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HomeMy WebLinkAbout492 PanzaDavid Panza RE: 85 -111 -C Dear Mr. Panza: 11r�s STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 ORDER OF THE COMMISSION c/o Stanley 14. Greenfield, Esquire 728 Fifth Avenue Pittsburgh, PA 15219 June 2.0, 1986 Order No. 492 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 Administrator of the Urban Redevelopment Authority of Pittsburgh, violated Section 3(a) of the State Ethics Act which prohibits a public official's use of his office or confidential information gained through that office to obtain a financial gain for himself or a with which he is associated when you recommended and /or approved grants to a business which you own. That you also violated Section 5(h)(8) and /or (9) which requires the reporting of any office, directorship, or employment in any husiness entity and any financial interest in any legal entity engaged in husiness for profit when you failed to report your interests including hut not limited to those in Lauren Associates. A. Findings: 1. You were employed by the Urban Redevelopment Authority of the City of Pittshurgh for various periods from Septemher 1, 1967 to January 22, 1985. Records of the Pittsburgh Urhan Redevelopment Authority show the following employment: David Panza June 20, 1986 Page 2 a. September 1, 1967 to April 1, 1971 - Design Assistant I b. April 1, 1971 to May 3, 1973 - Design Assistant II c. April 3, 1975 to July 1, 1976 - Construction Specialist I d . July 1 , 1976 to November 1 , 1979 - Construction Specialist I I e. November 1, 1979 to January 1, 1981 - Construction Advisor f. January 1, 1981 to January 1, 1983 - Administrator g. January 1, 1983 to January 22, 1985 - Program Administrator h. January 22, 1985 - Termi nated 2. Your responsibilities and duties in the last four positions were as follows: a. As a construction specialist and construction advisor you reviewed cost estimates and construction costs and recommended approval. b. While serving as administrator for the period of January 1, 1981 to January 1, 1983, your duties and responsibilities included: Primary Function: Assumes direct administrative responsibility for all staff activities and adherence to department policies and program guidelines. Duties and Responsibilities: (1) Review overall functions of section, analyze reports, determine problems, and recommend solutions. (2) Responsible for direct supervision and overall performance of section staff, including delegating assignments. (3) Responsible for preparation, review, and approval of all expenses related to program operations. David Panza Page 3 (4) Track all program expenditures in relation to the annual budget, i ncludi ng maintenance of an updated account of expenditures for each program for which responsible in order to prevent an over - commitment of funds. (5) Assist in the development and implementation of staff training programs. (6) Develop performance standards, evaluate staff performance, and propose recommendations regardi ng staff performance. ( Keep staff informed of any program changes, orient new staff, and assist in the selection of new personnel. (8) Compile monthly report of all section activities to be submitted to department di rector, i ncludi ng preparation of reports as required under program guideli nes. (9) Responsible for the documentation on homeowner /contractor compl ai nts. (10) Coordinate activities of section with other sections of the department. (11) Direct monthly section meetings; attend monthly meetings with director, administrative staff, and others as requi red. (12) Meet with representatives of other city departments; attend public meetings to explain program guidelines and procedures. (13) Must have working knowledge of all programs within the department. The description of duties and responsibilities reflects a general description of this position and is not an all inclusive 1 ist of tasks which an employee may be assigned. June 20, 1986 David Panza Page 4 c. While serving as Program Administrator for the Urban Redevelopment Authority from January 1, 1983 to January 22, 1985, your duties and responsibilities, as obtained from the Urban Redevelopment Authority, i ncluded: Position Summary This position has direct-responsibility for the day -to -day operations of one or more Housing Department programs. This position has responsibility for supervising staff activities, for reviewing program packages, and for coordinating activities with those of other Authority departments and divisions which may be involved. This position involves contact with outside agencies, contractors, and lenders to accomplish program objectives. This position operates under general supervision and guidance, and entails handling certain basic personnel problems. Examples of Representative Duties (1) Reviewing, correcting, and approving plans, loan packages, and other programmatic materials, and making specific recommendations to staff; (2) Recommending program changes to superiors, and assisting in development of new programs and procedures; (3) Meeting with clients, lenders, contractors, community groups, and others to explain programs and encourage community support; (4) Coordinating financial administration of programs with the controller and legal departments. (5) Organizing and monitoring program data with information systems analyst; (6) Assisting in arbitration proceedings, as necessary; (7) Providing training sessions for staff and making staff assignments; June 20, 1986 David Panza Page 5 (8) Making field inspections to resolve disputes, explore ideas, etc.; (9) Performing such other duties as may be required. 3. As a Construction Specialist II, Construction Advisor, Administrator and Program Administrator, you were a public employee within the definition of the State Ethics Act and subject to the provisions of the Act. Upon termination of your employment, you became a former public employee. 4. The Urban Redevelopment Authority was established in 1946 by the City of Pittsburgh pursuant to the Urban Redevelopment Law. 35 P.S. §1701 et. seq. a. Redevelopment authorities were created for the public purpose of the elimination of blighted areas through economically and socially sound redevelopment of such areas. 35 P.S. §1702. 5. The Urban Redevelopment Authority provides funding to individuals to help renovate and rehabilitate homes or apartments. This funding is made possible through a combination of financing methods including Urban Development Action Grants (UDAG), Community Development Block Grant (CDBG) equity participation loans or grants, Section 312 Funds, Section 8 Moderate Rehabilitation Funds and state funds. These financing methods assist the rehabilitation of rental housing through the Rental Housing Development and Improvement Program (RHIP). 6. To be considered for funding, all applicants /partnerships are required to submit applications to the Urban Redevelopment Authority setting forth the following information: a. Name of appl i cant b. Project name June 20, 1986 c. Urban Redevelopment Authority fi nanci ng /program request i .e. , RHIP, Section 3 Moderate Rehabilitation, Section 312 Rehabilitation Loan, etc. d. Developer information, including name, address, contact person, principals and owners e. Previous Urban Redevelopment Authority experience f. Sources of funds - construction g. Sources of funds - permanent David Panza Page 6 (c) Sends letter of reservation, contacts financial lender. 7. The URA application procedure is as follows: a. Owner submits application and proposal to URA. b. Prel imi nary screening and review of proposal . c. Inspection stage: (1) Financial specialist advises program administrator if the proposal is complete and ready for inspection. (2) Rehabilitation specialist conducts inspection to detemine work needed to renovate. (3) Program administrator approves rehabilitation specialist report. d. Review of Contractor proposal. (1) Rehabilitation advisor reviews proposal for legitimacy of costs, scope of work. Recommends acceptance or rejection. (2) Program administrator reviews proposal with rehabilitation advisor, if approved, sends cover memo to financial specialist, informs owner of decision. Owner notifies contractor. (3) June 20, 1986 e. Departmental review of proposal (Review Committee). (1) Review to detemine if letter of reservation for funding to be sent. (2) Items reviewed. (a) Cash equity of owner, amount of RHIP grant, rent, equity requi rements, evidence of fi nanci ng. (b) Financial Specialist calculates amount of grant based on percentage of final rehabilitation costs. David Panza Page 7 June 20, 1986 (3) Program Administrator approves proceeding with closing. (4) Fi nanci al Speci al i st reviews entire 1 oan package, schedules closing, escrowing of funds. (5) If no personal funds used, escrow with bank; if personal funds used, escrow with URA. f. Construction Process 1. Stage inspections, payments. (a) Contractor submits request for inspection and stage payment for work completed. (b) Program Administrator arranges for stage inspection. (c) Rehabilitation advisor conducts inspection, computes amount of payment, recommends payment. (d) Program Administrator reviews stage inspection report, approves stage payment. Program Administrator must sign all requests for payment. (e) Financial specialist verifies information, transmits payment request to controller. (f) Controller releases stage payment. The same procedure followed for each stage inspection and release of stage payment. (g) Final inspection completed prior to release of remaining funds from escrow. 8. The Urban Redevelopment Authority Regulations adopted on August 25, 1983 and subsequently amended in March, 1985, provide that no member or employee of the authority shal 1 be interested i n redevelopment projects or i n property i ncluded or planned to be included i n a redevelopment area. The regul ations further provide restrictions for interests in contracts for services and materials relating directly or indirectly to a redevelopment project. David Panza Page 8 June 20, 1986 Further restrictions are set forth regarding interests of an employee's or official's family members and the regulations provide for full disclosure of all such interests to the authority, the Department of Community Affairs and the Pittsburgh City Council. Failure to make such disclosure shall constitute misconduct in office. 9. The Urban Redevelopment Law, in part, provides for almost identical conflict of interest restrictions for authority members and employees. 35 P.S. §1708. 10. You, or a business with which you were associated, had direct interests in the following properties for which URA funds were sought or received. David Panza Page 8 FUNDS PROPERTY SOUGHT RECEIVED a. 450 -456 Augusta Street, Pittsburgh, PA , $84,000 $84,000 b. 608 -610 52nd Street, Pittsburgh, PA $33,994 $33,994 c. 3119 -3121 Brereton Avenue, Pittsburgh, PA $49,000 $18,760 d. 344 -346 Harmer Street, Pittsburgh, PA $40,000 0 Totals $206,994 $136,754 11. Individuals to whom you were related or associated, or businesses with which such individuals were associated, had interests in the following properties for which URA funding was sought or received: a. 4600 -4602 Friendship Street, Pittsburgh, PA; owned by Kincaid Associates, an entity controlled by John DiPucci; URA funds received - $21,000. b. 4917 Kincaid Street, Pittsburgh, PA; owned by company set forth above; URA funds received - $11,825. c. 5611 Rural Street, Pittsburgh, PA; owned by your brother, Alfred Panza; URA funds received - $63,000. David Panza Page 9 June 20, 1986 d. 732 -734 Millvale Street, Pittsburgh, PA; owned by your brother, Alfred Panza; URA funds received - $97,000. e. 5433 Carnegie Street, Pittsburgh, PA; owned by Panwick Enterprises, an entity controlled by your brother, Alfred Panza; URA funds received - $7,000. f. 316 Negley Street, Pittsburgh; PA; owned by Negley Associates, an entity controlled by your brother, Alfred Panza; URA funds received - $250,000. g. 300 -306 Negley Street, Pittsburgh, PA, owned by Urban Specialist Management, an entity controlled by your brother, Alfred Panza; URA funds received - $216,000. h. 4901 -4911 Penn Street, Pittsburgh, PA; owned by Celeste Emrick and Alfred Panza, your sister and brother, URA funds received - $21,000. i. 5171 -5173 Penn Street, Pittsburgh, PA; owned in part by Celeste Emerick, your sister; URA funds received - $42,000. j. 130 -140 Winebiddle Street, Pittsburgh, PA; owned by Victor and Carol Panza, your brother and sister -in -law; URA funds received - $42,000. Total funds received - $770,825. (See Appendix A for chart outlining all URA funded projects related to this matter). 12. The details of actions relating to the property at 450 -456 Augusta Street which was owned by you and Alfred J. Panza follow: a. On July 1, 1980, you and Alfred J. Panza, Jr., purchased this property as tenants in co- partnership for $105,057. b. Documents further reveal that on October 15, 1981, you and Alfred J. Panza, Jr., entered into an agreement to sell this property for $205,000. c. The deed regarding this sale was recorded on February 24, 1983. d. On October 27, 1980, Alfred Panza submitted an application to Richard Wiegman regarding this property; requesting $84,000 in URA funding. $156,000 was to be provided by the owner for a total project cost of $240,000. David Panza Page 10 e. An October 31, 1980 memo indicates that 0. Kertis was acting as the URA construction specialist on the property. (Orestes Kertis reported to you as URA Program Administrator). f. An undated memo to Alfred Panza from Al DeLucia indicates that Allegheny Mechanical will perform the rehabilitation of this property for $240,000. (Allegheny Mechanical is, in fact, your company). On December 1, .1980, 0. Kertis indicated in a memo that closing on this project would be arranged at $240,000. h. A February 5, 1981 Letter from E. C. Schaffnit, Banking Officer at Equibank, Pittsburgh, Pennsylvania, to Alfred Panza, i ndicates that "Based on your existing financial position, Equibank had approved a loan in the amount of $100,000 to be jointly and severably executed by Panwick Enterprises Incorporated as well as you and your wife." g • i. On February 11, 1981, the application for URA funding was approved in the amount of $84,000. The remaining $156,000 for the project was to have been provided by the project owners (you and Alfred Panza). k. On or about March 13, 1981, Alfred Panza provided URA with a copy of a letter addressed to him from Farmers National Bank, Kittanning, Pennsylvania, indicating that (2) loans totaling $55,000 had been approved. These $55,000 loans plus the $100,000 Equibank loan were to be the owners input of $156,000 as outlined above. The Farmers National Bank "committment" letter was initialed DAS. 1. In fact, no loan had been approved by Farmers National Bank and Dorothy A. Slovinski (DAS), an Assistant Vice - President of the bank, who was authorized to approve loans did not execute that letter. j. June 20, 1986 m. Farmers National Bank officials confirm that Alfred Panza applied for a loan in the amount of $55,000 but the loan was not approved because he did not have the necessary collateral. n. A March 24, 1981 letter from Alfred J. Panza, Jr., Area Insurance Consultants, Incorporated, 925 Penn Avenue, Suite 550, Pittsburgh, Pennsylvania, 15122, to Donna G. Fogle, indicates that Equibank has loaned him $100,000 and he will pay the remaining $56,000 from his existing funds. (See Finding 12(h) supra). David Panza Page 11 June 20, 1986 (1) The Commercial Loan Division of Equibank disclosed that the February 5, 1981 letter from Mr. Schaffnit to Alfred Panza was intended to serve as approval of a loan for the purchase of property located at 316 Negley Avenue. It was not a loan for the rehabilitation of the Augusta Street project, although the URA was led to believe so. o. On March 27, 1981, a judgement note was executed by Alfred Pan Donna G. Fogle for URA, in the amount of $52,000 regarding za and Street project Alfred Panza had agreed to pay URA $52, 00 h Equibank proceeds. The judgement note also states: t "in the event the monies delivered to the undersigned by Urban Redevelopment Authority of Pittsburgh and y secured by this note together with the monies borrowed by the undersigned from Equibank and utilized for purposes in keeping with s the l City d of are Pittsburgh Landlord Loan Program, the repayment of the monies delivered by the Urban Redevelopment Authority of Pittsburgh to the undersigned will be forgiven and this note will be null and void and of no legal effect ". March 27, 1981, a deferred loan from URA to Alfred Panza was is for a total URA subsidy of $84,000. sued q. On March 31, 1981, an internal URA memo from the URA Financial Closing Officer, Donna Fogle, authorized the issuance of the $84,000 s bsod to Alfred Panza and Equibank. ubidy r. On April 3, 1981, URA issued check #3475 in the amount of 84 Alred Panza and Equibank for the Augusta Street project. $ ,000 to s. URA files contain a receipt of check for URA check #3745 in the amount $84,000 regarding the Augusta Street property. You signed the receipt as the URA representative. mount t. Your interest in the Augusta Street property and application f fundi ng was not revealed to the URA. or URA P. u. Your brother, Alfred Panza, signed all applications and other documents submitted to the URA and as a result, your interest di d not appear. David Panza Page 12 a. You are the sole general partner. b. Your interest is 100 %. c. There are no limited partners. d. No address is listed. e. It appears that you acquired /assumed the name for Lauren Associates in late 1981 or early 1982 when you took over the interest that the former owners had in the property at 608 -610 52nd Street, Pittsburgh. b. The following organizations received mail at this P.O. Box: (1) Lauren Associates (2) Allegheny Restoration (3) You (David Panza) (4) Al DeLucia June 20, 1986 13. According to records in the Allegheny County Recorder of Deeds Office, Lauren Associates is a limited partnership as follows: 14. U.S. Postal Department Records provide the following information about P.O. Box 1401, Pittsburgh, PA, the address for Lauren Associates. a. The box was opened on April 5, 1981 by an 0. Kertis. Mr. Kertis was a URA employee who reported directly to you at URA as a construction specialist. He was responsible for project inspections and officially participated in the inspection and approval of al 1 projects of interest to you. (5) Orestes Kertis (Orestes Kertis was an URA employee who was responsible for project construction inspection and approval). c. The box was closed on January 30, 1985. Eight days after your termination by URA. (See Appendix A for connections between Lauren Associates and Allegheny Restoration). David Panza Page 13 d. You deny knowing who opened this post office box address. June 20, 1986 e. You admit using this address to receive mail for Lauren Associates, Allegheny Restoration, and yourself. 15. The details of actions relating to the property at 600 -610 52nd Street in which Lauren Associates had an interest are as follows: a. Your interest in Lauren Associates and the 52nd Street property was not revealed to the URA in that you used another person to submit all papers to URA. b. You approached John DiPucci and requested that he submit the necessary applications and proposals to the URA. (1) You told DiPucci that it would be easier for you and the URA if DiPucci signed all the forms as owner of Lauren Associates. (2) By DiPucci signing as owner, you avoided obtaining the required waiver from the URA and you were able to keep your identity as owner of Lauren Associates and your interest in the 52nd Street Project unknown. c. John DiPucci agreed to sign as partner of Lauren Associates all documents submitted to the URA for the 608 -610 52nd Street property. This included checks drawn on the Lauren Associates account. DiPucci's actions were in return for your assistance in obtaining URA funds for the development of DiPucci's property on Friendship Avenue. (See Finding 20) . d. You, as owner of Lauren Associates, brought various stage inspection reports completed by Orestes Kertis to DiPucci's office for DiPucci's signature. DiPucci signed those forms which enabled the URA to release stage payments from an escrow account to Lauren Associates and Allegheny Restoration. e. You, As Program Administrator for the URA, then approved the release of stage payments for the project between September, 1982 and February, 1983. f. You delivered the stage payment checks issued by the URA to John DiPucci's Office. Di Pucci signed as owner of Lauren Associ ates and returned the checks to you. Those checks were deposited into the Lauren Associates checking account. David Panza Page 14 g. Records of Equibank disclose that on June 7, 1982, Lauren Associates, P.O. Box 1401, Pittsburgh, PA, opened a checking account, number 375 - 672 -873. (1) Signature card lists principals authorized to sign checks as you, your brother, Victor Panza, and John DiPucci. Your home address of 812 St. James Street is also listed. The telephone number is 255 - 6585.. This is the business number at the Urban Redevelopment Authority. (2) Check numbers 100 through 325 were issued between June 11, 1982 and February 5, 1985. You signed /issued all but seven (7) checks. Those seven checks were signed by John DiPucci as follows: (3) #104 payable to Urban Redevelopment Authority $36,516.00 #114 payable to City of Pittsburgh #113 payable to Jaice Durkin #149 payable to Pasquirelli Brothers #197 payable to Daniel McBrevy Realtor June 20, 1986 $ 44.00 $ 185.00 $ 3,239.00 $ 5,000.00 #294 payable to Urban Redevelopment Authority $50,000.00 #295 payable to Alfred Panza $ 479.00 John DiPucci signed all checks and documents submitted' to URA so that your interest in Lauren Associates would not be reveal ed. These records show that Lauren Associates check #103, issued on July 13, 1982, in the amount of $16,000 payable to Allegheny Restoration, bearing signature of John DiPucci, was never cashed. (a) A Copy of that check was submitted to the Urban Redevelopment Authority as proof of payment made by Lauren Associates to Allegheny Restoration, the contractor working on 608 -610 52nd Street, according to information submitted by URA. David Panza Page 15 (b) The Urban Redevelopment Authority thereafter included the above amount ($16,000) as part of Lauren Associates' portion of the rehabilitation expenses for 608 -•610 52nd Street, and Lauren Associates was not, therefore, required to place this amount in the escrow account for this redevelopment project. - (c) Because that $16,000 check ( #103) submitted to the Urban Redevelopment Authority, but not cashed, was accepted as a credit to the owner, Lauren Associates remaining share of the project for 608 -610 52nd Street was only $36,516. That amount was paid to the Urban Redevelopment Authority on July 14, 1984 by check #104 made payable to the Urban Redevelopment Authority. (d) The payment by Lauren Associates of $16,000 to Allegheny Restoration was a paper transaction that reduced the amount of funds that Lauren Associates was required to pay in order to obtain the URA subsidy. (4) The following deposits relating to the 608 -610 52nd Street project were made to Lauren Associates Checking Account No. 375 - 672 -873: DATE (a) 6/25/82 AMOUNT DEPOSITED ITEM $54,000.00 Alfred J. Panza, Jr., Construction Account, 925 Penn Avenue. June 20, 1986 You stated that this money was a loan for the purchase of the 52nd Street property. The checking account records, however, do not show that this money was used for such purpose. (b) Alfred Panza was your brother who also had received URA funding in which you as a URA official had participated in reviewing and approving. DATE (c) 10/22/82 AMOUNT DEPOSITED ITEM $18,080.00 Urban Redevelopment Authority David Panza Page 16 1) This was check #464 from the URA payable to Lauren Associates and Allegheny Restoration for completion of the first stage work on 52nd Street. John N. DiPucci endorsed this check as Homeowner and. Al DeLucia endorsed it as Contractor. Records in the URA show these parties as independent of each other. 2) Lauren Associates received the above amount instead `of the $34,080 because Lauren Associates was given credit for having paid $16,000 to Allegheny Restoration for work. This check was never cashed and was never an expenditure of Lauren Associates. See Finding 15 9(3) (a) -(d). DATE AMOUNT DEPOSITED ITEM (d) 11/23/82 $26,220.00 Urban Redevelopment Authority This was URA check #478 payable to Lauren Associates and Allegheny Restoration for completion of the second stage work on the 52nd Street property. This check was endorsed by John N. DiPucci and Al DeLucia. DATE AMOUNT DEPOSITED ITEM $6,400.00 Urban Redevelopment Authority This was URA check #493 payable to Lauren Associates and Allegheny Restoration for completion of third stage work on the 52nd Street property. The check was endorsed by John N. DiPucci, Lauren Associates, and Al DeLucia. (e) 12/21/82 DATE AMOUNT DEPOSITED ITEM $12,500.00 Urban Redevelopment Authority This was URA check #503 payable to Lauren Associates and Allegheny Restoration for completion of forth stage work on the 52nd Street property. This check was endorsed by John N. DiPucci, Lauren Associates, and Al DeLucia. (f) 1/18/83 June 20, 1986 David Panza Page 17 DATE (g) 2/22/83 AMOUNT DEPOSITED ITEM $7,310.00 Urban Redevelopment Authority June 20, 1986 This check was URA check #515 payable to Lauren Associates and Allegheny Restoration as the final payment for work on the 52nd Street property. The check was endorsed by John N. DiPucci, Lauren Associates partner, and Al DeLucia. (h) Total URA checks deposited into this account amounted to $70,510. (See Finding 16; Re: The Lauren Associates' Checking Account). h. Documents at the URA show the following application and payment process for URA funding for this property. (608 -610 52nd Street.) (1) Two applications were submitted. The information and authority's initial review is shown on these applications. (2) On cr. about October 1, 1981, the date the application for funding was submitted, 0. Kertis, as a URA employee, signed a completed "Property Inspection Report ". (3) On or about December 3, 1981, James May of J & M Home and Real Estate issued a letter to Ralph Falbo agreeing to perform work on the 52nd Street project for $80,700. Ralph Falbo, General Partner, noted on this letter, "accepted ". URA records indicate that J & M was to be the original contractor on this property. The company was approved by the contractor Grua URA. See Finding 15h(11),(19). (4) On or about December 8, 1981, Orestes Kertis issued a memo to the URA Loan Closing Officer, John Pivarnik, indicating the financing on this project as follows: Total $80,700 Grant $28,000 Owner Input $52,700 David Panza Page 13 June 20, 1986 Proof of ownership prior to closing, "cash injection $7,080 Deed ". The original project cost was to have been $80,700 with owners input as set forth above. The cost was later increased. See Finding 13e(20)(d). The total owner input was never escrowed because of credits which Lauren Associates was given. See Finding 15g(3)(a) -(d); 15h(21)(C). (5) The notarized application for occupancy permit was executed by Ralph Falbo on December 8, 1981. (6) URA records reveal that you, as a URA employee, performed field inspections and assessments inspections in relation to this project. (7) On or about February 9, 1982, Ralph Falbo, on behalf of Lauren Associates, forwarded a letter to you as a URA official seeking a 30 -day extension of the closing date. You, as a URA official, initialed this request as approved. (8) On or about March 8, 1982, Ralph Falbo requested an additional 30 day extension. This letter was initialed by various URA officials, including you. (9) On or about May 27, 1982, URA funding was approved for this project by the Section 8 Moderate Rehabilitation Committee. (10) On or about July 13, 1982, John DiPucci, on behalf of Lauren Associates, executed judgement note in the amount of $21,184. (11) Various documents on file with URA show John DiPucci as a partner in Lauren Associates and J & M Home and Real Estate as the contractor for the 52nd Street project. (12) On or about July 13, 1982, the work proposal for the 52nd Street project was requested to be increased. (13) On or about July 13, 1982, URA was given a copy of Lauren Associates check no. 103 payable to Allegheny Restoration in the amount of $16,000. This check was signed by John DiPucci. Handwritten note on sheet on which check was copied says "Down payment to contractor $4,000 for RHIP unit and $12,000 for 3 Section 8 Mod. Rehab. units. This check was never negotiated. See Finding 15g(3) (a) -(d). David Panza Page 19 June 20, 1986 (14) URA files reveal a Memo dated July 14, 1982 from Pivarnik to Controller Wendell R. Holmes, Jr., to establish an escrow account. URA portion, $21,184; owners portion, $27,341, total subsidy $48,525. Handwritten note sets owners portion of $27,341 combined with owner's portion for 1 RHIP unit $9,175 in one check no. 104 drawn on Equibank account in the amount of $36,516 ". Approved "DJP ". (15) On July 14, 1982, Lauren Associates issued check no. 104 to URA for $36,516 for 608-610 52nd Street signed by John N. DiPucci. (16) URA files revealed an undated Memo from Leroy Mellix, a URA employee to Pivarnik to arrange escrow of $80,700 $28,245 RHIP Grant, $29,887 Owner cash escrow at closing $80,700 Total Rehabilitation A handwritten note indicates "form attached DJP prepare" The project cost was increased from $80,700 to $98,275 ($17,575). Owners input was to be increased by $11,581. This amount, however, was never placed in escrow even though the subsidy was received. (17) On October 9, 1982, a new contractor proposal was received. This proposal, signed by Al DeLucia and John DiPucci, indicated that Allegheny Restoration will be the contractor for $80,700. This was a company in which you had an interest. Allegheny Restoration and Lauren Associates shared a P.O. Box and checking account. (18) URA files show an undated letter from DiPucci to Pivarnik on Lauren Associates letterhead verifying acceptance of Allegheny Restoration as contractor for 608 -610 52nd Street. Handwritten on bottom right hand corner "rec'd 10- 19 -82 ". (19) Payments involving J & M Real Estate were processed as follows: (a) URA had originally issued a check in the amount or $18,080 to Lauren Associates and J & M Home and Real Estate for work completed on the 52nd Street Property. On October 13, 1982. This check was voided because the owner, lauren, had David Panza Page 20 June 20, 1986 changed contractors without informing the URA. There is no explanation for taking this action on October 13, when the Homeowner's Notification to URA that the contractor was changed was not received until October 19. There is also no explanation why 0. Kertis, URA Construction Specialist, approved on September 16, 1982 the contractor's completion of $34,080 worth of work without knowi ng that the contractor was not the one approved for the project. (J & M was to have been the contractor but as previously noted this had been changed.) (b) URA files show that on October 19, 1982, a memo from Pivarnik to Controller Holmes,,acknowleged 1st payment of $18,080 to Allegheny Restoration. "Approval DJP" of URA check #464 to Lauren Associates and Allegheny Restoration ($18,080) October 26, 1982. (20) Two change orders were processed for the work on the 608 -610 52nd Street property as follows: (a) On a document dated December 13, 1982, indentified as Change Order #1, a net increase of $975 was approved for which the owner was responsible. The document was signed by Al DeLuci a as Contractor; John N. DiPucci as Homeowner; and "Approved by DJP ". There are no dates after the signature or initials. This change related to RHIP funding for one unit. (b) Change Order No. 2 dated December 13,. 1982, lists a net increase of $16,600, other figures on the order are as: follows: Owner Grant Original Agreement Price $60,525 $39,341 $21,184 Revised Agreement Price $77,125 $50,131 $26,994 The signature and initials are the same as those on the second Change Order No. 1 (above). Change Order #2 related to the funding under Section 8 for three of the four units. David Panza Page 21 June 20, 1986 (c) The second Change Order #1 above appears not to have been processed. (d) On February 17, 1983, Final Payment was approved on the contract for $98,245. John N. DiPucci signed as homeowner, 0. Kertis as Construction Specialist, and "DJP" as Chief Inspector. (e) On February 18, 198, a memo from Pivarnik to Holmes requests process of final payment of- $7,310. Note shows contract amount as $54,335 (Mod. Rehab.) plus $16,175 (RHIP) plus $16,000 (contractor down payment) plus $11,735 (owner not escrowed) = $98,245 "Approval initials 'AJS I " . (21) Payments for work on the 608 -610 52nd Street properties from URA were made as follows: (a) Lauren Associates and Allegheny Restoration Approv. Date Pay. Stage Pay. Date Check No. Amount 9/15/82 First 10/22/82 464 $18,080 10/1/82 Second 11/23/82 478 $26,220 12/13/82 Third 12/21/82 493 $ 6,400 1/13/82 Fourth 1/18/83 503 $12,500 2/17/83 Final 2/22/83 515 $ 7,310 (b) Mr. John DiPucci signed the payment record as homeowner and Mr. 0. Kertis signed as construction specialist. (c) Of the $64,251 required as owner's input, you were allowed $16,000 credit for Lauren Associates check #103 payable to Allegheny Restoration (also your company) and not required to deposit an additional $11,735. You would not have been eligible for the subsidy of $33,994 for this project without this $27,735 that URA was led to believe you paid to the contractor, (Allegheny Restoration). David Panza Page 22 June 20, 1986 In addition, the Lauren Associates Checking Account reveals that of the $70,510 actually received for the project, less than $60,000 was expended. See Finding 16d(10). As a result, Lauren Associates benefitted by $39,725 in funds that were not escrowed and not used for rehabilitation purposes. (d) All payments were drawn in accordance with memorandum from Joseph Pivarnik to Controller Holmes. On these payment records, the initial "DJP" appear after the word approval. 16. Lauren Associates maintained a checking account at Equibank, Account No. 375672873. a. Individuals with signature authority for this bank account were you, John DiPucci and your brother, Victor Panza. b. Total deposits into this account from the date that it was opened until December of 1984 amount to $266,440.50. c. The following are the sources of the above identified deposits: (1) Edward Weist - total deposits, $1,041.11 (this individual was a tenant in one of the rental units that you owned). (2) Allegheny County Housing Authority - total deposits $1,763. (3) Alfred Panza -total deposits, $89,000. (4) Kelly -Woods Real Estate -total deposits, $123.10. (5) Urban Redevelopment Authority of Pittsburgh - total deposits $70,510. (This amount of money represents the escrowed funds for the project at 608 -610 52nd Street). (6) C. J. Hoffman Real Estate - total deposits $16,699.48. (These deposits represent rents that you collected on various rental properties that you owned). (7) David Panza -total deposits, $17,572.82. (8) Chris -Al, - total deposits, $1000. (This is a company owned by your brother, Alfred Panza). David Panza Page 23 (1) David Panza, total payouts - $11,839.51. (2) Expenses related to 812, St. James Street property, total payouts - $7,484.35. (The property was your personal residence). June 20, 1986 (9) T.A. Title Company - total deposits $13,201.38. (The foregoing deposit was a result of a mortgage that you obtained on a property that you own in Hidden Valley, Jefferson Township. On March 2, 1984, you obtained a mortgage in the amount of 560,000 on that property. $44,066.03 of that mortgage was utilized to pay off a loan that you had at a Dollar Savings Bank. An additional $2,732.59 was used to pay various closing costs. The above deposit into the Lauren Account represents the remaining funds from $60,000 mortgage that you obtained.) (10) Terra Abstract Company - total deposit, $51,517.99. (The above amount represents the proceeds of a mortgage that you had obtained on the 608 -610 52nd Street property from Lincoln Service Corporation. The above mortgage was a F.H.A. loan that you had obtained after you had transferred ownership of the above identified property from Lauren Associates to yourself for $1. The purpose of that transfer was so that you could obtain an F.H.A. mortgage in light of the fact that F.H.A. loans are not available for limited partnerships, (11) Atchmont Real Estate Company - total deposits $773.08. (12) Valley Needs Program - total deposits $550. d. Total checks paid out of the Lauren Associates account equaled 5264,576.06. The following represents the general categories of payouts from the above identified account: (3) Area Insurance Consultants - a company owned by Alfred Panza, and Alfred Panza personally - total payouts, $3,163.29. (4) Pioneer Savings & Loan Association and Atlantic Financial Federal , total payout - $13,874.57. (The above amount represents payments made for the mortgage on your personal residence at 812 St. James Street). David Panza Page 24 (5) June 20, 1986 Miscellaneous expenditures - total payout $7,492. above payments relate to non - contruction related including auto - repairs, mortgage payments to the Service Corporation, (See Finding 16c(10) above), and other expenses). (6) Utilities, including gas, electric and oil for properties other than 812 St. James Street in which you had an interest - total payout, $2279.35. (7) Urban Redevelopment Authority of Pittsburgh - total payout, $86,576. (The above disbursement to the Urban Redevelopment Authority is in relation to two projects, one at 52nd Street and one at Brereton Street. Both checks to the Urban Redevelopment Authority were signed by John Di Pucci . ) Allegheny County Sewage Authority -total payout $206.54. (8) 42. (The payments, Lincoln Insurance, (9) City of Pittsburgh - total payout $1,507.39. (The above amount represents taxes that you paid on various properties that you owned). (10) Expenditures related to construction and rehabilitation costs related to 608 -610 52nd Street - total payout $58,719.99. (11) Expenditures related to a property that you owned at Brereton Street - total expenditures $51,071.27. (12) Expenditures related to the purchase of a property that you owned at Harmar Street - total expenditures $20,000. (13) Expenditures related to a property at Penn Street in Pittsburgh, Pennsylvania - total expenditures $421.38. e. While you had received $70,510 from the escrow account at the Urban Redevelopment Authority for the rehabilitation of the property at 608 -610 52nd Street, the Lauren Associates' checking account reveal that only $58,719.99 of that amount was actually spent on construction and rehabilitation costs. As a result, approximately $11,790 that should have been utilized for the rehabilitation of the 52nd Street project was not used for that purpose. David Panza Page 25 June 20, 1986 f. Deposited items into the Lauren Associates' checking account reveal that you received $89 from Alfred Panza, your brother, who had obtained projects from the URA, the approval of which you played a role in as an employee of that governmental body. g. Deposited items in the Lauren Associates' checking account reveal that you received a $1,000 payment from Chris -A1 Company, an entity owned by your brother, Alfred Panza_, who obtained projects from the URA, the approval of which you played a role in as a URA employee. 17. The detail of actions relating to the property at 3119 -3121 Brereton Avenue are as follows: a. Lauren Associates acquired this property as follows: (1) On June 23, 1983, Salvatore and Theresa Greco, sellers, and Lauren Associates, buyers, signed an agreement of sale. (2) Subsequent to the agreement of sale, the Grecos sold the property to Lauren Associates. Lauren Associates paid $5,000 immediately and agreed to pay $4800 in 12 monthly installments with 12% interest and to pay the balance of $32,200 on August 15, 1984. (3) John N. DiPucci signed for Lauren Associates. b. Your interest in the Brereton Street project was not revealed to the URA in that you used another person to submit the application on to the URA. c. In June, 1983, you approached John DiPucci to act as partner for Lauren Associates for a property located at 3119 -3121 Brereton Street which was rehabilitated with URA funds. d. DiPucci confirms that he signed any documents you askE.d him to sign regarding this project. These documents included sales agreements for the purchase of the property, URA applications, work proposals and a stage inspection report. e. DiPucci also confines that he signed, at your behest, a Lauren Associates check, no. 293, dated September 1, 1984, payable to Allegheny Restoration in an amount of $41,941 as an advance to the contractor. That check was submitted to the URA as a part of the owner portion for the rehabilitation of this project. That check was never cashed. David Panza Page 26 June 20, 1986 f. DiPucci confines that you told him that Lauren Associates is a fictitious entity. URA records confirm DiPucci's role in this process. (1) On September 15, 1983, a proposal was submitted by Allegheny Restoration, 927 Penn Avenue, Pittsburgh, Pennsylvania, 15222, to John N. DiPucci, S. Winebiddle Street, Pittsburgh, Pennsylvania, to provide all labor and - material for $140,941 in accordance with an attached write -up. Alfred Panza signed the proposal for Allegheny Restoration and John N. DiPucci signed the section titled "acceptance of proposal ". (2) On September 15, 1983, John N. DiPucci signed an "Application for Occupancy Permit /Building Permit" for the Brereton Avenue property. g • (3) On September 19, 1983, John N. DiPucci for Lauren Associates, P.O. Box 1401, Pittsburgh, Pennsylvania, 15230, submitted a "Rental Housing Improvement Program Application" to the URA. An attached "work proposal schedule" listed Allegheny Restoration as the contractor and the amount of funding as $140,941. The word "void" is handprinted across this schedule. (4) RHIP "contractor warranty" was signed by Alfred Panza for Allegheny Restoration, 927 Penn Street, Pittsburgh, Pennsylvania and the phone number was 765 -1500. (5) An undated memorandum from you, as a URA official, to Jack McGoogan, Bureau of Building Inspection, asked for an i nspe.cti on of a number of properties i ncludi ng "Lauren Assoc. 3119 -21 Brereton Avenue ... ". The phone number is listed as 391 -2534. (6) On October 14, 1983, Mr. 0. Kertis signed a "property inspection report" and submitted a memorandum to Joseph F. Pivarnik, Financial Specialist, URA, stating that he had inspected the property at 3119 -3121 Brereton and found all requirements met and the "rehab. cost of $140,941 justified. The financing listed for total rehab. cost was: $140,941 less URA subsidy grant of $49,000 leaving the owner's input of $91,941. On March 5, 1984, A. J. Sontheimer, Division Manager, Program Operations, URA, notified Lauren Associates that funds had been reserved for the Brereton Avenue project. The grant reserved was $49,000, the owner's input was $91,941. (7) David Panza Page 27 June 20, 1986 (3) On September 1, 1984, Lauren Associates' check #293 in the amount of $41,941 was made payable to Allegheny Restoration for "advance to the contractor ". The check was signed by John N. DiPucci. (a) That check was not processed through the Lauren Associates' account. (b) A copy of that check submitted by URA as proof of advance to the contractor doing the work on 3119 -3121 Brereton Avenue. (c) The URA included that amount as part of Lauren Associates' portion of $91,491 input into the rehab. As a result, $41,941 was deducted from the amount Lauren Associates was requi red to escrow with the URA. Although Lauren failed to escrow the required funds, the full subsidy was nevertheless received. (9) September 11, 1984, John N. DiPucci signed as Partner for Lauren Associates a judgement note for $42,000 under the Section 8 Moderate Rehabilitation Program. On that same date, he also signed a judgement note for $7,000 under the Rental Housing Improvement Program. (10) On September 11, 1984, John N. DiPucci signed as Partner for Lauren Associates a rent limitation agreement with the Urban Redevelopment Authority of Pittsburgh. (11) On September 13, 1984, Lauren Associates' check #294 for $50,000 was made payable to URA of Pittsburgh for "RHIP escrow John N. DiPucci signed this check. (12) On September 24, 1984, Joseph F. Pivarnik, Financial Specialist, URA, wrote to Wendel R. Holmes, Jr., Controller of URA, notifying him to establish an escrow account of $99,000 consisting of $50,000 of Lauren Associates' money and $49,000 of a subsidy. The financing listed on this document was handwritten as follows: David Panza Page 28 RHIP Grant Mod. Rehab. Grant Personal Funds (escrowed at URA) Contractor Down Payment Total Rehab. Contract $7,000 $42,000 $50,000 $41,941 $140,941 June 20, 1986 (13) For this project, Lauren Associates ordered materials, primarily storm doors and windows, from the Architectural Window Division of Cassady- Pierce & Commercial Service Companies, 2295 Preble Avenue, Pittsburgh, Pennsylvania, 15233. The following actions resulted from this order: (a) On December 26, 1984, John N. DiPucci signed as Homeowner and you initialed as inspector, approval of work completed to date. Handwritten notes on the "Payment Inspection Record" show that this work was for the supplier of material only, at a cost of $18,760 for 100% of this materi al . (b) On December 31, 1984, Joseph F. Pivarnik, Financial Specialist wrote to Wendel R. Holmes, Jr., Controller of URA, requesting payment of $18,760 to "Lauren Associates and Allegheny Restoration and Cassady- Pierce and Commercial Service Companies Supplier ". This payment was for material on the Brereton Avenue property. (c) On December 26, 1984, a request for stage payment 1 on the Brereton Avenue property was made by Allegheny Restoration. The request was signed by Alfred Pasquirelli. (d) On January 8, 1985, the Urban Redevelopment Authority issued check #726 payable jointly to Lauren Associates and Allegheny Restoration and Cassady- Pierce and Commercial Service Companies in the amount of $18,760 for supplier payment for material and property located at 3119 -3121 Brereton Avenue. (e) URA check #726 was processed with stamps of Lauren Associates, P.O. Box 1401, Pittsburgh, Pennsylvania, 15230, Allegheny Restoration, P.O. Box 1401, Pittsburgh, Pennsylvania, 15230, and "pay to the order of: Cassady - Pierce Company, Inc., Commercial Services Company ". David Panza Page 29 (f) (9 ) June 20, 1986 After the issuance of the URA check, you contacted William Wilson of Cassady- Pierce and advised that changes were to be made on the project. You informed Wilson that a URA check for the amount of the quote was being mailed to Cassady - Pierce by mistake. You requested that Wilson deposit the check in the C.P. account and then send a check to Lauren Associates and Allegheny Restoration. On January 21, 1985, Cassady- Pierce issued check #17368 payable to Lauren Associates and Allegheny Restoration in an amount of $18,760. 1) William Wilson, General Manager, Architectural Window Design, Cassady- Pierce, confirms that you picked up that check. 2) The reverse side of that check is stamped Lauren Associates and Allegheny Restoration. 3) The check was processed on January 23, 1985. 4) Records of your personal bank account at Mellon Bank, reveal that on January 23, 1985, you deposited this check into that account. (h) You admit that you, acting for Lauren Associates, received the check in an amount of $18,760. 1) You contend you personally retained this amount because you had already escrowed $50,000 with the URA. 2) The $18,760 that was delivered from the URA was to have been used for the purchase of materials for the rehabilitation of the Brereton Street property. You deposited this money into your personal bank account and the funds were not used for the above purposes. (14) On January 8, 1985, Change Order No. 1 was prepared, the order did not increase or decrease the total amount of the project but deleted $12,000 for pointing and cleaning of exterior walls and added $12,000 to frame out all interior walls, insulate, and install drywall. Alfred Pasqui rel li signed as contractor, John N. DiPucci signed as homeowner and on January 9, 1985, you approved this by placing your initials on the change order. David Panza Page 30 June 20, 1986 (15) An additional payment was also made to Allegheny Restoration on the request of Alfred Pasquirelli. This request is undated. There are two memorandums from Joseph F. Pivarnik to Wendel R. Holmes. Both are dated January 18, 1985 and are otherwise identical except that one requests payment of $5,539 and the other payment of $5,529. 18. You also attempted to obtain URA funding for a project at 344 -346 Harmer Street, Pittsburgh, PA., a. URA was not aware of your interest in this property as you used another individual to submit the application to URA. b. In August, 1984, you again approached John DiPucci to sign documents as partner of Lauren Associates for projects you were developing at 344 and 346 Harmer Street. DiPucci admitted to signing - as Lauren Associates - documents that were submitted to the URA. c. The Harmer Street project was not completed because your service with URA was terminated. 19. The details of properties for which URA funding was sought or received and which were owned by individuals to whom you were related or with whom you were associated follow. (See Appendix A for complete description of all URA funded projects related to this matter). 20. Between March 22, 1983 and June 4, 1983, URA provided $21,000 for a property at 4600 -4602 Friendship Street, Pittsburgh, PA. the relevant elements of this project are as follows: a. Kincaid Associates, John N. DiPucci owner, was the applicant. He also signed URA documents as Lauren Associates partner for the URA funded projects at 52nd Street and Brereton Avenue. (1) In December, 1983, you, as an individual and general contractor, completed URA applications and work proposals for the project 1 ocated at Friendship Avenue. (a) By verbal agreement with John DiPucci, you also served as general contractor for that project. (b) You, as Program Administrator for the URA, participated in approval of grants for this property. (2) Your agreement with John DiPucci for your services as general contractor for the Friendship Avenue project included a $500.00 payment for each of the four units to rehabilitate. David Panza Page 31 June 20, 1986 (3) The project subsequently did not qualify for a RHIP grant due to one of the tenants being ineligible. (4) As a result, you did not receive the payment referred to above but instead, you informed Di Pucci that someday he could do you a favor. (5) On February 26, 1981, .John DiPucci did give you a personal check i n an amount of $1,000 - Co cover general work done on a property in which he and Ralph Falbo had owned on Winebiddle Street. (6) You received this payment from an individual whose projects you were revi ewi ng as a public employee. b. Allegheny Restoration was the contractor listed for this project. Allegheny Restoration is a paper company of yours. Allegheny Restoration did not work on the project; all work was done by subcontractors. There are no records to document the actual coney spent to rehabilitate this project. Al DeLucia signed all URA documents for Allegheny Restoration. (1) You told John DiPucci to use the name Allegheny Restoration as the general contractor for this project. (2) You also directed DiPucci to submit to the URA a copy of a check made payable to Allegheny Restoration as payment for contracting services even though no such services were provided. (3) URA file for this project discloses a copy of a check drawn on the Ki ncaid Associ ates checki ng account, check #364 dated February 23, 1983 in an amount of $1,500 made payable to Allegheny Restoration. (4) John DiPucci confirms he submitted a copy of this check to the URA and that the check was never cashed. c. Orestes Kertis inspected the work on this project. He opened the Post Office Box address for Lauren Associates. d. You approved a number of the documents submitted for this project. David Panza Page 32 June 20, 1986 e. Di Pucci also signed URA documents for Allegheny Mechanical, contractor of record for property at 450 -456 Augusta Street, and for Allegheny Restoration, contractor for properties. At 608 -610 52nd Street, 3119 -3121 Brereton Avenue and 4600 -4602 Friendship Street. 21. Between October, 1981 and November, 1981, URA provided $11,825 for a property at 4917 Kincaid Street. The relevant facts of this project are as fol lows: a. Kincaid Associates, John N. DiPucci owner, was the applicant. He also signed URA documents as a Lauren Associates partner for the URA funded projects at 608 -610 52nd Street and 3119 -3121 Brereton Avenue. (1) You, acting as an individual and general contractor, completed URA applications, work proposals, arranged for sub - contractors and acted as a general contractor for property located at 4917 Ki ncaid Street. a. You, as Program Administrator for URA, also participated in the RHIP grant approval for this property in September, 1981. (2) You were paid from Kincaid Associates checking account check #158 in an amount of $500 for services performed as general contractor for the 4917 Kincaid Street property. This amount included work you did in relation to the above finding. (3) On January 11, 1982, you were also paid, as general contractor, from Kincaid Associates $225 for electrical work performed for the 4917 Kincaid Street property. (4) You, thus, received financial remuneration from an individual whose projects you were responsible for reviewing as a URA empl oyee. (5) DiPucci also acted as the straw party for you in relation to applications for funding submitted to URA by Lauren Associates. This was done in return for your assistance to DiPucci in obtaining the URA funding for both the Friendship Street and Ki ncaid Street projects. David Panza Page 33 June 20, 1986 b. Chris -A1 was the contractor for this project. This company is owned by your brother, Alfred Panza. c. Al DeLucia signed URA documents for Chris -Al. d. Orestes Kertis conducted the inspections on this property. He was involved with your company, Lauren Associates, at least in that he opened P.O. Box 1401 as the Lauren Associates address. 22. Between December ,1983 and January, 1984, URA provided $7,000 for a property at 5433 Carnegie Street. The relevant facts of this project are as follows: a. Your brother's, Alfred Panza, company, Panwick Enterprises, was the owner of record for this property. b. Your brother's, Alfred Panza, company, Chris -Al, was the contractor of record on this project. c. Al DeLucia signed URA documents for Chris-Al. 23. Between April , 1982 and November, 1982, URA provided $250,000 for property at 316 Negley Street. The relevant facts of this project are as follows: a. Your brother's, Alfred Panza, business, Negley Associates, was the owner of record for this property. b. Your brother's company, Chris-Al, was the contractor of record for this project. c. Al DeLucia signed URA documents for Chris -Al as contractor. d. Orestes Kertis conducted the inspections on this property. He was involved with your company, Lauren Associates, at least in that he opened P.O. Box 1401 as the Lauren Associates address. 24. Between December, 1983 and July, 1984, URA provided $216,000 for a property at 300 -306 Negley Street. The relevant facts of this project are as follows: a. Your brother's, Alfred Panza, business, Negley Associates, was the owner of record for this property. David Panza Page 34 June 20, 1986 b. Your brother's company, Chris-Al, was the contractor of record for this project. c. Al DeLucia signed URA documents for Chris -A1 as contractor d. Orestes Kertis conducted the inspections on this property. He was involved with your company, Lauren Associates, at least in that he opened P.O. Box 1401 as the Lauren Associates address. 25. Between January, 1985 and February, 1985, URA provided $63,000 for a property at 5611 Rural Street. The relevant facts of this project are as follows : a. Your brother, Alfred Panza, was the owner of this property. As noted in previous findings, he was your business partner, loaned you money for URA funded projects and; b. Al DeLucia signed URA documents as Chris-M, contractor for this project. c. 0. Kertis inspected this property. His relationship to your private interest have been noted i n previous fi ndi ngs. 26. On May 24, 1985, URA provided $97,000 for a property at 732 -734 Mil ivale Street. The relevant facts of this project are as follows: a. Your brother, Alfred Panza, was the owner of record of this property. Hi.s involvement with you and your business interests is shown in previous findings. b. Chris -A1 was the contractor for this project. This is your brother's, Alfred Panza, business. c. Al DeLucia signed URA documents for Chris -Al. His relationship to your business interests is shown on previous findings. d. Orestes Kertis inspected the work in this project. His involvement i n your private interest i s shown i n previous fi ndi ngs. 27. On January, 1985, URA provided $21,000 for a property at 4900 -4911 Penn Avenue. The relevant facts of this project are as follows: a. Your brother, Alfred Panza and sister, Celeste Emrick, were the owners of record for this property. Celeste Emrick was also the owner of record of property at 5171 -73 Penn Avenue that was also funded by URA. David Panza Page 35 b. Chris -A1 was the contractor for this project. This is your brother's, Alfred Panza, business. June 20, 1986 c. Al DeLucia signed URA documents for Chris -A1. His relationship to your business interests is shown on previous findings. d. Orestes Kertis inspected the work in this project. His involvement in your private interest is shown in previous findings. 28. In May, 1985, URA provided $42,000 for a property at 5171 -5173 Penn Avenue. The relevant facts of this project are as follows: a. Your brother, Alfred Panza and sister, Celeste Emrick, were the owners of record for this property. Celeste Emrick was also the owner of record of property at 5171 -73 Penn Avenue that was also funded by URA. owners Celeste Emrick, sister, and Roth Vogeling. b. Chris -A1 was the contractor for this project. This is your brother's, Alfred Panza, business. c. Al DeLucia signed URA documents for Chris -A1. Al DeLucia and Alfred Panza signed for Chris -A1 as contractors. His relationship to your business interests is shown on previous findings. d. Orestes Kertis inspected the work in this project. His involvement i n your private i nterest i s shown i n previous fi ndi ngs. 29. Between June, 1985 and December, 1985, URA provided $42,000 for a property at 130 -140 Winebiddle Street. The facts elements of this project are as follows: a. Your brother, Alfred Panza and sister, Celeste Emrick, were the owners of record for this property. Celeste Emrick was also the owner of record of property at 5171 -73 Penn Avenue that was also funded by URA. Owners Celeste Emrick, sister, and Roth Vogeling. Owners, your brother, Victor and Carol Panza. b. Chris -A1 was the contractor for this project. This is your brother's, Alfred Panza, business. c. Al DeLuci a signed URA documents for Chris -Al. Al DeLuci a and Al fred Panza signed for Chris -A1 as contractors. His relationship to your business interests is shown on previous findings. David Panza Page 36 (1) C. J. Hoffman Real Estate for rental collection 608 -610 52nd Street - $8,250.76. June 20, 1986 d. Orestes Kertis inspected the work in this project. His involvement i n your private interest i s shown i n previous fi ndi ngs. 30. As a public employee, you are required to file a Statement of Financial Interests with your governmental body by May 1 of each year. a. You were required to file Statements of Financial Interests with the URA by May 1 of 1979, 1980, 1981, 1982, 1983, 1984, and 1985. As a former public employee, you were also required to file the Statement of Financial Interests by May 1, 1986. b. Records obtained from the URA confirm that only one (1) Statement of Financial Interests was filed by you. (1) That form is not dated but is marked for the 1984 calendar year. (2) On line 15, you failed to list Lauren Associates as a source of income in excess of $500. (3) Line 18 of that form, office or directorship in any business, fails to disclose your interest in Lauren Associates, Allegheny Restoration and Allegheny Mechanical. (4) Line 19 of that form, financial interest in any legal entity in business for profit fails to list your interest in Lauren Associates, Allegheny Restoration or Allegheny Mechanical. c. Lauren Associates' checking account deposit records disclose the following deposits in 1984: c. Lauren Associates' checking account deposit records disclose the following deposits in 1984: (2) C. J. Hoffman Real Estate for rental collection for 3119 -3121 Brereton Street - $2,724.80. (3) Alfred Panza Construction Account to David Panza - $35,000. (4) Chris -Al to David Panza - $1,000. (5) Atchmont Real Estate - $773.08. David Panza Page 37 June 20, 1986 SUMMARY OF FINDINGS 31. You or a business with which you were associated, Lauren Associates, had a direct interest in URA funded projects which you had reviewed and approved in your position as URA Program Administrator as follows: a. 450 -456 Augusta Street, Pittsburgh, Pennsylvania, $84,000 in URA Funds received. b. 608 -610 52nd Street, Pittsburgh, Pennsylvania, $33,994 in URA funds received. c. 3119 -3121 Brereton Avenue, Pittsburgh, Pennsylvania, $18,760 in URA funds received. d. 334 -346 Harmer Street, Pittsburgh, Pennsylvania - no URA funds received. 32. You had an interest i n Allegheny Restoration, the contracting company involved in the above projects. 33. As a public employee of URA, you participated in various aspects of the URA review, inspection and approval of the above projects i ncludi ng: a. Approving the establishment of the escrow. b. Approving the closing for URA's participation in the project. c. Approving extension to closing. d. Participating in the field inspection and assessments. e. Recommending Section 8 Moderate Rehab. funding. f. Approving payments from the escrow. In some cases by signing the approval as chief inspector. g. Approving increases to the escrow. h. Approving change orders. i. As chief inspector, approving a "Payment Inspection Record" of work performed by "J & M Home and Real Estate" for $34,080. A report was also signed by 0. Kertis on September 15, 1982 as construction specialist. Then approvi ng payment for the same work to Allegheny David Panza Page 38 June 20, 1986 Restoration after J & M had been replaced by Allegheny Restoration as contractor even though you knew that you were the sole owner of Allegheny and that it was a paper company and had not performed the work. j. You admit that the initials DJP appearing on numerous URA douments officially approvi ng actions relating to 608 -610 52nd Street and other properties are yours. 34. You hid your interest in Lauren Associates and rehabilitation projects for which URA funding was requested and received from the URA by using John DiPucci to sign all applications, documents and checks forwarded to the URA in regarding the 52nd Street, Brereton and Harmer Street projects. 35. You hid your interest in the Augusta Street project by using your brother to submit applications and proposals to the URA. 36. You received financial remuneration from people or entities whose projects you had reviewed and approved as a URA employee as follows: a. $54,000 loan received from Alfred Panza to your company, Lauren Associates. Alfred Panza had received URA funding for a number of projects and you participated in the URA consideration of most of his applications. b. $35,000 loan to your company, Lauren Associates, received from Alfred Panza, identified above. c. $500 received from John DiPucci, who had applied for URA projects on which you acted at Kincaid Street and Friendship Street. d. $1000 received from John DiPucci, identified above. e. $225 received from John DiPucci as identified above. f. $1000 received from Chirs -A1 an entity owned by Alfred Panza. 37. Misleading or false information was submitted to URA regarding projects in which you had a hidden interest. Said information was provided to the URA i n order to secure the receipt of URA funding. Such information was false i n that the checks issued by your company, Lauren Associates, proving the disbursement of such funds as owner's input were never, i n fact, negotiated or cashed. As a result, you were able to obtain URA funding to which you would not have been entitled had you not deposited the funds. Those Items are as follows: David Panza Page 39 June 20, 1986 a. A $16,000 check issued by Lauren Associates to Allegheny Restoration as owner's portion of funding in relation to the property at 52nd Street (check never negotiated). b. $11,735 requi red to be escrowed by you was never escrowed as owner's input relating to property located at 52nd Street. c. A $41,941 check issued by Lauren Associates to Allegheny Restoration, as owner's input into a project, at Brereton Street (check was never negotiated). 38. Misleading or false information was submitted to URA regarding projects in which you had a hidden interest. Said information related to bank loans which were allegedly obtained for the rehabilitation of the Augusta Street project as follows: a. URA was informed that Equibank had committed $100,000 as a loan for the rehabilitation of this property. Said loan was, in fact, for the purchase of another property and not for the purpose stated above. b. URA was given a letter from Farmers National Bank allegedly initialed by a bank loan officer as evidence of a bank loan on this project for $55,000. Said loan, i n fact, had not been approved and no offici al of the bank signed or initialed this letter. 39. You failed to use all URA funding of $70,510 in relation to the 52nd Street project. Approximately $58,000 was used of the project, and therefore, in excess of $11,000 in URA funding obtained for rehabilitation was used for other purposes. Your failure to expend this amount combined with your failure to escrow the requi red funds of $27,735 (See Fi ndi ng 37) resulted i n the . expenditure of approximately $58,000 for a rehabilitation project 'hat should have equaled $98,000. 40. You al 1 owed Orestes Kerti s, a URA empl oyee whom you supervi sad, to inspect and approve all projects in which you or an individual w -th whom you were associated or related had an interest. 41. As a URA empl oyee, you diverted $18,760 in URA fundi nc , i ntended for the purchase of materials for the Brereton Street project to your personal bank account. 42. As a URA offici al , you revi ewed and approved the di sbursements of UkA funds to individuals to whom you were related or businesses in which your relations had an interest as follows: David Panza Page 40 g. Total funds received - $770,825. June 20, 1986 a. 4600 -4602 Friendship Street, Pittsburgh, PA; owned by Kincaid Associates, an entity controlled by John DiPucci; URA funds received - 521,000. (As a private individual you acted as general contractor for this project while at the same time you reviewed this project as a URA employee). b. 4917 Kincaid Street, Pittsburgh, PA; owned by company set forth above; URA funds received - $11,825. c. 5611 Rural Street, Pittsburgh, PA; owned by your brother, Alfred Panza; URA funds received - $63,000. d. 732 -734 Milivale Street, Pittsburgh, PA; owned by your brother, Alfred Panza; URA funds received - $97,000. e. 5433 Carnegie Street, Pittsburgh, PA; owned by Panwick Enterprises, an entity controlled by your brother, Alfred Panza; URA funds received - $7,000. f. 316 Negley Street, Pittsburgh, PA; owned by Negley Associates, an entity controlled by your brother, Alfred Panza; URA funds received - $250,000. 300 -306 Negley Street, Pittsburgh, PA, owned by Urban Specialist Management, an entity controlled by your brother, Alfred Panza; URA funds received - $216,000. h. 4901 -4911 Penn Street, Pittsburgh, PA; owned by Celeste Emrick and Alfred Panza, your sister and brother, URA funds received - $21,000. i. 5171 -5173 Penn Street, Pittsburgh, PA; owned in part by Celeste Emerick, your sister; URA funds received - $42,000. 130 -140 Winebiddle Street, Pittsburgh, PA; owned by Victor and Carol Panza, your brother and sister -in -law; URA funds received - $42,000. 43, You failed to file a Statement of Financial Interests for six (6) of the years in which you were required to file. 44. In the one year that you did file, you failed to list Lauren Associates as a source of income in excess of $500 and as a business in which you had a Financial Interest. David Panza Page 41 June 20, 1986 B. Discussion: As previously set forth in the fi ndi ngs of fact, you were an employee of the Urban Redevelopment Authority of the City of Pittsburgh for various periods beginning in 1967 through and including January of 1985. From 1979 through and including January, 1985, you served in the positions of Contruction Specialist, Administrator, and Program Administrator. In all of these positions, you were to be considered a public employee as that term is defined in the State Ethics Act. 65 P.S. §402. Specifically, that provision of law provides as follows: Section 2. Definitions. "Public employee." Any individual employed by the Commonwealth or a political subdivision who is responsible for taki ng or recommends ng official action of a nonministerial nature with regard to: (1) contracting or procurement; (2) administering or monitoring grants or subsidies; (3) planning or zoning; (4) inspecting, licensing, regulating or auditing any person; or (5) any other activity where the official action has an economic impact of greater than a de minimus nature on the interests of any person. There is no doubt that upon a review of your job functions as set forth in the findings of facts which were based upon your job classifications and descriptions, you were involved in the type of activity enumerated in the definition set forth above. As such, you were a public employee as defined in the Act and therefore your conduct must conform to the requirements of the Act. We hasten to note that Redevelopment Authorities that are formed under the Urban Redevelopment Law, 35 P.S. §1701 et. seq., are without doubt agencies of the Commonwealth of Pennsylvania and as such you are a public employee of said agency. Harriman V. Carducci, 475 Pa. 359, 380 A.2d 761, (1977); 43 Op. Att'y Gen. 1973. David Panza Page 42 June 20, 1986 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 ; immedi ate family, or a business with which he is associated. 65 P.S. 403(a). Within the above provision of law, no public employee may use the public position which they hold in order to obtain any financial gain for themself, a member of their immediate family or a business with which they are associated other than the compensation that is provided for by law. Such a public employee may not use confidential information obtained in their public position for similar purposes. The Ethics Act 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. The Act further defines a member of one's immediate family as follows: Section 2. Definitions. "Immediate family." A spouse residing in the person's household and minor dependent children. 65 P.S. 402. In the in.;tant situation, we have been called upon to determine whether you, as a public employee of the Urban Redevelopment Authority of the City of Pittsburgh, used you public position as a Construction Specialist, as an Administrator, or as a Program Admi nistrator i n order to obtain a financial gain other than the compensation that was provided for by law for either yourself, a business with which you were associated or a member of your immediate family. This Commission has determined on a number of occasions that various types of actions in which a public employee or official engages could constitute such a use of public office. Such actions would include reviewing, considering or David Panza Page 43 June 20, 1986 approving proposals in which the employee or his business has an interest as set forth above. Cherpes, 171. The Commission has also determined that such a use of public office would be occasioned by virtue of a public official inspecting or otherwise auditing a proposal or project in which they have an i nterest. As a construction specialist and construction advisor, you were responsible for reviewing cost estimates and construction costs in relation to projects for which URA funding was disbursed. As administrator, you were responsible for the preparation, review and approval of all expenses related to program operations. This included the tracking of all program expenditures in relation to the annual budget, including the maintenance of an updated account of expenditures for each program for which you were responsible in order to prevent overcommittment of URA funds. As program administrator, your responsibility included the overall operation on a day -to -day basis of one or more Housing Department programs. In this respect, you reviewed and approved plans, loan packages and other programmatic materials and you made specific recommendations to your staff in relation thereto. You also were responsible for coordinating the financial administration of programs with the controller and the Legal Department at URA. As a private individual, however, you also had applied to URA for funds relating to at least three projects in which you had a direct interest through a company which you owned (Lauren Associates) or through your brother Alfred Panza. These projects at 52nd Street, Brereton Street, and Augusta Street, all received URA funding. In relation to these projects, you took various actions as a URA employee. You participated in field inspections and assessments regarding some of these properties and you were involved in the approval of stage payments from the URA escrow account for the projects in which you had an interest. Indeed, you participated in a number of specific actions and signed or initialed various URA approvals as a URA official in relation to projects in which you had a direct financial interest. The specifics of your actions are clearly outlined in the findings of fact that are summarized in Finding 31. In total, projects in which you were interested received $136,754 from the Urban Redevelopment Authority and you participated in the Urban Redevelopment Authority's review, consideration, and acceptance of these projects. You were also involved in the URA's disbursement of these funds to your projects. While this activity, in and of itself, is enough to constitute a use of your public office to obtain financial gain other than the compensation that is provided for by law, it is noted, that i n addition to such actions as a URA employee, your intent to use your public office for your personal financial gain in this matter was further evidenced by the fact that you did not reveal to the URA your interest in these projects. Specifically, you used an individual, John DiPucci, as a straw party to sign all papers and documents that were forwarded David Panza Page 44 June 20, 1986 to the URA. Indeed, a review of the checking account for Lauren Associates clearly indicates that you signed nearly all checks for that entity except for those specifically going to URA. John DiPucci signed those checks. Thi s was done in order that the URA would not be aware of your interest in these projects. Additionally, DiPucci has acknowledged that he was approached by you to sign various other documents that were submitted to the URA in relation to your applications for funding . Di Pucci has confirmed that he had no interest in these properties other than to act as the straw party for you. The fact that you knowingly hid your interest in the URA projects from the URA is further evidence that you intended to use your public office in order to obtain this financial gain. DiPucci's actions in relation to this matter were in return for your assistance to him as a URA official in obtaining URA funding for a specific projects in which he was involved. This type of activity is a further use of your public office to obtain a financial gain to which you were not entitled. The fact that you agreed to help DiPucci receive URA funding for his project in return for his acting as your straw party not only is a violation of Section 3(a) of the Ethics Act but implicates various other provisions of law. In relation to your dealings with DiPucci, it is also noted that as a private individual you were acting as Di Pucci's general contractor preparing documents in that capacity while at the same time you were reviewing DiPucci's projects as a URA employee. In relation to the project at Brereton Street in which you had an interest, it is specifically noted that as a URA employee you diverted in excess of $18,000 of URA funding to your personal bank account. This was occasioned when a URA check for $18,760 was disbursed from the URA made payable jointly to the Cassady- Pierce Company, Lauren Associates, and Allegheny Restoration in relation to materials that were being purchased for the Brereton Street property. These materials were purportedly purchased from Cassady - Pierce Company. However, no such materials had been obtained. You, as a URA employee, notified Cassady- Pierce Company that a mistake had been made in relation to URA's disbursement of this check and advised them to deposit the check into their own account and issue another check made payable in the same amount to the two companies in which you had an interest, Lauren Associates and Allegheny Restoration. Cassady- Pierce officials did, in fact, issue such a check and this check was deposited into your personal bank account at the Mellon Bank. Your contact with Cassady - Pierce officials as a URA employee to inform them that URA had inadvertently issued this check is another use of your public office to obtain a financial gain other than the compensation provided for by law. David Panza Page 45 June 20, 1986 In addition to the foregoing, we have found a number of other actions that have taken place in relation to this matter that create substantial questions under other provisions of law. Specifically, the funding that you received for the 52nd Street project was obtained only after the URA had been provided with false or misleading information. URA was advised that $16,000 had been paid by your company, Lauren Associates, di rectly to the contractor, Allegheny Restoration (also your company). The $16,000, however, which should have been escrowed with URA as part of the owner's input into the project was a check that was never cashed. -This paper transaction allowed your company to receive a credit for the project. Additionally, another $11,735 that was required to be escrowed for the same purposes in relation to this project, was never placed into escrow. As a result, you were able to avoid paying $27,735 in the escrow account in relation to this project. Nevertheless, however, no questions were asked by URA officials and as a result, you obtained the full subsidy even though you had not placed into the escrow account your portion of the required funding. You were the individual who was in charge of the URA's review of funds relating to this type of program and project. As such, you were in a position to prevent any further investigation of this situation by URA. In addition, a review of the Lauren Associates' checking account reveals that of the $70,510 actually received for the rehabilitation of the 52nd Street property, approximately $58,000 was used for that project. As a result, in excess of S11,000 of URA earmarked rehabilitation funding was not used for that purpose. The 52nd Street property was to have been a $98,000 rehabilitation project. As a result of your failure to escrow the previously mentioned S27,000, and your failure to expend the additional $11,000 noted above, this proposed $98,000 in reality only cost approximately $58,000. URA, however, never questioned these activities as you were the program administrator and the individual who was responsible for ensuring the constuction work was done. Orestes Kertis, the URA employee responsible for ensuring that the work is completed was your subordinate, as URA program administrator. Clearly, these activities create substantial questions as to your use of your public position to ensure that the URA never became aware of these activities. In addition to the foregoing, we note that similar activity took place with relation to the Brereton Street property. In that situation, Lauren Associates, your company, issued a $41,941 check to Allegheny Restoration for payment of work done purportedly in the rehabilitation of that property. Once again, this check was never cashed but was credited by URA to the Lauren Associates' account. As a result, you were not required to deposit that amount into escrow. The check, however, as noted was never cashed and as a result this was just a paper transaction which enabled you to obtain the amount of subsidy that was there marked for the Brereton property. URA was provided, once again with false or misleading information which was never questioned, navid Panza Page 46 June 2.0, 1986 False or misleading information was also provided to the URA in relation to the funding of the Augusta Street Project. The URA was informed that F_quihank had committed $100,000 to Alfred Panza for the rehabilitation of this property. In fact, these funds were not for that purpose but for the purchase of another property. Also URA was provided with a letter from the Farmers National Rank as evidence of a $55,000 loan. This letter, however, while hearing the initials of an authorized loan officer was in reality not signed by that officer and in fact no loan had been approved. - In addition to the ahove questions that have been raised, we have also observed, during the course of this investigation, that your company, Lauren Associates, received funds directly from individuals who were receiving URA funding on other projects in which you were involved as a public employee. Specifically, your brother, Alfred Panza, who had received a substantial amount of URA funding, deposited in Lauren Associates' Accounts, a total of $89,000. While these deposits were marked as loans, there is no evidence that any repayment was made by you or your company. The fact that you received this money from Alfred Panza and the fact that you had been involved to a great degree in the URA's reviewing of projects relating to your brother and approving said projects, creates substantial questions not only under the Ethics Act hut under other provisions of law. Similar funds were received from other individuals who also had URA projects in which you were involved as a public employee. Such funds were received from John DiPucci totaling $1,725 and S1,00() was received from Chris -A1, a company owned by your brother, Alfred Panza. As a result of all the foregoing, we find that you did in fact violate Section 3(a) of the State Ethics Act when you, as a public employee, took various actions in relation to the projects in which you, through your company Lauren Associates, had a direct interest. We believe that you intentionally hid your interest in these projects from URA and as a result, we believe that your violation of the State Ethics Act was intentional in nature. We also he.lieve that as Program Administrator, your use of a URA employee, Orestes Kertis, to inspect your projects as well as your failure to question the receipt of highly questionable information provided in relation to your projects were further violations of the Act. In addition to the foregoing, we must review the situation regarding your actions as they involved your brother, Alfred Panza, your sister Celeste Emrick, and your brother, Victor Panza. These individuals received a combined total of S77f,R25 in URA funding. Your participation in these matters and in assuring that these individuals received that funding was suhstantial. Your office was responsible for the approval of stage payments in relation to URA dishursements to these individuals and was also responsible for the inspection David Panza Page 47 June 20, 1986 of the rehabilitation operations. This was done through Orestes Kertis, your subordinate who, interestingly, was listed as the individual who opened the post office box for your company, Lauren Associates. In relation to the projects that were awarded to your family members, these individuals were not mi nor dependents residing in your household and as a result, they are not members of your immediate family as set forth in the definition of the State Ethics Act. As such, we do not believe that we can find a violation of Section 3(a) of the State Ethics Act in relation to your activities insofar as you approved projects for these individuals. We do, however, believe that various other provisions of law have been implicated by your activity in relation to these individuals. Specifically, as we have noted above, insofar as your approval of projects related to your brother, Alfred Panza, or companies owned by Alfred Panza, you had received approximately $89,000 from your brother while at the same time as a URA employee you were approving projects for him. We believe that this particular situation warrants further review by appropriate law enforcement authorities to determine whether other provisions of law have been violated. Such payments may have been made to influence your decisions and actions as a public employee. The Ethics Act also provides as follows: Section 4. Statement of financial interests required to be filed. (a) Each public empl oyee empl oyed by the Commonwealth shall file a statement of financial interests for the preceding calendar year with the department, agency or bureau in which he is employed no later than May 1 of each year that he holds such a position and of the year after he leaves such a position. Any other public employee shal fil e a statement of financial interests with the governing authority of the political subdivision by which he is employed no later than May 1 of each year that he holds such a position and of the year after he leaves such a position. 65 P.S. 404(a). 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 i ncome total 1 i ng in the aggregate of $500 or more. However, this provision shall not be construed to require the divulgence of confidential information protected by statute or existing professional codes of ethics. David Panza Page 48 (8) Any office, di rectorship or employment of any nature whatsoever in any business entity. June 20, 1986 (9) Any fi nanci al i nterest i n any 1 egal entity engaged in business for profit. 65 P.S. 405(b). You failed to file Statements of Financial Interests for six (6) years in which you were required to file. In the one year that you did file the Statement of Financial Interests, 1984, you failed to list Lauren Associates as an entity in which you had a financial interest. Additionally, you failed to list as sources of income in excess of $500, Lauren Associates and various rental properties in which you had an interest. Our review of the Lauren Associates accounts clearly reveals that you received funds from Lauren Associates during this time period. The funds you received were related to expenses paid for your personal residence, payment of the mortgage on your personal residence, and direct payments to you. As such, we believe failure to file as required by Section 404(a) of the Ethics Act and 405 of the Ethics Act constitutes a violation of the State Ethics Act as well as potential violations of other provisions of law. In conclusion, we note that the Urban Redevelopment law was enacted in order to romote the health, safety, and welfare of inhabitants of the municipalities of this Commonwealth. This was to be accomplished through the elimination of blighted areas through socially and economically sound redevelopment of such areas. These purposes were specifically declared in the Urban Redevelopment law as public purposes for which public money would be spent. 35 P.S. Section 1702. As a public employee, you were entrusted with the duty of ensuring that these public purposes were accomplished and that the public monies were expended in a manner that would accomplish the general policies outlined in the law. Your free wheeling, however, as a URA employee in the disbursement of funds to yourself, to corporations in which you had an interest, and to members of your family evidences a clear abuse of office. Mi sl eadi ng information was submitted to the URA i n order to obtain certain amounts of funding. Funds were diverted from the URA and your interest in projects was intentionally hidden from the URA. You, a company with which you are associated, and individuals who were related to you or individuals with whom you were associated through business transactions were able to receive URA funding for a combined total of $907,579 regarding at least 15 different properties. As such, we believe that you clearly used your position at the URA in order to obtain a financial gain other than the compensation provided for by law, We are, therefore, referring this matter to the Office of Attorney General with a recommendation that they initiate prosecution in relation to this situation. We further are recommendi ng that additional investigation be conducted i n order to determi ne i f various other provisions of law have been violated and if other individuals have been involved in these activities. In addition to the foregoing recommendation, we are also forwarding this David Panza Page 49 June 20, 1986 information to appropriate federal authorities so that they may act in accordance with their appropriate discretion in this matter. We specifically note that during the course of our investigation, we found no control systems at the Urban Redevelopment Authority in Pittsburgh to prevent this type of activity. While your interests were specifically hidden from the URA, the names of your brother and family members clearly are evidenced in the files, however, no waivers were obtained in relation to this situation from the URA. No one at URA seriously questioned this activity and when action was finally taken, you received only a three day suspension. It wasn't until your complete hidden interests were revealed that you were terminated. We believe, that the record keeping system and control systems of the URA should be reviewed so that future situations of this type may be avoided. We are, thus, forwarding this order to the Urban Redevelopment Authority in Pittsburgh as well as to the Pennsylvania Department of Community Affairs and the United States Department of Housing and Urban Development. This matter will also be forwarded to the appropriate federal prosecuting authorities for their review and disposition. C. Conclusion: You violated the State Ethics Act when you, as a URA employee, participated in and approved the award of URA funding to a company with which you are associated. Your interest in this company and your interest in these projects was hidden from the URA. You also violated the State Ethics Act in various other actions in which you were involved as a URA official as outlined in the findings of fact and the discussion above. In addition thereto violated the State Ethics Act when you failed to file Statements of Financial Interests for six (6) years in which you were required to so file. You further violated the State Ethics Act when you failed to list Lauren Associates as a business entity in which you had a financial interest and as a source of income in excess of $500. In addition to the foregoing, we believe that various other provisions of law have been implicated by the activities outlined above. As a result, "we are referring this matter to the Office of Attorney General with a recommendation that the violations of the State Ethics Act be prosecuted to the fullest extent of the law. We are further recommending that additional investigation be conducted in order to determine if other laws have been violated and to further identify the individuals who have participated in such violations. Additionally, we are referring this matter to various other State and Federal law enforcement and administrative agencies for review and appropriate di sposi tion. David Panza Page 50 June 20, 1986 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 thi s 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). By the Commission, d rt4A4 012031 G. Sieber Pancoast Chairman n - 7 p • • ► ? i s n ♦j 11 n s. 0 0 2. zm � C1 Y O P. 0 n sl nl ew _ Z: p l 4 y y O ••T.V T � h S _m w 1 v ZC ' • • T TZ m1 T n N.y zc mm• 3, n n w y O n z. m ; n r. O I N • N I C, N 1J • -1 " "" • y 7 G • 4 • G 4. O 1 .. fir, I -,C 1 - I +^ .!� r 1 0 0. N ~ I 0 10 SI Y O n 1 G I N G • N p .• I -1 G I „Q.p u Y c • 1 a 71 =ti 7 F w zw O f: 17. t r• Mr. Thomas E. Waters, Jr. District Attorney Montgomery County Courthouse Norristown, PA 194C4 Re: 85 -110 -C Dear Mr. Waters: STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 ORDER OF THE COMMISSION June 20, 1986 Order No. 493 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 District Attorney in Montgomery County Pennsylvania, violated Section 5(h)(8) and or (9) which requires the reporting of any office, directorship, or employment in any business entity and any financial interest in any legal entity engaged in business for profit when you failed to report your in Deep -Run Design, Incorporated. A. Findings: 1. You have served as District Attorney of Montgomery County since Novemher 21, 1984. The court appointed you to this position. 2. You filed Statements of Financial Interests dated November 3, 1984 and March 6, 1985. 3. On hoth statements, Item 18 of the statement "office or directorship in any business" and Item 19, "financial interests in any husiness for profit" were completed with the word "none ". 4 . Upon leaving the law firm of Waters, Gallager and Trachtman, Norristown, Pennsylvania, in Novemher of 1984, you received 5% of the stock in Deep -Run Design, Incorporated. Mr. Thomas E. Waters, Jr. June 20, 1986 Page 2 5. You provided the following information: a. Deep -Run Design is a Sole Proprietorship. b. The corporation has been seeking financial support but has not received funds to date. c. No stock certificates have been issued by this corporation. 6. You are neither an officer, director, or employee of Deep -Run Design, Incorporated. 7. You state that you were not aware that you were required to report your interest in this corporation. B. Discussion: As the District Attorney for Montgomery County, you are a public official as that term is defined in the State Ethics Act, 65 P.S. §402. As such, you must comply with the requirements of the State Ethics Act. The State Ethics Act provides that all public employees must file a Statement of Financial Interests by May 1 of each year with the governing authority of the political subdivision in which he serves. This requirement is equally applicable to public officials. See, Kremer v. State Ethics Commission, 56 Pa. Commw. 160, 424 A.2d 968, (1981) At 969. The State Ethics Act further provides that said Statements of Financial Interests must include any office, di rectorship or employment of any nature whatsoever i n any business entity and any financial interest i n any legal entity engaged in business for profit. 65 P.S. §405(b)(8) and (9). In relation to the above, the regulations of the Commission further provide that: §5.15.Financial interests to be disclosed. A publi c official , public employe or candidate shall disclose his financial interest and that of his spouse, and minor dependent children in any legal entity engaged in business for profit where such interest exceeds 5.0% of the equity of the business or, if such financial interest is i ndebt ness, equals or exceeds 5.0% of the assets of the business. 51 Pa. Code 5.15. In the instant situation, you have not listed Deep -Run Design as a business entity in which you have a financial interests. You do not, however, hold any office, director, or employment position with that corporation and, therefore, such would not be required to be filed pursuant to Section 5(b)(8) above. In addition to the foregoing, we note that while the State Ethics Act would requi re the identity of any fi nanci al i nterests i n any 1 egal entity engaged i n business for profit, the regulations of the Commission have limited that Mr. Thomas E. Waters, Jr. June 20, 1986 Page 3 disclosure requirement to those interests which exceed 5% of the equity of the business entity at fair market value. In the instant situation, our investigation reveals that you do not hold more than 5% of the stock of Deep -Run Design. As such, you would not have been required to file that corporation as an entity in which you hold a financial interests on your statement. In light of the foregoing, we do not believe that there was any violation of the State Ethics Act. C. Conclusion: There was no violation of the State Ethics Act when you failed to list Deep -Run Design as a business entity in which you have an interest in light of the fact that your interest therein does not exceed 5% of the common stock at fair market value of the company. Also, you are not an officer, director, or employee of that corporation, therefore, you would only need list this corporation as a source of income, if in fact, you received an income in excess of $500 from that entity. There is no evidence to indicate that such has occurred. We do note that the Commission may accept and file any information voluntarily supplied that exceeds the requirements of this Act. 65 P.S. §407(4). 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 thi s 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). By the Commission, af G. Sieber Pancoast Chairman Honorable Frank Salvatore Senate of Pennsylvania Commonwealth of Pennsylvania 14219 Barcalow Street Philadelphia, PA 19116 Re: 84 -133 -C STATE ETHICS COMMISSION 308 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 1 71 08 -1 470 TELEPHONE (717) 783 -1610 ORDER OF THE COMMISSION June 20, 1986 Order No. 494 Dear Senator Salvatore: 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, as a member of the Pennsylvania House of Representatives, violated Section 3(a) of the State Ethics Act, 65 P.S. 403(a), which prohibits the use of public office or confidential information gained through that office by a public official or public employee when you distributed campaign literature and taxpayer - funded literature as part of your campaign for the Pennsylvania Senate. A. Findings: 1. You served as a member of the House of Representatives of the Commonwealti; of Pennsylvania from 1973 to January 1985 and, as such, are a " puhlic official" subject to the Ethics Act. 2. You sought election to the Senate of the Commonwealth of P running in the May, 1984 riniar the , 1984 general e l e ctio n , by p y and th general election. a. You were elected and currently serve in the Fifth Senate District o'r Pennsylvania. 3. During March and April, 1984, a letter entitled "Salvatore for Senate" was distributed door -to -door. Honorable Frank Salvatore June 20, 1936 Page 2 a. The "Salvatore for Senate" letter head contained the following: Salvatore for Senate Committee 316 Ruxmont Street, Philadelphia, PA 19116 !port Gorlick /Co- Chairmen /George Costello John Eagan, Finance Chairman /Edith Kitchin, Treasurer It also had a phone number - 215- 464 -4480 on it. 4. According to your attorney, taxpayer funded literature was distributed around .luly, 1984. a. Your Guide to the State Sales Tax and Non - Taxable Items" contained the House 0 Representatives seal, your district office and Harrishurg office addresses and phone numbers on it. h. "A Guide to Philadelphia Services" also contained your district office and Harrishurg addresses and phone numbers on it. 5. You also distributed a letter dealing with legislative action on the state lottery. a. This letter contained the House of Representatives letter head and your district and Harrisburg addresses and phone numbers. h. It did not appeal for political support, discuss political issues or opponents. 6. no riarch 7, 1986, your Attorney, Richard H. Glanton, wrote to Edward M. Seladones, Executive Director of the State Ethics Commission, and stated the following: a. He was submitting information that he believed would cause a conclusion that the complaint was without merit and make an interview with you unnecessary. h, You distrihuted campaign material paid for hy your campaign committee to residents of the senatorial district for which you were a candidate. You did not use state personnel , equipment or finds in this effort. d, Section 3(a) of the Ethics Act does not restrict communications hetween voters and their elected officials unless the relationship is used for "personal financial gain restricted hy the Act itself ". e. That the distrihution of taxpayer—funded literature is governed hy Howe rules which provide: Honorahle Frank Salvatore June 20, 1986 Page 3 "Such allowable expenses of memhers may be used for any legislative purpose or function, including hut not limited to the following: (3) Rent for legislative office space; purchase of office supplies; postage; telephone and answering services; printing services and rental only of office equipment; voucher and. vendor's receipt, except for postage expense. No reimbursement or expenditure shall be made out of any appropriation account for any mass mailing including a hulk -rate mailing made at the direction or on behalf of any member which is mailed or delivered to a postal facility within sixty (60) days immediately preceding any primary or election at which said- member is a candidate for public office. P-lass mailing shall mean a newsletter of similar mailing of more than fifty (50) pieces in which the content of the matter is substantially identical. Nothing in this rule shall apply to any mailing which is in direct response to inquiries or requests from persons to whom matter is mailed, which is addressed to colleagues in the General Assembly or other governmental officials or which consists entirely of news releases to the communications media." (emphasis supplied). (1) That the taxpayer funded literature was "prepared by your legislative staff, deals with relevant legislative issues, does not appeal for political support, discuss campaign issues, nor refer to political opponents ". (2) That a mailing to "potential constituents in the legislator's (new) district, or more aptly stated, non- constituent at the time of the mailing does not automatically determine that the mailing is a non - official one ". (3) That most of the mailings were made in July, 1984 and months before the Novemher election. P. Discussion: Section 3(a) of the Ethics Act prohibits the use of puhlic office for personal financial gain.. See 65 P,S. 403(a). A legislator may not use his office or, in this case, puhlic money which is to he expenders only for "legislative" purposes to secure.. or primarily advance his own personal goal or re-election. A legislator, however, when running for re- election cannot he Honorable Frank Salvatore June 20, 1986 Page 4 restrained because of Section 3(a) of the Ethics Act from performing his official or legislative business during the campaign. The question can be reduced to simply whether or not the activity (mailing -or printing) in question constitutes "official business" of the member. If not, then the activity amounts to using the public purse to finance purely personal efforts and violates the Ethics Act. See, McClatchy, No. 130; Rappaport, No. 129. In the current situation, we have_ been called upon to review the distribution of certain -items as follows: 1. letter entitled Salvatore for Senate 2. two Guides to Services 3. letter regarding the State Lottery With relation to the first item listed above, it is noted that while that material was specifically related to your re- election efforts, such material was paid for with private funds. No public funds, personnel or facilities were employed regarding the printing and distribution of that item. Similarly, the guides listed in item two above, while printed at public expense, do not - appear to have been used in relaton to the re- election activities. Members of the General Assembly are authorized, pursuant to the law, to print and distribute this type of material to their constituents. There is no evidence - that these items were used as part of your door -to -door campaign activities. Absent such evidence, we do not believe that there has been any violation in relation to the State Ethics Act. The final item to be reviewed is the letter regarding the State Lottery. This letter, while containing the House of Representatives letter head and your district office locations, did not appeal for any political support and did not reference to your campaign. Generally, i n reviewing similar situations, we have employed the following criteria in analyzing whether a mailing or distribution is for non- legislative purposes: 1. What per -cent of the mailing can be said to be ded'cated to ''other matters which strongly lends itself to the suspicion that it is promotive of getting votes for the sender? In Rising v. Brown, 313 F. Supp. 824 (D. C. Cal. 1970) a 50% rate of such material was involved. It is also notable that in Rising, the mailing was prepared by the same Public Relations firm which was managing the legislator's election campaign. In Rising, the court concluded the "franking" privilege had been abused. 2. What was the main content matter of the mailings' written ,portions? Honorable Frank Salvatore June 20, 1986 Page 5 a. Did it include appeals for political support? b. Did it refer to what a member expects to do in the next session? c. Did it discuss the upcoming political campaign /contest? d. Did it refer to political opponents? e. Can it reasonably be said to relate to legislative responsibilities. f. Can mailing be viewed as one designed primarily to advance electoral prospects? See Schaiffo v. Helstoski, 492 F.2d 413 (3rd Cir. 1974). 3. How extensive was the mailing? Examine total copies and distribution. In Hoellen v. Annunzio, 468 F.2d 522 (7th Cir. 1972), cert. den. 93 S. Ct. 3001, 412 U.S. 953, a total mailing of 134,000 copies was sent; 100,000 to potential constituents and 34,000 to "old" constitutents (defendant was serving representative in 7th District, running for seat in 11th District). The Court found 34,000 copies were properly "franked" as official business but 100,000 were for the purpose of advancing candidacy and, therefore, not properly "franked." 4. When was mailing made? In Rising, supra, a massive state -wide mailing two weeks prior to election was sanctioned. In the instant situation, we believe that the "lottery letter" was a proper mailing under the above criteria. That letter informed constituents of recent legislative actions in relation to the lottery. It did not appeal for support or otherwise mention any election. It did not set forth any future plans and was issued mainly as a result of requests for information. As such, we do not believe that there has been any violation of the State Ethics Act. Finally, we note that we have recently issued an advice in relation to similar activity which generally outlines the permissible scope of an official's actions in similar matters. In relation to election campaign activities, we have determined that: 1. Use of the Commonwealth seal; the House of Representatives letterhead, and official title is permitted. Honorable Frank Salvatore June 20, 1986 Page 6 2. All stationery containing the aforementioned items should set forth a disclaimer indicating that the stationery is not official Commonwealth stationery and has been paid for with private funds. 3. An official may not use the address of the Commonwealth offices, legislative offices or legislative phone numbers as campaign contact points. 4. The purchase of the stationery in support of a campaign should not be made through the House of Representatives and an official may not take advantage of any special rates accorded to the House of Representatives by any printing company for the purchase of Commonwealth supplies. 5. An official may not use the House mails or postage for dissemination of this material. 6. Finally, the content of the letter should not indicate or leave the impression that the letter is an official governmental document or part of the legislative function. Fee, 86 -542. C. Conclusion: There was no violation of the State Ethics Act as there is no evidence that you used Commonwealth funds to print or distrihute re- election campaign materials. There was also no evidence that the distribution of items paid for with public fends was for campaign purposes. 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 nada available as a public document 15 days after service (defined as nailing) 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 S1,000 or imprisoned for not more than one year or both, see 65 P.S. 409(e). Ryythe Commission, .cJ �O .i c (rt1�• -6 0,,- -c -ra.ot G. Sieher Pancoast Chairman Mr. Glenn Snavely R.D. #2, Box 2.40 Elizabethtown, PA 17022 Re: 86 -020 -C STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 ORDER OF THE COMMISSION June 20, 1986 Order No. 495 Dear Mr. Snavely: The State Ethics Commission has received a complaint regarding you and a possihle 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 Code Enforcement Officer for the Borough of Highspire, violated Section 3(a) of the Ethics Act which prohibits a public employee or public official's use of office or confidential information gained through that office to obtain financial gain when you failed to enforce building code and zoning requirements on projects you huilt as a private contractor. A. Findings: 1. You have served as a part -time Code Enforcement Officer for Highspire Borough since November, 1978 and, as such, are subject to the State Ethics Act. 2. The full -time code enforcement officer for the borough is Donald H. Horner. 3. You own property at 657 -669 Eshelman Street in Highspire. 4. You were granted a variance from sideyard requirements on this property. The actions leading to the granting of this variance were as follows: a. On August 8, 1983, you applied for a zoning variance. Mr. Glenn Snavely June 20, 1986 Page 2 b. James R. Brokenshire, Jr., the zoning officer for the Highspire Zoning Hearing Board, issued a public notice at the Highspire Zoning Hearing Board and set August 24, 1983 at 7:30 p.m. as the date for a hearing on your variance. c. On August 25, 1983, George Keiter, Chairman of the zoning hearing board, notified you and all parties that the zoning hearing board had unanimously granted the variance you had requested. d. On April 16, 1984, Use and Occupancy Certificate #478 was issued to you and your wife. Donald H. Horner signed this certificate as code enforcement officer and James R. Brokenshire, Jr., signed it as zoning officer. 5. You were not involved in any of the official actions which resulted in the approval of the variance on your property. a. You were not the borough zoning officer. B. Discussion: As a code enforcement officer for the Bcrough of Highspire you are a public employee as that term is defined in the State Ethics Act. 65 P.S. §402. As such, your conduct must conform to the requirements of that Act. See, Simmons, 79 -056. Generally, the State 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, a public official or public employee may not use their public position in order to obtain any financial gain for themselves other than the compensation provided for by law. A public employee may not use confidential information obtained i n their public position for similar purposes. Based upon the above provision of law, it is clear that a public official may not take any action, in their public capacity, that would benefit them financially or in relation to private projects in which they are involved. In the instant situation, the facts indicate that you took no action as a public employee in relation to the housing development in which you were involved. You were not the zoning officer and you were not a member of the zoning hearing board. You did, as a private citizen, make application Mr. Glenn Snavely June 20, 1986 Page 3 to the zoning hearing board in order to obtain a variance from the borough zoning ordinance. This was done in order to construct the houses as indicated in the findings of fact. In relation to that application, however, you took no action and participated in no way as a public official in the zoning hearing board's review, consideration, and decision in relation to that matter. You were not, as code enforcement officer, in a position to affect the outcome of the zoning hearing board decision in any way. We also note that as code enforcement officer you did not participate, to any extent, in the review of the proposed buildings that you were constructing. As such, we do not believe that you violated the State Ethics Act. C. Conclusion: There was no violation of the State Ethics Act in light of the fact that you did not participate, to any extent, as the borough's code enforcement officer in a private housing 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 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). By the Commission, G. Sieber Pancoast Chairman Mr. B. Edward Smith 537 Bluff Street Johnstown, PA 15905 Re: 85 -09 -C Dear Mr. Smith: STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 ORDER OF THE COMMISSION June 20, 1986 Order No. 496 The State Ethics Commission has received a complaint regarding you and a possihle 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 Southmont Borough Councilman, violated Section 3(a) of the Ethics Act which prohibits a public employee or public official's use of office or confidential information gained through that office to obtain financial gain by having yourself appointed Borough Manager. A. Finding: 1. You served as a council member of Southmont Borough for approximately 11 years and resigned on January 9, 1985. As a borough council member you are suhject to the requirements of the State Ethics Act (Act 170- 1978). 2. You also served as Borough President from 1978 until January 8, 1985. 3. You held a council workshop in July or August 1984 and the council informally agreed to begin looking for a borough manager. 4. In November 1984, council passed Ordinance #329 to advertise for a full or part -time borough manager. The motion was made by council memher Christman, seconded by council memher Askey. You abstained, and the ordinance was approved by a vote of six to nothing. Mr. B. Edward Smith June 20, 1986 Page 2 5. On December 17, 1984, councilman Weir motioned that the ordinance be accepted, councilman Glass seconded the motion and it was approved by a five to nothing vote. You abstained. a. On motion by councilman Weir, seconded by councilman Kelly, the borough voted to advertise for a part- time borough manager. No benefits would be included and the salary would be negotiable. The motion carried..and you abstained. b. You appointed council members Kelly, Askey and Weir to an i ntervi ewi ng committee. c. The advertisement was scheduled to appear on December 19th and 20th, the final day for receiving applications was established on December 28th, and a special council meeting was scheduled for January 9, 1985, to hire the borough manager. 6. At the January 9, 1985 council meeting the following actions took place: a. You resigned from council effective January 8, 1985. b. The interviewing committee reported that four applications were received and one applicant withdrew before being interviewed. c. Each candidate was interviewed individually. identified as Donald Costlow, Douglas Grubb, d. The committee recommended that you should be your knowledge of the borough and its functi These candidates were and you. appointed because of ons. e. On motion by councilman Kelly, second by councilman Glass. You were hired as the Manager of Southmont Borough with a salary of $10,000 per year and a working week of 30 hours under a two year contract. f. Two council members were absent, all others voted for your appointment. 7. On August 14, 1985, you resigned as Borough Manager to manager's position in Upper Yoder Township. B. Discussion: As an elected member of the borough council in Southmont 3orough, you were a public official as that term is defined in the State Ethics Act. 65 P.S. §402 et. seq. As such, your conduct must conform to the requirements of the Act. See, Davis, 84 -012; Domalakes, 85 -010. accept the township Mr. B. Edward Smith June 20, 1986 Page 3 Generally, the State 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, no public official may use his public position in order to obtain any financial gain for himself, for a member of his immediate family or for a business with which he is associated. An individual may not use confidential information obtained in his official capacity for similar purposes. Within the above provision of law, this Commission has previously determined that an individual who is a public official may not vote or otherwise appoint himself to a compensated position within the governmental body that he serves. See, King, 85 -025; Gabig, No. 457. Additionally, if an individual were to use confidential information obtained in his public office in order to place himself in a position of employment with his govermental body, then such would also be a violation of the State Ethics Act. The above principles of law have been set forth, not only by this Commission, but by the courts of this Commonwealth as well. See, Meixell v. Hillertown Borough, 370 Pa. 420, 88 A.2d 594, (1952), holding that a borough councilman may not vote to appoint himself mayor. In the instant situation, while you were appointed by the council to the position of borough manager, the evidence reveals that you abstained from generally participating in this matter. The record reflects that in November of 1984, you abstained from the council's decision to seek, through advertising, a part -time borough manager. Additionally, on December 17, 1984, you similarly abstained from the borough's enactment of an ordinance to seek a full -time manager. The only action which you took, in relation to this matter, is that you did, in fact, participate in the appointment of the members who were to serve on the interviewing committee. While your participation in this respect may be considered questionable, you did not participate in the decision to appoint yourself to the position of borough manager. Additionally, the position of the borough manager was publicly advertised and a number of candidates were, i n fact, interviewed. You were the candidate that was selected. Because of your abstention in the matters, as outlined in the findings of fact, we do not believe that Section 403(a) of the State Ethics Act has been violated. In addition to the above, we must note that Section 403(e) provides as follows: Mr. B. Edward Smith June 20, 1986 Page 4 Section 3. Restricted activities. (e) No former official or public employee shall represent a person, with or without compensation, on any matter before the goverrme body with which he has been associated for one year after he leaves that body. 65 P.S. 403(e). Generally, under the above provision of law, a former public official would be prohibited from representing a person or entity before his governmental body for a period of one year after Ms employment is terminated. In relation to this restriction, this Commission has determined that when such a former official or employee obtains employment with another governmental body or on a different level of government, the above restriction would not be applicable. See, Hagen, 84 -019; Pinto, 84 -021. The Commission has also determined that when a public official or employee transfers within a governmental system, they do not become a former governmental employee or official, but rather they continue as a public official or employee. See, Gray, 83 -596; Cohen, 79 -045; Teets, 85 -542; McClellan, 86 -551. C. Conclusion: You did not violate the State Ethics Act in that you did not participate in the borough's decision to appoint you as borough manager. You abstained from participating in these matters and your abstention was publicly recorded as required by the State Ethics Act. Section 403(e) of the State Ethics Act would not prohibit a public employee or public official from transferring positions within his governmental body or from otherwise obtaining a position at a different level of government. An individual who proceeds in this matter does not become a former public employee within the provisions of Section 403(e). 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 thi s 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). By the Commission, xY. G. Sieber Pancoast Chairman Ms. Olga Wilson 6825 Ridge Avenue Finleyville, PA 15332 Re: 86 -088 -C Dear Ms. Wilson: STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 ORDER OF THE COMMISSION June 20, 1986 Order No. 497 The Ethics Commission has reviewed the allegation(s) that you have violated the Ethics Act, Act 1978 -170. The nature of the alleged violation(s) is as follows: That you, a Supervisor and Roadmaster of Union Township, violated Section 3(a) of the Ethics Act which prohibits a public official's use of office or confidential information gained from that office to realize financial gain other than compensation allowed by law when you voted to appoint yourself as township roadmaster. On May 2, 1986, the Commission issued Order No 457 -R to Mr. Jack Gabig. In that order we found: Conclusion: Your act in voting for yourself to a position of employment in a township of the second class, where you served as a township supervisor, .is not in accord with our most recent interpretation of the State Ethics Act. In light of the fact, however, that your actions in this matter predated our King Opinion and that there are no other factors which indicate that you intentionally attempted to obtain financial gain in violation of the law, we will take no further action in this matter. We do note that the decision in this particular case is a result of the specific factors outlined herein and that such decision could he different under other circumstances. The circumstances in your case are essentially the same as in Gahig. W will take no further action in accordance with the above conclusion. Ry the Commission, O G. Sieber Pancoast Chairman P1r. Daniel Nurnberger Route 88, R.D. #1 Finleyville, PA 15332 Re: 86-089-C STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 ORDER OF THE COMMISSION June 20, 1986 Order No. 498 Dear Mr. Nurnberger: The Ethic Commission has reviewed the allegation(s) that you have violated the Ethics Act, Act 1978 -170. The nature of the alleged violation(s) is as follows! That you, a Supervisor and Roadmaster of Union Township, violated Section 3(a) of the Ethics Act which prohibits a public official's use of office or confidential information gained from that office to realize financial gain other than compensation allowed by law when you voted to appoint yourself as township roarimaster. On May 2, 1986, the Commission issued Order No 457 -R to Mr. Jack:Gahig. In that order we found: Conclusion: Your act in voting for yourself to a position of employment in a township of the second class, where you served as a township supervisor, is not in accord with our most recent interpretation of the State Ethics Act. In light of the fact, however, that your actions in this matter predated our King Opinion and that there are no other factors which indicate that you intentionally attempted to obtain financial gain in violation of the law, we will take no further action in this matter. We do note that the decision in this particular case is a result of the specific factors outlined herein and that such decision could he different under other circumstances. The circumstances in your case are essentially the same as in Gahig. We will take no further action in accordance with the ahove conclusion. By the Commission, G. Sieher Pancoast Chairman Mr. Stephen J. Parish, Jr. R.D. #1, Airport Road Finleyville, PA 15332 Re: 86 -090 -C Dear Mr. Parish: STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 ORDER OF THE COMMISSION June 20, 1986 Order No. 499 The Ethics Commission has reviewed the allegation(s) that you have violated the Ethics Act, Act 1978 -170. The nature of the alleged violation(s) is as follows: That you, a Supervisor and Roadmaster of Union Township, violated Section 3(a) of the Ethics Act which prohibits a public official's use of office or confidential information gained from that office to realize financial gain other than compensation allowed by law when you voted to appoint yourself as township roadmaster. On May 2, 1986, the Commission issued Order No. 457 -R to Mr. Jack Gahig. In that order we found: Conclusion: Your act in voting for yourself to a position of employment in a township of the second class, where you served as a township supervisor, i.s not in accord with our most recent interpretation of the State Ethics Act. In light of the fact, however, that your actions in this matter predated our King Opinion and that there are no other factors which indicate that you intentionally attempted to obtain financial gain in violation of the law, we will take no further action in this matter. We do note that the decision in this particular case is a result of the specific factors outlined herein and that such decision could he different under other circumstances. The circumstances in your case are essentially the same as in Gabig. We will take no further action in accordance with the above conclusion. By the Commission, V . rer,wt w £t G. Sieber Pancoast Chairman Mr, Larry Spahr R.G. #5, McChain Road FinleyviLe, PA 153K'. Re7 86- 091--C STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 ORDER OF THE COMMISSION June 20, 1986 Order No. 500 Dear Mr. Spahr: she Ethics Commission has reviewed .e allegation(s) that you have violated the Ethics fact, Act 1978 -170, lne nature of the alleged violation(s) as ro :lows: That you, a Supervisor and Roadmaster of union Township, violated Section 3(a) of the Ethics Act which prohibits a public official's use of office or confidential information gained from that office to realize financial gain other than compensation allowed by ":aw when you voted to appoint yourself as township roadmaster. On May 2, 1986, the Commission issued Order No. 457 -R to Mr. pack :Gabig. In that order we found: Conclusion: Your act in voting for yourself to a position of employment in a township of the second class, where you served as a township supervisor, is not in accord with our most recent interpretation of the State Ethics Act. In light of the fact, however, that your actions in this matter predated our King Opinion and that there are no other factors which indicate that you intentionally attempted to obtain financial gain in violation of the law, we will take no further action in this matter. We do note that the recision in this particular case is a result of the specific factors outlined herein and that such decision could he different under other circumstances The circumstances in your case are essentially the same as in Gahig. We will take no further action in accordance with the above conclusion. Ry the Commission, G. Sieher Pancoast Chairman