. An Answer was filed and a hearing was waived. A consent agreement was submitted by the parties to the Commission for consideration which was subsequently approved. This adjudication of the Commission is hereby issued which sets forth the individual Allegations, Findings of Fact, Discussion, Conclusions of Law and Order. This adjudication is final and will be made available as a public document thirty days after issuance. However, reconsideration may be requested which will defer public release of this adjudication pending action on the request by the Commission. A request for reconsideration does not affect the finality of this adjudication. A reconsideration request must be received at this Commission within thirty days of issuance and must include a detailed explanation of the reasons as to why reconsideration should be granted in conformity with 51 Pa. Code §21.29(b). 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. Friend, 94- 057 -C2 Page 2 I. ALLEGATION: That Douglas Friend, a public official in his capacity as a President of Markleysburg Borough Council, Fayette County, violated the following provisions of the State Ethics Act (Act 9 of 1989) when his firm utilized the borough building to conduct computer training classes. Section 3(a) of Act 9 of 1989 provides: II. FINDINGS: Section 3. Restricted Activities (a) No public official or public employee shall engage in conduct that constitutes a conflict of interest. 65 P.S. §403(a). Section 2. Definitions "Conflict" or "conflict of interest." Use by a public official or public employee of the authority of his office or employment or any confidential information received through his holding public office or employment for the private pecuniary benefit of himself, a member of his immediate family or a business with which he or a member of his immediate family is associated. "Conflict" or "conflict of interest" does not include an action having a de minimis economic impact or which affects to the same degree a class consisting of the general public or a subclass consisting of an industry, occupation or other group which includes the public official or public employee, a member of his immediate family or a business with which he or a member of his immediate family is associated. 65 P.S. §402. 1. On September 26, 1994, the Investigative Division of the State Ethics Commission received a signed, sworn complaint alleging that Douglas Friend violated provisions of the State Ethics Act (Act 9 of 1989). 2. Upon review of the complaint by the Director of Investigations a recommendation was made to the Executive Director to commence a preliminary inquiry. 3. At the direction of the Executive Director, the Investigative Division initiated a preliminary inquiry on October 4, 1994. Friend, 94- 057 -C2 Page 3 4. The preliminary inquiry was completed within sixty days. 5. On December 1, 1994, a letter was forwarded to Douglas Friend by the Executive Director of the State Ethics Commission informing him that a complaint against him was received by the Investigative Division and that a full investigation was being commenced. a. Said letter was forwarded by certified mail, No. P 016 239 233. b. The domestic return receipt bore the signature of Douglas Friend, and was undated. 6. The full investigation was commenced at the direction of the Executive Director of the State Ethics Commission. 7. The Investigative Complaint was mailed to the Douglas Friend on May 16, 1995. 8. Douglas Friend has served as a member of Markleysburg Borough Council since July, 1990. a. He was appointed to fill a vacancy on council created by his father's death. 9. Friend was elected to a two year term in the fall of 1990. 10. Friend ran for re- election in 1992, and was elected to a four year term. 11. Friend was elected Borough Council President in January, 1992, and has served in that capacity to the present time. 12. Friend has operated a business known as VITALink since approximately November, 1991. a. VITALink is a computer firm specializing in all areas of computers, including the assembly, sale, service, and the support in training, as well as the development and operation of advertising for the local cable television information channel. 13. Corporation Bureau records confirm VITALink's application for a fictitious name was recorded on November 7, 1991, and that Friend owns a 50% interest. a. The remaining 50% interest is held by Brian Frazee. b. Brian Frazee has been a member of Markleysburg Borough Council since 1994. Friend, 94- 057 -C2 Page 4 14. Statements of Financial Interests on file with Markleysburg Borough include the following filing for Friend, which reflects his interests in VITALink: a. Calendar year: 1993 Filed: April 4, 1994 Position: Council Member Creditors: None Direct /Indirect Income: VITALink Office or Directorship: VITALink /Partner All other Financial Interests: None 15. From VITALink's inception until October, 1994, the business office was located at Friend's residence, Church Street, in Markleysburg, PA 15459. a. This location was not adaptable for training classes. b. After October, 1994, VITALink re- located to a building across from Friend's residence on Church Street, in Markleysburg, PA 15459. 1) The building was purchased by Friend in October, 1993, for the purchase price of $15,000.00. 16. In 1992, VITALink began to offer computer training classes. a. VITALink did not have space available to conduct classes. 17. In December, 1992, Friend and Brian Frazee, co- owners of VITALink, made a request of Markleysburg Borough Council to use the borough building to conduct computer training classes. 18. The Borough of Markleysburg uses an old school house building as the office and meeting facility. a. The first floor of the building, used as the office and meeting facility, measures 1845 square feet. b. The building also has a basement and second story. c. The building is located at the north east corner of State Route 281, (Main Street), and Church Street, Markleysburg, Fayette County, PA 15459. d. Markleysburg Borough Council maintains and controls the use of the borough building. e. The building was regularly utilized by the borough auditors; and as a public polling place. Friend, 94- 057 -C2 Page 5 f. The building had ample space for VITALink to use as a training facility. 19. Prior to January, 1993, borough council permitted the use of the borough building by the following non- profit organizations, free of change: a. The Boy Scouts of America met in the basement. b. The local Cemetery Association met bi- annually; and c. Bible schools 20. Minutes from the Markleysburg Borough Council meeting of December 28, 1992, reflect the following in regard to VITALink requesting use of the borough building for computer training classes. "Doug Friend and Brian Frazee (from VITALink) requested use of the borough building for computer classes. Classes would start mid - January, one day and two nights weekly for eight weeks." Present: Council Members Friend, Hoffman, Knight, Orndoff, Riley, Jesse Wilson, Bill Wilson a. Friend was a Council Member at the time. b. No action was taken at the meeting on VITALink's request. 21. During the Markleysburg Borough Council meeting of January 3, 1993, VITALink again requested use of the borough building for computer training classes. " VITALink requested to use the borough building for computer classes. They said they would be willing to follow any guidelines and pay a fee, set by the Council." Present: Council Members Friend, Hoffman, Knight, Orndoff, Riley, Jesse Wilson, Bill Wilson a. Friend was a Council Member at the time. 22. As a result of Friend's request on behalf of VITALink at the January 3, 1993, council meeting, Markleysburg Borough Council implemented a borough use building policy. The policy was enacted as follows: "After a discussion, Councilman Orndoff made a motion to allow VITALink to use the building under the following conditions: Friend, 94- 057 -C2 Page 6 1. VITALink will pay $100.00 security deposit, which may be refunded. 2. Allow one Council member to be present at any and all meetings in the building. 3. Donations will be accepted also." Present: Council Members Friend, Hoffman, Knight, Orndoff, Riley, Jesse Wilson, Bill Wilson a. The motion was carried. b. A roll call vote was not taken. c. There is no record of Friend's participation in this action. 23. The guidelines established by Council at the January 3, 1993, meeting, for use of the borough building by VITALink, were applied to anyone requesting use of the borough building. a. The borough did not have a building use policy prior to VITALink's request. 24. Prior to January, 1993, when VITALink requested use of the borough building, there is no record of for - profit organizations /businesses using the borough building. 25. Friend, as President of Borough Council, did not participate in the design or discussion of the borough building general use policy. a. Friend did not participate in any vote which granted VITALink permission to utilize the borough building for computer training classes. b. Other Council members' recollections are that Friend did not vote in any matter relating to VITALink. 26. VITALink prepared professionally printed training class flyers prior to January 4, 1994, regarding the advertising of the January 11, 1993, training classes, held at the borough building. a. The site for the classes was identified as the Markleysburg Borough Building. b. The training flyers were pre - printed with U.S. Postal Bulk mail Permit #20, displaying a January 5, 1993, date. Friend, 94- 057 -C2 Page 7 1. The bulk permit date contained a typographical error and should have read January 5, 1994. 27. The first VITALink Training classes held at the borough building began on January 11, 1993. 28. On two subsequent occasions, VITALink requested additional use of the borough building for computer training classes. a. The requests were initiated in order to host additional computer training classes. 29. The June 7, 1993, minutes of the Markleysburg Borough Council meeting reflect the following request by VITALink to use the borough building. "VITALink requested use of the borough building for computer classes. The classes would be two nights a week for the month of July." Present: Council Members Friend, Hoffman, Knight, Orndoff, Riley, Jesse Wilson, Bill Wilson a. The motion was made to Orndoff, seconded by Knight, to permit VITALink to use the borough building provided VITALink follow the pre - established general building use policy ($100.00) security deposit. The motion carried. There was no roll call vote. b. There is no record of Friend participating in the vote. c. The borough continued to hold the original security deposit made by VITALink. (Reference Finding #37). 30. The minutes of the August 2, 1993, Markleysburg Borough Council meeting reflect an additional request by VITALink to use the borough building. "VITALink asked to continue using the borough building for computer classes." Present: Council Members Friend, Hoffman, Knight, Orndoff, Riley, Jesse Wilson, Bill Wilson a. The motion was made by Orndoff, seconded by Riley, to permit VITALink's continued use of the borough building. b. No other stipulations were noted. c. The motion carried. No roll call vote was taken. Friend, 94- 057 -C2 Page 8 d. There is no record of Friend participating in the vote. 31. During the period from January, 1993, through October, 1994, borough council approved the use of the building by VITALink as long as the established general building use policy was adhered to. a. The specific time frame and duration of the computer training classes were not disclosed. b. The borough continued to hold the original security deposit made by VITALink. (Reference Finding #37). 32. Records do not reflect that Douglas Friend participated in the discussion or vote to approve additional use of the borough building by VITALink. a. Friend acted as the representative of VITALink in making the requests at both the June 7, and August 2, 1993, meetings. b. The minutes only disclose that the requests were made by VITALink. 33. VITALink hosted approximately five separate training classes between January 11, 1993, and September 1, 1994. a. The classes varied between six and eight weeks in duration. b. The last reported classes ended in March, 1994. 34. One other request was received to use the borough building between January, 1993, and September, 1994. a. In June, 1993, Congressman Murtha requested use of the borough building for a Governor's Outreach Program. b. Murtha's office was required to follow the guidelines established by Council for use of the building. c. The duration of the use was requested for one day. d. A $100.00 security deposit was submitted to the borough, per the general use policy. e. The security deposit was returned to Murtha after the program. 35. There were no other uses of the borough building during the time period between January, 1993, to September, 1994. Friend, 94- 057 -C2 Page 9 36. VITALink stored computer equipment and other training material in the borough building from January, 1993, through September, 1994. a. The equipment and supplies were stored on the first floor of the building. b. Training posters and business advertisements were left in plain view during the monthly public borough council meetings. 37. Minutes from the Borough Council meeting, dated February 1, 1993, indicate two payments received from VITALink, at $100.00 security deposit and a $100.00 donation, as well as a donation of a bulletin board. 38. VITALink made additional donations to the borough in the for of money, fuel oil and miscellaneous items. 39. Markleysburg Borough Council meeting minutes of March 1, 1993, reflect that Tressler Oil Company was donating 100 gallons of heating oil to the borough, and that VITALink was paying to have the remainder of the oil tank filled. 40. Tressler Oil financial records confirm receipt of $235.79 from VITALink as payment for 262 gallons of heating oil for the borough building. a. VITALink's payment was recorded as having been received on January 7, 1994, approximately nine months after the oil was delivered to the borough building. b. VITALink sold computer equipment to Tressler Oil Company. c. Tressler Oil Company utilized advertising services provided through VITALink. 41. Minutes of the Markleysburg Borough Council meeting of June 7, 1993, reflected a $100.00 donation to the borough from VITALink. 42. VITALink reportedly made an additional donation in the form of paying for the professional cleaning of the borough building's carpet on the first floor. a. No records were available regarding this transaction. 43. Donations made to Markleysburg Borough by VITALink between January, 1993, and September, 1994, total $535.79. Cash $100.00 x 2 = $ 200.00 Friend, 94- 057 -C2 Page 10 Fuel oil Security deposit (not refunded) Bulletin board Carpet cleaning /no receipt supplied 44. A review of the Borough Audit Reports for the years 1992 through 1994, showed a significant increase in the cost to the borough for heating oil during the period when VITALink used the borough building. Year 1992 1993 1994 Heating Oil Total Cost $ 283.97 341.88 873.94 235.79 100.00 = Unknown = Unknown $ 535.79 a. The 1993 total reflects the donation from Tressler Oil and VITALink. (See Finding #39 and #40). b. Without the donation from VITALink, the borough's 1993 cost for heating oil would have been approximately $577.67. c. The increased fuel costs are, in part, a result of the increased use of the building by VITALink for it's training classes. d. Fuel oil costs per gallon were approximately the same during this period. 45. Friend computed VITALink's total costs in hosting classes at the borough building between January, September, 1994, to be $10,470.00. a. These listed costs also included the security donations, bulletin boards and fuel oil. a. This is a total of tuition charges only. training 1993, to deposit, b. Friend included the original purchase of the equipment, which was listed at $9,000.00. 46. VITALink's reported gross revenue from the computer training classes held at the borough building equalled $3,560.00. computer b. This amount does not include profit received from the sale of home computers and supplemental equipment to the class students. Friend, 94- 057 -C2 Page 11 c. Friend estimated that VITALink sold approximately ten home computers to it's students. d. Other overhead costs were not computed. 47. The monthly rental cost which VITALink was not required to pay by utilizing the borough building was between $2.00 and $2.40 per square foot, including heat. a. The average rental for office space in Markleysburg was approximately $2.00 to $2.40 per square foot. b. VITALink utilized the first floor of the borough building, approximately 1,845 square foot. c. VITALink utilized the borough building for twenty -one months. (January, 1993, through September, 1994). 48. By utilizing, the Markleysburg Borough Building to teach computer classes, VITALink received a financial gain by not paying a monthly rental cost for office space. a. 1845 sq. ft. x $2.20 per sq. ft. (average) = $4,059/yr. rental cost $4,059 per year divided by 12 months = $338.25/mo. rental cost $338.25 per month x 21 months = $7,103.25 total rental cost $7,103.25 - 535.79 (donations, etc.) $6,567.46 = net savings for rental 49. Friend, through his company VITALink, received a $6,567.46 financial benefit by not renting office space for computer classes. 50. Markleysburg Borough Council held a special meeting with the Borough Solicitor, Steve Leskinen, on October 24, 1994, to provide legal guidance on various issues on the agenda. a. One of the issues on the October 24, 1994, Markleysburg Borough Council meeting agenda was councilmen using the borough building. 51. Solicitor Leskinen advised council that he could see nothing improper in VITALink's use of the borough building. Leskinen advised: Friend, 94- 057 -C2 Page 12 "Council members must not use their titles or positions to gain preferential treatment and their use of the building for profitable reasons was perfectly legitimate as long as others wishing to use the building were not discriminated against." 52. During the October 24, 1994, Special Markleysburg Borough Council meeting, Borough Solicitor Steve Leskinen addressed the issue of the borough's liability regarding 3rd party usage of the borough building. a. Leskinen stated that the language used in a general liability insurance policy normally would include any liability that the borough would incur. b. Leskinen was not familiar with the borough's specific policy. c. Leskinen believed that who would be using the borough building didn't matter as to the borough's liability. d. Leskinen felt that the council should not lose money by allowing usage. III. DISCUSSION: 1) This was in respect to increased utility costs. As a President of Markleysburg Borough Council, Fayette County, Douglas Friend, hereinafter Friend, is a public official as that term is defined under Act 9 of 1989. 65 P.S. §402. As such, his conduct is subject to the provisions of the Ethics Law and the restrictions therein are applicable to him. Initially, it is noted that Section 9 of Act 9 of June 26, 1989 provides, in part, as follows: This amendatory act shall not apply to violations committed prior to the effective date of this act, and causes of action initiated for such violations shall be governed by the prior law, which is continued in effect for that purpose as if this act were not in force. For the purposes of this section, a violation was committed prior to the effective date of this act if any elements of the violation occurred prior thereto. Since the occurrences in this case transpired after the effective date of Act 9 (June 26, 1989), we must apply the provisions of Act 9 to determine whether the Ethics Act was Friend, 94- 057 -C2 Page 13 violated. Under Section 3(a) of Act 9 of 1989 quoted above, a public official /employee shall not engage in conduct that constitutes a conflict of interest. The term "conflict of interest" is defined as quoted above. The issue before us is whether Friend as President of Markleysburg Borough Council violated Section 3(a) of Act 9 of 1989, regarding the allegation that he utilized the borough building to conduct computer training classes offered by a business with which he is associated. Friend was elected to Markleysburg Borough Council in 1990 and is currently Council President. In a private capacity, Friend is a 50% owner of VITALink which is a firm that specializes in computer assembly, sales, service and training. Brian Frazee, another member of Markleysburg Borough Council, holds the other 50% interest in VITALink. Even after Friend moved the VITALink office from his residence to a separate facility, there was insufficient space to conduct computer training classes. When VITALink actually began to offer computer training classes, Friend and Frazee, as representatives of VITALink, approached Markleysburg Borough Council with the request to use the borough building to conduct such classes. Borough Council had in the past permitted the use of the borough building without charge to non - profit organizations such as the Boy Scouts of America, the Cemetery Association, or bible schools. Because Borough Council at its December 28, 1992 meeting took no action on the Friend /Frazee request, the same request was made by them at the January 3, 1993 meeting with the proviso that they would adhere to appropriate established guidelines and pay a fee. At that time Council implemented a borough use building policy whereby the borough building could be used only if VITALink would pay a $100.00 security deposit, one member of Council could be present for observation and donations could be made. The motion carried without a roll call vote; as a result, there is no record that Friend participated in such action. The guidelines established by Council for VITALink were applied to anyone requesting the use of the borough building. Regarding the borough building use policy, Friend did not participate in the design or discussion of such policy nor did he participate in any vote which allowed VITALink to use the borough building. The recollections of other borough council members were that Friend did not vote in any matter relating to VITALink. VITALink began using the borough building for five separate training classes which began in January, 1993 and continued into Friend, 94- 057 -C2 Page 14 1994. During that time, VITALink also stored computer equipment and other training material within the borough building. For the utilization of the borough building, VITALink made certain donations consisting of $200.00 in cash, $235.79 for fuel oil, a $100.00 security deposit which was not refunded as well as a bulletin board and carpet cleaning with the value of the latter two items being unknown. During that time period there was only one other request for the utilization of the borough building which was made by Congressman Murtha for a Governor's Outreach Program. Murtha's office was allowed to use the building subject to the requirement that the building use guidelines be followed. Lastly, the issue of the borough building usage by council members was directed to the borough solicitor. If the council members did not use their titles or positions to gain preferential treatment and the borough building was used for legitimate reasons without any discrimination against others who would want to utilize the building, the solicitor opined that VITALink's use of the borough building was not improper. In applying the provisions of Section 3(a) of Act 9 of 1989, one of the necessary elements to establish a violation is a use of authority of office on the part of the public official. Without the requisite use of authority of office, there can be no violation of Section 3(a) of Act 9 of 1989. In Juliante, Order 809, we interpreted and applied the statutory definition of the phrase "authority of office or employment" broadly; however, a recent decision of Commonwealth Court in the case of Marchitello and McGuire v. State Ethics Commission, Opinion filed at 2613, 2614 C.D. 1994 on April 18, 1995, has narrowed the parameters of the phrase "use of authority of office ": "Use" of public office requires action by a public official that in some way facilitates his receipt of compensation to which he is not entitled, such as in Yacobet where the individual voted to increase his own salary without having authority to do so. Slip Opinion at 13. In this case, the record reflects no action of Friend as a public official regarding either the borough building use policy or VITALink. The facts reflect that the contacts which Friend had with borough council on this issue were in a private capacity as a representative of VITALink and not as a borough council member. In addition, there is no showing of action by Friend in terms of participation or voting on these matters. Therefore, based upon the Marchitello and McGuire v. State Ethics Commission decision, we must conclude that there was no action taken hy Friend as a public Friend, 94- 057 -C2 Page 15 official which resulted in a private pecuniary benefit to himself or a business with which he is associated. Without that requisite use of authority of office, there is no violation of Section 3(a) of Act 9 of 1989. Therefore, we find that Friend did not violate Section 3 (a) of Act 9 of 1989 when his firm VITALink utilized the borough building to conduct computer training classes in that there was no use of authority of office on the part of Friend as a public official. IV . CONCLUSIONS OF LAW: 1. Douglas Friend as President and Member of Markleysburg Borough Council is a public official subject to the provisions of Act 9 of 1989. 2. Friend did not violate Section 3(a) of Act 9 of 1989 regarding the utilization of the borough building to conduct computer training classes by VITALink, a business with which Friend is associated, in that there was no use of authority of office on the part of Friend as a public official. In Re: Douglas Friend File Docket: 94- 057 -C2 . Date Decided: 08/03/95 . Date Mailed: 08/14/95 ORDER NO. 981 1. Douglas Friend as President and Member of Markleysburg Borough Council did not violate Section 3(a) of Act 9 of 1989 regarding the utilization of the borough building to conduct computer training classes by VITALink, a business with which Friend is associated, in that there was no use of authority of office on the part of Friend as a public official. BY THE COMMISSION, m.i.v,u 6 a ti DANEEN E. REESE, CHAIR