HomeMy WebLinkAbout164 PearlmanMr. Al Pearlman
c/o Mark L. Alderman
Wolf, Block, Schorr and Solis -Cohen
Twelfth Floor Packard Building
Philadelphia, PA 19102
Re: #82 -24 -C
Dear Mr. Pearlman:
STATE ETHICS COMMISSION
308 FINANCE BUILDING
HARRISBURG, PENNSYLVANIA 17120
ORDER OF THE COMMISSION.
Order No. 164
December 28, 1982
The State Ethics Commission has received a complaint regarding you and a
possible violation of Act 170 of 1978. The Commission has now completed its
investigation into these actions and finds no violation of Act 170.
are:
The individual allegations and findings on which our conclusion is based
I. Allegation: That you, as a candidate for Senator in the Pennsylvania
General Assembly, failed to report numerous creditors on his Financial
Interest Statement and that this violates Section 5 (b) (4) of the State
Ethics Act.
A. Findings:
1. As a candidate in the 1982 Primary Election for Senator in the 4th
Senatorial District in Philadelphia you were subject to the Financial Interest
Statement filing requirements of Act 170.
2. You filed a Financial Interest Statement with the Ethics Commission. It
was received on March 8, 1982.
3. The section requiring information on creditors owed over $5,000.00 was
filled in with the word "NONE ".
4. You did not report on debts of your business, only on those for which you
were personally liable.
5. There is no evidence that you failed to report debts for which you were
personally liable.
Al Pearlman
December 28, 1982
Page 2
B. Discussion: Section 5 (b) (4) of the Ethics Act (170 of 1978) requires
that:
The name and address of each creditor to whom is owed in
excess of $5,000 and the interest rate thereon. However,
loans or credit extended between members of the immediate
family ana mortgages securing real property which is the
principal residence of the person filing or of his spouse
shall not be included. 65 P.S. 405(b)(4).
The Commission has interpreted this as requiring the reporting of debts
for which a person is personally liable.
Personal liability is distinguished from that of a guarantor in
accordance with the principles cited in Michaels v. Chemical Bank,
441 N.Y.S. 2d 638, 640, 110 Misc. 2d 74, 76 (1981):
A "debt" is a certain obligation to pay a sum of money or
another thing of value, either at the present time or in
the future, while an "obligation" is a legally enforceable
duty to perform or forbear.
The Court went on to distinguish a debt from a guaranty:
A guaranty is a secondary obligation collateral to the
primary obligator's duty to pay, and is contingent upon
the primary obligor's default.... A guaranty is not a debt
and does not make the guarantor a debtor to the primary
obligor's creditor but binds the guarantor to a
relationship under which he may become so indebted in the
future. Id. (emphasis added).
The Pennsylvania Supreme Court in Alanta Corp. v. Ohio Valley
Provision Co., 414 A.2d 123 (1980) similarly stated that a "guaranty is a
promise to pay the debt of another when the creditor is unable, after
prosecution, to collect the amount owed by the debtor." Thus, a guarantor is
more appropriately in a contingency situation and would not become a debtor
under the terms of Act 170 unless the primary debtor defaults. If this occurs
during the reporting year the guarantor- debtor would be required to report
that particular item as a debt. We found no situation in which your guarantor
circumstances had changed to make you personally liable for the debts.
Persons required to file under Act 170 must report "debts" for which they
were personally liable as discussed above exceeding $5,000.00 at any time
during the reporting year.
C. Conclusion: You did not violate the requirements of Section 5 (b) (4).
Al Pearlman
December 28, 1982
Page 3
II. Allegation: That you, as a candidate, have unpaid claims for use taxes,
withholding taxes, unemployment taxes, mercantile taxes and withholding taxes
for the City of Philadelphia.
A. Findings:
6. Pertinent findings from Allegation I are included here by reference.
7. There is no evidence that you failed to report an item meeting the
criteria of the Act.
8. There is no evidence that any of these tax claims has been reduced to a
judgment.
9. There is no evidence that tax claims reduced to judgments have been
omitted from your Financial Interest Statement.
B. Discussion: Until a judgment is filed, there is legal and valid
uncertainty as to the debt and the amount of the debt. It would be
inappropriate to require filing where the information needed to apply the
criteria specified in the Act is unknown. In this case, debts are reportable
only when they exceed $5,000.00 and in tax matters this fact is only
established upon the filing of the judgment.
C. Conclusion: You did notviolate Section 5 (b) (4) of the Ethics Act.
III. Allegation: That you, as a candidate, failed to report a source of
income in excess of $500 from a restaurant known as the White House at 7571
Ridge Avenue, Philadelphia, PA.
A. Findings:
10. Pertinent findings from Allegations I and II are included here by
reference.
11. You did not receive $500.00 or more from your interest in this restaurant
during the year 1981.
B. Discussion: Section 5 (b) (5) requires:
The name and address of any person who is the direct or
indirect source of income totalling in the aggregate $500
or more. However, this provision shall not be construed
to require the divulgence of confidential information
protected by statute or existing professional codes of
ethics. 65 P.S. 405(b)(5).
Al Pearlman
December 28, 1982
Page 4
We found no evidence of income of $500.00 or more from this restaurant.
C. Conclusion: You did not violate Section 5 (b) (5) of the Ethics Act.
Our files in this case will remain confidential in accordance with
Section 8(a) of the Ethics Act, 65 P.S. 408(a). However, this Order is final
and will become available as a public document within 15 days after service
unless you file documentation with the Commission which justifies
reconsideration and /or challenges pertinent factual findings. See 51 Pa. Code
2.38. During this 15 -day period, no one, including the Respondent unless he
waives his right to challenge this Order, may violate this confidentiality by
releasing, discussing or circulating this Order.
Any person who violates the confidentiality of a Commission proceeding
is guilty of a misdemeanor and shall be fined not more than $1000 or
imprisoned for not more than one year or both, see 65 P.S. 409(e).
Sincerely,
(-7 ^/% i
`Paul J. mith
Chairman
PJS /jc