HomeMy WebLinkAbout327 GlovaMr. Eugene Glova
c/o Richard J. Green, Esq.
305 Franklin Street
Johnstown, PA 15901
Re: No. 83 -23 -C
Dear Mr. Glova:
STATE ETHICS COMMISSION
308 FINANCE BUILDING
HARRISBURG, PENNSYLVANIA 17120
ORDER OF THE COMMISSION
September 6., 1984
Order No. 327
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 a supervisor in Upper Yoder Township you acted as a
sales representative for Colonial Life & Accident Insurance Company and
participated in presentations to the township and township employees designed
to sell disability insurance and to convince the township to authorize same
for payroll deduction purposes as well as approaching township employees about
obtaining such coverage. These actions may violate Section 3(b) or 3(a) of
the Ethics Act, 65 F.S. 403(b) and (a) respectively.
A. Findings:
1. You served as a Supervisor in Upper Yoder Township hereinafter the
Township and as such are subject to the terms and provisions of the Ethics
Act. You began serving as Township Supervisor in January, 1978 and left
office in January, 1984.
2. You became a licensed agent with Colonial Life and Accident Insurance
Company, Columbia, S.C. on September 9, 1978 and remained an agent for
Colonial until May, 1982.
3. Minutes or records of the Upper Yoder Township Supervisors' Meetings
confirm the following in regard to the Colonial Life and Accident Insurance
Company, hereinafter C.L.A. and insurance coverage in general:
Eugene Glova
Page 2
September 6, 1984
a. 2/15/79 Minutes - G. Philip Hylen, Regional Manager, C.L.A.,
presents a plan for supplemental insurance disability plan for
township employees when injured on or off the job. The plan would be
available through payroll deduction at a cost of $3.12 per week per
employee. No definite action taken by the supervisors. You were
present at this meeting.
b. 8/2/79 Minutes - You report that Workmen's Compensation insurance
coverage increased by $6,900 over the past fiscal year ending July 1,
1979 due to excessive claims for the years 1975, 1976, 1977 and you
request a breakdown of the claims.
c. 10/15/79 Minutes - Harry Wilson, Workmen's Compensation Agent, C.
L.A., presents a plan to the Board of Supervisors where the Township
could save money on Workmen's Compensation coverage. Wilson requests
permission to talk to the supervisors three months prior to
expiration of policy. No decision reached.
d. 11/15/79 Minutes - Harry Wilson appears before the supervisors to
inform of the various rating programs available under Workmen's
Compensation. Motion by Supervisor Gillen, seconded by Supervisor
Hunt that C.L.A. be granted permission to make programs available to
township employees through a payroll deduction. You abstained from
voting.
e. 11/6/80 Minutes - Letter received from Bernard Martin notifying the
supervisors that AFSCME is prepared to begin negotiations for wages
and health and welfare benefits for the two bargaining units in the
Township, both subject to re- opener after January 1, 1981.
f. 2/19/81 Minutes - Executive Session at 5:32 p.m. relative to AFSCME
contracts with Bernard Martin and Sylvester Mucardelli. Open meeting
reconvened 5:52 p.m. Insurance disability income plan was discussed.
4/16/81 Minutes - (1) You commented regarding negotiated road
contract which included an insurance package through C.L.A. and the
minutes reflect you represented C.L.A. by presenting an insurance
program to Township street workers.
9-
(2) The minutes further reflect that while the Solicitor Eckel had
previously ruled you could handle C.L.A. insurance proposals to the
Township or Township workers, he had now reversed that ruling. The
basis of this new conclusion was the Second Class Township Code, not
the Ethics Act, and the fact that you had participated in making the
original presentation to the Township /workers on behalf of C.L.A.
(3) You questioned the Solicitor's opinion if you would be willing to
bow out, have another agent write the coverage, receive no
compensation, publicly state he is a licensed agent for the company
and abstain from voting, but you stated you would abide by the
Solicitor's ruling.
Eugene Glova
Page 3
September 6, 1984
h. 5/7/81 - Supplemental agreements to the clerical and maintenance
workers' contracts were signed effective May 1, 1981 the employer
agreed to contribute on behalf of each employee the amount of $45
each month to the Union Disability Income Fund, the "Fund" for the
purpose of establishing and maintaining an Insurance Income
Protection Plan and effective April 1, 1982, the Township
contribution to this Fund would be increased to $52.
i. Agreement between the Township and AFSCME mentioned above was signed
by all Township Supervisors, including you.
4. You made the necessary arrangements to have Mr. Hylen and Mr. Wilson
placed on the agenda of the Township meetings outlined above at No. 3, a, c
and d.
5. On a business card attached to correspondence from the Township to C.L.A.
dated 11/16/79 you are listed as "Special Representative" for C.L.A.
6. a. In November, 1979, you assisted Harry Wilson in making presentations
to Township employees in an effort to sign a sufficient number of employees.up
to a plan with C.L.A. to qualify for group coverage for accident and
disability.
b. Police and road department crew members were specifically approached by
you.
c. However, no group plan was sold to these employees at this time because
you and Mr. Wilson were unsuccessful in signing up the minimum number
of employees needed to qualify for group coverage.
7. You continued to attempt to provide data to Township employees or their
representatives on the C.L.A. insurance coverage available as follows.
a. Prior to Township - AFSCME contract negotiations early in 1981, see No. 3, e
and f above, you provided information regarding C.L.A.'s disability income
protection plans to David Hornick, a member of the Township workers' union
negotiating team.
b. During the initial negotiation period with AFSCME, the union representing
the road and clerical workers, you assisted C.L.A. Regional Manager Philip
Hylen in making a presentation of the C.L.A. Income Disability Plan to union
officials Bernard Martin and James Meyers at the union offices located at
Duncansville, PA.
c. Subsequent to this Glova -Hylen presentation, AFSCME representative Bernard
Martin decided to include the C.L.A. Insurance Income Protection Plan as part
of the Township clerical and maintenance workers labor demands for the 1981
contract.
Eugene Glova
Page 4
September 6, 1984
d. During the Township /Union negotiating workshops and bargaining sessions,
you made presentations regarding the C.L.A. plan and these presentations
included explaining the program and its benefits as well as working up a cost
per month per employee for C.L.A. coverage. You spoke with each member of
the road crew and passed out pamphlets and answered questions during these
presentations.
8. Although not recorded in the Minutes of the Township meeting (No. 3
above), a verbal agreement was reached by the Supervisors to have C.L.A.
benefits included as part of the labor agreement being negotiated with the
clerical and maintenance workers.
a. However, because Solicitor Eckel questioned your actions with respect to
"selling" this plan, see No. 3(g)(2) above, the contract could not be
finalized to include the Township providing C.L.A. benefits to these workers
as negotiated.
b. An agreement was then reached between the Supervisors and the union
whereby the Township would deposit an amount of money for each employee into
an account with the union. AFSCME would then purchase an accident and
disability plan of the Union's choice. The amount of money negotiated to be
deposited was determined by you computed from and based upon the C.L.A. plan.
c. Neither the Township nor the Union (AFSCME) solicited quotations or
submissions from insurance companies other than C.L.A. during the process of
negotiation or afterward.
d. As a result of the process described herein, Article XVIII of the Labor
Agreement eventually signed between AFSCME and the Township provided for
payments tc the Union Fund of $45 and $52 as set forth in No. 3(h) above.
9. AFSCME purchased the insurance disability plan from C.L.A. in May, 1981.
a. You were listed as C.L.A.'s representative on the premium invoice
sent by C.L.A. to the Union until June, 1982 when Gene Martin's name
appeared as representative.
b. The original coverage included life insurance and accident disability
policies.
c. The coverage was expanded in December, 1981 to include a sickness
policy.
10. Since May, 1981 and each month thereafter until February, 1984, C.L.A.
has sent a premium invoice to AFSCME. The premiums set and payments expected
list the following coverages:
Eugene Glova
Page 5
September 6, 1984
a. From May, 1981 through November, 1981 - Life Insurance - $20
monthly premium per employee except $22.32 for Ethel Hcckensmith,
Accident Insurance - monthly premium varied from $12.50 to $21
Total monthly premium $252.
b. December, 1981 - one new employee added to increase total premium to
$293.82. Sickness policy added with increase of $104.50. Total
premium increased to $398.32.
c. June, 1982 - Total premium increased to $414.32 due to addition of
sickness policy ($16 per month) for Robert Kasper.
d. Total premium due from June, 1982 to present -- $414.32.
11. Township records regarding payments to AFSCME attributable to the Fund
reveal the following:
a. From May 8, 1981 through November, 1981 a check in an amount of
$315 drawn on the Township General Fund was sent to AFSCME
($45 x 7 employees).
b. December 3, 1981, the check was increased to $360 to cover an
additional employee ($45).
c. April 1, 1982, the monthly check was increased to $416
($52 x 8 employees).
d. As of January 25, 1984 the Union's Counsel advised the Township that
the indirect payment of premiums for insurance provided by C.L.A.
by the Township to C.L.A. through the Union violated AFSCME's
Financial Standards Code and must be discontinued. As of February,
1984 the Township was being billed and paying premiums directly to
C.L.A. for this insurance for these Township employees.
12. Documents you provided and verified by Dave Dalton, Regional Manager of
C.L.A., disclose:
a. As a result of the sale of these life insurance and disability
policies to Township employees, you obtained $720.62 as a commission.
b. The sickness policy added as rider to the original policy in
December, 1981 (see No. 9, c, above) resulted in a $250.80 commission
payable and paid to you.
c. No renewal premiums or commissions were paid or are expected to be
paid to you as a result of these policies.
13. Dave Dalton, C.L.A. Regional Manager, (See No. 12 above) states that:
Eugene Glova
Page 6
September 6, 1984
a. Premiums for this plan were unusually high due mainly to types of
coverage written by you.
b. Typical life insurance premiums for similar group plans vary between
$6 and $12 per month, whereas the premiums associated with the
life insurance coverage provided as described above was $20 per
month.
c. Policies for Class (3) Groups usually include a combination of two of
three policies; life, accident, sickness, not all three.
d. Typical commissions for C.L.A. agents writing similar plans is
not more than $400 whereas you were paid commissions totalling
$971.42 (See No. 12 a, and b above) .
14. Your employment or association with C.L.A. ended in May, 1982 and your
license to sell insurance for C.L.A. expired in November, 1982.
6. Discussion: As a Township Supervisor you were a "public official" within
the meaning of the Ethics Act. See 65 P.S. 402. As such your conduct must
conform to the requirements of the Ethics Act. The provisions of the Ethics
Act most applicable to this case are reprinted below for ease of reference:
Section 1. Purpose.
The Legislature hereby declares that public office is
a public trust and that any effort to realize personal
financial gain through public office other than
compensation provided by law is a violation of that
trust. In order to strengthen the faith and confidence
of the people of the State in their government, the
Legislature further declares that the people have a
right to be assured that the financial interests of
holders of or candidates for public office present
neither a conflict nor the appearance of a conflict
with the public trust. Because public confidence in
government can best be sustained by assuring the
people of the impartiality and honesty of public
officials, this act shall be liberally construed to
promote complete disclosure. 65 P.S. 401.
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).
Eugene Glova
Page 7
September 6, 1984
(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) .
Reviewing your conduct and based upon the facts as found above, we
conclude that your conduct in soliciting the business for C.L.A. in the manner
outlined above and in receiving commissions as a result of these sales (See
No. 12, above) you used your public office to realize personal financial gain
in violation of Section 3(a) of the Ethics Act.
Your activities in this entire solicitation process are suspect. You
have, in our opinion, the right to attempt to sell these policies to the
Township employees, but your presentations and approaches here represented
undue pressure upon the Township workers. This approach coupled with your
assertion that you would not receive a commission from this process --
which, in fact, was untrue -- indicates you have used the "weight" and power
of your public office to your personal, financial advantage. We have
previously ruled that a School Director who met with District employees and
union members to authorize payroll deductions for insurance policies the
Director was selling, constituted an appearance of a conflict under Section 1
of the Ethics Act. We found n� violation of Section 3(a) in that case because
there was no evidence of financial gain to the Director as a result of the
sale of policies. See Patterson, No. 116. Here, not only is there an
appearance of a conflict with the public trust but the gain you experienced
requires a finding that Section 3(a) has been violated.
We wish to emphasize in this ruling that we do not question the right of
AFSCME in this case to contract with C.L.A. or to negotiate on behalf of its
members for the inclusion of health, life and accident benefits in the
Union - Township labor agreement. We are addressing only your conduct and
concluding that you have used your office under these circumstances to your
own benefit.
Eugene Glova
Page 8
September 6, 1984
We find no violation of Section 3(b), however, in that it is not clear
that you solicited or accepted the business on behalf of C.L.A. from which you
would benefit with the understanding that your official conduct as a
Supervisor would be influenced thereby. However, it is clear that you should
have abstained from any votes or discussions regarding this policy purchase
and failure to do so created the appearance of a conflict of interest. The
information gathered in the course of this investigation indicates that your
involvement in discussions and presentations to the Township workers and
Supervisors was substantial. Absent clear evidence that you properly
abstained from Township decisions, votes, and discussions regarding C.L.A., we
find your activities gave rise to an appearance of a conflict between your
personal interests and the public trust.
C. Conclusion: Your activities, as outlined and found above, violated
Section 3(a) of the Ethics Act. We will pursuant to Section 7(11) of the
Ethics Act refer this matter to the appropriate law enforcement officials with
a recommendation that prosecution be undertaken pursuant to Section 9(a) of
the Ethics Act unless, within 30 days of the Order, you remit the sum of $971
representing the commissions you secured by use of your public office (See No.
12 above) with interest from the date acquired to the date paid in the amount
of 10% per annum. The total to be paid, with interest calculated through June
30, 1984 is $1,239.82, representing the commission of $720.62 with $216.00 in
interest from June, 1981 plus the commission of $250.80 with $52.40 in
interest from January, 1982. This total will be subject to recalculation if
this amount is not paid by June 30, 1984. See 65 P.S. 407(11) and 409(a) and
(c) respectively which provide:
Section 9. Penalties.
(a) Any person who violates the provisions of section
3(a) and (b) is guilty of a felony and shall be fined
not more than $10,000 or imprisoned for not more than
five years, or be both fined and imprisoned.
65 P.S. 409(a) .
(c) Any person who obtains financial gain from
violating any provision of this act, in addition to
any other penalty provided by law, shall pay into the
State Treasury a sum of money equal to three times the
Financial gain resulting from such violation.
65 P.S. 409(c).
Your conduct it general with respect to C.L.A. and your participation in
presentations and solicitations to Township employees and decisions of the
Township with respect to C.L.A. policies constitutes an appearance of a
conflict of interest with the public trust.
Eugene Glova
Page 9
September 6, 1984
II. Allegation: That as Supervisor in Upper Yoder Township you acted as an
Agent /Sales Representative for Bankers Life Insurance Company, participated in
presentations to the Township and Township employees designed to sell life
insurance and pension plans and to convince the Township or Township
employees to place /purchase such coverage from /with Bankers Life. These
actions may have violated Section 3(a) and 3(b) of the Ethics Act.
A. Findings: Findings Nos. 1 -14 are incorporated herein by reference, in
addition to which we find as follows:
15. Early in 1982 the Township Supervisors decided to update the Police and
Municipal Workers' pension plans but there was no official action taken at
this time at any meeting of the Supervisors in.regard to any changes.
a. At the time the Police pension programs were administered by
L. Walter Coble Associates.
b. At the time the road crew pension programs were administered by
Robert F. Huebner and Associates.
c. Both of these programs were basically funded by the purchase of
whole life insurance policies with a "side" or contingency fund
as well.
d. The whole life policies associated with the police pension program
were placed with Minnesota Mutual Life Insurance Company and
Provident Mutual Life Insurance Company.
e. The whole life policies associated with the municipal road workers
program were placed with Putnam Growth Fund, Templeton Growth Fund,
Lincoln Life Insurance and Volunteer State Life Inisurance Company.
16. a. Early in 1982 you contacted Ronald Clark, hereinafter Clark, a Pension
Specialist for Bankers' Life Insurance Company, hereinafter Bankers'
to examine the Township police and municipal pension plans.
b. You had been placed in contact with Clark by Joseph Costanzo, Agency
Manager with the Bankers' Pittsburgh Office.
c. You had been placed in contact with Costanzo by introduction by a
mutual friend.
Eugene Glova
Page 10
September 6, 1984
17. During August, 1982, Clark made a presentation to the Township's policemen
regarding their pension plan and you were present during this session.
a. During this session, you provided assistance in explaining the
advantages of the Bankers' plan to the police officers, answering
questions and advocating that a switch or "rollover" to Bankers'
would be beneficial.
b. No final decisions were made at this session as to changing the
pension plan.
c. You approached at least three of the Township police officers
individually to advise them of the Bankers' program and to persuade
them that a "rollover" was beneficial to their interests and these
officers understood that part of the benefit of a change to Bankers'
would be greatly increased monthly pension payments.
18. Following this presentation the police officers expressed a desire to
receive information and presentations from other insurance and pension
companies, but the only other company permitted to or invited to make a
presentation was the current carrier, Walter Coble Associates.
19. In September, 1982 the Supervisors had prepared and circulated to the
police and road workers, a memorandum asking these employees if they felt it
was beneficial to change and secure pension coverage with Bankers.
a. The proposed coverage would convert the whole life program funded by
whole life policies to a group life insurance one with a group
annunity arrangement.
b. Of the 11 workers whose names appeared on the memorandum, seven
responded by checking the column "yes," indicating their agreement
with the proposal of changing to Bankers'; one employee was noted as
being "on vacation "; and three employees did not appear to respond in
that they did not sign their names on the space provided or check the
"yes" or "no" column.
c. As to the three employees who originally did not respond (see b,
above) to the memorandum, you approached at least two of these persons
to persuade them that the change to Bankers' should be made and these
persons recall that the indication was made to them that the decision
was already made to change to Bankers' so they had no choice but to
agree /comply with the change.
Eugene Glova
Page 11
September 6, 1984
d. Subsequently, in a memorandum separate from the September 1, 1982
memorandum referred to above, the three employees who originally did
not respond to this proposed change to Bankers' (see b, above) and who
were approached by you (see c, above) signed a memo dated September
21, 1982 and stated as follows: "We agree with a decision to change
to Bankers' Life."
20. Minutes of the Township Supervisors' meetings disclose the following:
a. 2/2/82 - Motion by Cowie, second by High, that whoever serves on the Board
of Supervisors will serve as Trustees for the municipal pension plan.
Approved unanimously.
b. 8/17/82 - You report you are still receiving pension proposals.
c. 9/21/82 - You called for an Executive Session to discuss Township
employees' pension plan. Cowie seconds. Regular meeting reconvened thirty
minutes later.
- You made a motion that Joseph Costanzo be named Agent of Record to advise
the Supervisors on various proposals for pension plans. Motion carried
unanimously.
d. 9/30/82 - Special Meeting. You made a short presentation of pension plans
and stated both police and municipal workers desire change from outdated whole
life to new concept of term life and change to a new carrier.
- You made a motion, seconded by Cowie, that the administration of police
pension program be transferred from Walter Coble Associates to Bankers' and
the motion passed unanimously:
- You made a motion, seconded by Cowie, that the administration of the
Township municipal workers' pension plan be transferred from Huebner
Associates to Bankers' and the motion passed unanimously.
- You made a motion, seconded by Cowie, that the Township purchase group term
insurance, separate from pension plan funding, on all Township employees from
Bankers' and that a check in an amount of $270 payable to Wells Fargo, the
Trustee, be submitted to cover the first month's premium and the motion passed
unanimously.
- You made a motion, seconded by Cowie, that Section 2 of Ordinance #143,
ordained and enacted November 21, 1974 be amended to read death benefits of
life insurance policies purchased on the lives of police officers may be
either whole life or term policies and the motion passed unanimously.
Eugene Glova
Page 12
September 6, 1984
21. Correspodence between the Township Supervisors and Walter Coble Associates
hereinafter Coble, confirm the following:
a. 9/1/82 - Coble letter to the Township explaining the Minnesota Mutual Fund
Agreement and a statement of the assets of both Provident Mutual and Minnesota
Mutual.
b. 9/7/82 - Letter from Township Secretary to Coble requesting information
concerning changes in the police pension fund no later than 9/15/82.
c. 9/15/82 - Coble reply advising of changes that could be made in the police
pension plan.
(1) Coble advised a switch to term insurance was not possible
under the present plan but by transferring funds from the
Provident Fund to the Minnesota Mutual Fund and interest
rate of 13% would be guaranteed for two years.
(2) Termination of the Provident Fund which contained $96,987
would result in a 525,950 penalty unless taken over a
five -year period.
d. 10/7/82 - Letter from Township Secretary to Coble advising that the
Township Supervisors elected to move the police pension funds to Bankers'.
22. The Township received funds as follows as a result of terminating the
police pension plan with Coble:
a. 12/6/82 - Letter from Minnesota Mutual terminating premium deposit fund
and enclosing check in an amount of $106,832.18.
b. 12/13/82 - Benefit memo from Provident Mutual enclosing check in amount of
571,037.02. That amount was less 525,950, an adjustment from book value to
market value made by Provident when the deposit administration account was
terminated. See No. 21, c(2) above. The book value was $96,987.
c. 1/31/83 - Check in amount of 539,283.48 received by the Township from
Minnesota Mutual representing the cash value of 33 life insurance policies on
Township police.
23. Huebner Associates, Putnam Growth Fund, Templeton Growth Fund, Lincoln
National Life Insurance Company and Volunteer State Life Insurance Company
were notified by letter dated 10/7/82 from the Township Secretary that
as of 10/1/82 the municipal workers pension funds were being transferred to
Bankers' Life.
Eugene Glova
Page 13
September 6, 1984
24. The Township received funds as follows as a result of terminating the
municipal workers' pension plan with Huebner Associates.
a. 11/9/82 - $34,391.09 received from Volunteer State Life representing the
cash surrender value of (16) insurance policies taken out on Township workers.
b. 11/10/82 - $3,447.06 received from_Lincoln National Life representing cash
surrender values of municipal workers' insurance policies.
c. 1/3/83 - $6,370.46 received from Lincoln National Pension representing
lump sum payouts for six insurance policies.
d. 2/10/83 - $32,305.06 received from Templeton Growth Fund.
25. Correspondence between the Township and Bankers, Life confirm the
following:
a. 6/14/82 - Letter from Pension Specialist Ronald Clark requesting
information on Township municipal workers.
b. 8/11/82 - Letter from Clark to you explaining pension proposals and
requesting a meeting for 8/17/82.
c. 10/7/82 - Clark memo to Supervisor Richard High with materials for
applying to Bankers'. Costanzo commission acknowledgment and group annunity
application attached.
d. 10/13/82 - Memo from D. P. Carter, Bankers' Vice- President, expressing
thanks for applying to Bankers'.
e. 10/20/82 - Memo from Clark requesting government certification letter on
group term insurance.
f. 11/1/82 - Letter from G. David Hurd, Bankers' Vice - President, thanking the
Township Supervisors for selecting Bankers' Deposit Administration Group
Annuity contract.
26. Payments to Bankers' were made by the Township as follows:
a. 10/1/82 - $270 application deposit for first month's term insurance
premium drawn from the Township's General Fund Checking Account ( #50- 02480),
b. 10/8/82 - $28,725.93 drawn from the Township Police Pension Fund Checking
Account ( #50- 02506), Check #111, represented yearly contribution from
Commonwealth of Pennsylvania.
c. 10/14/82 - $100 drawn from the Township's General Fund Checking Account
(application deposit).
Eugene Glova
Page 14
September 6, 1984
d. 11/17/82 - Check #113 drawn on the Township's Municipal Pension Fund
Checking Account (#50-05541) in an amount of $34,391.09.
- Check #114 - drawn on the Township's Municipal Pension Checking
Account (#50-05541) in an amount of $3,447.06.
e. 12/8/82 - $106,832.18, check #111, drawn on the Township's Police Pension
Fund Checking Account (350- 02506). -
r, 12/17/82 - $71,037.02, check #112, drawn on the Township's Police Pension
Fund Checking Account.
g. 1/5/83 - o-6,370.46, drawn on the Township's Municipal Workers' Pension
Fund Checking Account ( #50- 05541).
h. 2/3/83 - $39,283.48, drawn on the Township's Police Pension Fund Checking
Account ( #50- 02506), credited by Bankers to the General Asset Fund.
i. 3/1/83 - $32,315.06, drawn on the Township's Municipal Workers Pension
Fund Checking Account ( #50- 05541), credited to the General Asset Fund.
27. The telephone numbers of the Township's Municipal office are 814- 255 -5243
and 814- 255 -6073.
a. A review of the records of calls made from these numbers reveals that
during the period immediately prior to the change -over from Coble and
Huebner to Bankers', you placed numerous calls to both the offices and
homes of Bankers' Pension Specialist Clark and Agency Manager Costanzo.
b. One such telephone call by you was made to Clark's home at 10:41 p.m.
on 9/21/82 from another phone in the Johnstown area. The call was made
after the Township Supervisors' meeting where you recommended
converting the pension plan to Bankers'.
c. After this 9/21/82 Township Supervisors' meeting convened you made a
59- minute telephone call to the home of Joseph Costanzo at 10:45 p.m.
The call was made from another phone in the Johnstown area but billed
to the Township.
d. Other calls to Costanzo's home were made on 12/13/82 and 1/2/83.
e. On the same date that Joseph Costanzo was scheduled to be interviewed by
the State Ethics Commission Investigator in Pittsburgh, Pennsylvania,
April 25, 1983, you made a 26- minute call to Costanzo immediately prior
to that interview. The call, which was made to the Bankers' offices,
was made from another phone and billed to the Township.
28. The calls referred to in Pao. 27 above and other calls you admit to making
are as follows:
Eugene Glova September 6, 1984
Page 15
Number
Date Called
1) 5/14/82 412 - 281 -8313
2) 5/19/82
3) 6/14/82
7) 9/23/82
11
4) 9/21/82 412 - 367 -2.355
5) 9/21/82 412 - 281 -9516
6) 9/22/82 412 - 281 -8313
11
10) 10/7/82 412 - 281 -8313
11) 10/25/82 412 - 281 -8313
12) 10/27/82 412 -281 -8313
13) 11/16/82 412 -281 -8313
14) 10/29/82 412-281-8313
15) 12/6/82 412 - 281 -8313
16) 12/14/82 412 -281 -8313
17) 12/16/82 412 - 281 -8313
18) 12/20/82 412 - 281 -5483
19) 12/23/82 412 - 281 -8313
Number
Identified as: Time
Office of 3:27 p.m. 26 min. Johnstown
Ronald Clark area phone
Home of
Joseph
Costanzo
Home of
Ronald Clark
Office of
Ronald Clark
8) 9/26/82 412- 835 -9516 Home of
Ronald Clark
9) 9/27/82 412- 281 -8313 Office of
Ronald Clark
11
20) 12/23/82 412 - 281 -8313 "
Office of
Joseph Costanzo
Office of
Ronald Clark
3:33 p.m. 8 min.
12:22 p.m. 43 min.
10:45 p.m. 59 min.
10:41 p.m. 3 min.
12:01 p.m. 1 min.
Call made
Duration from
11
9:38 a.m. 1 min.
Cost
$ 8.58
$ 2.38
$12.00
$10.66*
$ 1.01
$ 1.01
10:51 p.m. 28 min. Twp. office $ 4.82
3:29 p.m.
3:27 p.m.
9:52 p.m.
9:22 a.m.
11:30 a.m.
9:40 a.m.
11:46 a.m
1:59 p.m.
1:36 p.m.
3:25 p.m. 1 min. Johnstown $ 1.01
area phone
6 min. Twp. office $ 1.71
3 min. Twp. office $ .93
2 min. Twp. office $ .67
1 min. Twp. office $ .41
1 min. Twp. office $ .41
1 min. Twp. office $ .41
1 min. Twp. office $ .41
1 min. Twp. office $ .41
89 min. Glova pri. $23.89
office - Ebensburg
10:00 a.m. 1 min. another $ 1.01
phone in
Johnstown
11:24 a.m.. min. another $ 1.01
phone in
Johnstown
Eugene Glova
Page 16
September 6, 1984
Number Number Call made
Date Called Identified as: Time Duration from
Co
21) 2/31/82 412 - 367 -2355 Home of 1:58 p.m. 1 min. another $ 1.01
Joseph phone in
Costanzo Johnstown
22) 1/2/83 412- 367 -2355 4:29 p.m. 17 min. another $ 2.42
phone in
Johnstown
23) 1/4/83 412 - 281 -8313 Office of 11:13 a.m. 1 min. Twp. office $ .41
Ronald Clark
24) 1/17/83 412 - 281 -0409 Private number 4:00 p.m. 63 min. another $16.85
Costanzo phone in
Johnstown
25) 1/17/83 412 -281 -5483 Office of 1:58 p.m. 7 min. another $ 2.57
Joseph Costanzo phone in
Johnstown
26) 2/19/83 412 -281 -8313 Office of 4:09 p.m. 1 min. Twp. office $ .41
Ronald Clark
27) 1/4/83 412 -281 -8313 n 2:02 p.m. 2 min. Twp. office $ .67
28) 2/3/83 412 - 281 -8313 n 2:51 p.m. 1 min. Twp. office $ .41
29) 2/14/83 412 -281 -8313 11 3:43 p.m. 14 min. Twp. office $ 3.79
30) 2/14/83 412 - 281 -5483 Office of. 4:19 p.m. 25 min. Twp. office $ 6.65
Joseph Costanzo
31) 3/7/83 412- 281 -8313 Office of 2:29 p.m. 8 min. Twp. office $ 2.23
Ronald Clark
32) 3/16/83 412- 281 -8313 n 2:26 p.m. 2 min. Twp. office $ .67
33) 4/25/83 412- 281 -8313
34) 4/26/83 412 - 281 -8313
* billed to Township
11
.12:18 p.m. 26 min. another $ 6.91*
phone in
Johnstown
11:26 a.m. 3 min. another $ 1.53
phone in
Johnstown
Eugene Glova
Page 17
September 6, 1984
29. As noted in No. 20,c above you made the motion to appoint Joseph Costanzo as the
Township's Agent of Record as of 9/21/82.
a. Costanzo was named Agent of Record even though he works out of
the Pittsburgh office and at least two other insurance agencies in
the Johnstown area write pension plans for Bankers'.
b. Prior to this action on 9/21/82 you had discussions with Costanzo's
father -in -law about the possibility of Costanzo handling the Township
pension funds.
30. You made an application to the State Insurance Department for a resident agent
license to sell life, annuities and accident and health insurance for Bankers'.
a. State law requires that an individual seeking to sell insurance must have
the sponsorship of the Company for which he seeks to be licensed.
b. Joseph Costanzo, acting as Agency Manager for Bankers' acted as your sponsor
by endorsing your application to the State Insurance Department on
January 20, 1983 to become a resident agent for Bankers'.
c. Records of the State Insurance Department disclose that you were licensed
to sell insurance for Bankers' since January 23, 1983.
d. There is reason to believe that in April, 1982 you had approached
Bankers', through Joseph Costanzo and attended a meeting of prospective
Bankers' agents but did not become or make application to become a
Bankers' agent until some time later (See b, above).
31. Joseph Costanzo received a commission of $3200 as a result of the change to
Bankers' described above.
a. This commission was based upon a sliding scale of the total amounts involved
in the changeover.
b. Clark, who made presentations as described above, as a full -time employee
of Bankers' was ineligible to receive a commission.
Eugene Glova
Page 18
September 6, 1984
32. There is insufficient evidence to conclude that you received any commission or
money directly or indirectly as a result of the Township's change to Bankers.'
a. There is no evidence that any payments of the administrative costs
associated with the non - police pension funds were made from the funds
associated with the police pension program were made or designed to or did
benefit you personally.
b. There is no evidence that the rollover to Bankers, although different in
terms from the previous policies provided a benefit or gain to you personally,
especially insofar as you are no longer serving as a Township Supervisor.
33. The Department of Auditor General, Bureau of Police Audits, conducted an audit of
the Township Police Pension Fund covering the period January 1, 1981 to December 31,
1981 in July, 1983. The audit report and letter dated August 2, 1983 made a number of
findings, including the following findings or comments:
a. Municipal police pension funds are controlled by the Act of May 29, 1956,
P. L. (1955) 1804 as amended, 53 P.S. 767 et. seq. (commonly known as
Act 600) and police pension funds are financed by allocations of
Commonwealth taxes on foreign casualty insurance premiums.
b. The Upper Yoder Township Police Pension Fund is governed by Township
Ordinance 133 adopted pursuant to Act 600.
c. Page 4 and Page 6 of the Audit Report refer to the $25,950 loss, See No. 21,
c(2) above, on the termination of deposit administration account with
Provident Mutual.
d. Page 9 refers to the potential conflict of interest regarding your being
a licensed agent with Bankers' and recommended that municipal officials should
take whatever action necessary to remove the possibility of such conflicts.
Such action recommended could include written notice to all municipal
officials of such potential conflict or disqualification of such officials
from decisions in which such an incompatibility could arise.
e. The report also found that the Township as custodian of the records of the
police pension find, did not adequately maintain the Fund's record and thus it
was not possible for the Township to efectively monitor activity in the Fund's
accounts.
Eugene Glova
Page 19
September 6, 1984
34. Officials within the Office of the Auditor General further provided the following
information:
a. The provisions of Act 600 govern the amount of monthly pension a
retiring officer can receive. That monthly amount cannot be any
more than one -half of the monthly earnings at the time of retirement.
This is contrary to the impression of the officers you approached
to persuade them to change to Bankers' because their monthly pension
would be increased by such a change -over. See No. 17, c, above. They
were under the impression from you that a change would greatly increase
their pension payments.
b. The changeover to Bankers' was initiated primarily to achieve a
higher rate of return on the Fund's assets and although there was
a loss associated with the change -over (See No. 21, c,(2) and
No. 33, c, above) the fact that the interest rate with Bankers'
might be higher made it difficult to predict the net loss or gain
to the Fund as a result of the change -over at least until late 1984
or early 1985 when the actual interest paid by Bankers' as a result
of management of the Fund could be reported and compared.
35. You served as an agent for Colonial Life and Accident Insurance Company (C.L.A.)
from September 9, 1978 until May, 1982, and as set forth in more detail in Findings
No. 1 -14 above during this period the Township negotiated a contract for its road and
clerical workers which included a package of health and accident benefits to be placed
with C.L.A., and you were agent on this C.L.A. policy, and you received commissions
totaling $971.41 (See No. 12 above) as a result of this transaction.
B. Discussion: As a Township Supervisor you were a "public official" within the
meaning of the Ethics Act and as noted in "Discussion," Part I, your conduct must
conform to the requirements of the Ethics Act. The provisions of the Ethics Act most
applicable to this case are reprinted above and will not be repeated here.
We have carefully reviewed the facts as found above and your conduct in light of
the Ethics Act. We have found insufficient evidence to find a violation of Section
3(a) or (b) of the Ethics Act as to this Allegation. We are, however, concerned that
your conduct and specifically your attempts to convince Township employees to change
to Bankers' and your role immediately prior to your involvement with the Bankers'
change in the placement and selling of C.L.A. disability insurance policies to cover
Township road and clerical workers (See No. 35 and 1 -14 above).
Eugene Glova
Page 20
September 6, 1984
While we have not discovered direct evidence of any financial gain you received
through commissions on the transfer to Bankers' unlike the role you played vis -a -vis
C.L.A., we are distressed that your role with Bankers' was bound to lead to an
appearance of a conflict of interest. Particularly, you have been advised to avoid
the direct Township - C.L.A. purchase plan (See Allegation I above) in order to remove
conflicts in the role you played as agent (seller) and Supervisor (purchaser) of these
policies. Then, less than six months later you were actively engaged in "selling"
Township employees on the change to Bankers'. You must be presumed to have heard the
advice of the Solicitor as to your C.L.A. involvement, but failed to see any similar
problem with respect to Bankers'. In fact, as outlined above, it is reasonable to
conclude that you were aware of restrictions on your activities to act directly and
overtly as agent for Bankers' as you had with C.L.A. so you did all the "selling" and
persuading, short of technically acting as agent, possible.
We recognize you were not licensed as a Bankers' agent until January, 1983, well
after the Township voted to change to Bankers' on October 7, 1982. Also, we cannot
find evidence that you received any payments as commission or otherwise unlike the
C.L.A. sale which would place you in direct violation of Section 3(a) or (b).
However, there can be little public confidence or trust in a public official who is so
vigorous in his sales tactics as were evident and found above as to the Township's
employees and who then seeks and secures the sponsorship of the Company to become that
Company's agent for whom he has so recently "labored." Under all these circumstances
your conduct gave rise to an appearance of a conflict with the public trust.
Your future conduct should you again serve as Supervisor must conform to the
requirements of the Ethics Act where you seek to ply your trade of insurance vis -a -vis
the Township. Specifically, you must:
1. Comply with the provisions of Section 3(c) of the
Ethics Act where applicable as set forth below:
Section 3. Restricted Activities.
(c) No public official or public employee or a member
of his immediate family or any business in which
the person or a member of the person's immediate
family is a director, officer, owner or holder of
stock exceeding 5% of the equity at fair market
value of the business shall enter into any
contract valued at $500 or more with a
governmental body unless the contract has been
awarded through an open and public process,
including prior public notice and subsequent
public diclosure of all proposals considered and
contracts awarded. Any contract made in
violation of this subsection shall be voidable
by a court of competent jurisdiction if the suit
is commenced within 90 days of making of the
contract. 65 P.S. 403(c)
Eugene Glova
Page 21
2. Abstain from any decisions, votes and discussions
as to the placement of Township business with any firm,
company, etc. where you are or expect to be an agent,
whether you receive(d) a commission or not.
C. Conclusion: We cannot discern sufficient evidence to conclude that you violated
Section 3(a) or (b) of the Ethics Act with respect to the Bankers' transaction.
However, your conduct as described above, created an appearance of a conflict of
interest with the public trust.
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 in accordance with 51 Pa. Code 2.38(a).
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).
HBC /jc
September 6, 1984
rt :. Conner
Ch- .irman
Mr. Eugene Glova
c/o Richard J. Green, Esq.
305 Franklin Street
Johnstown, PA 15901
Re: Order No. 327; File 83 -23 -C
Dear Mr. Glova:
STATE ETHICS COMMISSION
308 FINANCE BUILDING
HARRISBURG, PENNSYLVANIA 17120
RECONSIDERATION ORDER OF COMMISSION
No. 327 -R
September 6, 1984
This refers to the Petition for Reconsideration you presented on June 4,
1984 with respect to the above - captioned Order issued on May 24, 1984 pursuant
to 51 Pa. Code 2.38. The discretion of the State Ethics Commission to grant
reconsideration is properly invoked, pursuant to our regulations, 51 Pa. Code
2.38(b) when
(b) Any party may ask the Commission to reconsider an order within 15
days of service to the order. The person requesting reconsideration
should present a detailed explanation setting forth the reason why the
order should be reconsidered. Reconsideration may be granted at the
descretion of the Commission only where any of the following occur:
(1) a material error of law has been made;
(2) a material error of fact has been made;
(3) new facts or evidence are provided which would
lead to reversal or modification of the order and
where these could not be or were not discovered
previously by the exercise of due diligence.
The Commission, having reviewed your request must DENY your request
because none of these circumstances are present.
Therefore, the State Ethics Commission concludes that your request for
reconsideration must be DENIED.
The Order referred to above having been redated is accordingly, hereby
reissued. This Order and this decision denying reconsideration are final and
shall be made available as public documents on the third day following the
date of this Order.
Mr. Eugene J. Glove
c/o Richard J. Green, Esquire
305 Franklin Street
Johnstown, PA 15901
Re. Orders No. 325 and 327
Dear Mr. Glove:
EMS /jh
STATE ETHICS COMMISSION
308 FINANCE BUILDING
P.O. BOX 11470
HARRISBURG, PA 17108 -1470
TELEPHONE (717) 783 -1610
September 21, 1984
This acknowledges receipt of your check No. 104 in the amount of
$1,239.82 in accordance with our Orders of September 6, 1984, Nos. 325 and
327. The Commission will take no further action in this case and our file
will be closed because you have met the requirements of those Orders.
This letter will be a part of the Order and a public record' as such.
Sincerely,
dward M. Seladones
Executive Director