HomeMy WebLinkAbout656 LaughllinMr.=Raymond Laughlin
Benezette, PA 15821
Re: 86 -084 -C
Dear Mr. Laughlin:
A. Findings:
STATE ETHICS COMMISSION
308 FINANCE BUILDING
HARRISBURG, PENNSYLVANIA 17120
ORDER OF THE COMMISSION
Order No. 656
Date Decided: June 10, 1988
Date Mailed: June 24, 1988
•
The State Ethics Commission has received a complaint
regarding you and a possible violation of Act 170 of 1978. The
Commission has now completed its investigation. The individual
allegations, conclusions, and findings on which those conclusions
are based are as follows:
I. Allegation: That you, a Benezette Township Supervisor,
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,
in that you authorized payment from township funds for medical
insurance /life insurance plans in which you participated.
1. You served as a Benezette Township Supervisor, for
approximately twelve years until the end of December, 1986 when
your term of office expired.
2. Records of Benezette Township and the Columbia Insurance
Company disclose that the Benezette Township Supervisors
received health insurance coverage through Columbia.
a. An application and adoption agreement was executed on
April 8, 1975 and signed by Frank Gigliotti, agent for
Columbia and Jean Tuttle, Benezette Township Secretary -
Treasurer.
3. Columbia Insurance Company records confirm that you were
insured as follows:
a. Policy No.: AKSM -3019
Effective date: August 22, 1978
Coverage: Disability income benefits, employee OPH
Plan - E
$100 /week, accident and sick plus dependent
coverage, AOR.
b. Policy No
Ef f ectivJ
Coverage:
c. Policy No
.sf f ectve
Coverare:
d. policy No
E' f ective
• Coverage:
. : AKM2- ')534
date: December 15, 1986
Major Medical - Hospitalization
. : KMC -3019
date: August 22, 1978
Cancer
. : LXSM -3920
date: August 22, 1978
Life
Flan F $10,000.00 plus accidentl death and
dismemberment.
e. Columbia representatives informed that AKME coverage
included basic major medical coverage, the AKSM
included outpatient medical coverage, weekly disability
benefits and a supplemental accident disability.
1. Columbia Insurance Company records disclosed the following
changes to township coverages:
a. 12- 12 -80: Memo to Rosemary from Frank Gigliotti noting
addition to coverage:
Raymond Laughlin, cancer coverage fami" v,
$35.40.
•
Robin Roberts, family Plan B, $138.84
Robert Larkin, cancer, $4.14.
William Woodring, cancer, $30.73.
New business turn -in form 7A identifying
upgrade in policies.
b. Undated, handwritten policy change sheet noting change
in hospitalization coverage type from KSM to KME:
Raymond Laughlin - December 15, 1980 - $1,616.39.
Robert Larkin - December 15, 1980 - $552.69.
William Woodring - December 15, 1980 -
c. January 20, 1981 - Transfer hospitalization form KSM
to KME (upgrade). Premium costs:
Laughlin $1,616.39.
Mr. Raymond Laughlin
Page 3
Larkin $522.69.
Woodring $1,207.89.
Additional upgrade - Raymond Laughlin
A/H 83.40
KSM -3019 Credit $16.68
Total: $66.72
d. December 7, 1982 - Memo from Frank Gigliotti to
Rosemary Huber upgrading benefits effective November
15, 1982. Add $50.00 /weekly benefit, $9,000 life
insurance and a death and disability benefit.
New Business Turn -in form 7A, upgrade costs:
$50.00 weekly disability.
Laughlin $58.32.
Woodring $33.04.
Life Insurance:
Laughlin: $24.95.
Woodring: $24.95.
5. Columbia Records disclose that premium payments were made on
your behalf by Benezette township as follows:
a. December 20, 1980: Upgrade Cancer coverage family $35.40.
b. Updated, handwritten policy change sheet noting charges in
coverage for hospitalization from KSM to KME. Effective
date of coverage 12- 15 -80, premium cost of $1,616.39.
c. 1981: Invoice for transfer of hospitalization from KSM
to KME:
AKME: $1,616.39
d. 1982: Invoice dated 1/19/82, due to 3/15/82.
Policy No. AKME 0534 - $1,885.86 - Accident
AKSM 3019 - 234.68 - Health
LKSM 3019 - 17.16 - Life
Total - $2,137.64
.
/It ge 4 �.
Weekly disability: :Laughlin $24.95
Woodring $24.95
t. 1983: Invoice dated 1/19/83, due date 3/15/83.
g.
_...•��. .:11...6
In•ccice dated f /;: /;; : due 8/15/82, r_ ic
check No. 1830:
KMC 3019 - $67.00
12 -7 -82: Kemp from Frank Gigliotti to Rosemary ':tier'_
Columbia) upgrading benefits effective 51-15-02.
t50.O0 weekly disability benefit added, $5,0 ^0
added to life insurance. New business turn -in
form identified cost for only Laughlin anc:.
Woodring as:
Life insurance:
AKME 0534
AKSM 3019
LKSM 3019
Invoice dated 6/20/83, due 8/15/83
AKMC 3019 $77.05
Invoice dated 1/6/84, due 3/15/84.
AKME 0534 $1,920.82
AKSM 3019 418.61
$2,339.43
Life insurance coverage deleted LKSM
h. 1985: Invoice of 3/1/85, due 3/15/85. Second notice
AKME 0534
AKSM 3019
$1,670.28
242.21
251.16
$2,163.65
$1,920.82
418.61
$2,339.43
Laughlin $58.32
Woodring $33.04
by
for coverage from 3/15/85, due 3/15/86.
i 1986: Invoice date 2/28/86, due 3/15/86.
Handwritten on invoice was, the auditor's for i3enezette
Township did not approve hospitalization. Therefore,
this policy will not be renewed. Note signed Janice
Wilson, secretary.
Mr. Raymond Laughlin
Page 5
this policy will not be renewed. Note signed Janice
Wilson, secretary.
6. Your coverage was terminated on December 31, 1986 due to your
term of office expiring. Columbia records confirm that refunds were
made to the township as follows:
a. AKME 0534 - $368.20 — Check #10810
b. AKSM 3019 - 83.32 - Check #10810
$456.52
7. _ riinutes of the Benezette Township Supervisors disclosed the
following in regards to questions raised about the supervisors
receipt of insurance benefits:
a. March 5, 1984, Page 124: Citizens present to discuss
insurance for supervisors. Major concerns expressed at
costs of $6,767.47, which is more than half real estate
taxes.
Letter from Solicitor Richard Masson read stating that
nothing illegal in current coverage.
Auditors stated PSATS, Marion Nailor, was contacted, who
stated insurance is not illegal but may be unethical.
Auditor Chairperson Pauline Pansi asked why the supervisors
did not present policies when asked to do so;;
Following decision reached by the supervisors, all benefits
carried for the secretary /treasurer will be dropped
(volunteered by the secretary /treasurer) amounting to
$1,249.35.
Supervisors also will drop coverage for supervisors' life
insurance ($381.12) and cancer insurance ($207.). Total
decrease of $1,737.47.
Supervisors state they will not drop any of their health or
accident coverage.
b. April 2, 1984, Page 127: Old Business. Citizens present to
ask what decisions were made concerning supervisors'
benefits. Supervisors report that as read in the minutes
coverage in the amount of $1,737.47 were dropped. No
further reductions will be made at this time. PSATS
newsletter of March 5, 1984, which discusses State Ethics
Commission rulings was read.
Mr. Raya<ord ughlin
Iage
c. 6, 1984, Page 134: 1,3ported that tie cancel p 1icy
from Columbia Insurance due, policy to oxpire August :5,
1984. Supervisors to consider paying frr policy.
Letter from PSATS read regarding Senate Bill 1385,
insurance and benefits for supervisors. Secretary to
notify Representative William Wachob giving the township's
support.
d. March 4, 1985, Page 142: Reported that Solicitor Richard
Masson has all the information from the State Ethics
Commission concerning the supervisors' insurance benefits.
Masson requested a copy of the township auditors' letter tc
the supervisors. -
e. May 6, 1985, Page 145: Resident James McCluskey questions
what insurance policies renewed for 1985. Information given
that hospitalization and accident policies for supervisors
were renewed, life insurance was discontinued.
Resident James Wonderly states Supervisor William Woodring
has coverage at place of employment. Woodring responds that
he is covered only after working a certain number of hours,
township insurance covers supervisors on or off the job.
July 1, 1985, Page 150: Supervisors report that they are
looking in to the legalities of supervisors
hospitalization.
g. August 8, 1985, Page 153: PSATS letter to Auditor Hazel
Campbell and Campbell reply read.
Resident Kim Roberts questions how the township supervisors
could approve payment of the 1985 hospitalization without
auditor approval as was stated in the PSATS letter.
Supervisors state that the vote of the auditors on this
subject was (1) auditor in favor, (1) auditor opposed.
Discussion followed.
h. September 3, 1985, Page 154: Supervisor Raymond Laughlin
stated that Auditor William Hoak did not approve or
disapprove the hospitalization, Hoak was not present at the
meeting.
Questions raised concerning Superviors' decision to write
to PSATS regarding insurance. Supervisors stated no letter
was written, a telephone call was made.
Mr. Raymond Laughlin
Page 7
i. February 3, 1986, Page 165: Robert Larkin resigns as
township supervisor.
8. Minutes of the supervisors' meetings also disclosed that premium
payments to Columbia were approved as follows:
a. February 1, 1979, page 34 - $ 375.42
b. April 5, 1979,_page 37 - $1,068.72
c. June 7, 1979, page 39 -
d. July 5, 1979, page 41 -
e. August 2, 1979, page 43 -
$ 42.00
$ 200.00
$ 158.00
f. November 30, 1980, page 48 - $ 366.84
g. March 6, 1980, page 55 - $1,170.39
h. April 3, 1980, page 56 - $ 392.40
i. June 5, 1980, page 60 - $ 42.00
j. July 3, 1980, page 64 - $ 86.98
k. August 7, 1980, page 67 - $ 32.04
1. February 5, 1981, page 78 - $4,317.89
m. June 8, 1981, page 85 - $ 72.54
n. July 2, 1981, page 88 - $ 140.00
o. February 4, 1982, page 96 - $5,601.49
p. July 1, 1982, page 102 - $ 207.04
q. February 7, 1983, page 110 - $5,425.28
r. July 11, 1983, page 116 - $ 238.05
s. April 1, 1985, page 144 - $5,175.62
(i) $2,339.43 of this amount was for your
coverage [see 5 (f)]
(ii) There was a refund of $456.52 due to the
coverage concellation in January 6, 1986.
(see 6)
t...r . Payi c
Page 8
(iii) T :tal 1985 payment for your coverage was
$1,882.91.
9. All of the above.listed payments were approved from the township
general fund with the exception of the $200 payment approved cr... July
5, 1979. That payment was approved for payment from Revebiue
Account. .
10. Auditor minutes disclosed the following regarding the benef .tc
and compensation approved for township supervisors:
a.
b. January 7, 1975
auditors. There
c. January 7, 1976
d. January 4, 1977
were not set.
�. January , 1978
supervisors. A
benefits set.
f. January 4, 1979
supervisors. A
benefits set.
g.
h. January 25, 1980 - Auditors commence audit. Supervisors
present to object to the raise. Supervisors asking for the
same amount as those in other townships. Auditors decide
the salary remains as previously set.
i. January 5, 1981 - Township Secretary Robin Roberts asks for
$.75 /hour increase for supervisors. Motion approved, no
benefits set.
i
January 8, 1974 - The board of supervisors shall also be
authorized to purchase reasonable insurance. The premium
shall be paid by the general fund.
Note: No motion made but this item follows setting ox
wages for supervisors.
- Wages for supervisors set by the
was no mention of benefits.
- No wages or benefits approved.
- Wages for supervisors approved.
- Discussion regarding
$.50 per hour increase
- Discussion regarding
$.75 per hour increase
pay increase
approved, no
P its
for
pay increase for
approved, no
January 3, 1980 - Supervisors requested pay increase. A
$.25 per hour increase approved, no benefits set.
January 5, 1982 - Motion carried that wages for supervisors
reltin the same as 1981. No benefits approved.
Mr. Raymond Laughlin
Page 9
k. January 4, 1983 - Township Secretary Roberts presents
supervisors pay raise request in an amount of $.50 /hour
making the rate $5.50 /hour. Voted unanimously that it was
not feasible to increase the hourly rate.
1. January 4, 1984 - Supervisors request $.75 /hour raise to
$5.75 /hour. Auditors Pansi and Campbell vote "no," Auditor
Hoak votes "yes" but for lower rate. Request denied.
m. February 1, 1984 - Auditors meet, much discussion about the
excessive personal insurance on the supervisors paid for by
the township unknowingly.
n. February 8, 1984 - Additional discussion about the
excessive fringe benefits supervisors have voted for
themselves.
o. February 8, 1984 - Unanimously approved to send a letter to
each supervisor requesting them to present their Columbia
Insurance policies to the auditors for examination on
February 22, 1984. An oral request was previously refused
as being "none of the auditors business."
It was noted that premiums for 1983 totalled $6,179.00 and
1984 are $6,767.00.
Reported that a call was placed to Marian Nailer, PSATS, who
disclosed that supervisors' action may be unethical in
voting themselves benefits, but not illegal. Copy of
February 13, 1984 letter - Letter requests review of
policies to supervisors.
p. February 20, 1984 - Meeting held with Supervisors Laughlin,
Woodring, Larkin and Columbia Insurance Agent Frank
Gigliotti. Policies reviewed, Auditor Pansi questions
extravagance of having so much coverage at the township's
expense.
q January 8, 1985 - Supervisors present to request $1.00 /hour
raise to $6.00 /hour. Auditors approve $.75 /hour increase.
No benefits discussed.
r. January 7, 1986 - Hourly rate for supervisors acting as
roadmaster and laborer set at $6.00 /hour. Additional
compensation in the form of health benefits was not
approved and that such coverage be discontinued.
11. Benezette Township payroll records confirm the following
salaries paid to township supervisors:
Retyb.,n(.
ge 16
b. 1981:
Raymond Laughlin $2,511.50
William Woodring $1,356.13
Robert Larkin $1,301.75
1982:
d. 1983:
e. 1984:
William Woodring
Thomas Vanvoorhis $ 43.25
Raymond Laughlin $2,015.42
Robert Larkin - $1,570.88 -
Raymond Laughlin
William Woodring
Robert Larkin
Raymond Laughlin
William Woodring
Robert Larkin
Raymond Laughlin
Robert Larkin
William Woodring
f. Raymond Laughlin
Robert Larkin
William Woodring
$2,488.75
$1,212.50
$1,000.75
$2,082.75
$2,050.00
$ 380.00
$ 397.50
$2,984.50
$1,862.50
$3,989.96
$3,105.69
$2,487.50
12. Hazel Campbell, Benezette Township Auditor since JannaLT, 1982
provided the following information.
a. Since she began serving as auditor, the supervisors have
never requested that benefits, particularly
hospitalization, be approved. Benefits have never be n
approved.
b. In early 1984, while auditing 1983 accounts, the auditors
became concerned over the amount of money expended on
hospitalization. Annual premiums for the supervisors was
nearly $7,000 while total tax revenues were only $10,000.
The auditors were concerned because the supervisors worked
an average of less than (20) hours each month.
Mr. Raymond Laughlin
Page 11
c. A request was made of the supervisors in January or
February to review the policies, the supervisors refused
stating it was none of the auditors' business.
d. A meeting was held with the auditors and supervisors and
Frank Gigliotti. Gigliotti said the plans were legal.
Eventually, the supervisors agreed to drop cancer and life
insurance coverage as well as hospitalization insurance for
the township secretary /treasurer.
e. The auditors did not join in this decision or approve the
benefits. Advice was received from the Pennsylvania State
Association of Township Supervisors to withhold making a
decision due to pending court action.
f. In 1985, no action was taken to either approve or
disapprove the plans and it was decided to let the matter be
handled by the State Ethics Commission.
g. The auditors never authorized all of the changes made to the
policies which included life insurance, disability, family
and cancer coverage.
13. William Hoak, Benezette Township Auditor in 1985 and a former
supervisor advised as follows:
a. The insurance for township supervisors became an issue in
1984 during the audit when the auditors learned of the high
premium costs. At that time no decision was made to either
approve or disapprove.
b. A meeting was held sometime in 1984 with the supervisors,
auditors and insurance agent Frank Gigliotti in attendance.
The insurance plans were discussed and eventually some of
the coverages were deleted.
c. In 1985 the insurance was again questioned due to the high
costs. The auditors never made a decision to approve or
disapprove.
d. The supervisors never made a request to have the insurance
coverages approved. If asked, he would have voted to
approve the insurance.
e. The insurance was initially approved in 1974 by the
auditors. It was his impression that the auditors were not
required to approve the insurance every year. To the best
of his knowledge, the insurance was never voted on after
1974.
lace 1
f. his opiz,ion '.hat if the supervisors were F.F, <r:e ' t
they were not -: =mitted to `lave the insurar.;e, tL y 1-01216
have cancelled the plan. The supervisors believed t. ay T„
entitled to the coverage and that annual auditor approval
was not necessary.
14. Robin Roberts, current Benezette Township Secretary who also
served from 1977 through 1985 advised as follows:
a. Each year she would meet with the auditors to discuss
compensation for the supervisors. Her requests %lever
included approval for hospitalization medical inPurance.
b. The supervisors had coverage when she was appointee
secretary in 1977. The plans were upgraded in 198r or
1981.
c. The supervisors had various meetings with insurance agent
Frank Gigliotti regarding the insurance. These were private
meetings.
d. The auditors questioned the insurance in 1984 due to the
high premium costs. The supervisors became angry and
refused to discuss the insurance and stated it was none of
auditor's business.
c. Later in 1984 her entire insurance coverages and some
policies for the supervisors were cancelled by the
supervisors.
f.. The supervisors continued the hospitalization in 1985. A
premium of $5,175.62 for Supervisors Larkin, Laughlia and
Woodring was approved for payment at the April 1, 1985
supervisor's meeting. This would have been for coverages
for March 1, 1985 through March 1, 1986. •
g. The insurances were not renewed in 1986 because of iht
auditor's refusal to approve.
h. In 1985 the supervisors were provided with informatio..
regarding Ethics Commission decisions by the auditors.
15. William Woodring, Benezette Township Supervisor, provided the
following information:
a. He has served as a township supervisor the past eight
(8) or nine (9) years and is also serving as roadmaster.
b. Insurance coverages for supervisors were in effect when he
took office. He was added to the plan once he took office,
Mr. Raymond Laughlin
Page 13
but was not certain if he signed an enrollment form or added
to the plan by the township secretary.
c. The insurance was not an issue until 1984 when the auditors
questioned the costs. At a subsequent meeting some
coverages were deleted, but hospitalization and disability
were continued.
d. Coverages were - continued mainly because the PA State
Association of Township Supervisors and the township
solicitor both provided information that the insurance was
�..
legal. .
e. Coverage was maintained through 1985 but was eliminated in
1986 once the auditors stated that they would not approve
any additional payments.
f. Coverage was only maintained in 1984 and 1985 because the
auditors did not formally disapprove the payments. Once the
auditors ruled in 1986 to disapprove payments, the
supervisors decided it wasn't worth the hassle to try and
continue the coverages.
16. Robert Larkin provided the following information to a State
Ethics Commission investigator:
a. He was appointed to fill the unexpired term of a supervisor
who has resigned. He was then elected to serve a full term
in 1981.
b. He resigned in January, 1986 due problems with insurance,
working too many hours for the township without compensation
and his health problems.
c. The township secretary had him added to the township
hospitalization insurancae plans. He was told by the other
supervisors, the township secretary and the insurance agent
that the policy was legal.
d. The auditors questioned the insurance in 1984 because they
wanted on the plan but were refused by the supervisors.
e. He did not know that the insurance required auditor
approval, but the supervisors checked the records and found
that the auditor approved the insurance in January, 1974.
•
f. The matter of auditor approval was never fully explained.
Insurance agent Gigliotti said the plan was legal and cited
other municipalities where insurance was provided.
Ar o Raymond Lat.
:gage 14
The township solicitor s: id ..t vas permiss.thle to keep the
plan until a ruling was received from the state.
h. Once the auditors ruled that peyments would not be approved
in 1986, the plan was terminated.
g •
17. You provided the following information tro the State Eth!-s
Commission investigator:
a. The hospitalization was is effect when you took office.
You were given an insurance card by their
Secretary /Treasurer, Jean Tuttle, wiio said you.were
-
covered.
b. The plan was updated and coverages added by the supervisors
but you were told this was legal by the insurance agent,
Frank Gigliotti.
c. The supervisors needed adequate coverage waxen working
because they received very low salaries.
d. In 1984 after the auditors questioned the insurance, the
riders and coverage for the secretary /treasurer were
eliminated.
e. In 1985 the auditors never voted to approve or disapprove
the insurance. There were only two (2) auditors at that
time, Auditor Pauline Pansi died and Auditor_;William Hoak
would have voted to approve.
f. After the auditors questioned the insurance, the
supervisors had meetings with Frank Gigliotti who said the
plan was legal and that the supervisors were doing nothing
wrong. The supervisors felt powerless to do anything
because they thought Gigliotti was correct.
g. There was never any intent on the part of the supervisors to
violate any laws.
18. Correspondence from Benezette Township Solicitor Richard Masson
to the supervisors regarding insurance /compensation disclosed as
follows:
a. February 13, 1984:
The letter quoted the Second Class Township Code,
Section 65515 pertaining to compensation for
supervisors and also noted: While the Auditors
determine the amount of compensation, they must
consider the compensation paid f«r similar work in or
Mr. Raymond Laughlin
Page 15
about the Township. Thus, for road work, the measure
of compensation could or should be measured against
that of the employees of PennDot. This would
necessarily include insurance benefits.
That letter also noted: Finally, Section 702, Clause
13, of the Second Class Township Code, 53 Pa. C.S.A.
Sect. 65713, permits the expenditure of funds to secure
hospitalization insurance for employees, including
workmen's insurance, fire insurance for
township property, liability insurance for errors and
omissions, and group insurance covering life, health,
hospitalization, medical service or accident
insurance.
b. March 16, 1984:
This was a letter advising of a review of court case
Conrad vs. Township of Exeter, 27 D &C 3d 253 a Berks
County case.
The letter analyzed the court's ruling and noted: In
substance that only employed townwship supervisors may
reaceive insurance benefits and that the auditors must
approve such beneits as part of the suprvisors
compensation. He also noted that auditing the records
each year without surcharge does not satisfy the
requirement. (Township of Ross vs. McDonald, 60 Pa.
Cmwlth. 306, 431 A. 2d 385, 1981.)
He concluded that the Benezette Township Auditors
should specifically provide that the insurance premiums
paid out of township funds are in fact compensation for
the supervisors when acting as employees.
B. Discussion: As a supervisor in Benezette Township, you are a
"public official" subject to the provisions of the Ethics Act and the
restrictions therein are applicable to you. 65 P.S. §402; Sowers,
Opinion 80 -050; Svzmanowski, Order 539. Section 3(a) of the Ethics
Act provides:
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
R - -'ro.cyd J• , c .;
of his immediate f .wily, o:: a business with which - • .
he is associated. 65 P.S. 403(a).
Sectio: 3(a) specifically provides in part that a public off;Fia:.
may not use ais public office or confidential information to obt�yn a
gain for himself other than compensation provided for by law.
The compensation which is allowed for a supervisor is strictly
regulated by statutory and decisional law. -
Under Section (a) of the Ethics Act, this Commission has
previously determined that a township supervisor may not receive rt
.he- township's expense, health, hospitalization, medical and life
insurance benefits when such supervisor acts only in the capacity of a
supervisor. Kane, Opinion 84 -001; Cowie, 84-010. Additionalll, even
if such a supervisor is employed by the township as a superintcadent,
secretary /treasurer, roadmaster or laborer in accordance with the
Second Class Township Code, such benefits are considered compensation
and must, therefore, be fixed as such by the township board of
auditors. See Svnoski v. Haile Township, 93 Pa. Commw. 168, 500 A.2d
1282, (1985); In re: Appeal of the Auditors Report of Muncy Cre
Township, Pa. Commw. Ct. , 520 A.2d 1241 (1987); Hunt, O e ::
348 -R. The foregoing principle was recently reaffirmed by
Pennsylvania Commonwealth Court in Yocabet v. State Ethics Commis.ion,
Pa. Commw. , 531 A.2d 536 (1987). In the cited case, the Curt
held inter alia that a township supervisor violated Section 3(a cj
the Ethics Act when he received a salary for the position of
secretary /treasurer which had not been set by the auditors. The
Court, in affirming the Order of the Ethics Commission which required
a restitution of the financial gain, noted on page 539 of its Opinion:
Section 7 of the Ethics Act instructs thr.
Commission to investigate situations where there
is a reasonable belief that financial coni.ct may
exist, and if conflict is found, to require the
offender to remove himself from the conflict
without gain.
Any benefits received other than as provided for above, wou.c
constitute a financial gain obtained in violation of the State Ethics
Act. See McCutcheon v. State Ethics Commission, 77 Pa. Commw. 529,
466 A.2d 283, (1983); Conrad v. Exeter Township, 27 D & C 3d 253
(1983). These principles of law are now well settled and constitute-
the law under which this situation must be reviewed. See In Re:
Report of Audit of South Union Township, 47 Pa. Commw. 1, 407 A.2d
906, (1979). Further, the right to sue for the restitution of the
financial gain obtained in violation of the Ethics Act has been upheld
by Commonwealth Court in Fee v. Commonwealth of Pennsylvania and
Township of Union, filed at 1932 C.D. 1987 on December 1, 1987.
Mr. Raymond Laughlin
Page 17
In the instant matter, you were a non - working supervisor and were
enrolled in a medical /life insurance plan at township expense while
you were a non - employee supervisor until the expiration of your term
in office in December, 1986. Since you were not a working supervisor
and since there was no auditor approval, you could not, under the
Second Class Township Code, be legally entitled to receive the
insurance benefits that were paid at township expense. However,
Section 1(c)(2) of House Bill 1577 of 1987, Act 41 of 1988, which was
signed into law on March_ 1988, provides in part: "Any life,
health, hospitalization, medical service or accident insurance
coverage contract between January 1, 1959 and March 31, 1985, that
incluaes or provides coverage for non - employee supervisors shall not
be void or unlawful solely because such inclusion of non - employee
supervisors was ... subsequently found to be without lawful authority.
No penalty, assessment, surcharge, forfeiture or disciplinary action
of any kind may occur as a result of participation by non - employee
supervisors."
Since the above quoted provision of law provides amnesty to
non - employee supervisor regarding the insurance which was received
between January 1, 1959 and March 31, 1985, the Commission finds that
there is no violation of Section 3(a) of the Ethics Act for your
receipt of those benefits up to March 31, 1985. However, the receipt
of the insurance benefits for the period April 1, 1985 through
December of 1986 violates Section 3(a) because the receipt of those
township paid insurance benefits occurred beyond the amnesty period.
The financial gain you received amounts to $1,780.36.
The State Ethics Act provides as follows:
Section 9. Penalties.
(a) Any person who violates the provisions of
Section 3(a) and 3(b) is guilty of a felony and
shall be fined not more than $10,000 or imprisoned
for not more than five years, or be both fined and
imprisoned. 65 P.S. Section 409(a).
(c) Any person who obtains financial gain from
violating any provision of this act, in addition
to any other penalty provided by law, shall pay
into the State Treasury a sum of money equal to
three times the financial gain resulting from
such violation. 65 P.S. Section 409(c).
Additionally, this Commission may make recommendation to
appropriate law enforcement authorities for the initiation of criminal
charges or the dismissal of such charges rising out of violations of
the State Ethics Act. Prior judicial decisions have also determined
that this Commission may offer an individual who has obtained a
_ od Lai c hlin
Page I
..iaanc ?.al , ,airy in viols. Lion c ti. lEw the or , ortun3 . ty to c iveet
';iiinself of financial g� n prior: t. the issuance of a locommendati On te.
law enforcement authority. 7cCutcheon v. State Ethic -s Commjss isc
£upra; 65 P.S. $407 (9) (ii) . Iii the instant situation, upon 1. re',/
of all of the facts, the lattor course may be appropriate. 'thus, ?: .
the financial gain obtained in violation of the State Ethics Act ?F
returned to the governmental body from which it is obtained, you vial
have removed yourself from a violation of the Act without having
received a financial gain. Therefore, you are directed within thirty
30) days of the date of -this Order to forward a check to the Stat3
^thics Commission payable to the Order of Benezette ( 2ownship in the
amount of $1,780.36. Failure to comply with the foregoing 'sill result
in the - referral of this matter to the appropriate law enforcement
authority for review and appropriate action.
•
Conclusion and Order:
1. As a Township Supervisor in Benezette Township, you are a
"Public official" subject to the provisions of the Ethic;ii
Act.
2. There is no violation of Section 3(a) of the Ethics Act
regarding the receipt of medical /life insurance at township
expense on your behalf as a non- working supervisor for
the period up to April 1, 1985 due to the applicable amnesty
provisions in Act 41 of 1988.
3. You violated Section 3(a) of the Ethics Act when you received
medical /life insurance benefits at township expense from
April 1, 1985 through December, 1986 which amounts to
$1,780.36.
4. You are hereby directed to forward a check within t..'rty (30)
days of the date of this Order to the State Ethics
Commission payable to the Benezette Township in the amount of
$1,780.36.
5. Failure to comply with the provisions of paragraph 4 will
result in the referral of this matter to the appropriate law
enforcement authority for review and appropriate action.
Our files in this case will remain confidential in accordance
with Section 8(a) of the Ethics Act, 65 P.S. S408(a). However, this
Order is final and will be made available as a public document 15 days
after service (defined as mailing) unless you file documentation with
the Commission which justifies reconsideration and /or challenges
pertinent factual findings. See 51 Pa. Code §2.38. During this ?5-
day period, no one, including the respondent unless he waives his
right to challenge this Order, may violate this confidentiality by
releasing, discussing or circulating this Order.
Mr. Raymond Laughlin
Page 19
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. 5409(e).
By the Commission,
k 4440
Joseph W. Marshall, III
Chairman
Mr—Raymond 0. Laughlin
P.O. Box 58
Benezette, PA 15821
STATE ETHICS COMMISSION
308 FINANCE BUILDING
P.O. BOX 11470
HARRISBURG, PA 17108 -1470
TELEPHONE (717) 783 -1610
August 4, 1988
Re: Order No. 656, File No. 86 -084 -C
Dear Mr. Laughlin:
On July 21, 1988, the State Ethics Commission approved your
requested payment method for reimbursing Benezette Township as
required by Order No. 656.
We have forwarded your check No. 3060 dated July 29, 1988,
in the amount of $148.36 to Benezette Township. We will expect
checks in the amount of $148.36 on the 30th of each month for a
total of 12 months. Your next payment will be expected on August
30, 1988.
such.
JJC /na
This letter will be part of the Order and a public record as
cc: Public Binder
Sin
tino
ve Director