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HomeMy WebLinkAbout420 StacheAugust G. Stache, Jr. 1019 Balsam Drive Washington, PA 15301 Re: 84 -178 -C Dear Mr. Stache: STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 ORDER OF THE COMMISSION September 17, 1985 Order No. 420 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'Washington County Controller from January, 1980 to January 1982, violated Section 3(a) of the Ethics Act which prohibits a public official's use of office or confidential information gained through that office to obtain financial gain by approving payments of $74,980 in 1980, and $107,779 in 1981 to William DuVall, owner of DuVall's Drug Store of Donora, Pennsylvania, for whom you worked as an Accountant. A. Findings: 1. You have held the following positions with Washington County: a. 1974 - Auditor /Accountant. 1976 - Chief Accountant. May, 1977 - Deputy Controller, acting. September, 1977 - Deputy Controller. January, 1980 - Acting Controller. January, 1982 - Director of Financial Administration. January, 1983 - Director of Finance b. You resigned on January 4, 1983. August G. Stache, Jr. Page 2 September 17, 1985 2. You are currently the Accountant for Washington /Greene County Community Action Program - a private, non - profit agency. a. This agency is funded by federal, state and county funds. b. Commissioners of Washington and Greene Counties are public members of the board which governs this agency. 3. You were the Accountant for DuVali Drugs from February, 1977 until January, 1984. You also did the accounting work for a durable goods business owned by Mrs. DuVall from January, 1982 to January, 1984. 4. Washinton County had a number of vendor- pharmacist agreements with William DuVall between 1977 and 1984: a. March 3, 1977 - Agreement between William DuVall and Washington County that DuVall, as vendor - pharmacist, would deliver prescriptions and supplies to the county home and provide continuous service to the county home. b. August 24, 1978 - Agreement between Washington County and William DuVall that William DuVall, pharmacist, would perform professional services as an independent contractor and not an employee of the county. The pharmacist was to perform services on the behalf of clients who were residents at the county health center. c. February 14, 1982 - Agreement between Washinton County and William DuVall, pharmacist, to provide professional services as an independent contractor on behalf of clients who are residents of the Washington County Health Center. 5. You state that as Acting Controller you never approved contracts for DuVall. 6. Washington County Controller's office files show that you, as Controller, approved payment to William DuVall or DuVall's Drug Store for services and supplies as follows: a. 1980 - $79,140.00 b. 1981 - $111,299.00 7. About August 7, 1981, while Acting Controller of Washington County and while employed as Accountant for William DuVall, you approved an order from Pfizer Labs. Div., Clifton, N.J., through the Commonwealth's "piggyback" purchasing system for chemicals including sinequan and vibramycin at a total cost of $11,662.22. .August G. Stache, Jr. Page 3 September 17, 1985 a. You did not set up inventory, auditing or reporting controls for these drugs which were purchased for use at the Washington County Health Center but stored at DuVall's Drug Store in Donora, Pennsylvania. b. You state this was an error through your neglect. c. Mr. DuVall admits that he used these drugs for over - the - counter sales to his customers and also may have sold them to welfare recipients for whom he would later bill the Commonwealth of Pennsylvania. He also states he had no inventory records and no records of the sale or disposal of these drugs. 8. Although you were Acting Controller for Washington County and Accountant for William DuVall, you did not require, as Controller, or ask about inventory or other records for these drugs nor, as his Accountant, advise him to establish a record - keeping system. 9. There is no evidence of contracts, other than the above, relating to the county and Mr. DuVall. B. Discussion: As County Controller, you were a public official as that term is defined in the State Ethics Act. 65 P.S. §402. As such, your conduct is subject to the requirements of the Act. Leete, 82 -005; Nelson, 85 -009. Generally, the State Ethics Act provides that: 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). The Act further defines business with which one is associated as follows: Section 2. Definitions. Business with which he is associated." Any business in which the person or a member of the person's immediate family is a director, officer, owner, employee or holder of stock. 65 P.S. 402. August G. Stache, Jr. "Page 4 September 17, 1985 As the employed accountant for DuVall Drugs, you were associated with this business within the above definition. You, thus, could not use your official position as county controller to obtain financial gain for the business. DuVall was involved with the county as a vendor - pharmacist and delivered pharmaceutical goods and supplies to the county home. The county would, •thereafter, pay DuVall for these services and supplies. While you were not responsible for the award or approval of any contract to DuVall Drugs as county controller, you had the power to refuse to authorize any fiscal transaction which is not authorized by law or which you had reasonable grounds to investigate. 16 P.S. §1702. Your duties generally were to manage and administer the fiscal affairs of the county. In this respect, the Controller has broad investigative powers including the power to issue subpoenas, compel the attendance of witnesses and administer oaths and affirmations. Additionally, the County Code provides as follows: The controller or the county commissioners in counties havi ng no controller shall scrutinize, audit and decide on all bills, claims and demands whatsoever against the county, except such as are otherwise provided for in this subdivision. • The controller or the commissioners, as the case may be, may, i f he or they deem it necessary, require evidence, by oath or affirmation, of the claimant and otherwise that the claim is legally due and that the supplies or services for which payment is claimed have been furnished or performed under legal authority. He or they may inquire or ascertain whether any officer or agent of the county is interested in the contract under which any claim may arise, or has received or is to receive any commission, consideration or gratuity relating therto, or whether there has been any evasion of the provisions of this act by making two or more contracts for small amounts which should have been in one. If he or they shall find that there has been any evasion, or that any such officer or agent is so interested, he or they shall refuse to approve the claim. 16 P.S. §1750. As an accountant, you were engaged to provide professional services to DuVall Drugs. This, of course, would include services related to the recording and disposition of funds received by or earned by that business. August G. Stache, Jr. Page 5 As the county controller, you reviewed and approved payments of funds to DuVall totalling $190,439. You did this knowing full well that DuVall would be employing you as the accountant for that company. In light of this, we believe that you used your public office in order to obtain financial gain for a business with which you were associated in violation of Section 3(a) of the Ethics Act. The Ethics Act provides: Section 7. Duties of the commission. (11) Make recommendations to law enforcement officials either for criminal prosecution or dismissal of charges arising out of violation of this act. 65 P.S. 407(11). September 17, 1985 We are, in accordance with the foregoing, forwarding this matter to the appropriate law enforcement authority for further review and action. C. Conclusion: You violated Section 3(a) of the Ethics At when you, as county controller, reviewed and approved the payment of county funds to a business that employed you as an accountant. This matter will be referred to the appropriate law enforcement authority for further review and appropriate action. II. Allegation: That, as a Washington County Controller, you failed to properly report your sources of income in excess of $500 as required by the Ethics Act. 9. Findings 1 through 3 are incorporated here by reference. 10. You admit that you were employed by William DuVall as an accountant from February, 1977 to January, 1984 and by Mrs. DuVall for the period January, 1982 to January, 1984. 11. You admit that you earned $900 to $1,500 annually while employed by the DuVal l's. 12. William DuVall has stated that he paid you $150 to $175 per month, ($1,800 to $2,100 per annum) for your work as his accountant. 13. A review of your Statement of Financial Interests for the year 1980 dated January 31, 1981, on file with Christine Dallatore, Chief Clerk, Washington County, disclosed that you failed to list the DuVall's as a source of income. 14. You admit that you did not declare DuVall in 1980 as a source of income You said that it was due to a misinterpretation of the written instructions. August G. Stache, Jr. Page 6 September 17, 1985 15. Other Statements of Financial Interests show that you listed the following sources of income: a. Calendar year 1979 dated April 17, 1980: Washington County and self - employed. b. Calendar year 1981 dated January 20, 1982: Washington County and "Self employed Income from preparation of Tax Returns." c. For calendar year 1982 dated January 10, 1983: "Self- employed Income same as above." You list your profession as Accountant - CPA. B. Discussion: The State Ethics Act requires public officials to file Statements of Financial Interests for each calendar year in which they serve. See 65 P.S. §404 (a); (d); Kramer v. State Ethics Commission, 56 Pa. Commw. 160, 424 A.2d 968, (1981).. Additionally, the Act requires: Section 5. Statement of financial interests. (b) The statement shall include the following information for the prior calendar year with regard to the person required to file the statement and the members of his immediate family: (5) The name and address of any person who is the direct or indirect source of income totalling in the aggregate of $500 or more. However, this provision shall not De construed to require the divulgence of confidential information protected by statute or existing professional codes of ethics. - Income is defined in the State Ethics Act as: Section 2. Definitions. "Income." Any money or thing of value received, or to be received as a claim on future services, whether in the form of a fee, salary, expense, allowance, forbearance, forgiveness, interest, dividend, royalty, rent, capital gain or any other fonn of recompense or any combination thereof. 65 P.S. 402. August G. Stache, Jr. 'Page 7 September 17, 1985 The regulations of the Commission also provide: §5.8. Attorney /certifed public accountant incomed disclosure requirements. (a) Where disclosure is required under 5.7(b) (relating to income disclosure), the disclosure requirements for attorneys or certified public accountants apply only to those clients of the attorney or certified public accountant or his firm where a public official, public employe, or candidate has received $500 or more from a particular client through partnership distribution, addition to partnership basis, bonus, commission, referral fee whether to the attorney's law firm or any certified public accountant's firm or business, corporate distribution, or other form of payment. 51 Pa. Code 5.8(a). §5.8. Attorney / certifed public accountant incomed disclosure requirements. (d) Public officials, public employes, candidates, must disclose those clients which are represented by their firms in nonministerial action involving their governmental body where they receive $500 or more adjusted income resulting from such representation. 51 Pa. Code 5.8(d). As an accountant, you provided professional services for DuVall Drug Company. You received income in excess of $500 specifically from this business for the services rendered as an accountant. In part, the services rendered related to income that that Company received as a result of dealing with your governmental body, the County. You were, as county controller, responsible for reviewing and approving the payment of these bills. Also, as a county controller, you had broad powers and authority in relation to the payment of these bills. Because of this, we beli eve that in light of the foregoing law, you were required to report the income earned as an accountant as a direct source of income and that you were specifically required to identify DuVall Drug Company as a client from whom more than $500 had been received. This company was a client doing business with your governmental body and you performed services that were in part related to the funds received from that body. Our result is also based upon the overall intent of the Ethics Act. Generally, the Act was intended to strengthen the faith and confidence of the citizens in their government. These citizens have a right tc be assured that the financial interests of holders of public office neither conflict nor August G. Stache, Jr. 'Page 8 appear to conflict with the public trust. The law is to be liberally construed so as to promote full and complete disclosure. 65 P.S. §401. The Act was intended to require disclosure of the exact type of relationships as are evidenced in the instant situation. It is this type of relationship that occasions such a conflict of interest as well as the appearance thereof. As such, we find that you failed to report your financial interests in accordance with the requirement of the Ethics Act and we will, therefore, refer this matter to the appropriate law enforcement officer for review and appropriate action. C. Conclusion: You failed to report your financial interests in accordance with the State Ethics Act by not reporting income in excess of $500 from a business that received income from your governmental body and from which you had certain official responsibilities. This matter will be referred to the appropriate law enforcement authority for further review and appropriate action. 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). JJC /sfb the C•mmi erb -rt B. Conner Chai man September 17, 1985