HomeMy WebLinkAbout461 StewartMr. Wayne H. Stewart
R.D. #1
Sligo, PA 16255
Re: 82 -51 -C
Dear Mr. Stewart:
a. The firm is not incorporated.
STATE ETHICS COMMISSION
308 FINANCE BUILDING
HARRISBURG, PENNSYLVANIA 17120
ORDER OF THE COMMISSION
March 3, 1986
Order No. 461
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:
Allegation:
That you, a maintenance superintendent at Clarion State university,
(CSU), violated Section 3(a) of the Ethics Act by using CSU employees during
normal working hours to: (1) service equipment owned by Stewart
Refrigeration, a company owned by you and your wife, (2) pick -up items for you
personally and for Stewart Refrigeration using state vehicles, (3) to service
fire extinguishers, a service for which your son held the contract (4) to work
on private vehicles.
Findings:
1. You were employed as an institutional maintenance superintendent at
Clarion State University from at least 1979 until retiring on December 21,
1984. As maintenance superintendent, you were a "public employee" and, as
such, are suhject to the provisions of the Ethics Act.
2. You were responsible for the assignment of university maintenance
personnel as institutional maintenance superintendent.
3. You have been owner of Stewart Refrigeration, a firm specializing in
refrigeration systems for light industry since 1950.
Mr. Wayne H. Stewart
Page
March 3, 19R6
4. In May, 1982 you directed two maintenance personnel employees to travel to
Pittsburgh, Pennsylvania, to pick -up supplies to be used at a Clarion
University Arts Festival.
a. You also di rected the employees to go to the Williamson Co. to
pick -up an air compressor to be used in your private business,
Stewart Refrigeration.
b. Upon arriving at Williamson Co. and learning that the compressor was
for Stewart Refrigeration, the employees did not pick -up the
compressor and returned to Clarion.
c. You expressed your dissatisfaction with the two employees but took
no other action.
5. university employees and state vehicles were also used in 1981 to
transport to Johnstown air compressors for refrigeration units belonging to
your personal business, Stewart Refrigeration.
a. You admit that this occurred but only as repayment for your loaning
a refrigeration unit to a university cafeteria.
h. It has been estimated that the trip to Johnstown took two employees
one working day, (8 hours), to complete.
6. On April 22, 1982, you directed Clarion University maintenance personnel,
George Coull (Grounds Supervisor), to travel in a state vehicle to Clearfield,
Pennsylvania, to pick -up fishing poles from Clearfield Hardware for a private
individual.
a. The trip was made during norrial working hours and took in excess of
two hours.
h. You admit to directing Coull to travel to Clearfield but claim you
did so to repay a favor to an individual who previously did favors
for the university.
7. Your wife, Anna Stewart, has a contract with the Clarion Foundation for
laundromat services in various dormitories at Clarion University. Early
contracts were between Stewart Refrigeration and Clarion State College
F
a. You claim this is a separate business entity not related to Stewart
Refrigeration. Your wife is not incorporated.
h. Neither Stewart Refrigeration nor Anna Stewart have contracts for
laundramat services other than the one with Clarion University.
Mr. Wayne H. Stewart
Page 3
c. You perform installation and maintenance work on the laundromat
facilities at Clarion university and share in any profits obtained.
8. Information obtained from Jack Rlaine, Executive ni rector, Clarion
University Foundation, confirms the following:
March 3, 1986
a. The foundation was incorporated in 1970 to support the students of
the university. It is a non - profit corporation, independent of the
university.
b. Ry agreement between the foundation and the university board of
trustees, the foundation would operate all vending machines,
including laundromat services. The foundation is responsible for
all contracts.
9. The Clarion Foundation first awarded a laundromat contract to Anna
Stewart, Stewart Refrigeration, on January 29, 1974, to provide laundromat
services to three university dormitories (Campbell, Nair, and Wilkinson). The
contracts have been renewed on a yearly basis.
a. Initially, Anna Stewart paid 20% of the gross receipts to the
foundation. In 1982, that was increased to 50% of the gross
receipts.
10. Ry terms of the agreement, Anna Stewart is to supply, install, maintain,
repair and service said laundromat machines and apparatus.
a. You are responsible for all installation and maintenance of the
laundromat machines owned by Stewart Refrigeration /Anna Stewart.
b. Servicing of said laundromat facilities is not part of your
university job or that of other university personnel.
11. You and university maintenance personnel serviced and repaired laundromat
facilities owned by Stewart Refrigeration /Anna Stewart as follows:
a. You admit working during working hours on laundromat equipment owned
by your wife but claim that you used compensatory leave approved by
your supervisor, Robert Nigro. No record of use of compensatory time
could he located.
h. Sworn statements from maintenance employees at Clarion confi nn that
university empl oyees serviced and repaired laundromat facilities hut
not on state time.
c. Sworn statements also confirm that you serviced laundromat facilities
during daylight hours while on state time. Exact dates and times
could not he obtained.
Mr. Wayne H. Stewart
Page 4
12. Records obtained from Clarion University Business Office and the
Department of Auditor General confirm the fol i owi ng
March 3, 1986
a. Your son, Duane Stewart, is sole owner of D & E Safety and Fire
Protection. Your son was in high school when the company was formed
and was a minor dependent sibling living with you. D & E stationery
lists your address and home telephone number for its business.
h. D & E Fire and Safety is not registered with Commonwealth of
Pennsylvania, Bureau of Corporations, or Clarion County
Prothonotary's Office to do business in the Commonwealth.
13. D & E began doing business with Clarion University during the 19764977
fiscal year. D & E was the successful bidder based on quotes sought by the
university business office. Contract was awarded under #SPC558040.
a. The contract was renewed by service purchase agreement for the
1977 -78, 1978 -79, 1979 -80, 1980 -81 and 1981 -82 fiscal years. The
contact was not renewed for 1982 -1983 fiscal years.
b. The contract requi red the followi ng servi ces :
1. Inspect, weigh, tag, and when necessary, replace hoses,
stopples, and gaskets on all fire extinguishers;
2. Remove all grease and grime from kitchen up- drafts, ducts, hoods
and fans in the Chandler Dining Hall and Reimer Center;
3. Inspect and service four automatic fire protection systems.
c. From 1976 through 1982 D & E Fire Safety was paid a total of $9,100
by the university for services rendered.
14. Auditor General Findings and Recommendations Report of Clarion State
College issued in May, 1984, Finding No. 3 states in part:
a. The bids for the extinguisher inspection contracts during the fiscal
years ended June 30, 1981 and 1980 were not awarded to the low
bidder. A miscalculation of the hid tabulation permitted the low
bidder's proposal to appear approximately 53,000 higher than the
local vendor, when the quote was about 5400 lower. It was noted in
the review of the hid documents that proper bidding procedures were
not implemented (See Finding No. 1). And adequate security and
confidentiality over hid amounts could not be insured or documented.
b. A comparison of actual. extinguisher refilling charges paid this
contractor to a hid proposal from a competitor disclosed the college
could have obtained the same service at approximately one -half the
cost.
Mr. Wayne H. Stewart
Page 5
March 3, 1486
c. The terms of the various contracts requi red the contractor to contact
the maintenance department when he would be on campus performing
services. Requests for dates, work schedules or some type of
substantiation of when the work was done revealed no documentation
was available or maintained.
d. The maintenance superintendent served as the final approving college
official for 61% of the total payments to the contractor who was also
determined to he the college institutional maintenance
superintendent's son. In addition, 16% of total payments were
processed and paid without any approving authorization.
e. The inspection of extinguishers for the 1981 -82 contract year began
in February, 1982 even though the contract was not yet approved.
Since the owner of the firm was in the United States Army and
stationed in Missouri from January to April, 1982, the college's
institutional maintenance superintendent undertook his son's contract
responsibility. He assigned the tasks of inspecting and tagging
extinguishers in several buildings to the college's safety inspector.
Signed depositions from college employees verified their
participation in fulfilling this and other services the contract
stipulated. These additional duties were performed during both
normal and after worki ng hours. In some cases, the superintendent
worked with his employees to fulfill these contract
responsibilities.
f. The initiation of work in February, 1982, prior to contract approval,
violates the Governor's Management Directive Number 215.6, Contract
Management, Policy 3 i, which states:
No contract should he implemented nor should any services
be accepted or work begun under any contract not processed
and approved in accordance with this directive. ANY
INDIVIDUALS r,IvINw, PERMISSION TO ACCEPT SERVICES OR TO
BEGIN WORK 'BEFORE A CONTRACT IS COMPLETELY APPROVED MAY RE
HELD PERSONALLY RESPONSIBLE.
g. upon considering all the conditions that existed, it appears the
contracted services could have been provided, at least in part, by
the maintenance staff during their assigned work schedules without
entering into service purchase contracts. The questionable
expenditures appear to he the result of a conflict of interest
between the normal college duties of the institutional maintenance
superintendent and the husiness operated by his son, and poor control
over kidding procedures within the husiness office. Since the
maintenance department was designated by the college administration
to control, monitor, and approve the work performed, the necessary
independence to objectively evaluate and regulate services rendered
Mr. Wayne H. Stewart
Page 6
h. You operated the fire extinguisher service in his absence.
March 3, 1986
was lost. Our investigation revealed that supervisory and internal
control procedures deteriorated to a point where there was virtually
no distinction between the maintenance superintendent and the
contractor.
15. Interviews with employees and sworn statements obtained by investigators
from Auditor General's Office disclosed the following: (related to 14e)
a. Your son, Duane Stewart, owner of D & E Safety and Fire Protection,
served on active duty in the military service at Fort Leonard Wood,
Missouri, from January 18, 1982 until May 22, 1982.
c. From January, 1982 through April , 1982 Clarion University employees
inspected and tagged fire extinguishers at the college during normal
working hours. This was the responsibility of D & E Fire and Safety
per contract (related to 13b) . The college employees received
inspection tags from you.
d. Inspections conducted on the following dates were verified with
employees.
1. January 14, 1982 - Venango Campus, McKeever Environmental
Center - 2 employees.
2. February 16, 17, 18, 1982 - Clarion Campus, Recker Hall, Fine
Arts Ruilding, Tippin Gymnasium
3. Employees also reported other dates but these could not he
verified.
16. An employee contends he was directed by you to install front brake pads
on a vehicle owned by your secretary while on state time.
a. You and the secretary deny that this occurred.
R. Discussion: As the institutional maintenance superintendent at Clarion
State University, you were a public employee as that term is defined in the
State Ethics Act. 65 P.S. , 5402. Specifically, in your position as
maintenance superintendent you were responsible for the administrative and
technical work in directing a complex program of building maintenance and
heating and utility plant operations at the state institution. Major emphasis
of your work was di rected toward the coordination of the functions of building
maintenance, grounds keeping, housekeeping, security and heating plant
operations as well as the acquisition and distribution of the fiscal,
material , and manpower resources to provide for preventive, operational , and
emergency plant maintenance. You were classified as an institutional
maintenance superintendent IV and the above functions are a part of your
Mr. Wayne H. Stewart March 3, 1986
Page 7
duties and responsibilities as set forth in your position classification, (No.
9474). Thus, there is no douht that you were responsible for functions that
clearly bring you within the definition of public employee as defined in the
State Ethics Act. See Trotta, 85 -002.
The Ethics Act provides as follows:
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).
Within the above provision of law, this Commission has previously determined
that a public employee may not use their public position, including the
facilities, personnel , equipment, or time, of their public employer in order
to advance their private financial interest. See Rreighner No. 160; Deetz,
No. 277. In the instant situation, the evidence clearly reflects that you
employed the vehicles and personnel of the Clarion State University in order
to advance your own personal interest. In May of 1982, you directed two
maintenance personnel employees to pick up an air compressor to be used in
your private business, Stewart Refrigeration. In 1981, you also used state
vehicles and state employees in order to transport air compressors for your
personal business to Johnstown, Pennsylvania. On April 22, 1982, you directed
Clarion University maintenance personnel to travel in a state vehicle to
obtain fishing poles for a private individual.
In addition to the foregoing, D & E Safety and Fire Protection, a
corporation which lists your address and home telephone numher as its office
and which was incorporated by your son who was a minor dependent at the time
of the business incorporation, contracted with Clarion Iniversity during the
1976 -77 fiscal year. This contract was renewed through and including the year
1982-83. You were responsible for performing various functions as outlined in
Finding No. 13 for the university. During the period that your son was unable
to perform the functions for this company you fulfilled these duties on his
behalf. During part of the time in 1982 when fl & E was responsible for
performing various fire and safety inspections, the college employees, under
your direction, performed these services and obtained inspection tags from
you. Public employees were, thus, used to perform the services of this
private entity. You were operating this company on behalf of your son at that
time and the entity's registered office was your home. In light of all of the
foregoing evidence, it is clear that you violated Section 3(a) of the State
Ethics Act when you, in your position as a public employee, utilized the
various personnel , facilities, vehicles, and time of Clarion State University
in order to perform functions and tasks for your personal financial benefit or
for the henefit of the business with which you were associated.
Mr. Wayne H. Stewart
Page 8
March 3, 1986
C. Conclusion: Rased upon the foregoing, you violated Section 3(a) of the
State Ethics Act. This matter will be referred to appropriate law enforcement
authorities for further reveiw as set forth infra.
Allegation #2:
That you, a maintenance superintendent at Clarion University, violated
section 3(c) of the Ethics Act, by contracting as Stewart Refrigeration, a
company owned by you and your wife, with Clarion University without an open
and public process.
Findings :
Findings #1 through #7 are incorporated.
17. Stewart Refrigeration, Anna Stewart, has contracted with the Clarion
Foundation to provide laundromat equipment in three college dormitories,
(Campbell, Nair and Wilkinson). The contract has been in existence since
1974. (See finding #7).
18. Laundromat facilities in other university dormitories (Ralston, Given,
Ral lentine Halls) are provided by another independent vendor, Mel l i o Vending
under a separtate agreement with the same terms.
19. Bids for these contracts were not advertised by the Foundation.
20. Laundromat receipts could be obtained for only the 1982 -1983 and
1983 -1984 school years. Those receipts confirm the following:
a. 1982 -1983 net receipts: Anna Stewart - $20,2.86.98
Mel li o Vending - $10,204.35
1983 -1984 net receipts: Anna Stewart - $ 20,077. ?1
Mel li o Vending - $10,660.76
21. Your wife's contract with Clarion University was cited in the 1984
Auditor General Report. That report, in part, stated:
COMMONI.IFALTH OF PENNSYLVANIA
DEPARTMENT OF EDUCATION
CLARION STATE COLLEGE
FINDINGS AND RECO'1rlENDATIONS
Finding No. ? - CSC Maintenance Superintendent's Private
Rusi ness conflicts with College Duties
The Institutional Maintenance Superintendent (Ir1S) is the
owner of a private business enterprise which contracts
Mr. Wayne H. Stewart
Page 9
with the CSC Foundation to provide laundromat equipment
(washing machines and dryers) in three of CSC's
dormitories. The equipment, located in Camphel l , Nair and
Wilkinson Halls, was provided for the convenience of
students. All machines were operated in vending fashion.
Under the terms of the contract, the IMS paid the
foundation a commission rate of 20% of gross receipts.
Subsequently, the foundation reimhursed the college for
utility and space usage. Laundromat facilities in other
college residence halls (i.e. Ballentine, Given, and
Ralston Halls) were operated by an independent vendor
under a separate agreement with the same terms.
Due to allegations of impropriety by college employees
and the appearance of possible conflicts with assigned
work duties, certain investigative inquiries were made
into the background of this contract and its relationship
to the college's IPIS. Our review revealed:
. The Institutional Maintenance Superintendent has
repaired, replaced, and removed change receipts from
the machines during normal work hours. Although we
were unable to document the number of occasions or time
involved when repairs were made, it was determined the
collections were taken once a month by the IMS and an
individual appointed by the foundation.
. College employes, using state vehicles during work
hours, have been directed by the IMS to pick up and
transfer equipment for his private business.
. The IMS expressed displeasure wi th empl oyees for
failing to pick up equipment for his private business
when they fel t it was improper.
. The laundromat agreement was originally entered into on
January 2.9, 1974. The percentage commission rate has
remained constant at 20% since that time. To review
this rate for reasonahlness, we obtained commission
percentages from California State College and Indiana
university of Pennsylvania and noted them to be %50 and
64.1%, of gross receipts, respectively.
The questionable instances of improper utilization of
state employes and vehicles appears to be a result of a
conflict between college and private interests. However,
the disparity between commissions paid required further
analysis.
March 3, 1986
Mr. Wayne H. Stewart
Page 10
Upon discussing the relatively poor commission rate with
foundation officials, we were informed there was
satisfaction with the rate of commission and the service.
As a result, comparative commission information had not
been solicited by the foundation when periodically
reviewing this contract. However, a review of the minutes
of executive board meetings revealed the issue of
1 aundromat vendi ng had been di scussed at three di fferent
meetings during the audit period. On one occasion, a
formal proposal from another vending company was presented
which would have increased revenues as well as prices.
Each time the executive board voted to continue the
present contract. Although the foundation repeatedly
indicated satisfaction with the agreement, the following
occurred suhsequent to our review:
. The foundation's executive director solicited
i nformation from other state colleges regardi ng
commissions received for laundromat vending. The
survey similarly showed a commission rate range of 50%
to 64.1%.
March 3, 1986
. A request was made to the Clarion Students'
Association, Inc., (CSA) to permit the foundation to
solicit competitive bids for a five year vending
agreement. The request was nec since the CSA has
been determined to have control over the provision of
Laundromat vending services which are annually
authorized for foundation implementation. CSA decided
to permit only a one year agreement. As a result,
competitive kidding on a five year contract hasis could
not proceed because vendors were unwi 1 1 i ng to bid on an
agreement requiring a substantial investment on their
part which could be terminated in one year.
R. discussion: The State Ethics Act also provides that no public official,
member of his immediate family, or a business in which the person or a member
of his immediate family is an officer, director, or owner of greater than 5%
of the equity at fair market value may contract in an amount of excess of 5500
with a governmental body unless the contract has been awarded through an open
and public process. See Howard, 7q -044. Previous opinions of this Commission
have determined that the term governmental hody as defined above refers to the
governmental body with which the individual , public employee or official
is associated. See Rryan, 80 -014 and Lynch, 79 -047. In the instant
situation, we must determine whether you or any member of your immediate
family contracted with Clarion State University in excess of S5f1) without
complying with the open and public process as set forth in Section 3(c) of the
Act. The facts evidenced that your wife, Anna Stewart had contracts with
Clarion University Foundation regarding the furnishing of laundramat services
Mr. Wayne H. Stewart
Page 11
for students use. This contract, however, is not with Clarion university but
is rather with the Clarion University Foundation. This Foundation is a
separate and independent entity from the University and is a non - profit
corporation. Thus, the contract between your wife and Clarion Foundation
would not he a contract between a member of your immediate family and the
governmental body with which you are associated. Because of these factors,
Section 3(c) of the State Ethics Act would not he applicable in the instant
situation.
C. Conclusion: You did not violate Section 3(c) of the State Ethics Act as
neither you nor any member of your immediate family contracted with Clarion
State University in excess of $500.
Allegation #3:
That you, a Plaintenance Superintendent at Clarion State University,
violated Section 5(b)5 of the Ethics Act by failing to report on your
Statement of Financial Interests income from Stewart Refrigeration, a company
owned by you and your wife.
Findings :
22. You are owner and operator of Stewart Refrigeration.
a. Your wife Anna Stewart, also doing business as Stewart Refrigeration,
has had a contract for laundromat services with the Clarion
University Foundation since 1974.
b. You share in profits /income derived from that business.
March 3, 1986
23. You have file Statements of Financial Interests with the Clarion
University Personnel Office on the following dates and disclosed financial
information as follows:
a. May 7, 1980 - No. 5 - Source of Income - "Commonwealth of
Pennsylvania Clarion State College." No. 8 - Office,
Directorship or Employment in any Rusiness "None"
No. 9 - Financial Interest in any legal entity in
for profit - "None"
h. April 21, 1982 - Sources of Income - "Clarion State College."
Financial Interest in Legal Entity in Business for
Profit - "None" Office or Directorship in any
Business - "!one"
c. April 30, 1984 - Spouse of Income "Clarion University,"
"Clarion Foundation." office or fi rectorship in any
Business - "N /A" - Financial Interest in Rusiness
Profit - "N /A"
Mr. Wayne H . Stewart
Page 12
March 3, 1986
d. April 30, 1985 - Sources of Income - "Clarion university." Office
or Directorship in any Business - "None" Financial
Interest in Any Legeal Entity in Business - "None"
24. You admit that you are owner of Stewart Refrigeration and that income
derived from this business has exceeded $500.00 per year.
25. The assistant vice - president for administration confirms that as a result
of the Auditor General Report and Findings and resulting turmoil, your
position was changed from maintenance superintendent to project inspector.
26. You retired from Clarion lJniversity on December 31, 1984.
B. Discussion:
The State Ethics Act provides as follows:
Section 5. Statement of financial interests.
(h) The statement shall include the following information
for the prior calendar year with regard to the person
requi red to file the statement and the members of his
immedi ate 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 he construed to require the
divulgence of confidential information protected
by statute or existing professional codes of
ethics.
It is clear, that you are the owner and proprietor of Stewart Refrigeration.
Your wife is also doing business as Stewart Refrigeration and has had a
contract with laundramat services with the Clarion University Foundation. You
share in profits and income derived from that business. Your Statements of
Financial Interests for May 1980, April 1982, April 1984, and April 1985, do
not list Stewart Refrigeration as a source of income in excess of $500 and you
further do not list Stewart Refrigeration as a legal entity in which you have
a financial interests on your Statements of Financial Interests. You have
admitted that you are the owner of Stewart Refrigeration and that the income
derived from this business has exceeded $500 per year. As a result, we must
find that you violated filing requirements of the State Ethics Act.
C. Conclusion: You violated the State Ethics Act when you failed to list
Stewart Refrigeration as a source of income in excess of $500 and as a legal
entity for profit in which you have a financial interest. You must file
amended Statements of Financial Interests with the State Ethics Commission
within thirty days of the issuance of this order.
Mr. Wayne H. Stewart
Page 13
March 3, 1986
Summary of Conclusions
1. Conclusion: Rased upon the foregoing, you violated Section 3(a) of the
State Ethics Act.
2. Conclusion: You did not violate Section 3(c) of the State Ethics Act as
neither you nor any memher of your immediate family contracted with Clarion
State University in excess of $500.
3. Conclusion: You violated the State Ethics Act when you failed to list
Stewart Refrigeration as a source of income in excess of $500 and as a legal
entity for profit in which you have a financial interest. You must file
amended Statements of Financial Interests with the State Ethics Commission
within thirty days of the issuance of this order.
As a result of the foregoing, we are also referring this matter to the
Office of Attorney General for further review and for a determination as to
whether any further action should he taken in reference to your violations of
the State Ethics Act.
Our files in this case will remain confidential in accordance with
Section R(a) of the Ethics Act, 65 P.S. 408(a). However, this Order is final
and will he made availahle 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
2.3R. nuring 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 he fined not more than $1,000 or
imprisoned for not more than one year or both, see 65 P.S. 409(e).
Ry the Com fission,
Chairman
R; Conner