HomeMy WebLinkAbout647-R CreehanMr. James E. Creehan
c/o James H. Joseph, Esquire
1214 Frick Building
Pittsburgh, PA 15219 -6002
Re: 86 -174 -C
Dear Mr. Creehan:
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STATE ETHICS COMMISSION
308 FINANCE BUILDING
HARRISBURG, PENNSYLVANIA 17120
ORDER OF THE COMMISSION
Order No. 647 =R
Date Decided: April 19, 19$9
Date Mailed: April 28, 1989
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, Executive Director of the Allegheny County
Sanitary Authority 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, when you used your position to purchase city owned
property along Arlington Avenue that was reserved for possible use as
greenspace and unavailable for sale from a city department under the
jurisdiction of an official with whom you have had a real estate
partnership.
A. Findings:
1. You served as the Executive Director of the Allegheny County
Sanitary Authority, (Alcosan).
a. You also served as a member of the Pittsburgh Water and
Sewer Authority.
2. During the 1980's, you purchased various parcels of land located
on Arlington Avenue, Pittsburgh.
a. Some of this land was obtained directly from private
owners.
b. Several parcels were obtained from the city which was
holding the land as an acquisition resulting from
delinquent city, county or school taxes.
Mr. James E. Creehan
Page 2
3. Records of the City of Pittsburgh, Department of City Planning,
Real Estate Division, indicate the following regarding vacant lots
located on Arlington Avenue.
a. Eighty -Three (83) separate parcels of land were delineated
in Real Estate Division files.
b. Sixty -Nine (69) of these parcels were disapproved for sale
due to "Greenway potential ".
c. Six (6) were marked as being reviewed for other public use.
d. Two (2) were subject to condemnation proceedings.
e. One (1) was undergoing guideline preparations.
f. Five (5) were sold or approved for sale.
g.
The "potential buyer" noted relating to the above five (5)
parcels was James E. Creehan.
h. Forty -Nine (49) interested buyer entries were noted on the
78 properties that were disapproved for sale.
4. The only properties on Arlington Avenue that were sold were the
properties in which you were interested.
5. There were no properties for which you were listed as an
interested buyer which you did not obtain.
6. The properties that you obtained on Arlington Avenue were the
following.
Address Sale Price Sale Completed
341 Arlington Avenue $1,500.00 10 -11 -85
339 Arlington Avenue $1,500.00 10 -11 -85
337 Arlington Avenue $1,500.00 10 -11 -85
351 Arlington Avenue $ 250.00 7 -5 -85
353 Arlington Avenue $1,500.00 10 -11 -85
7. Records obtained from the office of the Pittsburgh City Planning
Director contained a memo captioned "Chronology and rationale for the
sale of Arlington Avenue property to James Creehan".
Mr. James E. Creehan
Page 3
a. This memorandum was dated July 24, 1987.
8. The above referenced memorandum provides in substance as follows:
a. Mr. Creehan had been purchasing properties on Arlington
Avenue since 1981 from private_ owners.
b. Mr. Creehan, thereafter, approached the City about
purchasing six parcels.
These parcels had been designated as potential Greenway land
in July, 1981 along with 1400 other properties.
d. Mr. Creehan contacted the City Planning Department and
requested that the Sales and Classification Committee
release these properties for sale.
c.
e. By memo dated July 27, 1982, Bob Lurcott and Ray Reaves of
the City Planning Department expressed opposition to the
sale. It was also recommended that guidelines be developed
for construction on the Arlington site.
f. In September,
1982, Mr. Lurcott l
ottrecommended properties December, and in
P p (5) ertbe
removed from the potential Greenway status.
On January 3, 1983, the Sales and Classification Committee
reclassified seven (7) as suitable for private
use.
g.
h. The memo notes that it was not unusual to release property
from potential Greenway designation.
i. The deeds to four (4) properties
Creehan on November 5, 1985.
The title to one (1) parcel was
the City.
were transferred to James
clouded and remained with
k. The memo finally notes that the City Department of Public
Works has placed a hold on the sale of public property on
Arlington Avenue. Department of Public Works has been
willing to remove this hold when a sale is conditioned on
granting construction easements. The Real Estate Division
records, however, still indicates that these properties are
on hold.
Mr. James E. Creehan
Page 4
9. The Pittsburgh Property Management and Maintenance Program (PMMP)
of 1979, a 3 -year program to improve the maintenance of publicly held
tax delinquent properties, provides for a classification of property
as Greenway.
a. This designation was for vacant /environmentally sensitive
land, which was to be preserved as passive public open space
for the purpose of enhancing vistas in the City.
b. A PMMP report of January, 1983, indicates that the Sales and
Classification Committee has identified over 1400 properties
in large tracts located south of the rivers as having
Greenway potential.
c. The Sales and Classification Committee is comprised of the
Director of Planning, the Building Inspector and
representatives of the Urban Redevelopment Authority Parks
Department, Engineering and Construction and Finance
Department.
d. The Arlington Avenue properties were in that
classification.
e. The 1983 PMMP report indicates that formal designation of an
area as Greenway must come from city council.
10. By letter dated April 12, 1983, Daryl H. Smith, Director of the
Department of Lands and Building's submitted a resolution to city
council requesting approval to sell certain property through the
filing of a court petition.
a. The request consisted of ten (10) properties, including the
five (5) Arlington Avenue properties sold to James Creehan.
11. On or about September 18, 1984, a petition for validation of tax
title and approval of sale of real estate was filed in the Court of
Common Pleas of Allegheny County.
12. On September 25, 1984, the auction of the Arlington Avenue
properties was advertised in a paper of general circulation.
13. At a hearing conducted on February 12, 1985, in the Court of
Common Pleas, Allegheny County, Pennsylvania, James E. Creehan was
awarded the Arlington Avenue property for $8,500.00.
a. This order was subsequently re- affirmed by the Court on
April 9, 1985.
Mr. James E. Creehan
Page 5
14. Ronald C. Schmeiser is the Director of the Pittsburgh Department
of Finance.
a. As a result of a reorganization of City functions effective
1984, the Director of Finance_:is in charge of real estate of
the City, and the three taxing bodies, (The City of
Pittsburgh, Allegheny County and Pittsburgh School
District).
b. This reorganization was effective January 4, 1984.
c. Prior to this reorganization, the Director of Lands and
Buildings for the City was the trustee of the three taxing
bodies.
15. Ronald C. Schmeiser was not in charge of this real estate at the
time that the Greenway designation was eliminated and at the time city
council was requested to approve the filing of a court petition
seeking the approval of the sale of the Arlington Avenue lots to you.
16. Ronald C. Schmeiser was in charge of this real estate at the
time of the final sale in October, 1985.
17. Records of the City of Pittsburgh indicate the following
regarding the duties of the Director of the Finance Department.
a. In 1983, the Department was responsible for all financial
affairs of the City. The Department bills and receives all
revenues due the City and School District and reports to the
appropriate controllers. The Department also invests City
funds, manages the debt, serves as payroll office and
participates in establishing the operating budget.
b. In 1984, the duties of the Department were altered and as
part of the reorganization, the three taxing bodies section
was transferred from the Department of Lands and Buildings
to the Finance Department. That Department maintained and
disposed of property owned by the City, the County and the
School District.
c. Prior to 1984, in accordance with Ordinance 46 of 1981, the
Finance Director performed no duties in relation to City
owned land.
d. The reorganization effected by Ordinance No. 40 of 1983
specifically vested responsibility for the acquisition,
disposition and maintenance of city controlled property in
the Finance Director.
Mr. James E. Creehan
Page 6
18. You and Ronald C. Schmeiser were the incorporators of Primary
Products, Inc.
a. This entity was incorporated on December 20, 1982.
19. You and Ronald C. Schmeiser operated a real estate business
entity under the name Bay Tree Associates.
a. The application to acquire or operate under a fictitious
name was filed on April 20, 1981.
20. As the Executive Director of Alcosan, you had no duties,
responsibilities or authority over the sale of land or property owned
by the City of Pittsburgh.
21. An unsuccessful bidder on the Arlington Avenue properties that
you purchased advised that he pulled out of the bidding because he
could not finance the acquisition.
a. He further advised that you owned most of the adjoining
property and it is customary for the court to award the
sale to such adjoining owners.
b. The sale had been advertised and was public knowledge.
22. Robert Lurcott, Director of the City Planning Commission advised
as follows.
a .
b.
The proposal for the purchase was submitted by Daryl Smith,
the Director of Lands and Buildings.
Mr. Schmeiser never approached him about the properties.
He did discuss the matter with Mr. Schmeiser after various
news articles were published about the purchase.
Councilmember Eugene DePasquale contacted him and requested
that he meet with you.
f. At said meeting, Mr. Lurcott was
purchasing property on Arlington
eventually as a primary residenc
g. Originally, all Arlington Avenue
hold status.
c .
d.
e .
Your purchase of the Arlington Avenue properties was
discussed at one meeting of the Sales and Classification
Committee.
advised of your interest in
Avenue to be used
e .
properties were placed on a
Mr. James E. Creehan
Page 7
h. After numerous staff discussions and the preparation of
guidelines, it was decided to release the properties in
which you were interested.
i. The zoning could not be changed and you would be required to
build within the parameters of the developed guidelines and
restrictions.
Mr. Lurcott advised that you were successful in acquiring
the property because you were familiar with the system and
were persistent.
k. Mr. Lurcott advised that normally a private citizen could
not get in to see him and that he did not meet with any of
the other individuals interested in the Arlington Avenue
properties.
23. Councilman Eugene DePasquale, and a member of the Alcosan Board
advised that he contacted Paul Evers from the City Real Estate
Division and Robert Lurcott.
a. He further stated that he did not attempt to influence the
sale of the Arlington Avenue properties.
b. Mr. DePasquale's son is an employee of Alcosan.
c. He was hired prior to his obtaining his position as a board
member.
J
24. Mr. Evers confirmed that he was contacted by Mr. DePasquale and
that he met with you on several occasions.
a. He was surprised when your proposal was accepted by the
planning commission.
25. Paul J. McDermott, Director of the City Department of
Engineering and Construction advised that he had received numerous
telephone calls from individuals interested in the Arlington Avenue
properties.
a. These properties were on a hold status and not to be sold.
26. Jane Downing, Assistant Director for City Planning advised as
follows:
Mr. James E. Creehan
Page 8
a. In 1980 or 1981, a property classification plan was
initiated and the Arlington Avenue properties were placed on
a hold status until a decision as to classification could be
made.
b. Staff was of the opinion that all these properties should be
on hold.
c. The director, Mr. Lurcott, wanted selective development
which would not destroy aesthetic value, in effect,
overruling staff.
d. The Creehan request was presented to the Sales and
Classification Committee pursuant to established procedure.
e. Other interested individuals probably never requested a
change from the committee.
f. The zoning on the property was restrictive and most
individuals would be unable to afford to build a single
unit thereon and remain in compliance.
27. Ronald C. Schmeiser, Finance Director for the City of Pittsburgh
provided the following information in relation to this situation:
a. The Director of Lands and Buildings for the City Daryl
Smith forwarded the request to City Council to allow a
court petition to be filed to initiate the sale of the
property.
b. He was not involved with the initial activities in this
matter, was not responsible for the sale of the property and
had no participation whatsoever in the sale.
c. The property was available for sale to the public. The
matter was conducted through a court supervised sale with
prior public advertisement.
d. City Council never designated the property as Greenway.
While the property was studied for Greenway potential, the
Planning Commission released these properties for sale
because there was no public need for retention.
28. You provided the following information in relation to this
situation.
a. Ronald C. Schmeiser played no role in your acquisition of
the Arlington Avenue properties.
Mr. James E. Creehan
Page 9
b. You never requested the help of Mr. Schmeiser in obtaining
these properties.
c. You purchased several properties on Arlington Avenue from
private parties.
d. The properties purchased from city were done so under
court order.
e. The properties that you purchased were not designated
Greenway in that they were owned by private parties.
B. Discussion: As Executive Director of the Allegheny County Sewer
Authority, ( Alcosan) you are a "public employee" as that term is
defined in the Ethics Act. 65 P.S. §402; 51 Pa. Code 1.1. As such,
your conduct is subject to the provisions of the Ethics Act.
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. S403(a).
Section 3(a) of the Ethics Act basically provides that no public
employee may use his public office or confidential information
received through his holding public office to obtain financial in for
himself or business with which he is associated. 65 P.S. S403(a).
In the instant matter, you purchased the Arlington Avenue
properties while you served as Executive Director of Alcosan. Mr.
Ronald C. Schmeiser, your partner in Bay Tree Associates and Primary
Products Incorporated, served as the Finance Director of the City of
Pittsburgh and in that latter capacity had the responsibility for both
the acquisition and disposition of City owned property. As to the
five properties which you purchased from the City on Arlington Avenue,
it is noted that they were originally designated as having "greenway
potential" and hence, were not subject to sale. In this situation,
your conduct must now be scrutinized to determine whether you used
your position to purchase these five properties from the City. The
facts reflect that you contacted the City Planning Department with a
request that the properties be released for sale by the Sales and
Classification Committee, however Messrs. Lurcott and Reeves, from
that Department, initially expressed opposition to the sale. After
Mr. James E. Creehan
Page 10
guidelines were established regarding removal of properties from
greenway status, it is noted that Mr. Lurcott recommended the
properties in question be removed from that status. Shortly
thereafter, seven properties were classified as suitable for private
use by the Sales and Classification Committee and four of those
properties were transferred to you while the 5th parcel had a cloud on
title and remained with the City. As to the five Arlington
properties, it is further noted that Mr. Daryl Smith, the Director of
the Department of Lands and Buildings, submitted a. resolution to City
Council to sell ten properties through the filing of a court petition,
five of the properties were the Arlington properties sold to you.
Thereafter, the Arlington Avenue properties were listed for auction in
a paper of general circulation and you were awarded those properties
after a hearing in the Court of Common Pleas of Allegheny County. In
this regard, an unsuccessful bidder has stated that it was customary
for the court to award such properties to adjoining owners and you did
own adjoining properties. Mr. Lurcott has indicated that although the
Arlington Avenue properties were discussed at a meeting of the Sales
and Classification Committee, your partner, Ronald C. Schmeiser, never
approached or discussed the matter with him although he did talk to
Mr. Schmeiser about it after various news articles appeared. Jane
Downing, Assistant Director of City Planning, stated that your request
was submitted to the Sales and Classification Committee pursuant to
established procedure.
Your partner, Ronald C. Schmeiser, stated that he had no
involvement with these properties which were released for sale to the
public by the Planning Commission because there was no public need for
retention.
You stated that Mr. Schmeiser played no role in purchasing these
properties which was done under court order.
At the time when you finally acquired these properties your
business associate, Ronald C. Schmeiser, was in a position of
authority and responsibility over these properties and while you were
the only individual of all the interested parties who was able to
secure the purchase of the properties, the evidence elicited fails to
indicate that you used your public office or confidential information
to obtain these Properties.
II. Allegation: That you, Executive Director of the Allegheny
County Sanitary Authority, violated Section 3(b) of the Ethics Act
which prohibits a public employee, public official or candidate from
offering, soliciting or accepting anything of value based on the
understanding that the vote, official action or judgment of the public
official, public employee or candidate will be influenced when you, as
a member of the Pittsburgh Water and Sewer Authority, voted to award
contracts to Spinello Construction Company while, at the same time,
Mr. James E. Creehan
Page 11
this company was putting "fill material" on the properties you own on
Arlington Avenue.
A. Findings:
29. Findings No. 1 through 28 are incorporated herein by reference.
30. Paul Imhoff, Chief Building Inspector for the City of Pittsburgh
provided the following information:
a. He first learned that you were allowing the dumping of
material on your Arlington Avenue properties from a
citizens group.
b. As a result, a landfill specialist was dispatched to the
site and reported that the allegations appeared to be true.
c. No land fill permit was required when filling foundation
voids involving fill material comprising less than 50 cubic
yards per lot.
d. You did not have a landfill permit.
e. You were subsequently notified to cease dumping operations.
f. Charles DiNardo of Spinello Construction contacted the
office of the Building Inspector and advised that he would
obtain a permit and resolve any existing problems.
g. Mr. Imhoff met with Mr. DiNardo and decided what steps were
required.
h. Mr. DiNardo, thereafter, "benched" the side of the hill at
the property site so as to stabilize the slope, planted seed
and covered the seed with hay. He also erected a fence that
replaced an unsightly fence on the property.
i. He never dealt with you directly.
31. Records of the Office of the City Building Inspector contained
the following information.
a. On November 7, 1985, you were forwarded a Stop Work Notice
by certified mail advising that you were to stop all dumping
and remove what had already been dumped.
b. This notice was returned as undeliverable.
Mr. James E. Creehan
Page 12
c. By letter dated March 7, 1986 to Paul Imhoff from Robert
Kress, (Allentown Civic Association), the Building Inspector
was advised of the dumping on your property.
d. By letter dated May 29, 1986 from the Office of the
Building Inspector, you were directed to cease all dumping
on the Arlington Avenue properties.
e. Letter dated September 10, 1986 to you from Paul Imhoff
advises of 3 prior notifications and further confirms that
Spinello Construction Company would cut trees, remove stone
and fill, and bench the property. The letter advises that
such must be initiated within thirty (30) days.
f. By memorandum dated December 18, 1986 from Paul Imhoff to
Paul McDermott, Director, Department of Engineering and
Construction, it is advised that the Creehan site has been
completed.
32. Minutes of the Pittsburgh Water and Sewer Authority indicate the
following regarding contracts awarded to Spinello Construction Company
by that Authority.
a. February 19, 1985 - Contracts were awarded to Spinello
Construction for Grant Street, Phase I, $163,400.00
(alternate), change order for additional 36" valve Spinello
Construction, $45,000.00. The contracts were unanimously
approved and you were present.
b. May 10, 1985 - Contracts were awarded to Spinello
Construction for replacement of valves, $477,000.00 and to
clean and cement line 50" steel main at Negley Avenue and
30" steel main at Ross pumping station, $397,675.00. The
contracts were unanimously adopted and you were present.
c. June 14, 1985 - Changes to prior contracts were approved
regarding Grant Street Phase I in amounts of $12,750.00 and
$3,874.00. You moved for the approval of said change order
and the vote was unanimous.
d. September 13, 1985 - change orders were presented regarding
the clean and cement line projects in the amount of
$18,000.00. The change order was approved unanimously and
you were present.
e. November 8, 1985 - change order was presented regarding the
valve replacement project in the amount of $3,200.00. You
moved for approval of this change order and such was
unanimously approved.
Mr. James E. Creehan
Page 13
f. January 10, 1986 - change order were presented for the
cement line 30" Ross fuel pumping station line and 50"
South Negley line in the amount of $38,759.70 and Liberty
Avenue waterline in the amount of $6,331.38. The changes
were unanimously approved and you were present.
g. February 18, 1986 - change orders were presented regarding
the Smithfield Waterline project in the amounts of
$268,480.00 and $350.50 and regarding the valve replacement
protect in amounts of $7,876.56 and $89,500.00. The change
order were unanimously approved and you were present.
h. April 11, 1986 - contracts were awarded to Spinello
regarding the Ohio River Crossing in the amount of
$2,375,000.00, and to clean and cement line - Smallman and
Butler Streets waterline in the amount of $2,060,425.00.
You moved for the approval of these contracts and the vote
was unanimous.
i. May 9, 1986 - change orders were presented regarding the
Second Avenue project in the amount of $10,872.00 and
$14,484.00 and the valve replacement project in amounts of
$21,547.36, and $90,882.45. You seconded the motion for
approval and the vote was unanimous.
June 13, 1986 - change orders were presented regarding the
valve replacement Phase I in amounts of $5,000.00 and
$102,000.00 and the Second Avenue project in the amount of
$14,000.00. You moved for approval of the change order and
the vote was unanimous.
k. July 11, 1986 - a contract was awarded to Spinello
regarding the water system annual contract and emergency
line repair in the amount of $7,646,988.35. The vote to
award this contract was unanimous and you were present.
At the same meeting, change order were presented regarding
the Second Avenue project in amounts of $13,854.00 and
$42,940.00 and the valve replacement project in the amount
of $27,900.00. You seconded the motion and the vote was
unanimous.
1. August 8, 1986 - change orders were presented regarding the
Ohio River Crossing project in the amount of $8,008.73. You
moved the approval of the order and the vote was unanimous.
At this meeting, the board also approved 10 work orders and
emergency work orders regarding the annual contact and
Mr. James E. Creehan
Page 14
m. September 12, 1986 - a contract was awarded to Spinello
Construction in an amount of $4,832.675.00 to clean and
reline waterlines at Larimer Avenue, Penn Avenue, Greenwood
Street, Washington Boulevard, -and North Negley Avenue. (You
were not present at this meeting). Two change orders in the
amounts of $15,661.19 and $21,450.00 on the Second Avenue
project were also approved as was a change order regarding
the Sarah Street project in the amount of $148.000.00.
n. October 10, 1986 - Five change orders regarding various
Spinello projects were approved in amounts of $4,060.00,
$20,200.00, - ($148,901.00), $275,997.00 and $74,543.47. You
abstained from the vote advising the board that until you
finally resolved your personal dealings with Spinello
Construction, you would abstain. You noted that Spinello
Construction has not yet completely stabilized the fill on
your property on Arlington Avenue.
o. November 14, 1986 - six change orders were presented and
approved regarding projects in which Spinello was involved.
You abstained.
December 12, 1986 - two change order were presented and
approved regarding Spinello projects. You abstained.
January 9, 1987 - two Change orders were presented and
approved regarding projects in which Spinello was involved.
The vote was unanimous and you were present.
A work order in the amount of $228,397.50 under the annual
water system contract was also approved. You moved this
work order and the vote was unanimous.
r. February 20, 1987 - Five change orders were presented and
approved regarding projects in which Spinello was involved.
You were present and the vote was unanimous.
s. March 17, 1987 - Four change orders were presented and
approved regarding projects in which Spinello was involved.
You seconded the motion for approval and the vote was
unanimous.
P•
q.
emergency line repair in the amount of $4,077,107.00. The
vote was unanimous.
A work order in the amount of $1,582,610.00 under the
annual water system contract was also approved. You moved
the approval thereof and the vote was unanimous.
Mr. James E. Creehan
Page 15
33. By lease agreement dated May 30, 1986, Spinello Construction
Company leased a parcel of ground from ALCOSAN located at Tracey
Street, which property would be used in connection with the Ohio
River Crossing project that Spinello was completing for the
Pittsburgh Sewer and Water Authority.
(a) The rent for said property was $200 per month.
(b) The lease commenced on June 1, 1986, on a month to month
basis.
(c) The lease was terminated on October 16, 1986.
34. Charles DiNardo, Vice - President of Spinello Construction Company
provided the following information:
a. He was working on a sewer project in the vicinity of
Arlington Avenue and needed a location to dump fill.
b. He saw the lots and made inquiries and learned that you
were the owner.
c. He normally would pay to dump fill.
d. He did not know you at that time.
e. He offered to pay you to dump the fill but you refused any
payment.
f. You requested that the dumping take place in a certain area
of your property.
The City Building Inspector reviewed the site and requested
that certain steps be taken to avoid a landslide.
g.
h. He hauled in more dirt, benched the dirt into steps, seeded
the area and covered it with hay.
i. You were billed $3,200.00 for the work and paid in full on
January 27, 1987.
j There was no connection between Spinello's bidding on
Alcosan projects and his work for you.
35. Documents received from Spinello Construction Company indicate as
follows.
Mr. James E. Creehan
Page 16
a. By letter dated December 30, 1986, you forwarded a check in
the amount of $3,200 for costs associated with Arlington
Avenue site.
b. Payment was tendered via check No. 626, dated December 30,
1986 payable to Spinello Construction Company from the
account of James E. Creehan, Squibank.
c. Account statement for Spinello Construction Company at the
Midlantic National Bank indicates a deposit of $3,272.79 on
January 23, 1987 which included your payment.
d. You had been billed for said services on your Arlington
Avenue property on September 2, 1986.
36. You provided the following information in relation to this
situation.
a. Shortly after purchasing the Arlington Avenue properties you
discovered foundation voids, i.e., unfilled foundations
remaining after demolition of the structure supported
thereby, and which are required by ordinance to be filled.
b. You made application for a fill permit and were informed by
the City of Pittsburgh that if the proposed filling
operation is for foundation voids involving less than 50
cubic yards of fill material, no permit was necessar°r.
c. You cut a gate in the wrought iron fence bordering
Arlington Avenue and permitted a small amount of fill
material to be dumped in the foundation voids.
d. After the gate was cut and some fill material placed on the
site, you were contacted by Charles DiNardo of Spinello who
inquired about permission to dump a small amount of dirt
from a valve replacement job he was doing in the area. Mr.
DiNardo offered to pay you for the permission to dump the
dirt, which offer you refused because of your position with
the Pittsburgh Water & Sewer Authority.
e. Sometime after you gave Spinello permission to dump dirt in
the foundation voids, the gate securing the Arlington Avenue
properties was broken by a number of persons who trespassed
upon the properties to dump. This unlawful dumping was not
limited to foundation voids, nor to your properties. Some
of the dumping occurred on adjacent property of the City of
Pittsburgh, and at least one of the trespassing dumpers was
Equitable Gas Co.
Mr. James E. Creehan
Page 17
f. You did not rely upon Mr. DiNardo to resolve matters with
the City of Pittsburgh, but met with City officials on a
number of occasions. Spinello Construction Company admitted
responsibility for the unstable fill conditions and agreed
to correct the problem.
g• You would not accept services from Spinello Construction
Company which exceeded filling foundation voids without
payment therefor, and entered into an agreement with
Spinello to pay Spinello $3,200 to stabilize the filled
areas.
h. From the time the contractual relationship with Spinello
Construction Company commenced until the work was complete
you abstained from voting as a member of the Pittsburgh
Water and Sewer Authority on any contract involving
Spinello.
i• Spinello never bid on any ALCOSAN contracts.
B. Discussion: As noted above, you as Executive Director of ALCOSAN
are a public employee subject to the provisions of the State Ethics
Act.
Section 3(b) of the Ethics Act provides:
Section 3. Restricted activities.
(b) No person shall offer or give to a public
official or public employee or candidate for
public office or a member of his immediate family
or a business with which he is associated, and no
public official or public employee or candidate
for public office shall solicit or accept,
anything of value, including a gift, loan,
political contribution, reward, or promise of
future employment based on any understanding that
the vote, official action, or judgment of the
public official or public employee or candidate
for public office would be influenced thereby. 65
P.S. 403(b).
Section 3(b) of the Ethics Act basically provides that no public
employee may receive anything of value based on the understanding that
his official conduct will be influenced thereby. 65 P.S. S403(b).
Mr. James E. Creehan
Page 18
In this situation, Spinello Construction Company was dumping fill
material on your Arlington Avenue properties until a citizen's group
notified the Chief Building Inspector for the City of Pittsburgh
concerning the matter. Since you did not have a landfill permit, you
were notified to cease dumping operations, at that time Spinello
Construction Company contacted the building inspector and advised that
the permit would be obtained and that all existing problems would be
resolved. During the period of this activity, which began at a point
in time not later than November of 1985 and continued through
December of 1986, Spinello Construction Company had several contracts
and change orders before the Pittsburgh Water and Sewer Authority of
which you were a Director. The records reflect that for the period
from February of 1985 through August of 1986 and for the period
January of 1987 through March of 1987, several contracts or change
orders between the authority and Spinello Construction Company were
approved. It is further noted that you were either present when these
contracts or change orders were unanimously approved or that you made
motions for their approval. From the period of October of 1986
through December of 1986, you abstained in matters concerning Spinello
Construction Company because of the fill operation that was being done
on your Arlington Avenue properties. Charles DiNardo, who is Vice
President of Spinello Construction Company, advised that the fill
operation on your Arlington properties arose because he was working on
a project in the vicinity and needed a location to dump fill. He then
stated that he made inquiries, learned that you were the owner and
offered to pay you to dump the fill which offer you refused. Mr.
DiNardo then stated that you requested that the dumping be done in a
certain location. After the building inspector advised that certain
steps had to be taken, Spinello Construction Company complied and
completed the fill for which the company was paid $3,200 by you.
Payment for the work that was done by Spinello Construction Company on
your property is verified by a check written on your account in
Equibank. Under these facts and circumstances, we believe that the
evidence elicited fails to indicate that you violated Section 3(b) of
the State Ethics Act.
While we do not find a violation of the State Ethics Act, we do
feel compelled to note that the underlying purpose of the law is to
insure the public that the holders of public employment do not have
private financial interests or transactions that conflict with the
public trust. In the instant situation, you should have been more
sensitive to the potential public perceptions of engaging in private
transactions with an individual or entity that is also transacting
business with your governmental body. In the future, you should
remain more aware of such concerns.
Mr. James E. Creehan
Page 19
III. Allegation: That you, Executive Director of the Allegheny
County Sanitary Authority violated Section 5(b)(3) and (4) of the
Ethics Act which require that Statements of Financial Interests shall
include, for the prior calendar year, with regard to the person
required to file the statement and the member of his immediate family
any direct or indirect interest in a real estate which was sold or
leased to the Commonwealth, any of its agencies or political
subdivisions purchased or leased from the Commonwealth, any of its
agencies or political subdivisions or which was the subject of any
condemnation proceedings by the Commonwealth, and of its agencies or
political subdivisions, in that you failed to report, on Statements of
Financial interests, your real estate interests in property located on
Arlington Avenue in the City of Pittsburgh and an unused school
building in Hopewell, Beaver County, Pennsylvania.
A. Findings:
37. Findings 1 through 28 are incorporated herein by reference.
38. Records on file with the Pennsylvania Department of State,
Bureau of Corporations, indicates that an application to conduct
business under an assumed or fictitious name was filed on April 20,
1981.
a. The names of the individuals owning or interested in the
business were James E. Creehan, 1649 Forestview Drive,
Bethel Pennsylvania, and Ronald C. Schmeiser, 5612
Aylesboro Avenue, Pittsburgh, Pennsylvania.
b. The business name was Bay Tree Associates.
c. The nature of the business was real estate.
d. The application was signed by James E. Creehan.
39. Records of the Hopewell Area School District contained the
following information regarding the sale of the Johnson Street
School.
a. 1/79 - An item in the Hopewell Area School District
Bulletin indicates that the Johnson Street School will
close at the end of the present school term.
b. 12/4/79 - Application from the school district to re -zone
the property at the Johnson Street School to better enable
the school district to sell the property. Interested buyers
at that time were the Wildwood Chapel, who offered
$100,000., J & L Steel, Pappans Restaurant.
Mr. James E. Creehan
Page 20
c. 12/9/79 - The Planning Commission denied changes to the R -3
area where the school is located.
d. 12/14/79 - The Beaver County Planning Commission also
denied the zoning change request.
Robert F. Amalia, 712 -15th Street, Beaver Falls, PA,
(412 -843- 7330), appraised the fair market value of the
school at.
Present allowable uses - $100,000. If Business &
Professional uses - $250,000. If Multi- family uses -
$275,000.
e. 5/15/80 - Memorandum - Eugene Morris, Esq., to School Board
members: Charles Scalise, 218 E. 11th Street, Erie, offered
$10,000 for an 18- months option for conversion to apartments
for the elderly.
f. 5/15/80 - Richard Greco, Housing Group, Inc., 846 Beaver
Grade Road, Coroapolis, wanted to purchase the property as
an investment.
g. 6/18/80 - Eugene Morris, puts out bid announcement for the
sale of the school property. Bids were advertised in the
area paper. 7/15/80 - Ronald Schmeiser and James Creehan
responded with a bid of $222,222. for one bedroom
high - income rental units and remainder of property in
residential units or condominiums - thus needing a zoning
change. That was the only bid received.
h. 7/24/80 - The bid was accepted via Resolution No. 24 -1980,
by the School Board.
i. 7/30/80 - Ronald Schmeiser and James Creehan, 410 Manor
Building, 564 Forbes Avenue, Pittsburgh, responded that they
were engaging Dominick Palombo Associates as site planners
and Architect John Kauper, to prepare preliminary plans.
j. 7/15/80 - Letter, Schmeiser & Creehan to Eugene Morris, Esq.
k. 7/30/80 - Letter, Schmeiser & Creehan to Eugene Morris, Esq.
1. 8/5/80 - Suit was filed to block the sale of the property
for the uses intended by Creehan and Schmeiser. The suit
claimed that the bid was received after the 8:15 PM
deadline.
Mr. James E. Creehan
Page 21
m. 10/17/80 - Patrick McFall, Esq., same address as Creehan and
Schmeiser, filed for a zoning amendment.
n. 10/28/80 - By Resolution No. 33 -1980, The School Board
approved the sale of property to James Creehan and Ronald
Schmeiser for $222,222.
o. 12/4/80 - The Township Planning Commission denied the
request for a zoning change.
p. 12/5/80 - Beaver County Planning Commission denied the
zoning change request.
2/2/81 - The closing date for the purchase of the property
was extended.
q.
r. 3/27/81 - The Beaver County Planning Commission again rules
against the zoning change request.
s. 4/5/- Neighborhood meeting regarding the sale of the
property.
t. 4/8/81 - The planning Commission recommends the Creehan plan
to the Supervisor.
40. On April 27, 1981, the Board of Directors of the Hopewell Area
School District, Beaver County, Pennsylvania, passed Resolution 4 -1981
providing, in part, as follows:
a. The request of James E. Creehan and Ronald C. Schmeiser co-
partners, trading as Bay Tree Associates, to close the sale
of the Johnson Street Elementary School property was
approved.
b. The above partie were to proceed in good faith to obtain
previously agree to zoning changes.
c. That the Hopewell- Independence- Raccoon Joint School
Building Authority are requested to convey said property to
the aforementioned parties.
d. Total sale price to be $222,222.
e. The building to be leased by the purchase to Duquesne Light
Company as a training facility during the period that the
zoning requests are made.
41. You provided the following information in relation to this
situation:
Mr. James E. Creehan
Page 22
a. The Hopewell school property was owned by Bay Tree
Associates and not by you.
b. You were not trying to hide your interest in this property.
c. Failure to report your interest was deminimis.
42. A Statement of Financial Interests on file at Alcosan for you
dated February 2, 1983 regarding your financial interests for calendar
year 1982 indicates as follows:
a. Real estate interests - none.
b. Creditor - Equibank, FED Land Bank.
c. Income - Alcosan; John Costanza, Larry Williams, Bay Tree
Associates.
d. Gifts - none.
e. Office in Business - Bay Tree Associates - partner.
f. Financial Interest in legal entity - none.
43. A Statement of Financial Interests on file at Alcosan for you
dated March 30, 1984 regarding your financial interests for calendar
year 1983 indicates as follows:
a. Same as no. 42(a) above.
b. Same as no. 42(b) above with Pittsburgh National added.
c. Same as no. 42(c) above with Iron & Glass Bank and Equibank
added.
d. All other items were the same as the prior year.
44. A Statement of Financial Interests on file at Alcosan for you
dated April 19, 1985 regarding your financial interests for calendar
year 1984 indicates as follows:
a. Same as prior year.
b. Same as no. 43(b) above.
c. Same as no. 42(c) above with Primary Products added.
d. Gifts and Honoraria - none.
Mr. James E. Creehan
Page 23
e. Office or Directorship in as business - Primary Products.
f. Financial interest in legal entity - "See source of
income."
45. A Statement of Financial Interests on file at Alcosan for you
dated April 4, 1986 regarding calendar year 1985 indicates as
follows:
a. Same as prior years.
b. Creditor - Equibank; PNB, Iron & Glass Bank, FED Land Bank.
c. Sources of Income - Alcosan: John Costansa, Larry Williams,
Bay Tree Associates, Primary Products.
d. Office or Directorship - Bay Tree Associates, Primary
Products.
46. A Statement of Financial Interests on file at Alcosan for you
dated April 30, 1987 regarding your financial interests for calendar
year 1986 indicates as follows:
a. Real Estate interests - lots in City of Pittsburgh and the
property in Hopewell Township owned by Bay Tree Associates
is listed.
b. Creditors - Equibank (3 loans), Pittsburgh National Bank,
Brentwood Federal Savings and Loan Association., Federal
Land Bank of Baltimore, Iron & Glass Bank,' Slovak Savings &
Loan Association.
c. Bay Tree Associates and Primary Products are also listed as
entities in which you hold office or have a business
interest.
47. By addendum dated September 15, 1986 from you, your Statements of
Financial Interests as identified in Findings No. 42 to 46 above were
amended.
a. The addendum notes that Bay Tree Associates held an
interest in property purchased from the Hopewell, Raccoon,
Independence School District.
b. The addendum also notes your interest in the Arlington
Avenue lots which had been acquired from the City of
Pittsburgh.
Mr. James E. Creehan
Page 24
c. Your interest in property on Woods Run Avenue and a
mortgage held by Slovak Savings & Loan Association are
noted.
B. Discussion: As noted above, you are a "public employee" subject
to the provisions of the State Ethics Act.
Section 5(b)(3) and (4) of the Ethics Act provides:
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:
(3) Any direct or indirect interest in any real
estate which was sold or leased to the
Commonwealth, any of its agencies or political
subdivisions; purchased or leased from the
Commonwealth, any of its agencies or political
subdivisions; or which was the subject of any
condemnation proceedings by the Commonwealth, any
of its agencies or political subdivisions.
Factually you purchased five Arlington Avenue properties from the
City of Pittsburgh.
Further, you and your co- partner Ronald C. Schmeiser in Bay Tree
Associates, purchased the Johnson Street Elementary School property
from the school district, which is a political subdivision of the
Commonwealth of Pennsylvania. The sale of this property was
consummated in April of 1981, after several related matters such as
zoning problems were resolved.
Turning to an examination of your Statement of Financial
Interests for the calendar years 1982 forward, it is noted that
neither the Hopewell School property nor the Arlington Avenue
properties were listed on your 1982 through 1985 calendar year
Statements of Financial Interests. The foregoing interests were
listed on your 1986 calendar year Statement of Financial Interests.
While you have filed amended Statements of Financial Interests for
calendar years 1982 through 1985 which included these interests, this
Commission finds that you violated Section 5(b)(3) and (4) of the
Ethics Act.
Mr. James E. Creehan
Page 25
IV. Allegation: That you, Executive Director of the Allegheny
County Sanitary Authority violated Section 5(b)(4) of the Ethics Act
which requires disclosure of the name and address of each creditor to
whom is owed in excess of $5,000 and the interest rate thereon and
5.5(a)(2) and 5.6 of State Ethics Commission Regulations which
requires disclosure of any real estate purchased or leased from the
Commonwealth or any of its agencies or political subdivisions, every
creditor to whom the person, his spouse, or minor dependent children
owed an excess of $5,000, when you failed to report, on Statements of
Financial Interests, an $80,000 loan from Slovak Savings Association
for the purchase of an industrial building at 1415 Woods Run Avenue,
Pittsburgh, Pennsylvania and a $10,000 loan obtained from Dominic
Palombo, a landscape architect to whom you have awarded ALCOSAN
contracts.
A. Findings:
48.- Findings No. 1 through 47 are incorporated herein by reference.
49. Dominick Palombo, a landscape architect is president and owner of
D. Palombo Associates.
a. This firm operates as landscape architects, site planners
and golf course architects.
50. Documents of ALCOSAN regarding services performed by D. Palombo
provide as follows:
a. By letter dated April 23, 1980 for Dominic Palombo, Jr. to
you, D. Palombo submitted a bid to perform professional
services regarding a site analysis and master plan study for
the Mazarro property.
(i) That bid was for a total not to exceed $4,500.
b. Minutes of the ALCOSAN meeting of May 14, 1980, reflect
that the Board considered a proposal from D. Palombo
Associates for Professional Planning Services, site
analysis and master plan study for the Mazzaro property.
After discussion and upon motion of Mr. Bulls, seconded by
Mr. Stanek, the board approved the proposal. You were
present at the meeting.
c. By letter dated May 16, 1980, you informed Mr. Palombo of
the above action of the board.
51. ALCOSAN representatives indicated that because the work of D.
Palombo Associates related to professional services, bids were not
required.
Mr. James E. Creehan
Page 26
52. Records on file with ALCOSAN contained invoices from D. Palombo
Associates, as follows:
Date Amount Comments
June 1, 1979 $112.60
May 2, 1979 $259.40
March 3, 1980 $840.00 (Designed layout and
amounts of plants (flowers)necessary for
garden this summer).
April 1, 1980 $1,575.00
July 1, 1980 $1,855.00 Professional services for
Mazzaroproperty - Findlay Township.
September 26, 1980 $1,505.00 Professional Services. Regarding
Robinson Township site.
October 21, 1980 $1,120.00 Regarding Robinson Township site.
December 1, 1980 $852.00 Dominic Palombo worked on the site study
of consolidation coal property.
December 30, 1980 $945.00 Regarding consolidation site - Mr.
Dominic Palombo made the changes and
revisions to the site plan as per the
instructions of Mr. James Creehan.
May 1, 1981 $1,470.00 Regarding consolidation washer site and
Bologna Coal site. Preparation of
preliminary master planting plan for
consolidation washer site and restudy
and redesign of the Bologna Coal site.
June 1, 1981 $910.00 Regarding Washer site, Bologna Coal site
and landscape architectural services for
new facilities.
August 6, 1981 $1,680.00 Regarding Bologna site.
December 8, 1981 $2,450.00 Regarding Bologna site.
December 8, 1981 $1,610.00 Regarding Slope study.
July 18, 1983 $385.00 Regarding Arden Landfill.
Mr. James E. Creehan
Page 27
July 18, 1983
July 18, 1983
September 19, 1983
January 18, 1985
$245.00 Regarding Aloe site.
$595.00 Regarding Brochure.
$1,645.00 Arden Landfill.
$1,960.00 Regarding employee parking lot, planting
plan and specifications.
$735.00 Regarding employee parking lot, planting
plan and specifications.
$735.00 Employee parking lot area.
$23,484
All of the above cited invoices were addressed to the attention
of James Creehan and were marked "approved for payment."
53. On February 16, 1984, you and Dominic Palombo purchased a
condominium Unit No. 201 at 1700 Grandview Avenue, Pittsburgh,
Pennsylvania.
a. The purchase price for this $125.000.00.
b. The total amount due from the buyer, including all
settlement charges was $135,009.09.
May 13, 1985
October 1, 1985
Total:
c. You and Mr. Palombo made a down payment on this property in
the amount of $33,670.53.
d. Your portion of this down payment, $16,835.27 was tendered
to Jones, Gregg, Creehan and Gerace (settlement agents) via
check No. 865, account No. 311 2841 in the name of James E.
Creehan at the Iron and Glass Bank.
e. You and Mr. Palombo purchased this property as
tenants -in- common.
54. On December 30, 1986, you and your wife, Ann H. Creehan,
purchased the Grandview Avenue property from Dominic Palombo.
a. The sale price of this $66,000.
b. This represented Mr. Palombo's undivided 1/2 interest in the
property.
Mr. James E. Creehan
Page 28
c. The settlement sheet indicated a new mortgage in the amount
of $70,000 and hand money of $15,000.
d. Balance due from seller $41,547.
e. The settlement sheet also indicated $52,310.16 to Meritor
Mortgage Corporation, representing 1/2 balance of mortgage
and interest.
f. Total due seller $2,205.32.
55. Records provided by you regarding the above transaction indicate
the following payments to Dominic Palombo:
a. Check No. 1150, account No. 3112841 James E. Creehan, date
January 26, 1986, Iron and Glass Bank in the amount of
$10,285.26.
b. Check No. 167, Account No. 373661918 Equibank James E.
Creehan, dated January 28, 1985 in the amount of $5,000.
c. Check No. 5357 from the Jones, Gregg Creehan and Gerace
settlement account dated December 30, 1986 in the amount of
$2,205.32.
56. Records provided by the accountant for Mr. Palombo indicate as
follows regarding your payments to Mr. Palombo:
Date Amount
January 29, 1985 $5,000
April 19, 1985 $4,000
January 28, 1986 $10,285.26
Total: $19,285.00
Due: $1,000
Total: $20,285.26
57. Interest due by Creehan was:
a. $11,285,26 at 10 %. Total $1,128.93 for January 29, 1985
through January 26, 1986.
b. $1,000 at 10 %.Total $76.39.
Mr. James E. Creehan
Page 29
c. Due as of January 5, 1987 - $2,205.32.
58. You provided the following information relating to this
situation.
a. You and Mr. Palombo purchased the Grandview Avenue property
on February 16, 1984 as tenants -in- common.
b. This was purchased as an investment property.
c. You were to reside in this property until you completed the
Arlington Avenue properties and then Mr. Palombo was to
purchase the unit from you.
d. The Arlington Avenue properties could not be purchased and
you decided to stay in the Grandview Avenue Condominium
unit.
e. You re- financed the property and bought out Mr. Palombo
paying 10% interest for you for the year and eleven months
that the jointly owned.
f. The services of Palombo were requested and assigned, and
performance monitored by the ALCOSAN Chief Engineer. Your
approval of payment of invoices is purely ministerial and
required of all vendors and surveyors of services to
ALCOSAN.
59. Dominick Palombo provided the following information in relation
to this situation:
a. He has known you for 25 years.
b. You and he purchased the Grandview Avenue property as an
investment.
c. You moved into the unit and paid rent thereon until you
could build on lots located on Arlington Avenue.
d. You later purchased his share of the unit.
e. He never loaned any funds to you.
f. His son, David Palombo was hired by ALCOSAN as a
bio- chemist.
g
Mr. Palombo has informed you that his son was in that
field.
Mr. James E. Creehan
Page 30
h. You told Mr. Palombo to have your son talk to the ALCOSAN
chief engineer.
60. Minutes of the April 9, 1986 ALCOSAN meeting, indicate that the
board ratified the action of the Executive Director in authorizing the
employment of David L. Palombo as assistant to the Chief of Industrial
Waste at a salary of $21,000 per year.
a. David Palombo was hired by ALCOSAN as a bio- chemist, for
which technical position David Palombo was qualified.
Palombo possesses a B.S. degree in Bio- Chemistry from
Virginia Tech University.
61. Records of Slovak Savings and Loan Association indicate as
follows regarding the property on Woods Run Avenue:
a. Residential loan application dated January 17, 1985
regarding the property at 1415 Woods Run Avenue identifies
William Doerr as the borrower.
(i) Amount of Loan - $80,000.
(ii) Property Value - $110,000.
b. Residential loan application identifies James E. Creehan,
1700 Grandview Avenue as co- borrower on the above loan.
(i) The application indicates that title will be held by
William Doerr and James E. Creehan.
c. Promissory note dated April 8, 1985 in the amount of
$80,000 at an interest rate of 14% payable by May 1, 1990.
(i) The note was executed by James E. Creehan, Ann H.
Creehan and William Doerr.
d. Mortgage dated April 8, 1985 between Slovak Savings and
Loan Association and James E. Creehan, Ann H. Creehan and
William Doerr in the amount of $80,000.
(i) The note was secured by property at 1415 Woods Run
Avenue.
e. By lease dated January 1, 1985 through December 31, 1989,
William F. Doerr rented 1415 Woods Run Road to Mary Woods,
Rivell Industrial Contracting for $600 monthly. (Warehouse
and storage area and parking lot).
Mr. James E. Creehan
Page 31
f. By lease dated January 1, 1985, Equibank through December
31, 1989, William F. Doerr rented 1415 Woods Run Road to Ron
Faber B &C Equipment Rental and Supply Company. For $350
monthly. (Storeroom and loading dock).
g. By letter dated April 30, 1987, you advise Slovak Savings
and Loan that you had agreed to be a "DeFacto Guarantor" of
the loan because William Doerr was unable to obtain the loan
on his own. You requested to have your name removed from
the mortgage because Mr. Doerr proved his creditworthiness.
h. Insurance on the subject originally in the name of Primary
Products, Incorporated.
i. As of March 2, 1988, the loan balance was $78,249.92.
62. The property on Woods Run Road was originally the subject of a
land sale contract dated January 25, 1984.
a. Primary Products, Incorporated agreed to purchase the
property from Lois Y. Geissler.
b. The sale price was $83,500 with $10,000 down, $500 per
month for 12 months, unpaid balance of principal due on
January 1, 1985.
c. The contract, as well as the promissory note were signed by
you and Ronald C. Schmeiser.
63. Records of ALCOSAN reflect the following regarding the
transactions with the Slovak Savings and Loan Associates. -
a. Minutes of the ALCOSAN Board meeting of April 10, 1985
indicates that the board considered the request of the
Slovak Savings and Loan Association that they be considered
as a depository for authority funds. Following discussion
and upon motion of Mr. Stanek, second by Mr. O'Malley, the
Board approved the request and authorized the deficit of
$100,000 you were present at this meeting.
b. By memo of April 11, 1985, the Secretary to the board
advised the comptroller of the board's action.
c. On April 12, 1985, ALCOSAN check No. 112 was issued to the
Slovak Savings and Loan Association in the amount of
$100,000.
d. By letter dated April 15, 1985 to the Secretary of Slovak
the ALCOSAN Controller forwarded check No. 112 with
Mr. James E. Creehan
Page 32
instructions that said funds were to be invested in a one
year Certificate of Deposit.
e. Minutes of a meeting of the ALCOSAN Board on April 8, 1987
indicate that the Board approved the deposit of $100,000 in
a non - renewable certificate of deposit with Siovak Savings
and Loan Association. Mr. Creehan made it known that he was
grantor of a loan at Slovak, however, the solicitor advised
the Board that there was no violation in making deposits in
financial institutions where board members or the staff have
loans.
64. You provided the following information in connection with the
Woods Run Property and mortgage loan for Slovak Savings and Loan
Association.
a. You personal Federal income tax returns for the years
during which you were a co -owner of the Woods Run property
showing that you did not claim a deduction for depreciation
of this investment property, that you did not claim a
deduction for any expenses in connection with the operation
of the property, that you did not claim any income from the
rental of the property, and that you did not claim a
deduction for any interest paid to Slovak Savings and Loan
Association.
b. You did not receive any income from the Woods Run Property,
and that you became a co- borrower with respect to the
mortgage loan from Siovak Savings and Loan Association
because Mr. Doerr was not sufficiently creditworthy to
obtain such a loan himself, that Slovak Savings and Loan
Association required you to be a co- borrower, and that the
sale of the important to you because Primary Products, Inc.
was required to close the purchase of the property under its
land sale contract but had no use for the property but had
accumulated equity in the property which could only be
realized if the property were sold to another buyer.
65. Your Statements of Financial Interests are outlined in Findings
42 to 47.
B. Discussion: Once again, you as Executive Director of ALCOSAN, are
a public employee subject to the provisions of the Ethics Act.
Ms. Connie Smetanka
Page 6
Because Koslow never had a lawful appointment as an
authority member, he was not entitled to collect the monthly
salary allocated by law for such members. Hence, by receiving
financial compensation for a public office which he did not
lawfully hold, Koslow violated section 403(a) of the State Ethics
Act, in that he used his township office to obtain compensation
for which he had no lawful entitlement." Koslow v. State Ethics
Commission, at page 4.
The gain which you received for a member of your immediate
family which was compensation other than as provided for by law
amounts to $2,800.00. In Yocabet v. State Ethics Commission,
Pa. Commw. , 531 A.2d 536 1987, Commonwealth Court held that a
township supervisor violated Section 3(a) of the Ethics Act when
he received a salary for the position of secretary /treasurer
which has not been set by the auditors. The court, affirming
the Order of the Ethics Commission which required a restitution
of the financial gain, noted on page 536 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."
(Emphasis supplied.)
See also McCutcheon v. State Ethics Commission, 77 Pa. Cmwlth.
529 466 A.2d 283 (1983). Accordingly, this Commission directs
you to make restitution by mailing a check to this Commission
within thirty (30) days of the date of this order payable to the
Ambridge Water Authority in the amount of $2,800.00. Failure to
remit the foregoing amount will result in the referral of this
matter to the appropriate law enforcement authorities for civil
or criminal proceedings.
C. Conclusion and Order:
1. As the President of Ambridge Borough Council, you are a
public official subject to the provisions of the State
Ethics Act.
2. You violated Section 3(a) of the Ethics Act when you
voted in favor of appointing your husband John Smetanka
to a salaried position with the Ambridge Water
Authority.
3. You are hereby directed within thirty (30) days to remit
a check in the amount of $2,800.00 to this Commission
payable to Ambridge Water Authority which equals the
Mr. James E. Creehan
Page 34
(c) No dollar amounts are required. 51 Pa. Code
55.6(c).
As to the matter of the property located at 1415 Woods Run Road,
you were a co- borrower for a loan on that property amounting to
$80,000 from the Slovak Savings and Loan Association. The foregoing
loan application was made in January of 1985 and you also executed a
promissory note in April of 1985 in the amount of $80,000 in
connection with a mortgage loan made by the Slovak Savings and Loan
Association in that amount. Although Slovak Savings and Loan
Association was thus your creditor in the 1985 calendar year, your
Statement of Financial Interests for that period did not list Slovak
Savings and Loan Association as a creditor to which you owed an amount
in excess of $5,000. You did file an amended Statement of Financial
Interests which now lists Slovak Savings and Loan Association as a
creditor.
While you have filed an amended Statement of Financial Interests
for calendar year 1985, this Commission finds that you violated
Section 5(b)(4) of the Ethics Act in that you failed to include
Slovak Savings and Loan Association as a creditor for your calendar
year 1985 Statement of Financial Interests.
As to the matter of whether Dominick Palombo should also be
listed as a creditor whom you owed $10,000, it is noted that you and
Mr. Palombo originally purchased property at 1700 Grandview Avenue in
Pittsburgh as tenants in common, 'at which property you established
your personal residence while you constructed a new home on the
Arlington Avenue property referred to above. When the Arlington
Avenue project became delayed or unfeasible, you agreed to buy Mr.
Palombo's undivided one -half interest in that property in order to
maintain the property as your permanent residence. Pursuant thereto,
you made several payments to Mr. Palombo during which time Mr. Palombo
retained title to his undivided on -half interest in the condominium
unit, until you then obtained a mortgage loan so that his interest
could be purchased completely, at which time he would conveyed title
to his interest in the property to you and your wife. Although Mr.
Palombo was your creditor and the amount which you owned him exceeded
$5,000, this Commission finds that 1700 Grandview Avenue was by then
your principal residence, and that the device by which Mr. Palombo
held title to his undivided on -half interest until he was paid in
full by you for the purchase thereof has been recognized by
Pennsylvania courts as having the characteristics of a "residential
mortgage." Anderson Contracting Co. v. Daugherty, 274 Pa. Super. 13,
417 A.2d 1227 (1978). Accordingly, both Section 5(b) of the Ethics
Act, and the Regulations of this Commission, exempt you from reporting
any indebtedness to Mr. Palombo under the circumstances of the
aforesaid transaction.
Mr. James E. Creehan
Page 35
In relation to the situation with Mr. Palombo, while we do not
find a violation of the State Ethics Act, we do feel compelled to once
again note that the underlying purpose of the law is to insure the
public that the holders of public employment do not have private
financial interests or transactions that should have been more
sensitive to the potential public perceptions of engaging in private
transactions with an individual or entity that is also transacting
business with your governmental body. In the future, you should
remain more aware of such concerns.
C. Conclusion and Order:
1. As Executive Director of ALCOSAN, you are a public employee
subject to the provisions of the Ethics Act.
2. The evidence elicited does not indicate that you violated
Section 3(a) of the Ethics Act regarding your acquisition
of the Arlington Avenue properties from the City of
Pittsburgh.
3. The evidence elicited does not indicate that you violated
Section 3(b) of the Ethics Act in connection with the award
of contracts to Spinello Construction Company.
4. You violated Section 5(b)(3) and (4) of the Ethics Act by
your failure to include on your Statement of Financial
Interests for your Real Estate interests in the Arlington
Avenue properties which you purchased from the City of
Pittsburgh, and as to the school building which you and your
partner, trading as Bay Tree Associates, purchased from the
Hopewell Area School District.
In that you have now filed amended Statements of Financial
Interests, we will take no further action in relation to
this situation.
5. You violated Section 5(b)(4) of the Ethics Act by your
failure to list Slovak Savings and Loan Association as a
creditor on your 1985 calendar year Statement of Financial
Interests.
In that you have now filed amended Statements of Financial
Interests, we will take no further action in relation to
this situation.
6. The evidence elicited does not indicate that you violated
Section 5(b)(4) of the Ethics Act in connection with your
purchase of the other undivided one -half interest of your
residence at Grandview Avenue, even though Dominic Palombo
Mr. James E. Creehan
Page 36
was your creditor and the amount exceeded $5,000, inasmuch
as the Grandview Avenue property was your principal
residence and Dominic Palombo retained his one -half interest
in the property for the time during which you made payments
to him, which title retention device as a installment
purchase transaction has been .held by Pennsylvania Courts to
fall within the definition of a "mortgage," and which
transaction is thereby not required to be included on your
Statement of Financial Interests.
7. As previously noted, you should have been more sensitive to
public perceptions that result when a public employee
engages in private business transactions with an entity or
individual that is doing business with his governmental
body.
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
respondents consultation with legal counsel.
By th
Commission,
Helena G. Hughes
Chair