Loading...
HomeMy WebLinkAbout171 CherpesMr. Louis T. Cherpes c/o Stephen H. Jordan Rothman, Gordon, Foreman & Groudine 300 Grant Building Pittsburgh, Pennsylvania 15219 Re: #82 -04 -C Dear Mr. Cherpes: 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. The individual allegations, conclusions, and findings on which those conclusions are based are as follows: I. Allegation: That as an elected Supervisor in Ross Township, you cast critical votes on matters relating to Mr. Nascone, developer of Ross Park Mall when you have and had substantial business dealings /relationships with said developer. A. Findings STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 ORDER OF THE COMMISSION August 22, 1983 Order No. 171 1. You served as an elected Commissioner in Ross Township, Allegheny County, hereinafter, the Township during all periods of time pertinent to these proceedings and as such are subject to the Ethics Act. 2. You are engaged in business activities as follows: a. Cherpes Insurance Agency -- sole proprietor; b. Scordo Industries, Inc., -- president; incorporated September 2, 1981, in Pennsylvania; previously incorporated in West Virginia March 5, 1981, under name of Allegheny Consulting. 3. Frank Nascone is a land developer engaged in pertinent business activities as follows: a. F & F Associates -- 49% owner; incorporated in Pennsylvania April 18, 1976; b. Tri -Point Consulting Corporation -- 100% owner; incorporated in Pennsylvania January 7, 1975; Louis T. Cherpes August 22, 1983 Page 2 c. Maret Development Corporation (MDC) -- 100% owner; incorporated as Maret Corporation on April 12, 1960, in Pennsylvania and name changed to MDC August 30, 1971; d. Westmoreland Management Corporation (WMC) -- 100% owner; bought out MDC in 1981. 4. Nascone, as developer, proposed to construct a shopping mall to be known as the Ross Park Center, hereinafter the Center, and a housing project on approximately 150 acres of land in the Township. 5. According to law, the proposed development was presented to the Township's Planning Commission and the Township for review as confirmed through official minutes and records as follows: a. 12/20/79 - Nascone presented application Z -79 -19 to the Planning Commission for rezoning of 75 acres known as the Schramm farm for the purpose of erecting a shopping center and rezoning of an additional 22 acres for the erection of multi - family structures. b. 8/20/81 - Nascone applications for re- zoning reviewed by Planning Commission, including Z -81 -5 (northwest corner of Kinvara Drive); Z -81 -6 (between McKnight Road and White Oak Heights) and Z -81 -6 (between McKnight Road and White Oak Heights). c. 1/19/82 - Nascone applications S -81 -15 (subdivision of a 20 -acre land parcel known as Kinvara Drive, S -81 -16 (subdivision of 2.5 acres off McKnight Road) and S -81 -18 (subdivision of 5.5 acres on Kinvara Drive) were reviewed and voted unanimously by the Planning Commission to be recommended to the Township Commissioners for final approval. d. 1/19/82 - Nascone application SP- 81 -12, Ross Park Center site plan reviewed and approved by Planning Commission by a vote of 4 to 3 for preliminary approval. SP 81 -12 was recommended to the Township Commissioners for final approval by vote of 5 to 2 subject to seven conditions. 6. Minutes of the Ross Township Commissioners meetings confirm the following: a. 5/12/80 - You instructed Solicitor William Milnes to prepare the proper ordinance in connection with the Nascone rezoning application (Z- 79 -19). Public hearings were held on this matter July 14, 1980. b. 8/11/80 - Ordinance No. 1352 pertaining to Nascone rezoning request enacted by a vote of 7 to 1. You voted in favor of enactment /passage of the ordinance. This Ordinance related to Z- 79 -19, see No. 5(a) above. Louis T. Cherpes August 22, 1983 Page 3 c. 7/27/81 - Nascone presented a request to the Board of Commissioners to rezone additional parcels of land. d. 9/14/81 - Public hearing held to consider three proposed ordinances pertaining to additional requests of Nascone. e. 9/14/81 - Ordinance No.1401 (Nascone request for rezoning of northwest corner of Kinvara) passed by vote of 5 to 4. You voted in favor of the enactment /passage of the Ordinance. This relates to No. 5(b) above. f. 9/14/81 - Ordinance No.1402 (Nascone request for rezoning of a land parcel between McKnight Road and White Oak Heights to enlarge the Center) passed by a vote of 6 to 3. You voted in favor of passage /enactment of the Ordinance. This relates to No. 5(b) above. g. 9/14/81 - Ordinance No. 1403 (Nascone request for rezoning of additional land parcel between McKnight Road and White Oak Heights) passed by a 6 to 3 vote. You voted in favor of passage /enactment of the Ordinance. h. (1) 12/14/81 - Resolution No. 977 (accepting Deed of Dedication for public street connecting McIntyre Road with Ross Park Center) passed by a vote of 5 to 4. A motion was made to table said resolution until the Nascone site plan reviewed and approved. That motion was defeated by a 5 to 4 vote. You voted with the majority on each of these motions. (2) At this meeting, prior to this vote you requested that Township Solicitor Milnes advise you whether you should abstain or participate in this vote. He advised you were not precluded from voting. i. 2/8/82 - Nascone submitted three subdivision applications (S- 81 -15, S- 81 -16, S- 81 -18) to the Township Commissioners. All three passed by unanimous vote. You were in attendance. r (1) S- 81 -15, see No. 5(c) above related to the Nascone subdivision of 20 acres known as Kinvara Drive; (2) S- 81 -16, see No. 5(c) above related to the Nascone subdivision of 2.5 acres off McKnight Road; and (3) S -81 -18 - See No. 5(c) above related to the Nascone subdivision of 5.5 acres on Kinvara Drive. j. 2/8/82 - Application SP -81 -12 presented for approval. Seven attached conditions voted on separately. You voted in favor of the developer (Nascone) on each condition. This relates to the site plan for the Center, see No. 5(d) above. Louis T. Cherpes August 22, 1983 Page 4 k. 6/28/82 - Solicitor reports an appeal was filed by Nascone to the decision of the Zoning Hearing Board (ZHB) with respect to access road to the Center from McIntyre Road. A motion to appoint special counsel to intervene to defend the ZHB action ended in a tie, 4 -4, i.e. no action, with you reported as voting against the motion. 1. (1) 7/26/82 - Commissioner McAfee moved to rescind the action of the Board not to hire counsel for the ZHB matter /appeal and the motion carried 5 -4 with you voting negatively. (2) The minutes of this meeting further record that Commissioner McAfee "commented on Cherpes business relations with the developer of Ross Park Mall and asked the Solicitor's opinion on whether or not Mr. Cherpes' voting on the prior motion would have been a conflict of interest. The minutes record the following: The Solicitor answered that the fact that Mr. Cherpes voted on the last motion does not evidence a conflict of interest. If a conflict does exist, it exists whether or not he votes. Mr. Milnes added that he does not have all the facts, he only knows what he reads in the papers, he has not interviewed anyone. Mr. McAfee asked the Solicitor if the facts are as they seem, would Mr. Cherpes not have had a conflict of interest in voting. The Solicitor answered that back in November, 1981 when the Board was voting on the Mall matter, Mr. Cherpes asked hiom if there was any reason for him not voting on the matter. The Solicitor stated that he told Mr. Cherpes no, but more recently the Solicitor stated he does not know as he does not know what the actual facts are. He added that there certainly is an appearance of a conflict in his judgment, but he hastens to add that it is meaningless and there is little the Board can do about, the State Ethics Commission has jurisdiction in the matter. They would take the facts and investigate the matter. Mr. McAfee asked if there were any guidelines? Mr. Milnes stated that we do not know what all the actual facts are. Mr. McAfee then asked Mr. Cherpes to explain what the facts are in this case and what is involved with these policies? Mr. Earnest commented that this is invading someone's privacy. The Chairman asked Mr. Cherpes if he cared to respond to Mr. McAfee? Louis T. Cherpes August 22, 1983 Page 5 Mr. Cherpes acknowledged the presence of friends, family, members of the news media and some individuals from the 2nd Ward. He stated that he has not violated any law. His position has been stated many times. Mr. Milnes indicated that he has the right to vote. Mr. Cherpes asked what more can he say ?" (3) Commissioner McAfee then made a motion to obtain special counsel for the Zoning Hearing Board to defend their decision and specifying the counsel /firm to be appointed. The vote was 5 -0 in favor of the motion and you did not vote on this motion. m. A review of the minutes filed after July 26, 1982 to June, 1983 show that when matters relating to the Mali were presented to the Township Commissioners on December 27, 1982 and March 28, 1983, you abstained or were absent. 7. On or about April 7, 1980, you wrote to Maret Development Corporation (MDC), see No. 3(c) and (d) above, requesting the opportunity to bid or present a proposal to secure insurance business of Maret related to property, general liability, automobile and personal liability insurance. 8. On or about June 10, 1980, you submitted an insurance quotation proposal to MDC and subsequently on August 8, 1980, you supplied a modified proposal with increased coverage to MDC. a. On June 10, 1980, Nascone requested that A & A inform the Township that property to be developed as the Center would be insured by A & A. b. The original quotation you presented on June 10, 1980, was for a premium of $162,300.00 for the MDC "insurance package" and this "package" included coverage for some properties within Ross Township to be developed as part of the Center. c. The August 8, 1980 proposal was addressed to F & F Associates, see No. 3(a) above, and was to cover property (some of which were properties within Ross Township to be developed as part of the Center), general liability, umbrella (excess) liability and automobile liability and was in the amount of approximately $172,600. d. By letter of August 8, 1980, signed by Walter Klein, Controller of MDC, you, through Cherpes Insurance Agency, were named "Broker of Record for MDC" in the name of F & F Associates. e. The insurance coverage you provided was effective September 1, 1980, for a three -year period and was written by or through Allegheny Consulting, Inc. See 2(b) above. Louis T. Cherpes August 22, 1983 Page 6 f. Prior to September 1, 1980, MDC had insurance coverage through Alexander & Alexander (A & A). Their policy /renewal proposal, submitted to MDC on or about August 29, 1983, included coverage for 75 acres of land in Ross Township (Schramm Road) see No. 5(a) above and was to provide MDC with general liability umbrella (excess) liability and automobile coverage. The premiums for this coverage /proposal were approximately $179,800, although you state that you believe this proposal was to cost approximately $220,00. g. When the policy with A & A was cancelled, MDC incurred a short -term cancellation cost or loss of approximately $5,000.00. 9. Through Allegheny Consulting as of September 1, 1980, you provided insurance to MDC as follows on the properties including: Policy No: a. MP989 -84 -75 Type Coverage Property & Liability b. MP989 -84 -75 Fire(f) Description of Property 1). Donnermeyer Estate, 5.49 acres; located on McKnight Road; Subject of S- 81 -18; 2). Schramm property (See No. 5(a)) 3). Amy -Joy Bldg; 7390 McKnight Road; 4). Minnock Const. Co. purchase of 20 acres; minutes of Planning Commission (P.C.), 8/20/81 note this land was acquired in relation to Center. Subject of S -81 -15 1). Donnermeyer Estate Earthquake(e) 2). Schramm Property 3). Schomaker Property 13.57 acres McKnight Rd. 15.00 Subject of S -81 -6 or 7; eff. 10/21/80 See P.C. minutes 8/20/81 4). Amy Joy Bldg.; 7390 McKnight Road 5). Minnock Property, 20 acres Total Premium $143,368.00 (originally) for period 9/1/80 - 9/1/81 ) $200.00 (e) 276.00 (f) eff. 12/1/80 551.00 eff. 5/4/81 No add'l 5/13/ 81 Louis T. Cherpes August 22, 1983 Page 7 10. As of September 1, 1981, in consideration of an additional premium of $11,541.00 a revision in valuation of the properties, including those listed in No. 9 above was effected as an endorsement to Policy No. MP 989 -84 -75 and an additional piece of property located on McKnight Road and designated as Block 431 -K was added to the schedule of properties covered. This property is located at the southern tip of the Center development area and was acquired from Allegheny County. 11. Premiums for the policies listed in Nos. 8 and 9 above were approximately $172,666.00 for the first year of the three -year policy period; $189,000 for the second year and were projected to be approximately $190,000 for the third year, although you now claim a more reasonable estimate of third -year premiums would be $82,000. 12. Through Allegheny Consulting you received a 15% commission on these premiums and thus will or have received approximately $25,899.00 for the first year (1980); $28,350.00 for the second year and $28,500.00 for the third year of the policy's life, or $12,300 if the premiums are only $82,000 as you suggest. B. Discussion: Initially, we note that we conducted oral argument in this matter on June 20, 1983 and we include in our review of this matter the evidence, testimony, arguments and materials presented at that time. As a "public official" your conduct must conform to the requirements of the Ethics Act. Section 3 of the Ethics Act states: Section 3 - Restricted activities. (a) No public official or public employee shall use his public office or any confidential information received. through his holding public office to obtain financial gain other than compensation provided by law for himself, a member of his immediate family, or a business with which he is associated. 65 P.S. 403(a). (b) No person shall offer or give to a public official or public employee or candidate for public office or a member of his immediate family or a business with which he is associated, and no public official or public employee or candidate for public office shall solicit or accept, anything of value, including a gift, loan, political contribution, reward, or promise of future employment based on any understanding that the vote, official action, or judgment of the public official or public employee or candidate for public office would be influenced thereby. 65 P.S. 403(b). Louis T. Cherpes August 22, 1983 Page 8 The Commission believes that Section 3 as cited above is clear. You may not use your office as a Township Commissioner to obtain business from a developer such as Nascone. Equally clear is the conclusion that the developer in question may not attempt to influence your vote as Commissioner on his project by holding out the "promise of future employment." Likewise, an official may not solicit anything of value based on the understanding that his official conduct will be influenced thereby. While subsection (b) addresses the prohibitions against the developer and a public official, in this case the Commission feels compelled to address "other areas of conflict" pursuant to Section 3(d) which might be perceived under Section 3(a), (b) or otherwise in the relationship between the developer and you as Township Commissioner. These possible areas of appearance of a conflict between your financial interests and the public trust must be addressed. See Section 1 of the Ethics Act, 65 P.S. 401. The State Ethics Commission has previously stated that the question of whether an official may vote on a developer's proposals depends upon the "factual circumstances and the actual and temporal relationship between the individual supervisor and the developer." See Sowers, 80 -050. In Sowers, we ruled that a public official must refrain from acting on the project or proposal of a developer whose project /proposal is subject to the official's review where: 1) the official will seek, has been asked or can reasonably and legitimately anticipate being asked to perform work /services for the developer; or 2) the official has obtained /secured work from the developer and the official is asked to vote on matters relating to the developer which arise after the official obtained /secured the work /performed services for the developer. These principles are cjearly applicable to your situation. As of April 7, 1980 (Finding No. 7, above), you had solicited business from Nascone. As early as June 10, 1980, you actually bid on the Nascone insurance needs (Finding No. 8, above). The insurance you provided was effective September 1, 1980, and from the inception of this coverage parcels of land relating to the Center project were included in the "package" policy. See Finding No. 9, above. On the other hand, as early as May 12, 1980 -- one month after you solicited the Nascone business you directed the Township Solicitor to prepare Ordinances to be reviewed to effect Nascone's rezoning requests. Then, on August 11, 1980, three days after you presented a final, modified proposal to secure the Nascone business (See Finding 8, above), you voted in favor of the rezoning Ordinance sought by Nascone. See Finding No. 6(b) above. Under our prior ruling in Sowers, there is no doubt that your vote(s) in favor of Nascone were improper under the Ethics Act. Louis T. Cherpes August 22, 1983 Page 9 Typically, after reaching such a conclusion we merely caution the public official to avoid such votes under similar circumstances in the future. However, in this matter we feel that the additional step of forwarding our findings to other officials for review is appropriate. We do so because of: 1) the number and nature of the votes you cast favorably to Nascone; 2) the large commissions involved and projected (Finding No. 12); and 3) the clarity of the record to the effect that your votes in favor of Nascone requests could reasonably be viewed as benefitting your own financial interests,if on no other basis than that Nascone's projects in Ross Township required acquisition of additional properties which, in turn, added to the premiums and commissions associated with the policies you provided to Nascone. C. Conclusion: If a particular developer presents matters to the Township for official action, you should not participate in those actions by way of vote or discussion where you have offered to or been asked to provide services to the developer or can reasonably expect to be asked to perform services for the particular developer. If you acquire such business from the developer, especially related to the project /proposal subject to your official review, after you may have initially participated in the decision(s) of the Township, you should, on subsequent matters so presented, refrain from participation, including voting, on official actions. Your votes on the Center outlined above gave rise to the appearance of a conflict between your financial interests and the public trust. In the future, your conduct must conform to the standards outlined above. Additionally, we are requesting that the appropriate law enforcement officers review these findings and our files. II. Allegation: That as an elected Supervisor in Ross Township, you failed to report your income from several sources as follows or your financial interest in business as required by the Ethics Act on your Financial Interest Statement: Cherpes Insurance Agency; Allegheny Consulting, Inc., Scordo Industries, Inc.; and Ross Township. A. Findings: In addition to the above findings which are incorporated here by reference, we find the following: 13. Your Financial Interest Statement (FIS) for the calendar year 1978, filed August 6, 1979, lists: a. On No. 5 -- Direct or Indirect Sources of Income -- Robert Morris College and North American Union Life. b. On No. 8 -- Office /directorship or Employment in any business -- NONE. Louis T. Cherpes August 22, 1983 Page 10 c. On No. 9 -- Financial Interest in any legal entity in business for profit -- NONE. 14. Your Financial Interest Statement for calendar year 1979, filed March 17, 1980 lists: a. On No. 5 -- Direct or Indirect Sources of Income -- Robert Morris College; North American Union Life; Cherpes Insurance Agency; and Ross Township. b. On No. 8 -- Office /directorship in any business -- (blank) c. On No. 9 -- Financial Interest in any legal entity in business for profit (owner or holder of stock exceeding 5% of the equity at fair market value) -- NONE. 15. Your FIS for calendar year 1980, filed April 24, 1981 lists: a. On No. 15 -- Direct or Indirect Sources of Income -- Robert Morris College and North American Union; b. On No. 18 -- Office or directorship in any businesss (as identified in the Bylaws or Charter of the Business) -- NONE. c. On No. 19 -- Financial Interest in any legal entity in business for profit -- NONE. 16. Income statements (W -2) forms from Ross Township indicate you received payments from the Township in the amount of $3,000.00 per year in each of 1979, 1980, and 1981. B. Discussion: The Ethics Act Section 5(b) requires a Financial Interest Statement to include the following information: (5) 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). (8) Any office, directorship or employment of any nature whatsoever in any business entity. 65 P.S. 405(b)(8). (9) Any financial interest in any legal entity engaged in business for profit. 65 P.S. 405(b)(9). Louis T. Cherpes August 22, 1983 Page 11 It is clear you failed to report required data as follows: 1) Income from Ross Township received in 1980 in excess of $500.00 on the Financial Interest Statement you filed April 24, 1981; 2) Your income from and financial interest in Cherpes Insurance Agency on your Financial Interest Statement filed August 6, 1979, for calendar year 1978; 3) Your income from and financial interest in Cherpes Insurance Agency on your Financial Interest Statement filed April 24, 1981, for the calendar year 1980; 4) Your income from and financial interest in Allegheny Consulting for the calendar year 1980 (See Finding No. 12 above) on your Financial Interest Statement filed April 24, 1981; While we have uncovered no positive proof to establish that these omissions were intentional or deliberately designed to conceal the income or associations, we are, in line with our conclusion as to Allegation I, above, making our files in this area similarly available for review by the appropriate law enforcement officials. C. Conclusion: You are required to report income and financial interests in businesses as set forth in the Ethics Act. As noted in our discussion, you have failed to report certain items. Although you provided some of this information in the form of a Financial Interest Statement dated March 7, 1983 to cover the calendar years 1982 -83, proper amendments for all years in question, 1979, 1980 and 1981 are required. Amended Financial Interest Statements must be supplied to correct these omissions within 30 days of this Order. Supply one copy of such amendment(s) to our office to insure compliance with this Order and one copy to the Township to be retained with your previously filed Statements. 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 now final and will be made available as a public document in accordance with 51 Pa. Code 2.38(a). Louis T. Cherpes August 22, 1983 Page 12 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). PJS /jc By the Commission, Paul J. ith Chairman Commissioners Smith, Foley, Haley, Hill, Conner participating. Commissioner(s) Weiss not participating.