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HomeMy WebLinkAbout463 BehrMr. Timothy G. Behr Resource Development, Inc. Atruim - 4 Terry Drive Newtown, PA 18940 Re: 84 -22 -C Dear Mr. Rehr: STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 ORDER OF THE COMMISSION March 17, 1986 Order No. 463 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 former employee of the Department of Commerce, violated Section 3(e) of the Ethics Act, 65 P.S. 403(e), because you represented a person before the governmental body with which you were associated within one year of your leaving that body. A. Findings: 1. You held various positions in the Department of Commerce from 1972 until December of 1980 when you resigned. These positions included: a. Septemher, 1980 through December, 1980: Director of Appalachian Development and State Grants. h. 1977 to September, 1980: Action Officer III in the Bureau of Economic Assistance. 2. (luring your work in the Rureau of Economics Assistance, you were involved in tax exempt financing actions. Mr. Timothy G. Rehr Page 2 3. On December 10, 1980, you incorporated Totem Incorporated. The purpose of Totem Incorporated was to provide consulting services to those who need financial assistance from both public and private sources. 4. On August 27, 1981, Thomas Sherwood agreed to purchase Trails End Hotel. a. Also on August 2.7, 1981, you signed an agreement to lease this property from Mr. Sherwood, effective October 1, 1981. The lease was for $12,000.00 per year. Mr. Sherwood is your brother. 5. In the fall of 1981, you applied to the Industrial Development Authority of Central Pennsylvania for tax - exempt financing. You proposed to purchase property from Mr. Sherwood and renovate the property with a $440,000.00 loan requested of the authority. a. Local development authorities and the Department of Commerce extend tax exemptions to private lenders to encourage them to loan money at the low market rates for projects intended to create jobs. b. On December 17, 1981, the Industrial Development Authority of Central Pennsylvania forwarded a transmittal signed by Joseph Mazur, Chairman of the Authority to the Department of Commerce, advising the Department that a tax free first mortgage to Totem Incorporated was approved for $440,000.00. 6. On December 18, 1981, the Department of Commerce received the Industrial Development Authority's request for approval of tax exempt status for financing Economic Development Project No. 11565 of Totem Incorporated. a. On December 30, 1981, Shirley Dunaway, Administrator in the Bureau of Economics Assistance, recommended to Mr. Franklin Plohney, Executive Deputy Secretary of the Department of Commerce, approval of this project and request. b. December 30, 1981, Deputy Secretary Plohney wrote to Michael Sedor, Solicitor for Industrial Development Authority, advising that the application had been approved. c. On December 30, 1921, the Department of Commerce notified you of their approval. Mr. Timothy G. Behr Page 3 7. Ms. Dunaway was a co- worker while you were employed by Commerce. She was aware of your relationship with Thomas Sherwood because of conversations with you. a. She made no record of her knowledge of this relationship or other research in the project file. b. After checking with an attorney knowledgeable in a matter of industrial loans - not a Commerce attorney - and doing other research she believed the loan was legal and forwarded it to Bureau Director, Robert Aust, Jr., for approval. c. The documents submitted to the Industrial Development Authority and the Department of Commerce contained your name and signature as President of Totem Incorporated. B. Discussion: As the director of the Bureau of Appalachian Development and State Grants, you were a public employee within the purview of the State Ethics Act. 65 P.S. §402. As such, your conduct must conform to the requirements of the State Ethics Act. See Bruggeman, 84 -597; Nestico, 84 -512. The Ethics Act provides as follows: Section 3. Restricted activities. (e) No former official or public employee shall represent a person, with or without compensation, on any matter before the governmental body with which he has been associated for one year after he leaves that body. 65 P.S. 403(e). The rules and regulations of the Commission further define representation as follows : Section 1.1. Definitions. Representation - -- Any act on behalf of any person including but not limited to the following activities: personal appearances, negotiating contracts, lobbying, and submitting bid or contract proposals which are signed by or contain the name of the former public official or public employe. 51 Pa. Code 1.1. Mr. Timothy r. Rehr Page 4 Pursuant to these provisions of law, the Commission has interpreted the term representation as used in Section 3(e) of the State Ethics Act to prohibit personal appearances before the governmental hody with which the former employee has been associated; attempts to influence that body; participating in any matters before that body over which the former employee had supervision, direct involvement or responsibility while employed by the governmental body and lobbying before that goverrrnental hody. See Russell, 80 -048; Seltzer, 80 -044. The Commission has also held that preparing and signing a proposal , document, or bid or listing your name as the person who will provide technical assistance on such a proposal, document, or bid if submitted to or reviewed by the former governmental hody with which you are associated, constitutes an attempt to influence that body. See Kilareski, 80 -054. Thus, a former public employee must refrain from these activities within the first year or after he leaves his former governmental hody. In the instant situation, as a bureau director, your governmental body would be the Department of Commerce generally. We must, therefore, determine whether you have engaged in prohibited representation within the one year period after you have left that governmental body. You had applied to an industrial development authority in order to obtain tax exempt financing for the purchase of the properties set forth in the findings. This industrial development authority was not within or part of the Pennsylvania Department of Commerce and you were not associated with that authority in any way. That authority conducted all of the research on your proposed project and on December 18, 1981, that authority submitted a request for approval of the tax exempt status to the Pennsylvania Department of Commerce. The request for approval contained a certification by the industrial occupant which was Totem, Inc. You signed that certification on behalf of Totem, Inc. Our evidence reveals that this is the only action that you participated in before your former governmental body. You personally did not submit this application to the Department of Commerce and you were not involved in any other representation before that governmental body. You only signed this certification. The Commission has in the past held that certain documents may be submitted to a public employee's former governmental body without violating Section 3(e) of the State Ethics Act. For example, the Commission has stated that the inclusion of the former employee's name as an employee or consultant on a pricing proposal may he submitted to his former governmental hody. See Kotalik, 84 -007. Additionally, the Commission has held that former employees may submit applications to their former governmental bodies in order to become certified as qualified sub- contractors or to he certified as qualified minority business enterprises. See Anderson, 83 -014 and Rhajandas, 85 -5Q (). Mr. Timothy G. Rehr Page 5 Rased upon all of the facts in the instant situation, we do not believed that the submission by the Industrial Development Authority of Central Pennsylvania of a request for approval of tax exempt financing to the Department of Commerce, which contained a certification signed by you, was a prohibited representation under the State Ethics Act. There is no evidence that you attempted to influence the actions of the Deparment of Commerce or that you otherwised participated to any extent in the matter. C. Conclusion: There was no violation of Section 3(e) of the State Ethics Act when the Industrial Development Authority of Central Pennsylvania submitted a request to the Pennsylvania Department of Commerce, your former employer, seeking to ohtain tax exempt status for the financing of an industrial development project in which you were involved. 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 he 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 he fined not more than $1,000 or imprisoned for not more than one year or both, see 65 P.S. 4Oq(e). JJC /sfb By the l'omm'ssion, erbe R. onner Chairman STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 DISSENTING, OPINION OF COMMISSIONER PAUL J. SMITH I dissent from the finding of the majority in this case and submit that I find the type of conduct spelled out in this record to he exactly the kind of actions the legislature meant to condemn and prevent in Section 1 of the Ethics Act when they said the "Legislature hereby declares that puhlic office is a puhlic trust and that any effort to realize personal financial gain through puhlic office other than compensation provided by law is in violation of that trust." In a recent unanimous decision, the Commission said, "While we have found no violation of the Act, we do believe that we should point out to you the purpose and intent of the law. The Ethics Act was promulgated in an effort to insure the puhlic that the financial interests of public officials neither conflict nor appear to conflict with the puhlic trust. In this respect, puhlic officials must remain mindful of public perceptions. In certain situations even though a violation of the law will not take place, it may he the Netter course of action for a public official to abstain from participation in a matter wherein they may he perceived to have financial interest, even though said interest may he indirect." See Fister No. 448. Here, we have a case in which Mr. Rehr, a former official of the Department of Commerce responsihle for Tax Exempt actions while with the department, and while he was still within the jurisdiction of the Ethics Act suhmitting a request that he knew would come to'his former governmental body for final approval. A document containing his signature for a deal involving his brother - a fact not disclosed. The record shows that at least one employee in the department knew that Mr. Rehr and Mr. Sherwood were hrothers. She recommended approval of the request for tax exempt status after seeking legal advice Outside the department. The record is not clear as to whether or not she confided this information to Executive Deputy Secretary Mohney hefore his approval hut it is clear that she sought legal advice outside the department and that she apparently made no note of this action or of her knowledge of Mr. Rehr's relationship with Mr. Sherwood. But Mr. Rehr's signature was on the documents reviewed by the Department and it is reasonahle to assume that his name should Paul J. Smith Dissent Page 2 have heen recognized hecause of his service in that same area of the department. Ms. Dunaway's concern was demonstrated hy her action of going to an outside attorney. Rut there is no indication that any other official in the department was concerned. The Ethics Act requires diligence hy puhlic officials who are just as responsihile for upholding the Ethics law as any other law and the officials in the department should have recognized that Mr. Rehr was a recent official of the agency and determined whether he was meeting his obligations under the Ethics Act. The Ethics Commission is the agency for determining whether the law is being violated and the Department of Commerce officials should he aware of that and take appropriate action. They also have an obligation to insure that their employees know the requirements of the Act. While the Ethics Commission has no role in determining how the department processes applications for tax exemption status, their failure to have a basic system that would insure former officials do not violate the Ethics Act and the fact that an employee of the agency used outside counsel to check on Mr. Rehr's application raises serious questions about the process. I find that Timothy G. Rehr violated the puhlic trust as that is described in Section 1 of the Ethics Act and his personnel record should so indicate. Paul J. Sjth, Commissioner