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HomeMy WebLinkAbout620-R GriffinRe: 85- 090 -C, 85 -091 -C Dear Mr. Griffin: A. Findings: STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 ORDER OF THE COMMISSION Mr. William Griffin c/o Frank J. Tamulonis, Jr., Esquire Zimmerman, Lieberman & Derenzo 111 East Market Street P.O. Box 238 Pottsville, PA 17901 ORDER NO. 620 -R DATE DECIDED: August 18, 1988 DATE MAILED: September 13, 1988 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 Township Supervisor in West Mahanoy Township,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, because the township is currently paying for your annuity program and group life and hospitalization insurance. 1. You served as a West Mahanoy Township Supervisor from January, 1974 until the present. 2. Minutes of West Mahanoy township Supervisors' reorganization meetings disclose that from 1974 through 1985, you were appointed roadmaster. a. Prior to December, 1985, you served as part -time roadmaster but received no salary. You worked on an as needed basis. b. At the December 5, 1985 meeting, motion made by Letcavage, second by Yanchulis to employ you as a full -time roadmaster. You abstained from voting. Mr. William C:riffin Page 2 c. At that same meeting, Supervisor Letcavage was appointed group leader of the road crew and Supervisor Yanchulis was appointed as township treasurer. 3. Records of the West Mahanoy Township Auditors disclose that a special meeting was held on November 18, 1985. a. The purpose of the meeting was to establish salaries for township supervisors employed full -time. b. * Salaries were approved retroactive to October 16, 1985: William Griffin, Roadmaster, not to exceed $2,400 /year. John Letcavage, Group Leader, at a rate not to exceed $5.90 /hour. c. The minutes note these positions were a- roved by the supervisors at a prior meeting. 4. West Mahanoy Township payroll records disclos:2d that you received compensation as roadmaster at the rate of $100.00 b?- monthly effective October 16, 1985. The first pay was October 31, 1985. a. You were paid $500.00 in 1985. 5. You were enrolled in a retirement program as a township supervisor. 6. Records relating to this program indicate as follows: a. The original program was obtained thrc:?:.-, 'Cr.: Baltimore Life Insurance Company. b. Your Policy No. was A0593747. c. Coverage was thereafter with Life of Maryland Incorporated. d. Your new policy No. was 1010016610. a. This change occurred in November, of 1982. 7. Baltimore Life Insurance Company and Life of Maryland Incorporated, premium statements indicated semi - annual billings for the above policy as follows. Statement Date Amount From 06 -14 -85 $300.00 Life of Maryland 11- -85 $300.00 Life of Maryland Mr. William Griffin Page 3 06 -13 -86 $300.00 Life of Maryland 12 -12 -86 $300.00 Life of Maryland 8. Township records indicate the following in relation to payments by the township for the above benefit: Check Date Number Company 06 -12 -85 6705 Life of Maryland 12 -05 -85 7169 Life of Maryland 06 -11 -86 7591 Life of _ Maryland 12 -17 -86 8005 Life of Maryland Coverage Amount Annuity Annuity Annuity Annuity $1,500.00 $1,500.00 $1,200.00 $1,500.00 *These payments represent premiums for several township officials and employees including you. 9. The policy was terminated in June, 1987, and you have received benefits in the amount of $13,210.62. 10. You were enrolled in a life insurance program at the township's expense. 11. This insurance was with the Trustee's Insurance Fund and sponsored by the Pennsylvania State Association of Township Supervisors. a. The policy was effective (for you) on March 1, 1974. b. Policy No. 53 -14 -8. 12. Premium statements from the Trustee Insurance Fund to West Mahanoy Township indicate the following billings for your life insurance coverage from March, 1985: Statement Date Amount 07- -85 $66.95 08- -86 $66.95 Mr. William Griffin Page 4 13. Records of West Mahanoy Township indicate the following regarding the township payment of the above premiums for your life insurance coverage. Date Check No. Payee Coverage Amount 08 -29 -85 6882 Trustees Life $401.70 Insurance Fund 08 -27 -86 7766 Trustees Life $751.80 Insurance Fund *Payment represents premiums for several township officials and employees including you. 1e:. You were enrolled in a hospitalization and medical program at the township's expense. 15. This insurance was obtained through the TrustL's Insurance Fund as identified in Finding No. 13 above. The policy was effective on November 1, 1976. Your policy No. was 041843. This policy was changed to medical supplemental in 1980 and the policy number charged to 43411. 16. Premium statements from Trustee's Insurance Fund to West Mahanoy Township indicate the following billings for your ho?italization /medical insurance coverage from March 31, 1985: Statement Date Amount 09 -16 -85 $ 65.00 09 -19 -86 $ 73.00 08 -15 -86 $227.40 17. Records of West Mahanoy Township indicate the following regarding the township's payment of your hospitalization /medical insurance coverage. Date Check No. Payee Coverage Amount 10 -08 -85 7008 Trustee's Hospital $1,542.30 Insurance + Surgical Fund Mr. William Griffin Page 5 11 -10 -86 7901 Trustee's Insurance Fund Hospital $3,184.00 Surgical *Payments represent premiums for several township officials and employees including you. 18. A review of the above indicates that from March 31, 1985 to the present West Mahanoy Township expended the following for your various benefits: Annuity: $1,200.00 (Cash surrender $13,210.62) Life Insurance: $ 133.90 Hospitalization: $ 365.40 19. A review of minutes of the meeting of the township board of auditors from 1976 through January, 1987, do not indicate that any life, medical or pension coverages_were fixed or renewed for township supervisors employed by the township. a. Auditor minutes prior to 1976 could not be located and have been missing for many years. 20. Minutes of the township board of supervisors from January, 1979, to December, 1986, indicate as follows: a. January 3, 1984 - Minutes reflect a paragraph that all policies and procedures previously in effect will continue. b. January 7, 1985 - Minutes reflect a paragraph that unanimous approval by the Board of Supervisors was given to continue all past policies and procedures that are currently in effect. c. Both of these recordings were made at reorganization meetings. d. Minutes from January, 1979 through December, 1986 do not reflect that any life, medical or pension coverages were specifically fixed or renewed for township supervisors employed by the township. e. The township secretary /manager advised that the township supervisors wanted the paragraphs mentioneed in a and b above to include being a reference to the township's life, medical and pension programs. 21. By letter dated May 23, 1985, over signature of Leonard J. Tragus, Township Secretary /Manager, to Peter Sarno, Jr., it is Mr. William Griffin Page 6 verified that township supervisors are enrolled in life .:.d health insurance programs and are also enrolled in a retirement program. 22. Michael Kovalich served as a West Mahanoy Township auditor from 1966. a. Mr. Kovalich indicated that the township auditors approved the annuity, life and medical plans for supervisors in 1971, b. ,Yovalich could not provide auditor's minutes prior to January, 1976. :ovalich advised that former auditor Anthony Domarotsky was the last person to have the auditor's minutes prior to January, 1976 in his possession. d. Review of township supervisor minutes for 1971 and 197E disclosed no mention of any alleged controversy at tot r :'p meetings over the life, medical and annuity coverages affcrded the supervisors. 23. Anthony Domarotsky served as a township auditor from 1970 to 1976. a. He indicated that the auditors did nothing other than the annual audit. b. Domarotsky stated that he never voted on any motion to give auditor's approval for insurance benefits to the township supervisors. You provided the following information in relati^ to the stant situation. a. You are a "non- salaried" township supervisor and roadmaster. b. You are entitled to a salary but never accepted one. c. The township pays for your medical, life and annuity insurance. f. You voluntarily terminated your township pension plan in June, 1987. d. These programs were in place in 1974 when you took office. e. The auditors questioned this coverage in 1971 and 1976 and resolved all problems at that time. Mr. William Griffin Page 7 g. You received $13,210.62 from this plan and kept it for your personal use. h. You believed that the insurance benefits you received were a form of payment for work you did prior to accepting a salary in December, 1985. i. You agree with the amounts paid by the township as listed in Finding No. 18. B. Discussion: As a Township Supervisor you are a public official as that term is defined in the State Ethics Act. 65 P.S. 402. As such, you are subject to the provisions of the Ethics Act and the restrictions therein are applicable to you. Generally the Ethics Act provides that: Section 3. Restricted activities. (a) No public official or public employee shall use his public office or any confidential information received through his holding public office to obtain financial gain other than compensation provided by law for himself, a member of his immediate family, or a business with which he is associated. 65 P.S. 403(a). The question of the propriety of pension and annuity plans or insurance benefits for supervisors of second class townships have been reviewed by this Commission on many occasions. McCutcheon. No. 127, Hoak, No. 128, Marcello, 85 -003. The Commission determinations in these matters have been reviewed and affirmed by the Commonwealth Court of Pennsylvania. McCutcheon v. State Ethics Commission, 77 Pa. Commw. Ct. 529, 466 A.2d 283, (1982). Generally, in situations such as the instant matter, it must be determined whether the official used his position to obtain or secure financial gain other than the compensation that is authorized by law. It is now clear that pension or annuity benefits or insurance benefits such as the type herein question, constitute a financial gain. See McCutcheon v. State Ethics Commission, 466 A.2d 283, at 288. The additional question to be answered is, therefore, whether such benefits are compensation provided by law. A complete analysis of this exact issue has been set forth in the above authorities. See also Hendricks v. East Rockhill Township, 1 D & C 3d 763, (1977). Generally, the compensation to be paid to a townshlp supervisor who serves only in that position is specifically set by statute. 53 P.S. ivy. fl.liam Griffis,. Page :3 65515. A Supervisor who is also employed by the tow, ,ship in one of the positions authorized in the Second Class Township Code, may receive additional compensation. Such compensation, however, in order to be authorized by law, must be affirmatively fixed by the Township Board of Auditors. 53 P.S. 65542. Similarly, this Commission has also ruled in accordance with the above, that a non - working township supervisor may not receive health, medical and life or other insurance benefits without violating the F%cvisions of the State Ethics Act. Krane, No. 84 -001, Glova, No. :6. 7 idditionally, even if such a supervisor is employed by the Dwnship as a superintendent, secretary /treasurer, roadmaster, or :aborer in accordance with the Second Class Township Code, such 1enefits are considered compensation and must, therefore, be fixed as such by the township board of auditors. See Synoski v. Hazle Township, Pa. Commw. 168, 500 A.2d 1282, (1985); In re: Appeal of the Auditors Report of Muncy Creek Township, Pa. Commw. Ct. 520 A.2d 1241, (1987), Hunt, No. 348 -R. The foregoing principle was recently reaffirmed by Pennsylv`: Commonwealth Court in Yocabet v. State Ethics Commission, Pa. Commw. Ct. , 531 A.2d 536 (1987). In the cited case, the Court held inter alia that a township supervisor violated Section :LE) of the Ethics Act when he received a salary for the position of secretary /treasurer which had not been set by the auditors. The Court, in affirming the Order of the Ethics Commission which required a restitution of the financial gain, noted on page 539 of its Opinion. "Section 7 of the Ethics Act instructs the Commission to investigate situations where there is a reasonable belief that financial conflict may exist, and if conflict is found, to require the offender to remove himself from the conflict without gain." Any benefits received other than as provided for above, would constitute a financial gain obtained in violation of the State Ethics Act. See, McCutcheon v. State Ethics Commission, supra, Conrad v. Exeter Township, 27 D & C 3d 253, (1983). These principles of law are now well settled and constitute the law under which this situation must be reviewed. See, In Re: Report of Audit or South Union Township, 47 Pa. Commw. 1, 407 A.2d 906, (1979). In this case, you were a supervisor from January, 1984 to the present and you were annually appointed roadmaster. As to the period from October, 1985, forward, you received payments of $200 a month as roadmaster in addition to the annuity, group life and hospitalization insurance benefits. Although you have Mr. William Griffin Page 9 stated that you believed the foregoing benefits were your compensation from January, 1974 through October, 1985, you would not be entitled to the above benefits or any other salary because of the absence of the requisite auditor approval. The minutes of the meetings of township auditors from 1976 through January, 1987, reflect that there was neither a review nor approval of these types of benefits or any other form of compensation. Indeed, you first received compensation in October, 1985. The auditors, however, did not even approve or fix this compensation until November, 1985. Parenthetically, there are contradicting statements from two auditors concerning whether there was auditor approval for these benefits in 1971. However, it is noted in this regard that the auditor's minutes are unavailable for the period prior to January, 1976. Since it appears that auditor approval was never given for these benefits, you were not entitled to the receipt of same at the township's expense. You, as a public official, violated Section 3(a) of the Ethics Act in that you have obtained a financial gain through the receipt of the benefits which is not compensation as provided for by law. It also should be noted that even if these benefits had been received in good faith, such would not be controlling. Good faith receipt of such benefits, even when based upon a solicitor's advice, will not alleviate the necessity of a public official reimbursing his governmental body for the receipt of a financial gain to which he was not entitled. See Allegheny County v. Grier, 179 Pa. 639, 36 A. 353, (1897): McCutcheon v. State Ethics Commission, supra; Kestler Appeal, 66 Pa. Commw. 1, 444 A.2d 761, (1982). As a result, this Commission believes that you must reimburse the township for this financial gain. The State Ethics Act provides as follows. Section 9. Penalties. (a) Any person who violates the provisions of Section 3(a) and (b) is guilty of a felony and shall be fined not more than $10,000 or imprisoned for not more than five years, or be both fined and imprisoned. 65 P.S. 409(a). (c) Any person who obtains financial gain from violating any provision of this act, in addition to any other penalty provided by law, shall pay into the State Treasury a sum of money equal to three times the financial gain resulting from such violation. 65 P.S. 409(c). Mr. William Griffin Page 12 d. You son is about 34 years of age. He has worked for the ownship Streets Department for about 11 years. e. re resides at the residence of you and your spouse. Minutes of the township board of supervisors meetings indicate follows: a . April 14, 1982 - "Due to the increased demand for an additional street department vehicle for road maintenance, a motion was made and seconded to rent an all- purpose 4 -wheel drive pick up truck. Abstaining from voting was roadmaster William Griffin, Sr. b. The minutes supervisors increase of do not reflect any discussion by the regarding the cost of recital and subsequent this amount. c. The minutes do not indicate that the township will be renting your truck, or the cost of this rental. 23. The township general fund expenditures ledger and supervisors' meeting minutes indicate the following regarding the rental of your i ruck . Date Payee Check No. Amount 04 -16 -82 William Griffin, Jr. 4317 $ 50.00 05-12-82 William Griffin, Jr. 4331 $ 50.00 6 -23 -82 William Griffin, Jr. 4433 $ 50.00 :'7 -14 -82 William Griffin, Sr. 4450 $ 50.00 58- -11 -82 William Griffin, Sr. 4506 $ 50.00 09 -08 -82 William Griffin, Sr. 4565 $ 50.00 10 -15 -82 William Griffin, Sr. 4626 $ 50.00 11- -10 -82 William Griffin, Sr. 4692 $ 50.00 12 -08 -82 William Griffin, Sr. 4756 $ 50.00 1982 Total: $450.00 as Mr. William Griffin Page 13 01 -03 -83 William Griffin, Sr. 4792 $ 50.00 01 -31 -83 William Griffin, Sr. 4854 $ 50.00 03 -09 -83 William Griffin, Sr. 4916 $ 50.00 04 -13 -83 William Griffin, Sr. 4949 $ 50.00 05 -11 -83 William Griffin, Sr. 5036 $ 50.00 05 -28 -83 William Griffin, Sr. 5104 $ 50.00 06 -08 -83 William Griffin, Sr. 5113 $100.00 07 -13 -83 William Griffin, Sr. 5182 $100.00 08 -10 -83 William Griffin, Sr. 4756 $100.00 09 -14 -83 William Griffin, Sr. 5318 $100.00 10 -12 -83 William Griffin, Sr. 5381 $100.00 11 -09 -83 William Griffin, Sr. 5445 $100.00 12 -14 -83 William Griffin, Sr. 5504 $100.00 1983 Total: $1000.00 01 -11 -84 William Griffin, Sr. 5569 $100.00 02 -08 -84 William Griffin, Sr. 5639 $100.00 03 -14 -84 William Griffin, Sr. 5704 $100.00 04 -11 -84 William Griffin, Sr. 5753 $100.00 05 -09 -84 William Griffin, Sr. 5828 $100.00 06 -13 -84 William Griffin, Sr. 5896 $100.00 07 -11 -84 William Griffin, Sr. 5956 $100.00 08 -08 -84 William Griffin, Sr. 6029 $100.00 09 -04 -84 William Griffin, Sr. 6093 $100.00 10 -10 -84 William Griffin, Sr. 6142 $100.00 Mr. Wil:.iam Griffin Page 14 1x -14 -84 William Griffin, Sr. 6227 $100.00 12 -11 -84 William Griffin, Sr. 6299 $100.00 1984 Total: $1,200.00 01 -07 -85 William Griffin, Sr. 6357 $100.00 01 -15 -85 William Griffin, Sr. 6442 $100.00 03 -13 -85 William Griffin, Sr. 6495 $100.00 04-10 -85 William Griffin, Sr. 6551 $100.00 05- 03 -85 William Griffin, Sr. 6618 $100. 06- -85 William Griffin, Sr. 6717 $100.00 07- -85 William Griffin, Sr. 6774 $100.00 1985 Total: $700.00 29. You provided the following information in relation to the r' ?ntal of your truck by the township. a. Your truck was initially used when one township truck broke down during an emergency. Your truck was used to L low s;.iow and service narrow streets and roads in the township. b. Your truck was thereafter used on occasions of a simile. nature when needed. • Two township supervisors voted to pay you for the L:ontinued use of your truck and to provide gas when the truck was used on township business. d. You abstained from this decision. e. In January of 1984, two supervisors voted to increase the rental fee from $50.00 to $100.00 per month. f. No open and public process was used by the township regarding this rental. g There was no formal contract or rental equipment executed regarding this situation. Mr. William Griffin Page 15 h. You deny receiving any personal financial gain from this arrangement because you purchased the truck and paid all maintenance costs. i. You related that the two supervisors informally discussed the unfairness of using your truck without reimbursement and decided to rectify the situation. You have not received any reimbursement for the use of your truck since July, 1985, but still make it available for - township use when needed. k. In certain instances, the use of your truck saves the township the expense of using a large truck. 1. You stated that in 1983, you paid a repair bill of $700.00 on this truck when its clutch was burned out while pulling another township truck out of a snowdrift. B. Discussion: As previously noted above, you are a public official subject to the provisions of the Ethics Act. Section 3. Restricted activities. (c) No public official or public employee or a member of his immediate family or an'y business in which the person or a member of the person's immediate family is a director, officer, owner or holder of stock exceeding 5% of the equity at fair market value of the business shall enter into any contract valued at $500 or more with a governmental body unless the contract has been awarded through an open and public process, including prior public notice and subsequent public disclosure of all proposals considered and contracts awarded. Any contract made in violation of this subsection shall be voidable by a court of competent jurisdiction if the suit is commenced within 90 days of making of the contract. 65 P.S. 403(c). Section 3(c) basically provides that no public official shall enter into a contract valued at $500 or more with his governmental body unless the contract was awarded through an open and public process. In the instant case, you, as township supervisor, negotiated a contract with the township for the rental of your truck which was in excess of $500. The minutes of the township board of supervisors reflect that a motion was made and seconded for the rental of your truck. You did not participate in that vote which carried the motion. However, you were awarded this contract without a public and j Mr_. William Griffin Page 16 open process. There wa no advertisement for bids on a truck rental and hence there was no possibility of competition. This contract, which resulted in ayments to you totalling $3,350.00 over a three year period, was in excess of $500 and was not made in an open and pub1 =_c bidding process. This clearly violates Section 3(c) of the Ethics Lot. See Donati, No. 204, wherein this Comm ssion found a violation of Section 3(c) of the Lthics Act in a situation where a school director s spouse contracted with the school district in an amount over $500 where there was not an open and public process. See also Mart all, No. 528 and Gerhart, No. 530. C. Conclusion and Order. 1. Zs a Township Supervisor in West Mahanoy Township, you are a "public official" and, as such, are subject to the provisions of the Ethics Act. Section 3(a) of the Ethics Act is implicated when you received a gain through public office consisting of anmity, group life and hospitalization insurance at the township's expense for the period between January, 197'. and March 31, 1985., however, since Act 41 of 1988 provides amnesty as to the receipt of those benefits, no penalty or assessment may be charged for the receipt of the benefits during that pe :_iod. 3. You violated Section 3(a) of the Ethics Act when you received annuity, group life insurance and hospitalization benefits at the township's expense for the period April 1, 1985 forward in that such gain is not compensation provided for by law. 4. The financial gain which you received and which was not part of the compensation provided for by law amounts to $1,699.30. 5. You violated Section 3(c) of the Ethics Act when ' ►ou contracted with the township for the rental of your truck because the contract was in excess of $500 and was not awarded through an open and public process. 6. You are hereby ordered to remit to the State Ethics Commission, within thirty (30) days of the date of this order, the amount of $1,699.30 made payable to West Mahanoy Township as restitution for the financial gain that you received. 7. Failure to comply with the provisions of this order will result in a referral of this matter to the appropriate law Mr. William Griffin Page 17 enforcement authority with a recommendation that both civil and criminal proceedings be instituted. 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 5 business days after service (defined as mailing). 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). The confidentiality Provision does not restrict respondent's consultation with legal counsel. By the Commission, c-44Th Joseph W. Marshall, III Chairman