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HomeMy WebLinkAbout281 CaldwellRe: #83 -61 -C Dear Mr. Caldwell: STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 ORDER OF THE COMMISSION January 25, 1984 Order No. 281 Mr. John R. Caldwell County Commissioner c/o Donald Dennison, Esq. Solicitor for Jefferson County Commissioner 293 Main Street Brookville, PA 15825 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 county commissioner or candidate for said office in Jefferson County, you accepted substantial contributions from Henry Fisher of Henry Fisher Municipals and subsequently voted to award a contract to same contributor /company, which conduct may violate Section 3(a), (b) of the Ethics Act, 65 P.S. 403(a), (b) and 401 respectively. A. Findings: 1. You serve as a Jefferson County Commissioner and as such are a "public official" and subject to the terms and provisions of the Ethics Act. 2. You served as a Jefferson County Commissioner since 1972. 3. In 1975 the Jefferson County Board of Commissioners authorized the building of a new county nursing home, Jefferson Manor. 4. The Jefferson County Commissioners, pursuant to the Municipalities Authorities Act, May 2, 1945, P.L. 382, 53 P.S. 301 et. seq. formed the Jefferson County Municipal Authority (JCMA). John R. Caldwell January 25, 1984 Page 2 a. The JCMA was authorized to handle the financing and construction of the nursing home known as Jefferson Manor. b. Pursuant to statute, the Jefferson County Commissioners appoint the members of the JCMA. c. The Jefferson County Commissioners, however, have no role in the JCMA decisions as to the selection of JCMA financial advisors or as to the selection of bond firms or underwriters for JCMA projects. 5. Records of JCMA disclose the following: a. An organizational meeting of JCMA was held on August 7, 1975. b. At the organizational meeting, the firms of Arthurs, Lestrange & Short and Henry Fisher Co., Inc., were unanimously approved as financial advisors. c. The initial bond issue was funded in 1975. d, A special meeting of the JMCA was held on July 14, 1976 for the purpose of passing a resolution to refinance the bond issue. e. The JCMA entered into an Escrow Deposit Agreement on August 1, 1976 with the Savings and Trust Bank (Trustee) creating a special and irrevocable Escrow Fund of which $13,790,000 was applied to the purchase of United States obligations. 6. At a regular meeting of the Jefferson County Commissioners at which you were present held on January 29, 1980 upon motion by Commissioner Black and seconded by Commissioner Laska, the County Commissioners unanimously passed a resolution authorizing the JCMA to undertake a project to effect the redemption of certain U.S. Treasury certificates of indebtedness and to purchase certain other U.S. Treasury obligations and authorizing certain professional advisors to proceed with the planning and implementation of the the project (restructure the escrow fund). 7. The Resolution of January 29, 1980 specifically authorizes the JCMA to appoint Henry Fisher and Kroll, Annicelli, Inc. as c,'-row advisors. You voted in favor of this part of the resolution. John R. Caldwell January 25, 1984 Page 3 8. The JCMA held a special meeting on February 1, 1980 to pass a resolution to restructure the escrow fund. a. JCMA approved the restructuring by effecting the redemption of all or a portion of the government obligations and substituted therefore from the proceeds of the government obligations, direct obligations of, or obligations, the principal and interest of which are fully guaranteed by the U.S.A. and bearing a higher interest rate than the government obligations. b. The JCMA appointed Henry Fisher and Kroll, Annicelli & Company as escrow advisors. 9. As a result of the restructuring of the escrow fund, Treasury Bonds totalling $3,623,755.22 were redeemed. Treasury Notes totalling $3,238.052.53 were then purchased leaving a balance of $385,702.69. 10. The $385,702.69 remaining from the restructuring as disbursed as follows: Savings & Trust Company (Trustee fee) Lloyd Bush & Assoc. (Disbursement expenses) Lloyd Bush & Assoc. (Financial Analyst fee) Henry Fisher (Disbursement & expenses) Henry Fisher (Escrow Consultant fee) Kroll, Annicelli & Co., Inc. (Escrow Consultant fee) Ernst & Whinney (Escrow Accounting fee) Dennison, Matson, Dennison (Authority Solicitor fee) Ruffin, Hazlett, Snyder, Brown, Stabile (Escrow Counsel fee & expenses) Berkman, Ruslander, Pohl Lieber & Engel (Escrow Advisor - Attorney fee) Proceeds transfer to Jefferson County $10,000.00 20,000.00 56,308.93 10,000.00 46,924.11 84,463.40 4,500.00 20,000.00 25,506.25 5,000.00 282,702.69 103,000.00 $385,702.69 11. An addendum to the closing documents of escrow fund dated February 7, 1980 discloses that Fisher received an additional escrow consultant fee of $5,000.00. 12. JCMA Chairman Raymond Bachelier evaluated the disbursements and found all the disbursements to be in line with the bond discount charges quoted by the financial consultants at the time of the initial bond issue in 1975. John R. Caldwell January 25, 1984 Page 4 13. Henry Fisher, as an individual, made a contribution to your 1979 re- election campaign as a Jefferson County Commissioner. a. This contribution was made on June 25, 1979. b. This contribution amounted to $150.00. c. This contribution was reported on Schedule 1 of the Campaign Finance and Expense Report to cover the period June 25, 1979 to October 22, 1979 filed by you with the Bureau of Elections, hereafter the Bureau, Department of State, Commonwealth of Pennsylvania pursuant to Act 171 of 1978. d. You secured re-election., 14. Henry Fisher, as an individual, made contributions to the 1979 re- election campaign of Jefferson County Commissioner Andrew Laska. a. These contributions were made between May 1, 1979 and June 4, 1979. b. These contributions amounted to $200.00. c. These contributions were reported on Schedule 1 of the Campaign Finance and Expense Report filed by Andrew Laska to cover the period May 1, 1979 to June 4, 1979 with the Bureau pursuant to Act 171 of 1978. d. Andrew Laska secured re- election. 15. Henry Fisher, as an individual, made contributions to the 1979 campaign of Jefferson County Commissioner Mark Wildauer. a. These contributions amounted to $150.00. b. Mark Wildauer was defeated in his re- election bid. 16. a. Following the formation of the JCMA, in addition to the Jefferson Manor nursing home, JCMA undertook two other projects -- an addition to a local hospital and the construction of a new county jail. b. Neither Henry Fisher nor Henry Fisher Municipals were selected to serve as financial consultants or bond underwriters on these other projects. 17. There is no evidence that the campaign contribution to you (No. 13 above) was given or solicited or accepted based upon the understanding that your vote, official action or judgment as a public official or candidate for public office would be influenced there :y. John R. Caldwell January 25, 1984 Page 5 B. Discussion: As an elected official you are a "public official" as that term is defined in the Ethics Act and as such your conduct is subject to our review with respect to Section 3(b) of the Ethics Act, which states that: Section 3. Restricted Activities. (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). In reviewing this allegation, we are cognizant of the fact that Section 3(b) of the Ethics Act specifically prohibits the giving and receipt of a "political contribution" based upon any understanding that the vote, official conduct or judgment of the public official or employee or candidate for public office would be influenced thereby. However, as we have previously stated: "This section makes it clear that not all campaign contributions violate Section 3(b) of the Ethics Act. Only those which are given with the understanding that official conduct would be influenced are prohibited. We recognize that in the broadest sense all political contributions are motivated by the giver's desire to see a certain candidate succeed who may be more favorable to the giver's viewpoints and interests. This "motive" does not constitute the type of "understanding" necessary to make an otherwise valid contribution a violation of Section 3(b) of the Ethics Act." O'Pake, No. 158 and Weber, No. 245. In the present case, our findings fail to indicate any "understanding" which would transform these contributions into violations of Section 3(b) of the Ethics Act. C. Conclusion: There is no violation of Section 3(b) of the Ethics Act or the appearance of a conflict of interest in the circumstances presented. John R. Caldwell January 25, 1984 Page 6 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 be made available as a public document 15 days after service (defined as mailing) 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 $1,000 or imprisoned for not more than one year or both, see 65 P.S. 409(e). PJS /jc By the Commission, Paul ith Chairma