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Home My WebLink About352 KalenaMs. Barbara Ann !Galena Vice - President McAdoo Borough Council 23 N. Hancock Street McAdoo, PA 18237 Re: No. 83 -38 -C Dear Ms . Ka 1 ena : STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 ORDER OF THE COMMISSION November 28, 1984 Order No. 352 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 you, a Vice- President of McAdoo Borough Council, used your office and /or confidential information of that office in an attempt to gain a more favorable insurance settlement for Steve's Arco which would have benefitted your husband and brother and that this is a violation of Section 3(a) of the Ethics Act. A. Findings: 1. You served as a member of McAdoo Borough Council since at least 1982 and as such are subject to the requirements of the State Ethics Act. 2. On May 25, 1982, a McAdoo Borough truck accidentally damaged the light island at Steve's Arco. a. This station is owned by Stephen Klonitsko, your brother. b. You have no business interest in this station. c. Your husband occasionally works part -time at Steve's Arco. 3. On January 16, 1983, you wrote a letter to the attention of the Chairman of the Board of Aetna Life and Casualty Insurance Company asking him to review their decision to award Mr. Klonitsko a maximum payment of $674 for repairs to the damaged light island. Barbara Ann Ka l ena November 28, 1984 Page 2 a. You signed this letter as the Vice - President and Finance Committee Chairwoman of McAdoo Borough Council. b. You complained that the Aetna service of this claim had been poor stating "with the Borough of McAdoo paying several thousands of dollars for insurances plus reinvesting over $167,000 of Police Pension Fund money with Aetna how can you justify this type of service ?!" c. In this letter, you stated that Mr. Klonitsko "could not believe that he had over $2000 worth of damages and Aetna was paying him $674 ". d. In this letter, you also stated that Mr. Klonitsko "...showed every intention of taking legal action against the Borough for insufficient payment of damages caused by Borough equipment. Should this citizen's position prove to be accurate, we as Borough Council, have no alternative but to reconsider the search for more reliable, competitive service ". e. You have no particular responsibility for the insurance activities of Borough Council. f. You did not say that you were related to Mr. Klonitsko. 4. There was no discussion or decision at Council meetings that you should handle this matter or information given by you to the Council that you had written this letter. 5. On January 28, 1983, Mr. Kerry Youndt, Property Claims Supervisor, Aetna Casualty, asked for a meeting with you and you agreed to meet with him at ,your home. a. On January 31, 1983, Mr. Youndt confirmed the discussion in that meeting of January 28th. b. He reviewed the process the Insurance Company had used to arrive at their offer and added that he was agreeable to recalculating the depreciation and applying it only to the material which would result in an additional payment of $168.34. He noted that he would make this additional offer to Mr. Klonitsko in writing. 6. On July 20, 1983, Gabriel B. Frank, Jr., an attorney representing Aetna Casualty Company, sent to you, for your review and signature, Aetna's answer to a complaint filed by Steve's Arco. a. On July 28, 1983, Joseph P. Semasek, attorney, representi Borough of McAdoo, responded to Mr. Frank's letter stating that si a relative of the owner of Steve's Arco, documents should be prepa signature of Mr. Edward Bielen, President of McAdoo Borough Counci a conflict of interest. ng the nce you were red for the 1, to avoid Barbara Ann Ka l ena November 28, 1984 Page 3 b. Records in the Schuylkill County Prothonotary's office record a settlement awarding $900 in damages to Mr. Klonitsko and requiring that the Borough pay additional court costs of $48.25. c. There is no evidence that you realized personal financial benefit from this settlement. B. Discussion: Section 3(a) 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). Because of your husband's part -time employment, you had a financial interest in Steve's Arco Station but there is no evidence that you realized personal financial gain from your brother's business or the settlement he received from the Aetna Casualty and Insurance Company. Under these circumstances, we find no violation of Section 3(a) of the Ethics Act. However, we must comment on this matter further. The McAdoo Borough Council did not authorize you to represent the Borough in the settlement between Steve's Arco and Aetna Life and Casualty Insurance Company and you did not have official responsibility for Borough insurance matters. Yet, you used Borough stationery, your official title of Vice - President and Finance - Committee Chairwoman, and said "...we as Borough Council, (emphasis added) have no alternative but to reconsider the search for more reliable competitive (insurance) service," if Mr. Klonitsko would sue the Borough and his claimed proved to be accurate. While you did not receive personal financial gain from your brother's settlement with Aetna Life and Casualty Insurance Company and you did not have a business interest in your brother's service station, the continued success of his business was of a financial interest to you because your husband was occasionally employed there. As a public official you had a clear responsibility to represent the Borough whose interests were adverse to those of your brother. Had Aetna accepted your statement that Steve's Arco had over $2,000 worth of damages, they would have paid over $1,100 more than the final settlement of $900. We found no financial gain under Section 3(a) because neither you, a member of your immediate family, or a business with which you were associated realized financial gain through the settlement between Steve's Arco and Aetna Casualty and Insurance Company. Barbara Ann Ka l ena November 28, 1984 Page 4 Where your actions were clearly taken on behalf of your brother's business and where your husband was a part -time employee of that business, we find your actions constituted a conflict of interest with your public trust. We reach this conclusion because your public duty and responsibility were ignored or undermined when you failed to act as Council Vice - President on this matter with the interests of the Borough as to minimizing this insurance claim as your primary concern. C. Conclusion: You did not technically violate Section 3(a) of the Ethics Act and we will take no further action because we find no personal financial gain under these circumstances. However, you engaged in a conflict of interest with the public trust when you used your public office to intervene on behalf of your brother in the settlement of his claim for damages against the Borough and failed to properly and primarily represent and protect the interests of the Borough and the public in this claim. While we will take no further action in this matter, you must refrain from participating in similar actions in the future. 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). HBC/na By th_ Co ission erb Conner Cha rman