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