HomeMy WebLinkAbout648R Schmeisera.
Mr. ;;Coned chrneiser
c/o Robert Cinelrich, Esquire
Twentieth F :^)or, Four Gateway Center
Pittsburgh, 4:11. 15222
Re: 86 -173 -C
Dear Mr. Schmeiser:
STATE ETHICS COMMISSION
308 FINANCE BUILDING
HARRISBURG, PENNSYLVANIA I7120
ORS. ER CF THE COMMISSION
ORDER W. 648 -R
D.AT DECIDED: December 6 1988
DATE ?AILED: December T i5, 71g8
The State Ethics Commission has received a compiai, t r'gardinc-
you and a possible violation of Act 170 of 1978. The Commi - sion hr!s
now completed its investigation. On September 27, 198a, a '.1ear.ng tea_
the matter was conducted and relevant evidence and testimora- v�.r
presented. The individual allegations, conclusions, a:ld fiic ,t
which these conclusions are based are as follows:
T. 'l.legation: That you, Finance Director for the City of
Pittsburgh, violated Section 3(a) and (b) of the Ethics Act whit.
prch bits a public employee's or public official's use of offi -e r_
confidential information gained through that office to o•'•air
:.inricia' gain and which prohibits a public employee, pubic offici;a ?.
or candidate from offering, soliciting or accepting anything of value
basF on an understanding that the vote, official action or judgment
)f the public official, public employee or candidate will be
inf..ienced when you, through your position as Finance Director, were
responsible for the sale of city owned property along Arlington Avenue
that was reserved for possible use as greenspace and unavailable for
sal.'a to the general public, to James Creehan, your partner in Bay Try
Asc,ociates and Primary Products.
A. Findings:
1. You served as the Director of the Department cf Finance for the
City of Pittsburgh.
You served in this position since 1984.
2. Prior to January, 1984, you served as the city treasurer.
3. In 1983, Ordinance No. 40 was adopted effective January •�, 1984,
' - e rTan1, r r B`�.tc'' in c5t
Mr. Ronald Schmeiser
Page 2
a. As a result of this reorganization, the Director of
Finance became responsible for all of the duties And
responsibilities previously exercised and performed by
the City Treasurer including the responsibility for the
acquisition and disposition of city -owned property and
the acquisition, maintenance and disposition of city
controlled property.
4. Prior to this reorganization, the Director of Lands and
Buildings was responsible for the acquisition and disposition of
city owned land.
During the 1980's, James E. Creehan, the Executive Director
c;. the Allegheny County Sanitation Authority (ALCOSAN), an
individual with whom you had a business association, had
D.rchased 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.
r. 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. M� "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.
Mr. Ronald Schmciser
Page 3
7. The only properties on Arlington Avenue that were sold were
the properties in which James Creehan was interested.
8. There were no properties for which James Creehan was listed
as an interested buyer which he did not obtain.
9. The properties that Mr. Creehan obtained on Arlington Avenue
were the following:
.Address
341 Arlington. Avenue
339 Arlington Avenue
237 ;:.r lington Avenue
1 Arlington Avenue
E3 Ar'.; iigton Avenue
Sale Price Sale Completed
$1,500.00
$1,500.00.
$1,500.00
$ 250.00
$1,500.00
10 -11-85
10 -11 -85
10 -11 -85
7 -5 -85
10-11-85
10. -- ' ,, cords obtained from the office of the Pittsburgh City
Pia . - .in7 Director contained a memo captioned "chronology and
rp 'ion -1 for the sale of Arlington Avenue property to Tames
a. This memo was dated July 24, 1987.
11. Tie above referenced memo provides, in substance, as
folio' - , :
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.
c. These parcels had been designated as potential Greenwav
land in July, 1981 along with 1400 other properties.
d. Mr. Creehan contacted the City Planning Department and
requested that the Sales and Classification Conut.tt_
release these properties for sale.
e. By memo dated July 27, 1982, Bob Lurcott and Ray heaves
of the City Planning Department expressed oppos.i.ion 7,:o
the sale. It was also recommended that guidelines be
developed for construction on the Arlington
f. In September, guidelines were established and is
December, 1982, Mr. Lurcott recommended that five (5)
properties be removed from the potential Greenway
status.
Mr. Ronald Schmeiser
Page 4
g
j.
On January 3, 1983, the Sales and Classification
Committee reclassified seven (7) properties as suitable
for private use.
h. The memo notes that it was not unusual to release
property from potential Greenway designation.
i. The deeds to four (4) properties were transferred to
James Creehan on November 5, 1985.
The title to one (1) parcel was clouded and remained
with the City.
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 indicate
that these properties are hold.
12. 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,
Pennsylvania's 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
cif an area as Greenway must come from city council.
Mr. Ronald Schmeiser
Page 5
13. By letter dated April 12, 1983, Daryl H. Smith, Director of
the Department of Lands and Buildings submitted a resolutio:.i to
city council requesting approval to sell certain properties
through the filing of a court petition.
a. The request consisted of ten (10) properties, inc- ucjing
the five (5) Arlington Avenue properties soli'. to J7- s
Creehan.
1: . In September 25, 1984, the auction of the Arlin :ton Avenge
properties was advertised in a paper of general c.iroulatio-t.
15. At a hearing conducted on February /2, 1985, in the CCUC •
Commcn Pleas, Allegheny County, Pennsylvania, James E.
w - s 'warred the Arlington Avenue property for $8,500.00.
a. This order was subsequently re- affirmed by the Court on
April 9, 1985.
y . :pou and James E. Creehan were the incorporators o:" Primary
�roduc , In'orporated.
a. This entity was incorporated on December '';, 1902.
17. You and James E. Creehan operated a real estate business
71:der the name Bay Tree Associates.
The application to acquire or operate under a
fictitious name was filed on April 20, 1981.
: unsuccessful bidder on the Arlington Avenue properties
tnat Mr. Creehan purchased advised that he pulled out of the
bidding be. :ause he could not finance the acquisition.
a. h further advised that Mr. Creehan owned most of the
adjoining property and it is customary for the court to
aT•rard the sale to such adjoining owners.
b. The sale had been advertised and was public knowledge.
19. Robert Lurcott, Director of the City Planning Commission,
advised as follows:
. a. Mr. Creehan's purchase of the Arlington Avenue
properties was discussed at one meeting of the Sales
and Classification Committee.
b. The proposal for the purchase was submitted by Daryl
Smith, the Director of Lands and Buildings.
Mr. Ronald Schmeiser
Page 6
c. You never approached him about the properties.
d. He did discuss the matter with you after various news
articles were published about the purchase.
e. Councilmember Eugene DePasquale contacted him and
requested that he meet with Mr. Creehan.
f. At said meeting, Mr. Lurcott was advised of Mr.
Creehan's interest in purchasing property on Arlington
Avenue to be used eventually as a primary residence.
Originally, all Arlington Avenue properties were placed
on a hold status.
h. After numerous staff discussions and the preparation of
guidelines, it was decided to release the properties in
which Mr. Creehan was interested.
g.
i. The zoning could not be changed and Mr. Creehan would
be required to build within the parameters of the
developed guidelines and restrictions.
Mr. Lurcott advised that Mr. Creehan was successful in
acquiring the property because he was familiar with the
system and was 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.
20. 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.
21. Mr. Evers confirmed that he was contacted by Mr. DePasquale
and that he met with Mr. Creehan on several occasions.
a. He was surprised when Mr. Creehan's proposal was
accepted by the Planning Commission.
Mr. Ronald Schmeiser
Page 7
22, Paul J. McDermott, Director cf the City Department of
Engineering and Construction. advised that he had received
numerous telephone calls from individuals interested in the
Arlington Avenue properties.
These properties were on a hold status and not to be
sold.
23. Jane Dowaing, Assistant Director for City Planning, advised
as fol] ;w:s :
In 1980 or 1981, a property classification plan was
in3.ti ated and the Arlington Avenue properties were°
laced on a hold status until a decision as to
Llassification 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 val,ie, in effect,
overruling staff.
d. The Creehan request was presented to the Sales and
Classification Committee pursuant to established.
procedure.
Other interested individuals probably never requested a
change from the committee.
The zoning on the property was restrictive and most
ind.'.viduals would be unable to afford to build a single
unit thereon and remain in compliance.
24. James Creehan provided the following information in relation
to this situation:
a. You played no role in his acquisition of the Arlington
Avenue properties.
b. Mr. Creehan never requested your help in obtaining
these properties.
c. Mr, Creehan purchased several properties on Arlington
Avenue frIm private parties.
d. The properties purchased from the city were done so
under court order.
Mr. Ronald Schueiser
Page 8
e. The properties that he purchased were not designated
Greenway in that they were owned by private parties.
25. You provided the following information by letter dated
December 15, 1986, in relation to this situation:
The Director of Lands and Buildings for the City, Daryl
Smith, forwarded the request to city council to 7
court petition to be filed to initiate the sale -f 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 puh_ic. 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 commissioner eased these properties for
sale because there was no public need for retention.
e. You were 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 Mr. Creehan.
26. You further provided the following information in relation
to this situation:
a. You began your service with the City of Pittsburgh in
1980.
(i) You served as the City Treasurer,
(ii) In this position, you had no duties in relation to
the City Real Estate Division.
(iii) These duties were performed by the Director
of Lands and Buildings, Daryl Smith.
b. In 1983, a reorganization of City agencies occurred,
and you became the Director of Finance.
Mr. Ronald Schmeiser
Page 9
(i) In this position, w were in charge of city owned
property.
In 1984, you als() became a member of the sales and
classification Jommittee.
(a) This Committee reported its .reccmmendarions
to city council.
`'ru weru aware of the fact that Mr. Creehan was
accumulating properties on Arlington Avunae over a
period of years.
(i) You never discussed Mr. Creehan's attempt. to
secure these properties with the Planning;
Director.
(ii) You may have discussed Mr. Creehan's .•roblems in
securing these properties with him af'er they were
released by the city-.
(iii'You received no reports from your representtive
on the sales and classification committee
regarding these properties.
d, You played no role in the City's sale of properties
Mr. Creehan.
e, You were joint owners with Mr. Creehan in Bay Tree
Associates at the time when the designation on the
Arlington Avenue properties was changed.
B. Di You, as Director of the Department of :inance
for the City of Pittsburgh, are a "public employee" as that term
is refined in the Ethics Act. 65 P.S. §402; 51 Pa. Code Section
1.1. As such, your conduct must conform to the requirements of
the Ethics Act.
Section 3(a) of the Ethics Act provides:
Section 3. Restricted activities.
(a) No public official or public employee
,hall 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
Mr. Ronald Schmeiser
Page 10
family or a business with which he is
associated. 65 P.S. §403(a).
It is further provided in Section 3(b) of the Ethics Act:
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 §403(b).
Sections 3(a) and 3(b) of the Ethics Act basically provide
that no public employee may use his public office or confidential
?T1forr. tj (l?? received hi r }.^ 1r, ^" '
associated and no public employee may receive anything of value,
on the understanding that this official conduct be influenced
thereby. 65 P.S. §403(a) and (b).
In the instant matter, James Creehan, your partner in Bay
Tree Associates and Primary Products, purchased the Arlington
Avenue properties while you served as Finance Director in the
City of Pittsburgh. In this position, you did have
responsibility for both the acquisition and disposition of City
owned property. As to the five properties which Mr. Creehan
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
public office to aid Mr. Creehan in purchasing these five
properties from the City. The facts reflect that Mr. Creehan
contacted the City Planning Department with a request that the
properties be released for sale by the Sales and Classification
Committee; however, Mr. Lurcott and Reeves, from that Department,
initially expressed opposition to the sale. After 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,
Mr. Ronald Schmeiser
Page 11
seven properties were cla:lsified as suitable for private use by
the Sales and Classifica.ion Committee and four of those
properties were transferred to Mr. Creehan while the 5th paroel
had a cloud on title and remained with the City. As to th five
Arlington properties, it is further noted that Mr. Daryl Smith,
the Director of the Department of Lands and Buildings submitted a
resolh.tion to city council to sell ten properties through the
filing of a court petition; five of the properties were th'
Arlington properties sold to Mr. Creehan. Thereafter, the
Arlington Avenue properties were listed for auction in a paper of
general circulation and Mr. Creehan was awarded those propertie3
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 Mr. Creehan 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,
you never approached or discussed the matter with him although h^
3.id talk to you about it after various news articles appeared.
Downing, Assistant Director of Planning, stat ,, d that
Creehan request was submitted to the Sales and Classification
tittee pursuant to established procedure.
these properties which was done under court order. Lastly, you
state that you were not in charge of real estate at the time the
greenway designation was lifted; that city council was requested
to approve the filing of the court petition and that after that
approval was obtained, the Court did affirm the sale of the
properties.
Based upon the foregoing, the evidence elicited fails to
indicate a violation of Sections 3(a) or 3(b) of the State Ethics
Act.
II. Allegation: That you, Finance Director for the City of
Pittsburgh, violated Section 5(b)(3) of the Ethics Act which
states that the Statement of Financial Interests shall include
the following information for the prior calendar year wi_h r ^gard
to the person required to file the statement and the member of
his immediate family, any direct or indirect interest ii. 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, any of its agencies or political subdivisions,
Sections 5(b)(8) and (9) which requires that you list any office,
directorship or employment of any nature whatsoever in any
business entity and any financial interest in any legal entity
Mr. Ronald Schmeiser
Page 12
engaged in business for profit; and, Section 5.5(a)(2) and 5.14
of the State Ethics Commission regulations which requires that
you disclose the names and address of any direct or indirect
interests in real estate of the person, his spouse, and minor
dependent children as follows and any real estate purchased or
leased from the Commonwealth, or any of its agencies or political
subdivisions and the name and address of the business entity and
the position held where the person required to disclose, his
spouse, or minor dependent child is an officer, director,
fiduciary, or partner - -- limited or general.
A. Findings:
27. Findings 1 through 26 are incorporated herein by reference.
28. Records on file with the Pennsylvania Department of State,
Bureau of Corporations, indicate 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 Park, Pennsylvania, and Ronald C.
Schmeiser, 5612 Aylesboro Avenue, Pittsburgh,
1: C acbl i`vaIiia .
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.
29. 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.
c. 12/9/79 - The Planning Commission denied changes to the
R -3 area where the school is located.
Mr. Ronald Schmeiser
Page 13
d. 12/14/79 -- The Beaver Cou :-_ty Planning Commission also
denied the zoning change request.
Robert F. Amalia, 712 -15th Street, Beaver Falls, PA,
(4:'2- -843- 7330) , appraised the fair market value of the
school at:
Present allowable uses - $100,000.
If Business & Professional uses - $250,00r.
If 1•`ulti- family uses - $275,000.
fa. 5 / 15 / 8 0 - Memorandum - Eugene Morris, Esq., '-o Schoo
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., 346
Beaver Grade Road, Coraopolis, wanted to purchase the
property as an investment..
6/18.'80 - Eugene Morris, puts out bid announcement for
the sale of the school property. Bids were advertised
in the area papers.
h. 7/15/80 - Ronald Schmeiser and James Creehan responder:
with a bid of $222,222 for 1 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.
7/24/80 - The bid was accepted via Resolution No.
24 -1930, by the School Board.
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 prepa::e
preliminary plans.
k. 7/15/80 - Letter, Schmeiser & Creehan to Eugene Morris,
Esc.
J•
1. 7/30/80 - Letter, Schmeiser & Creehan ':o 2ugene Morris,
.-.sq.
Mr. Ronald Schmeiser
Page 14
m. 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.
n. 10/17/80 - Patrick McFall, Esq., same address aei
Creehan and Schmeiser, filed for a zoning amendment.
o. 10/28/80 - Via Resolution No. 33 -1980, Tie School Board
approved the sale of property to James Creehan and
Ronald Schmeiser for $222,222.
p. 12/4/80 - The Township Planning Commission denied the
request for a zoning change.
12/5/80 - Beaver County Planning Commission denied the
zoning change request.
r. 2/2/81 - The closing date for the purchase of the
property was extended. -
s. 3/27/81 - The Beaver County Planning Commission again
rules against the zoning change request.
q.
property.
��,_..;orr,00ci n►c:Lng eyc ily Lilt Sale o Li ie
u. = - The planning Commission recommends the Creehan
plan to the Supervisors.
30. On April 27, 1981, the Board of Directors of the Hopewell
Area School District, Beaver County, Pennsylvania, passed
I_os olutior. 4 -1981 providing, in part, as follows:
a. The request of James E. Creehan and Ronald C. Schmeiser
copartners trading as Bay Tree Associates to close the
sale of the Johnson Street Elementary School property
was approved.
b. The above parties were to proceed in good faith to
obtain previously agreed 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.
Mr. Ronald Schmeiser
Page 15
e. The building to be leased by the purchase to Duquesne
Ligh : : :, Company as a training facility during the period
`.hat the zoning requests are made.
31. .'ecords of the Pennsylvania Department of State, Corporation
Bureau, indicate that a certificate of incorporation was issued
by that agency on December 20, 1982.
a. The name of the corporation was Primary Produ ^ts,
Incorporated.
b. Registered offices as noted on the articles of
incorporation were 410 Manor Building, 504 Forbe3
Avenue, Pittsburgh, Pennsylvania.
The incorporators were James E. Creehan and Ronald C
Schmeiser.
C.
32. Statements of Financial Interests on file with the City of
Pittsburgh for you indicate as follows:
a. Statement Date - April 27, 1981
For year - 1980
Real .state interest - None
Creditors - Equibank, Peoples Bank of Western
enns lvania
Source of Income - Touche Ross and Company
Interest in Business - 45% Common Stock of R &E
Investment Corporation
Al! . other categories - None
b. Statement Date - April 29, 1982
For Year - 1981
Real Estate Interests - None.
All other categories listed are the same as (a) above,
r;cept that a 25% interest in Bay Tree Associates iz
also indicated.
c. Statement date - April 19, 1983
For Year - 1982
Mr. Ronald Schmeiser
Page 16
All categories listed are the same as (b) above except
that University of Pittsburgh is listed as a source of
income.
d. Statement Date - April 27, 1984
For Year - 1983
All Categories are the same as (b) above except that
Pa.r Tree Associates is also listed as a source of
income.
e. Statement date - April 16, 1985
For year - 1984
All categories are the same as (d) above.
lr
For Year - 1985
For °Y ar - 1986
lope_
"^11 .. , r +. ,., v
- r te ��"° as re} above e._cent that R
& E Investment Corporation is also listed as a Business
in which you serve as treasurer.
g. Statement date - March 25, 1987
Real Estate Interests - School Building purchased from
Hopewell Raccoon independence School District.
Creditors - Equibank, Peoples Bank of Western
Pennsylvania Source of Income - Touche Ross
and Company.
Office or Directorship - R &E Investment Corporation -
Treasurer, Primary Products, Incorporated.
Financial Interest in Business - R & E Investment
Corporation, Bay Tree Associates.
33.. Neither Primary Products, Incorporated nor the Hopewell
school property were listed on your Statements of Financial
Interests prior to the 1987 statement.
Mr. Ronald Schmeiser
Page 17
34. You provided the following information in relation to this
situation:
a. Bay Tree Associates was formed in approximately 1981.
(i) You and James Creehan were the principals of this
entity.
(.ii) The only asset of the Corporation was the tiopewell
High School property.
(iii)You were joint owners with Mr. Creehan ii. Say
Tree Associates at the time when the designation
on the Arlington Avenue properties was c'zarged..
b. Primary Products was formed in approximately 1912.
c. You were involved in the purchase of property on Roods
'?un Road.
(i)
d. You were doing this as a favor to a city counci?.person,
Ben Woods.
(il
(
(1)
(iii)Mr. Creehan asked you to help Mr.
bookkeeping for the business.
You did this for several months at no charge.
They wanted to buy a building but had no funds.
Yru and Mr. Creehan, via Primary Products,
purchased this property and had it }-or one year.
(vii)Ravell paid rent for one year and later purchased
the property.
James Creehan and your wife were the sharolders
of this entity.
1:J ti Vr�rG l.iaG �o%:t t L — I. zedsul - r.
This property was purchased by Primary Pro*"icts,
Incorporated.
Mr. Woods was a close friend of Mr. Creehan.
i) Mr. Woods' mother and brother were
business, Ravell Industries.
involved in a
Woods by doing
Mr. Ronald Schmeiser
Page 18
e. The financing when Ravell took over was secured through
Slovak Savings and Loan.
f. There was no profit on this transaction.
You were unaware as to why the insurance on the
property was in the name of Primary Products in 1985,
when the loan was obtained from Slovak.
g.
h. The omissions on your Statement of Financial Interests
were inadvertent.
i. You believe that by listing Bay Tree Associates, you
had complied with all filing requirements.
j. You resigned from the City in March, 1987.
k. You had no interest in any properties on Arlington
Avenue.
1. You never lobbied on behalf of Mr. Creehan.
35. You provided the following testimony:
a. You worked for the City of Pittsburgh from April 1,
1980 until approximately March of 1987.
b. You served as City Treasurer and later as Director of
Finance beginning in 1983; however, the Real Estate
Division was not transferred to the Finance Department
until January 1, 1984.
c. You admit violating Section 5(b)(3) of the Ethics Act
regarding your failure to list the Johnson Street
School for the calendar years 1981 through 1986.
d. You believed that the date of approval, rather than the
date of filing, for the articles of incorporation for
Primary Products, Inc. was controlling for financial
interests reporting purposes.
e. As to Primary Products, Incorporated, you admit that
you were an officer for 1983, 1984 and 1985.
• f. You were not Director of Finance when Mr. Creehan was
making the purchases referenced in the above findings.
Mr. Ronald Scxmeiser
Page 19
g
you acJ that you violate( Section 5(b)(8) and (9) of
the thics Act by failing to list yor as Treasurer
fo Primary Products, Incorporated for 1983 :through
3986.
36. You filed amended Statements of Financial Interests as
follows by way of letter dated December 15, 19U:
a. For .r1.': year 1981, you added the school building
as real estate !_nterest. Also added were the
: 7,- ".owing items: a second loan from Equibank, R
:Investment Corporation as a business in which :on were
treasurer and Bay Tree Associates, as a source of
income.
b. For calendar year 1982, all of the above information
was added.
c. For calendar year 1983, you added all of the :`oregoing
information and also included Prima Products,
Incorporated as a business in which you were treasurer.
c1. For 7alendar year 1983, you added al'. of the
information as set forth in (c) above.
e, For calendar year 1984, you added all of the .
information set forth in (c) above.
f. For calendar year 1985, you added all o: "' the
information set forth in (c) above.
. Yo' filed a second amended Statement of Financial Interests
dated Ma: 31, 1998 and received by the State Ethics Commission on
June `, 1988, for calendar year 1982, wherein you added your
interest. in Primary Products, Incorporated.
B. Discussion: As noted above, you are a "public employee"
subject to the provisions of the State Ethics Act.
Section 5(b)(3) of the Ethics Act provides:
Section 5. Statement of financial interests.
(b) The statement shall include the following
info:^ma. ion for the prior calendar year with regard to
the person required to file the statement and the
members of his immediate family:
Mr. Ronald Schmeiser
Page 20
(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
- ubdivisions, or which was the subject of any
condemnation proceedings by the Commonwealth, any
of its agencies or political subdivisions.
It is `urther provided in Sections 5(b)(8) and (9) as
follows:
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:
(8) Any office, directorship or employment of any
nature whatsoever in any business entity.
(9) Any financial interest in any legal entity
engaged in business for profit. 65 P.S. S405(b).
The Regulations of the State Ethics Commission provide in
Section 5.5(a)(2) and 5.14 as follows:
S5.5.Real estate.
(a) The person required to file shall lisp
the names and address of any direct or
indirect interests in real estate of tha
person, his spouse, and minor dependent
children as follows:
(2) Any real estate purchased or leased from
the Commonwealth, or any of its agencies or
political subdivisions.
5.14.Directorship.
A public official, public employe or candidate
shall disclose the name and address of the
business entity and the position held where the
person required to disclose, his spouse, or minor
dependent child is an officer. director,
fiduciary, or partner - -- limited or general. 51
Pa. Code 5.14.
Mr. Ronald Schmeiser
Page 21
Factually, you are a co-- partner with ;Fames E. Creehan in
71usines s k warn as Bay Tree Associates. Further_-, you were
incorpc -rator and also treasurer in the business known as Primary
Products, Incorporated. As to Bay Tree Associates, you and. your
' yr :ner Mr. Creehan, purchased the Johnson Street E1ementE ry
property from the school district, which is, of course, a
political subdivision of the Commonwealth of Pennsylvan & . . The
sale of this property was effectuated in April of 1981 after
�evorai. relJ'.ted matters, such as zoning problems, ire c' resolved.
As your business interests, it is noted that a fictitious
nar w-s applied for as to Bay Tree Associates in the ::alendar
1981 and that articles of incorporation for Primary
.'- , Aucts, Incorporated, were filed in the calendar year 1982.
Turning to an examination of your Statement of Financial
In':erests for the calendar year 1980 forward, it is noted that
the Hopewell School property which was acquired in 1981 was not
listed for the calendar year 1981 Statement of Financial
Interests or a Statement of Financial Interests for the following
,. 3r. Likewise, your interest in the Primary Products,
incorporated was not listed for the calendar year 1982 Statement
of rinaacial Interests or for any Statements. You have filed
amended, Statements of Financial Interests for the calendar year
1981 and all succeeding years, listing, inter alia, your interest
in Bay Tree Associates. It is noted that you recently filed a
3cond amended calendar year 1982 Statement of Financial
.interests listing your interest in Primary Products,
tnc,rporated. That interest was added in all succeeding
Statements of Financial Interests.
Under these facts and circumstances, you violated Section
5(b)(3) of the Ethics Act by not including your purchase of the
Jo Street School from the Hopewell Area School District for
the calendar years 1981 - 1986.
Further, you violated Sections 5(b)(8) and (9) of the Ethics
Act by failing to list your interest in Primary Products,
Incorporated for calendar year 1982 forward. You have filed
amended Statements which now list these financial interest;;. As
t; the 1982 calendar year, you, however argue that since the
articles of incorporation were not approved until January 5,
1982, Primary Products, Incorporated was not incorporated until
that date even though the articles were filed in December, 1931.
While you assert that you, as a layman, did not know the legal
iirLinctior as to when incorporation occurs, you are presumed to
know the law.
Ir. Ronald Schmeisel.
Page 22
As to the final resolution of this matter, we do note that
all filings have now peen made or amended and thus no further
y��tion will be taken.
C. Conclusion and Order:
1. As Director of the Department of Finance for the City of
Pittsburgh, you are a public employee subject to the
provisions of the Ethics Act.
2. The evidence elicited fails to indicate a violation of
either Sections 3(a) or 3(b) of the Ethics Act regarding the
acquisition of the Arlington Avenue properties by Mr.
Creehan.
3. You violated Section 5(b)(3) of the Ethics Act by not
listing, on your Financial Interest Statement, the purchase
of the Johnson Street School from the Hopewell School
District for the calendar year 1981 through 1986.
4. You violated Sections 5(b)(8) and (9) of the Ethics Act by
failing to list your interests in Primary Products,
Incorporated in the Statement of Financial Interests for the
calendar years 1982 through 1986.
5. In that you have now amended your prior statements, no
further action in this matter will be taken.
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
5 P.S. 409(e). The confidentiality provision does not restrict
respondents consultation with legal counsel.
By the Commission,
:3
Joseph W. Marshall, III
Chairman