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HomeMy WebLinkAbout975 KupchellaBefore: STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 In Re: Martin Kupchella File Docket: 94- 051 -C2 Date Decided: 05/04/95 Date Mailed: 05/16/95 Daneen E. Reese, Chair Austin M. Lee, Vice Chair Roy W. Wilt 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. 6401 et sec. 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 not filed and a hearing was deemed waived. The record is complete. 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 fifteen days after issuance. However, reconsidera- tion 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 fifteen 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 521.29(b). The files in this case will remain confidential in accordance with Act 9 of 1989, 65 P.S. 5408(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. 5409(e). Confidentiality does not preclude discussing this case with an attorney at law. Kupchella, 94- 051 -C2 Page 2 I. ALLEGATION: That Martin Kupchella, a public official, in his capacity as a Councilman for Nanty Glo Borough, Cambria County, violated the following provisions of the State Ethics Act (Act 9 of 1989) when the borough purchased a motor from his company, Kups, without an open and public process; and when he participated in this process. Section 3(a) of Act 9 of 1989 provides: Section 3 (a) ee shall conflict . Restricted Activities No public official or public employ - engage in conduct that constitutes a of interest. 65 P.S. §403(a). (f) No public official or public employ- ee 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 com- menced within 90 days of the making of the contract or subcontract. 65 P.S. 5403(f). 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 Rupchella, 94- 051 -C2 Page 3 II. FINDINGS: 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 employ- ee, a member of his immediate family or a business with which he or a member of his immediate family is associated. 65 P.S. 5402. 1. On August 24, 1994, the Investigative Division of the State Ethics Commission received a signed, sworn complaint alleging that Martin Rupchella 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 August 29, 1994. 4. The preliminary inquiry was completed within sixty days. 5. On October 25, 1994, a letter was forwarded to Martin Rupchel- la, 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 016 239 240. b. The domestic return receipt bore the_ signature o Martin Rupchella, with a delivery date of October 27, 1994. 6. The full investigation was commenced at the direction of the Executive Director of the State Ethics Commission. 7. On January 13, 1995, the Executive Director of the State Ethics Commission filed an application for a ninety day extension of time to complete the Investigation. 8. The Commission issued an order on February 23, 1995, granting the ninety day extension. 9. The Investigative Complaint was mailed to the Respondent on March 28, 1995. Kupchella, 94- 051 -C2 Page 4 10. Martin Kupchella has served as an elected member of Nanty Glo Borough Council since approximately 1988. a. Nanty Glo Borough operates by a six member council. 11. Nanty Glo Borough employs a Street Department of four super- vised by a Street Commissioner. a. Gerald Lightcap was employed as the Street Commissioner from approximately 1992 until December 19, 1994. 12. Lightcap's duties included overseeing the :general care and maintenance of borough equipment and vehicles. a. Nanty Glo Borough road equipment includes four trucks, a grader, a high -lift and roller. 13. Nanty Glo Borough has no formal policy for the repair of borough vehicles. a. The street commissioner determines whether the employees are capable of performing the needed repairs. b. Repairs unable to be performed by borough employees are sent out to local dealerships and /or repair facilities. 14. Street Commissioner Lightcap had great latitude in purchasing repair parts for borough vehicles. a. Purchases were to be made from the vendor offering the best price. b. Purchases were to be made locally whenever possible. c. Purchases over $500.00 were to go before council for authorization. 15. During the winter of 1992 -93, a connecting rod blew through the side of the engine block in the borough's 1971 Ford truck rendering it inoperable. a. This truck was one of two trucks the borough used for snow removal. 16. Due to raising maintenance costs and the engine failure, Nanty Glo Borough Council decided to explore the possibility of purchasing a new truck. 17. During council's March 8, 1993, meeting, the following action was taken authorizing Street Commissioner Lightcap to look for a new truck: Kupchella, 94- 051 -C2 Page 5 a. "Mr. Monborne suggested Mr. Lightcap check on a price for a new truck to replace the 1971 truck since cost of repairs on the 71 are getting very costly." Present: Bracken, McMullen, Monborne, Kupchella. b. No formal vote was taken. 18. No o ther Nanty Glo Borough Council meeting minutes include any discussion or authorization for the repair of the 1971 truck. 19. Due to the high cost of a new truck and limited borough finances, Lightcap obtained quotes for a remanufactured engine for the borough's truck. a. With the exception of the engine, the 1971 truck was considered solid and worth repairing. 20. Street Commissioner Lightcap did not obtain sealed, written bids for a remanufactured engine. a. Lightcap made telephone inquiries as to the price of a remanufactured engine. b. No advertisements were placed in local newspapers seeking quotes or bids. 21. Lightcap received telephone quotes from three (3) Ford dealerships in the Altoona area. a . b. c. Telephone quotes were obtained from Beasley Ford Inc., Courtesy Ford and Stuckey Ford. Phone quotes ranged between $1,800.00, and $2,000.00. Borough records do not include documentation of these quotes. 22. Lightcap also obtained written quotes from Mundys Corner Auto parts and Nanty Glo Auto, auto parts dealerships located close to the borough. a. Mundys Coroner quote was in excess of $1,600.00. b. Nanty Glo Auto quoted $1,425.00. c. Borough records do not include documentation of these quotes. 23. Lightcap discussed the bids with Councilman Martin Kupchella prior to making any purchases. Kupchella, 94- 051 -C2 Page 6 24. Kupchella, doing business as Kups Supply, subsequently provided Lightcap with a quote for the truck engine. 25. Martin Kupchella owns and operates a business known as Kups Supply, 1334 Caroline Street, Nanty Glo, PA 15943. a. Kups Supply is a part -time business venture for Kup- chella. b. Kups Supply is not incorporated in the Commonwealth of Pennsylvania. c . e . Kups Supply is operated out of Kupchella's residence does not have a storefront operation. Kups Supply sells automotive parts and accessories. Kups Supply does not maintain any inventory. 26. Prior to operating Kups Supply, Martin Kupchella was in partnership with his brother operating Mundys Corner Auto Parts. a. Martin Kupchella left the sixteen years of service. 27. Martin Kupchella, doing business Commissioner Lightcap a price sometime between March 8, 1993, a. No price quote was provided engine core charge. and business around 1989, after as Kups Supply, quoted Street of $1,400.00 for an engine and April 2, 1993. . at the time for an oil pan or b. Kupchella was unaware of the need for an oil pan or engine core charge at the time he provided the quote. c. The oil pan on the borough's old engine was not reusable. d. The borough's engine was not rebuildable necessitating a core charge. 28. Kupchella /Kups Supply quote of $1,400.00 was $25.00 (less) than the quote provided Lightcap by Nanty Glo Auto Parts. a. Neither entity provided a price quote for an oil pan or engine core charge. 29. Lightcap did not obtain any quotes for an oil pan or engine core charge. a. Core charges are often required by remanufacturers when Kupchella, 94- 051 -C2 Page 7 a rebuildable core cannot be supplied by the purchaser. b. It was determined that a core charge and oil pan were part of the necessary repairs. 30. Lightcap did not bring any of the quotes he obtained before council for consideration. 31. Council did not take any action on price quotes received by Lightcap. a. Lightcap did not present the quotes to council. 32. Gerald Lightcap, in his capacity as Street Commissioner, authorized the purchase of an engine for the borough's truck from Kups Supply. a. This decision was based on Kupchella providing the lowest quote. b. Kupchella did not direct that the purchase be made from Kups. c. No council authorization was obtained for the purchase. d. A purchase of this nature was within the scope of Lightcap's duties as Street Commissioner. 33. Neither Councilman Kupchella nor Street Commissioner Lightcap were aware of the restrictions of the Borough Code regarding contracting. a. Neither discussed the propriety of the sale with the borough solicitor or any other legal counsel. 34. Kupchella used a borough truck to pick up a remanufactured engine from Industrial Engine & Supply, 2105 Monongahela Avenue, Pittsburgh, PA 15218, which was sold to the borough on or about April 2, 1993. a. Kupchella turned in the borough's old engine to Industri- al Engine & Supply at the same time he picked up the new engine. b. The borough's old engine was deemed not rebuildable by Industrial Engine & Supply. 35. Kupchella picked up an oil pan assembly from John Stuckey Ford, Hollidaysburg, which was sold to the borough on or about April 2, 1993. Kupchella, 94- 051 -C2 Page 8 36. Kupchella, doing business as Kups Supply, delivered to the borough garage a remanuf ac tuned 330 C . I . D . Ford engine and oil pan assembly on or about April 2, 1993. a. Borough street department employees were used to install the engine into the borough's 1971 Ford truck. 37. Shortly after the engine was installed, a problem developed with it. Kupchella arranged for it to be repaired by John Stuckey Ford. a. The engine was under warranty and the cost of the repair was handled by the manufacturer. 38. On April 5, 1993, Kups Supply invoiced Nanty Glo Borough $1,809.42 for the following items: 1) 181 -C 330 Ford engine 1) Core charge 1) Oil pan $1,400.00 200.00 209.42 Total: $1,809.42 39. Nanty Glo Borough financial records include liquid fuel check #103, dated April 14, 1993, in the amount of $1,809.42, payable to Kups Supply. a. The check is authorized by James Bracken, Dorothy Kozlovac and Cynthia (last name unknown). b. The reverse side of the check indicates "credited to the account of Acct. No. 0080756" US National Bank, Johns- town, PA. 40. Nanty Glo Borough liquid fuel check #103, was deposited into the business account of Kups Supply. a. The business account for Kups Supply, Account #0080756, is maintained at The US National Bank, Johnstown, PA. b. Martin Kupchella is the custodian of this account. 41. The borough's payment to Kups Supply was ratified at council's April 12, 1993, meeting. a. Bill lists are voted on in their entirety. b. Bill lists are distributed to council members approxi- mately one week prior to the meeting during which official action is going to occur on them. Kupchella, 94- 051 -C2 Page 9 c. The motion to approve payment of bills totaling $24,063.39 was carried unanimously by a 4 to 0 vote, with Kupchella voting. 42. Business records of Rugs Supply, 1334 Caroline Street, Nanty Glo, PA 15943, include supplier invoices for the engine and oil pan sold to the borough. a. Supplier: Industrial Engine & Supply 2105 Monongahela Avenue Pittsburgh, PA 15218 Items: 181C 330 Ford engine Junk core charge Total: c. Total: $1,503.59 List Cost $1,781.00 $ 1,140.00 175.00 $ 1,315.00 b. Supplier: John Stuckey Ford P.O. Box 489 Rt. 22 Fort Fetter Place Hollidaysburg, PA 16648 Item: List Cost C4TZ, 6675, A $ 209.42 $ 188.59 Oil pan assembly Total: $ 188.59 43. Kupchella realized a financial gain of $305.83 for the sale of the engine. a. Item Cost Sale Profit Engine $1,140.00 $1,400.00 $260.00 Core charge 175.00 200.00 25.00 Oil pan 188.59 209.42 20.83 $305.83 44. On January 31, 1995, Kupchella voluntarily reimbursed Nanty Glo Borough $305.83, the profit realized by him for the engine sale. a. Kupchella's personal check #182, in the amount of $305.83, was deposited into borough savings account #74- 03462-0. b. Kupchella did not deduct any money for phone calls or the time he spent picking up the engine or oil pan assembly. Kupchella, 94- 051 -C2 Page 10 45. Kupchella, doing business as Kups Supply, has had no other business transactions with Nanty Glo Borough. III. DISCUSSION: As a Councilman for Nanty Glo Borough, Cambria County, Martin Kupchella, hereinafter Kupchella, 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 initi- ated 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 viola- tion 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 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 under Act 9 of 1989 in the allegations. In addition, Section 3(f) of Act 9 of 1989 specifically provides in part that no public official /employee or spouse or child or business with which he or the spouse or child is associat- ed 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 offi- cial /employee is associated unless the contract is awarded through an open and public process including prior public notice and subsequent public disclosure. There are two questions before us. First, whether Kupchella as a councilman for Nanty Glo Borough violated Section 3(a) of Act 9 of 1989 when he voted to approve payment of a bill attributable to his business, Kups Supply, for a truck engine and oil pan the borough purchased from Kups. Second, whether Kupchella as a Kupchella, 94- 051 -C2 Page 11 councilman for the borough violated Section 3(f) of Act 9 of 1989 when he was awarded a contract with the borough valued at $500.00 or more in a process that was not open and public. Factually, Kupchella has served as an elected member of the six member Nanty Glo Borough Council since approximately 1988. He also owns and operates a business known as Kups Supply, which sells automotive parts and accessories and is located in Nanty Glo. Nanty Glo Borough employed Gerald Lightcap as Street Commis- sioner from approximately 1992 until December 19, 1994. Lightcap's duties included overseeing the general care and maintenance of borough equipment and vehicles. Although the borough has no formal policy for the repair of borough vehicles, the Street Commissioner determines whether Street Department employees are capable of performing the needed repair. Repairs unable to be performed by borough employees are sent out to local dealerships and /or repair facilities. Lightcap had great latitude in purchasing repair parts for borough vehicles. However, purchases were to be made from the vendor offering the best price, were to be made locally whenever possible, and those over $500.00 were to go before council for approval. During the winter of 1992 -93, a connecting rod blew through the side of the engine block in the borough's 1971 Ford truck rendering it inoperable. Due to rising maintenance costs and the engine failure, the borough council decided to explore the possibility of purchasing a new truck. During council's March 8, 1993, meeting, in which council members Bracken, McMullen, Monborne, and Kupchella were present, the following action was taken authorizing Lightcap to look for a new truck: "Mr. Monborne suggested Mr. Lightcap check on a price for a new truck to replace the 1971 truck since cost of repairs on the 71 are getting very costly." The council took no formal vote and no other council meeting minutes include any discussion or authorization for the repair of the 1971 truck. Due to the high cost of a new truck and limited finances, Lightcap obtained quotes for a remanufactured engine for the borough's truck. With the exception of the engine, the 1971 truck was considered solid and worth repairing. No advertisements were placed in local newspapers seeking quotes or bids, and Lightcap did not obtain sealed, written bids for a remanufactured engine. Lightcap received telephone quotes from three Ford dealerships in the Altoona area: Beasly Ford, Inc., Courtesy Ford, and Stuckey Ford. The quotes ranged between $1,800.00 and $2,000.00, and borough records do not document these quotes. Lightcap also obtained written quotes from Mundy's Corner Auto Parts and Nanty Glo Auto, dealerships located close to the borough. Mundy's Corner's quote was in excess of $1,600.00 and Nanty Glo Auto's quote was $1,425.00, neither were documented in borough records. Prior to making any purchases, Lightcap discussed the bids with Kupchella. Kupchella, doing business as Kups Supply, Kupchella, 94- 051 -C2 Page 12 subsequently provided Lightcap with a quote for the truck engine. Sometime between March 8 and April 2, 1993, Kups Supply quoted Lightcap $1,400.00 for an engine, $25.00 less than Nanty Glo's quote. Lightcap did not obtain any quotes for an oil pan or engine core charge, and neither Kups Supply nor Nanty Glo Auto provided price quotes for an oil pan or engine core charge. Kupchella was unaware of the need for an oil pan or engine core charge. The oil pan on the borough's old engine was not reusable and the engine was not rebuildable. Core charges are often required by remanufac- turers when the purchaser cannot supply a rebuildable core. It was determined that a core charge and oil pan were part of the necessary repairs. Lightcap did not present any price quotes to the Council, and the Council did not take any action on price quotes Lightcap received. Lightcap, as Street Commissioner, authorized the purchase. of an engine for the borough's truck from Kups Supply based on Kupchella's quote, which was the lowest quote he received. A purchase of this nature was within the scope of Lightcap's duties as Street Commissioner. No council authorization was obtained for the purchase, and Kupchella did not direct that the purchase be made from Kups Supply. Neither Kupchella nor Lightcap were aware of the restrictions of the Borough Code regarding contracting and neither discussed the propriety of the sale with the borough solicitor or any other legal counsel. Kupchella used a borough truck to deliver the borough's old engine to and pick up a remanufactured engine from Industrial Engine and Supply in Pittsburgh. Industrial Engine and Supply deemed the old engine not rebuildable. Kupchella picked up an oil pan assembly from John Stuckey Ford in Holidaysburg. On or about April 2, 1993, Kupchella /Kups Supply delivered to the borough garage a remanufactured Ford engine and an oil pan assembly, which were sold to the borough on or about the same date. On April 5, 1993, Kups Supply invoiced the borough $1,809.42, which included a Ford engine at $1,400.00, a core charge of $200.00, and an oil pan at $209.42. Borough bill lists are distributed to council members approximately one week prior to the meeting during which official action is going to occur on them. The bill lists are voted on in their entirety. The borough's payment to Kups Supply was ratified at the council's April 12, 1993 meeting. The Motion to approve payment of bills totaling $24,063.39 was carried unanimously by a 4 to 0 vote with Kupchella voting. The borough's financial records include liquid fuel check #103, dated April 14, 1993, in the amount of $1,809.42, payable to Kups Supply. This check was deposited into the business account of Kups Supply maintained at the US National Bank, Johnson, PA. Kupchella is the custodian of the account. Kupchella, 94- 051 -C2 Page 13 The business records of Kups Supply include supplier invoices for the engine and oil pan that were sold to the borough. An Industrial Engine and Supply supplier invoice shows that the engine was sold for $1,140.00 with a core charge of $175.00. The John Stuckey Ford supplier invoice shows that the oil pan assembly was sold for $188.59. The total for the three items were $1,503.59. Kupchella's financial gain is the payment received from the borough less the cost of the items, which is $305.83. On January 31, 1995, Kupchella voluntarily reimbursed the borough $305.83, the profit realized by him for the engine sale. He did not deduct any money for phone calls or the time he spent picking up the engine or oil pan assembly. Kupchella /Kups Supply has had no other business transactions with the borough. One of the elements necessary to show a violation of Section 3(a) of the State Ethics Act is the use of "authority of office." Kupchella did not direct the purchase to be made from Kups. (Finding 32b). We note that Kupchella participated in the 4 to 0 vote to approve the payment of a list of bills, one of which included the bill from Kups Supply. (Finding 41c). In Krushinski, we found that voting on a stack of routine uncontested bills is not a "use of authority" under Section 3(a). Krushinski, Order 168. Accordingly, we find that Kupchella did not violate Section 3(a) of the Ethics Law when he participated in a 4 -0 vote to approve payment of a list of bills, one of which was attributable to Kups Supply. The Investigative Division's Complaint also alleges that Kupchella violated Section 3(f) of the Ethics Act. Section 3(f) prohibits a public official or any business in which the public official is associated from entering "into any contract valued at $500 or more with the governmental body with which the public official . . . 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 and contracts awarded." No advertisements were placed in local newspapers seeking quotes on bids, and Lightcap did not obtain sealed, written bids for the remanufactured engine. (Findings 20, 20b). Lightcap obtained three telephone quotes, two written quotes, and an oral quote for a remanufactured engine. (Findings 21 -21c, 22 -22c, 24). Lightcap subsequently authorized the purchase of an engine for the borough's truck from Kups Supply, one of the businesses that provided quotes. (Findings 24, 32). Kups Supply is a business in which Kupchella is associated, and Nanty Glo Borough is the governmental body with which he is associated. (Findings 10, 25). Because Kups Supply entered into a contract with Nanty Glo Borough valued at $500.00 or more, and it was awarded in a process that was not open and public, Kupchella violated Section 3(f) of the Ethics Law. Given the totality of facts and circumstances of this case and Kupchella, 94- 051 -C2 Page 14 noting that Kupchella voluntarily made restitution to the borough, we will take no further action. IP. CONCLIISIONS OF LAW: 1. Martin Kupchella, as a Nanty Glo Borough Councilmember, is a public official subject to the provisions of Act 9 of 1989. 2. Kups Supply is a business in which Kupchella is associated. 3. Kupchella did not violate Section 3(a) of Act 9 of 1989 when he voted to approve payment of a list of bills, one of which included a bill attributable to Kups Supply. 4. Kupchella violated Section 3(f) of Act 9 of 1989 when Kups Supply entered into a contract with the borough valued at $500.00 or more and not awarded in an open and public process. In Re: Martin Kupchella File Docket: 94- 051 -C2 Date Decided: 05/04/95 Date Mailed: 05/16/95 ORDER NO. 975 1. Kupchella did not violate Section 3(a) of Act 9 of 1989 when he voted to approve a list of bills, one of which was attri- butable to Kups Supply. 2. Kupchella violated Section 3(f) of Act 9 of 1989 when Kups Supply entered into a contract with Nanty Glo Borough valued at $500.00 or more that was not awarded in an open and public process. 3. Based on the totality of facts and circumstances of this case, this Commission will take no further action. BY THE COMMISSION, ca j aku 1/KJ DANEEN E. REESE, CHAIR