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HomeMy WebLinkAbout597 KulikMr. Joseph M. Kulik 121 Lorish Road McKees Rocks, PA 15136 Re: 86 -166 -C Dear Mr. Kulik: STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 ORDER OF THE COMMISSION Order No. 597 DATE DECIDED: August 31, 1987 DATE MAILED: September g, 1.9 87 The Ethics Commission has reviewed the allegation(s) that you have violated the Ethics Act, Act 170 of 1978. The nature of the alleged violation(s) is as follows: I. Allegation: That you, a member of the Montour School Board, violated Section 3(a) of the Ethics Act which prohibits a public employee's or public official's use of office or confidential information gained through that office to obtain financial gain other than compensation allowed by law for himself, a member of his immediate family, or a business with which he is associated and Section 3(d) of the Ethics Act which covers other areas of conflicts of interest, when you participated in awarding a personal /professional contract to your law partner and by participating in and voting on the payment of bills submitted by your law partner. A. Findings: 1. You were appointed to the position on the Montour School Board in May, 1977, to fill out the unexpired terns of a resigning member. a. You were then elected to the board and began serving in January, 1978, and have served as a board member since that time and, as such, you are subject to the provisions of the Ethics Act. b. You have also served as,a board secretary since 1983. 2. Peter J. King is the solicitor for the Montour School District. Mr. King has served in that capacity since at least 1969. He has been reappointed on a yearly basis. 3. You became an associate in Mr. King's law practice in 1981. You, subsequently, became a partner in Mr. King's practice in 1986. Mr. Joseph M. Kul i k Page 2 a.. The 1986 partnership agreement stipulated that any proceeds received by Peter J. King, as solicitor for the Montour School District, shall be excluded from the partnership and that you will not have any interest in any fees received from the Montour School District. b. King was to receive 95% of the profits of the partnership and you were to receive 5% of the profits. 4. Minutes of the reorganization meetings of the Montour School Board for 1981 through 1986 disclose that each year Peter King was reappointed solicitor. You are recorded as abstaining from voting for this reappointment. 5. By letter dated July 17, 1981, you sought an advice of counsel from the State Ethics Commission requesting whether a conflict of interest, would be created by your acceptance of employment in the law offices of the school district's solicitor. a. You provided information that you were a member of the Montour School Board of Directors. You, recently, graduated from law school and were seeking employment with Peter King, the school district solicitor. You stated that as a school board member you would not vote on the selection of Mr. King as solicitor or on the salary paid to the solicitor. Mr. King would not assign you to school district matters except in cases of great urgency. b. The Advice of Counsel, 81 -605 concluded that while there was no inherent conflict of interest in a school board member accepting employment with the school district solicitor or his firm, you may not use your position on the board or_confidential information - received as a member to obtain financial gain for yourself or your actual or prospective employer. Also, if the solicitor's contract is valued at more than $500 and you were an officer, director, or stockholder of 5% or more of the firm, the contract must be awarded in an open and_ public process, under certain guidelines. That you may not engage in discussions and /or vote on the selection and compensation of the solicitor in any event, and must place the reason for your abstention on the public record. 6. By letter dated August 11, 1986, you requested an additional advice from the State Ethics Commission regarding whether your law partner may be appointed as the municipal solicitor. The State Ethics Commission issued Advice of Counsel, 86 -597 on September 2, 1986. a. You provided information that your law partner was seeking the position of solicitor for the municipal body on which you serve. In relation to this situation, an arrangement would be transacted Mr. Joseph M. Kulik Page 3 whereby all of the fees to the solicitor will be placed in a segregated account. All of the work for the municipality would be performed by your partner and that you would receive no funds from your municipal body. You would not perform any work, as a private attorney, for that governing authority. You advised that, in all other respects, the partnership would remain intact and that you would share, on a partnership basis, all other fees generated by the partnership. b. The advice concluded: The State Ethics Act presents no absolute prohibition upon a municipal official's partner serving as the municipal solicitor. The municipal officer must abstain, however, from participating in the municipal body's decisions regarding the appointment or reappointment of the solicitor and regarding matters pertaining to decisions which would increase fee payments to the solicitor. This is so, even in light of the fact that the municipal officer will receive no fees directly from the municipal government's agreement with its solicitor. The fact that the municipal officer is associated with this particular business entity, requires adherence to the provisions of the State Ethics Act. In addition to the foregoing, if you, as the municipal officer, stand in the relation to the business as outlined above in Section 3(c) of the State Ethics Act, any contract in excess of $500 between the municipal body and the solicitor must be awarded after an open and public process. 7. Records obtained from the Montour School District disclosed the following amounts paid to Peter King from 1981 through 1987: 1981 - $13,343.48 1982 - $15,603.87 1983 - $12,913.86 1984 - $27,993.66 1985 - $42,410.52 1986 - $44,955.11 1987 - $20,057.10 (To May) 8. Review of the minutes of the monthly meetings of the Montour School Board from January, 1981 through November, 1986 reflect that you voted to pay bills submitted by Peter King. a. Beginning in December, 19.86, you abstained from voting to pay the bills of the district, which included invoices from Peter King. You also abstained from voting in January, February and April of 1987. You voted "no" in March, 1987. Mr. Joseph M. Kulik Page 4 9. Records obtained from the Montour School District regarding invoices submitted for payment by Peter King disclose that hours billed by King included hours worked by you (JMK) and charged to the school district. a. Invoice of January 9, 1984: - Mellon Bank Property Assessment Appeal - JMK .4 hours at $50. /hour. - Defamation of School Board Member JMK .3 hours at $60. /hour - Soffer Property Assessment Appeal JMK .7 hours at $60. /hour - Early Retirement Arbitration Proceeding JMK 3.5 hours at $60. /hour - Mosites Hightower - Prop Assessment Appeal JMK 2.5 hours at $60. /hour - Crafton Industrial Village Prop. Assessment Appeal $ 42.00 JMK .7 hours at $60. /hour - Calgon Prop. Assessment Appeal JMK .3 hour at $60. /hour b. Invoice of March 5, 1984: - Prop. Assessment Appeals - General $ 24.00 JMK .4 hours at $60. /hour - Tom Lawlor (employment status) JMK 1.2 hours at $60. /hour c. Invoice of July 9, 1984: $20.00 $18.00 $ 42.00 $210.00 $150.00 $ 18.00 $500.00 $ 72.00 $ 96.00 - Delinquent Taxes JMK 1.9 hours at $60. /hour $114.00 d. Invoice of September 5, 1984: - Assessment Appeal - Crafton - Ingram Shopping Center JMK .2 hours at $60. /hour $ 12.00 Mr. Joseph M. Kulik Page 5 e. Invoice of November 12, 1984: - Assessment Appeal - Catholic Cemeteries Association JMK 1.6 hours at $60. /hour $ 96.00 - Assessment Appeals - Westpointe Apartments JMK .3 hours at $60. /hour $ 18.00 - Thomas Buteri JMK 1.7 hour at $60. /hour $102.00 - Delinquent Taxes JMK .6 hours at $60. /hour $ 36.00 - Scott Limbaugh JMK 3.3 hours at $60. /hour $198.00 Total: $582.00 g. - Assessment Appeal - Apico Inns JMK .9 hours at $60 /hour - $ 54.00 - Tonidale Motel Property JMK .6 hours at $60. /hour $ 56.00 - Basketball Coach Arbitration JMK 7.1 hours at $60. /hour $426.00 Total: $528.00 f. Invoice of January 7, 1985: - Assessment Appeal - Crafton - Ingram Apartments JMK 6.8 hours at $60 /hour - $408.00 - Arbitration - basketball coach JMK 4.9 hours at $60 /hour - $282.00 - Arbitration - seniority JMK .7 hours at $60. /hour $ 42.00 - Yearbook arbitration JMK 1.1 hours at $60. /hour $ 66.00 Total: $798.00 Invoice of August 31, 1986 - Telephone calls to Canello, Karl (July 28, 1986) JMK .5 hours at $70.00 /hour $ 35.00 Mr. Joseph M. Kulik Page 6 - Conference with Peter King JMK .3 hours at $70.00 /hour $21.00 - Law Research (July 28, 1986) - JMK - .2 hours at $70.00 /hour $14.00 Total: $70.00 10. Records also disclose the following bill submited to the Montour School Board dated September 30, 1986 from the firm King & Kulik. a. The invoice itemizes an August 14, 1986 telephone call to the State Ethics Commission and a discussion with JMK. b. You were the only person in the law firm with the initials JMK. 11. By letter dated November 13, 1986, Peter King advised the school business manager as follows: It has just come to my attention that when I sent you bills with my letter of October 24 for the November list of bills, our word processor /computer printed these bills onto KING & KULIK letterhead. This was done in error. The bills should have been printed onto my letterhead, and not KING & KULIK letterhead since these fees are not part of KING & KULIK. Would you please substitute these bills for the bills that I sent to you in late October. They are the same bills and for the same amounts and I have merely re- xeroxed them onto new letterhead. The arrangement that Joe and I have is that we have a partnership for all matters not involving Montour and other items of personal business that we keep on our own. Any fee from Montour belongs solely to me and not to Joe. Whenever our word processor types the bills, it does so in draft form. I reviewed these bills at that time but when they were rerun onto letterhead paper, I did not review them. This is the reason they went out to you on KING & KULIK letterhead rather than PETER J. KING letterhead. 12. Time slips obtained from Peter King which are kept as records of time spent working on individual cases disclosed the following regarding the 1986 billing (Finding 9g). These slips bear the initials JMK and as a result, the Montour School District bill listings reflect you as working on school district matters. Mr. Joseph M. Kulik Page 7 a. The first time slip dated July 28, 1986 with the heading "Mr. Pamuni" indicating 5 /10's of an hour time spent. The initials would appear to be "PK ", although somewhat difficult to read, which would stand for Peter King. b. The second slip dated July 28, 1986 with the heading "M- Renner" indicating 5 /10's of an hour time spent. The initials are smeared and difficult to read, but would appear to be "PK" for Peter King. c. Mr. King stated those were recorded in error by a new secretary, who mistakenly took the initials to be "JK." 13. Minutes of the meetings of the Montour School Board meetings disclosed the following information: a. September 15, 1981 - Jack Karl, Business Manager, reads a letter from the State Ethics Commission confirming that there is no conflict of interest concerning your employment with Pete King. b. January 19, 1982 - a motion is made to approve property assessment appeal settlements which were outlined in the letter from Ktng The motion is passed on a 9/0 vote, members present: Atkinson, Cersosimo, Dobda, Donaldson, Duessel, Fald, Kulik, Lugaila, Lutz. c. September 20, 1983 - Kulik moved to authorize the solicitor to enter into a Consent Court Order Agreement with the Borough of Ingram and County of Allegheny to condemn property for the purpose of a park from which the district will share in $8300 in delinquent taxes. Motion carried 6/0, members present: Cersosimo, Duessel, Kulik, Falk, Lugaila, Lutz. d. December 4, 1986 - regular meeting. Kulik abstained from voting to approve and pay bills. Kulik states that he has been advised to abstain on the voting to pay bills. e. May 6, 1987, special meeting, budget board member Zeh questioned if legal expenses are projected at $48,000. Superintendent Davis stated that based on current billing a full year would be $48,000.00. 1985 -1986 expenses totalled $57,589.89. A tremendous amount of legal work is being done for tax appeals. You stated that all that you're doing is finally getting in a more realistic figure on what is being spent. Mr. Joseph M. Kulik Page 8 Solicitor Peter King added that the figure of $57,000 is not all going to him. There are other categories in there. His 1099 for last year was $41,000 and the year before was approximately that amount. There are other expenses in the Legal Budget other than just the solicitor's charges. 14. Montour School District Solicitor, Peter King, your law partner and former employer, provided the following information: a. The 1986 bill was in error due probably to a clerical error which mistook "PK" for "JK." b. Regarding previous billings when you were an associate, it was considered permissible based on the 1981 Advice of Counsel issued by the State Ethics Commission. In addition, there were occasions when he was in a bind due to court matters and asked.you to do something related to school district affairs. c. He does not see anything wrong with you as his partner, helping him out in an emergency situation, with school district matters, if all other available lawyers are busy d. You have told him that you will not, as his partner, ever again be involved in school district matters. e. Regarding your vote on assessment appeals or consent agreement resulting in payments to King, there would only be a conflict if your vote swayed the outcome. He stated that all work leads to financial gain, the school district gains money through the assessment appeals and agreements. f. Regarding the partnership, King was very much aware of the Ethics-Act and Section 3(c). He retains 95% of the partnership, while your interest is 5 %. He does not see any conflict. King has a separate business agreement with Montour School District; you have a separate business for taxes and bills. King pays you $24,000 /year plus parking and hospitalization benefits. He lost money by having you as a partner. You did much work in the teacher negotiations for free which resulted in less billing for him. g. h. He lost a vote for himself when Kulik became his associate because of Kulik's service on the school board. i. Any lawyer would have hired you. You possessed the necessary qualifications. He did not hire you to have influence on the board, He had been solicitor since 1969. Mr. Joseph M. Kulik Page 9 j. Kulik receives no remuneration from the income received from the Montour School District. 15. You provided the following information to a State Ethics Commission investigator: a. You have been a director on the Montour School Board since 1977 and board secretary since 1983. b. After graduating from law school in 1981, you became an associate of Peter King. King was forming a new practice at that time. c. You sought and received an Advice of Counsel from the State Ethics Commission regarding your acceptance of the employment. It was your impression from the advice that there would be no prohibition from accepting employment and no conflict if you were involved with Montour School District business as long as it was some sort of emergency. d. You became a partner in Mr. King's law practice in January or February, 1986. You stated Mr. King asked you to consider being a partner. e. The firm is a partnership and private practice. You recognized that you could not be a partner and be involved in school district matters or even share in any of the income. f. Mr. King retains a private practice for school district affairs. He has separate bank and checking accounts, and registration with the courts. You maintain a private practice for tax work. You have a partnership for the general practice of law. Income produced by the partnership is paid to you and King by a draw system until a decision can be made as to percentages. h. You do not see a conflict in your voting to pay King's bills since you don't see any of that money paid to King. That is money for King's business. If you thought it was a conflict you would not have voted. g. i. You stated that you voted in favor of some tax appeals and against others which would affect the volume of King's work with the board. • j. Your vote was never crucial on any matter affecting King. k. As board secretary, he receives all correspondence from King and refers them to the appropriate committees. You receive a computerized listing of King's bills as board member, but don't see it as his position to go into the back up of all bills. Mr. Joseph M. Kulik Page 10 1. You agreed that as partners, you got to meet with King more often than would other board members. These meetings result in billings to the district. You stated that if it wasn't King, you would be meeting with another solicitor. m. You did not think it was excessive for the billings for the teachers negotiations, the board wanted the solicitor to be at the meetings. n. You explained that initials appearing on a bill means that the person contributed time toward the particular bill. Each person in the office fills out time slips showing what they do and how much time was used. o. You explained that your initials on some bills in 1982 through 1985, while you were an associate, were probably time you spent doing something for the school district that King could not do. Generally, if King had a conflict in schedule that couldn't be changed and there was school district business, such as filing documents, he would do it. You saw no problem, since you were adhering to the Ethics ruling, which allowed you to do it in an emergency. Your delivery of papers, filing appeals, etc. had no effect on you as a board' member. B. Discussion: As a member of the Montour School Board, you are a "public official" as that term is defined in the Ethics Act. Accordingly, your conduct is subject to the provisions of the Ethics Act and the restrictions therein are applicable to you. Section 3(a) of the Ethics Act provides: 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). It is further provided in Section 3(d) of the Ethics Act: Section 3. Restricted activities. (d) Other areas of possible conflict shall be addressed by the commission pursuant to paragraph (9) of section 7. 65 P.S. 403(d). Mr. Joseph M. Kulik Page 11 While you have served as a member of the Montour School Board, hereinafter Board, from 1977, you also were associated with the Board's solicitor, Peter King, in his private practice of law from 1981, and as his partner since 1986. Because of this arrangement, you requested an Advice of Counsel relative to your simultaneous service as Board member and as an associate in Mr. King's law firm. General Counsel advised you neither to participate in any discussions nor vote on the selection or compensation of the solicitor. You did abstain from voting on the yearly reappointment of Mr. King as solicitor but you did vote to pay Mr. King's bills, which were not contested, for the period from Janaury 1981 through November 1986. Further, in your capacity as an associate in Mr. King's law firm, you performed work of a legal nature relative to school district matters as is evidenced by invoices for the periods between January 1984 and January, 1985. In this regard, it is noted in your original advice request that you would, as Mr. King's associate, perform some legal work relative to school district matters in cases of "great urgency." Lastly, in January of 1982, you voted in favor of a motion, (9/0 vote), which approved a property assessment appeal settlement which was submitted by Mr. King. Likewise, you voted in favor of a motion, (6/0 vote), on September 20, 1983 to authorize Mr. King to enter into a consent order relative to a condemnation of property for a park. Although the foregoing course of conduct reflects that you have not strictly adhered to the Advice of Counsel in that you voted to approve bills of Mr. King, in that you performed legal work for Mr. King on school district matters which might be said to go beyond cases of "great urgency" and in that you voted on property assessment approval settlements and consent orders in a property condemnation matter, such action does not establish that you have used your public office to obtain , financial gain other than compensation provided by law. Since there is no evidence in this record which establishes that you have received a direct personal financial gain as a result of your voting as Board Member in matters involving Mr. King, there is no violation of Section 3(a) of the Ethics Act. See Krushinski, No. 168. Similarly, this Commission finds that there is no violation of Section 3(d) of the Ethics Act. It must be noted that this Commission has reached its decision by taking cognizance of the fact that you have stated that you will not, as Mr. King's partner, ever again be involved in school district matters and that you, as Mr. King's partner, do not share in any moneys received by Mr. King from the school district. Lastly, this Commission must point out that your conduct has only been reviewed relative to the Ethics Act; no consideration has been given as to whether you have violated any other statutes, ordinances or codes such as the Public School Code or the Code of Professional Responsibility. C. Conclusion and Order: 1. As a member of the Montour School Board, you are a "public official" under the Ethics Act. Mr. Joseph M Kul i k Page 12 2. There is no violation of Section 3(a) of the Ethics Act, in that there is no evidence to establish that you used your public office to obtain financial gain other than compensation provided for by law. 3. There is no violation of Section 3(d) of the Ethics Act. 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 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