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HomeMy WebLinkAbout1164 PalovichIn Re: Michael Palovich, Sr. File Docket: 99- 074 -C2 X -ref: Order No. 1164 Date Decided: 9/20/00 Date Mailed: 10/5/00 Before: Louis W. Fryman, Vice Chair Julius Uehlein John J. Bolger Frank M. Brown Susan Mosites Bicket This is a final adjudication of the State Ethics Commission. Procedurally, the Investigative Division of the State Ethics Commission conducted an investigation as to the above -named Respondent regarding a possible violation of the Public Official and Employee Ethics Law, Act 9 of 1989, P.L. 26, 65 P.S. §401 et seq., as codified by the Public Official and Employee Ethics Act, Act 93 of 1998, Chapter 11, 65 Pa.C.S. §1101 et seq., which inter alia provides for the completion of pending matters under that Act. At the commencement of its investigation, the Investigative Division served upon Respondent written notice of the specific allegation(s). Upon completion of its investigation, the Investigative Division issued and served upon Respondent a Findings Report identified as an "Investigative Complaint." An Answer was filed and a hearing was waived. The record is complete. A Consent Agreement and Stipulation of Findings were submitted by the parties to the Commission for consideration. The Consent Agreement was subsequently approved and the Stipulation of Findings appears as the Findings in this adjudication. This adjudication of the State Ethics Commission is issued under Act 93 of 1998 and will be made available as a public document thirty days after the mailing date noted above. However, reconsideration may be requested. Any reconsideration request must be received at this Commission within thirty days of the mailing date and must include a detailed explanation of the reasons as to why reconsideration should be granted in conformity with 51 Pa. Code §21.29(b). A request for reconsideration will not affect the finality of this adjudication but will defer its public release pending action on the request by the Commission. The files in this case will remain confidential in accordance with the Ethics Act. Any person who violates confidentiality of the Ethics Act is guilty of a misdemeanor subject to a fine of not more than $1,000 or imprisonment for not more than one year. Confidentiality does not preclude discussing this case with an attorney at law. Palovich, 99- 074 -C2 Page 2 I. ALLEGATION: That Michael Palovich, a public official /public employee in his capacity as a councilman for Vintondale Borough, Cambria County, violated the following provisions of the State Ethics Act (Act 93 of 1998) when he used the authority of his office for the private pecuniary benefit of himself and /or a member of his immediate family by participating in discussions and actions of council resulting in a contract being awarded to his son; and when a contract was awarded to his son without an open and public process, including prior public disclosure. II. FINDINGS: 1. Michael Palovich, Sr. served as councilman for the Vintondale Borough, Cambria County, being officially appointed to fill a vacancy from November 1994 to December 1995, and thereafter appointed to fill a subsequent vacancy in February 1996, and Palovich remains currently serving as a member of the borough council. 2. Palovich has served in public office in Vintondale Borough on and off for the past thirty years. 3. The Vintondale Borough is governed by a seven member borough council. 4. Beginning in 1992 until 1995, the Vintondale Borough Council had frequently discussed building a borough garage due to the poor and dilapidated condition of the building which had been used to store borough equipment and supplies. 5. The new proposed borough garage was to be used to house the borough vehicles, equipment and supplies. 6. Prior to the building of the new borough garage in 1995, the borough vehicles had been stored at the Vintondale Volunteer Fire Company, which asked the borough to relocate its vehicles because it needed the space for a new fire vehicle. 7 Council Member Leslie Sheesley assumed the responsibility on behalf of the council to research prices for the garage construction and contacting interested contractors. 8. Formal requests for proposals for the building of the new borough garage were not advertised, as it was not determined what would be the approximate total cost of building the garage. 9. Michael Palovich, Jr., is the son of Vintondale Borough Council Member Michael Palovich, Sr. 10. In 1995, Michael Palovich, Jr., was self - employed as a carpenter/ contractor. 11. Michael Palovich, Jr., was contacted by Council Member Leslie Sheesley and submitted a bid for the building of the borough garage on or about May 18, 1995. a. The proposal was for $9,990.00, which included materials estimated to cost $5,248.15, with the remaining funds of $4,742.00 to cover costs of labor. Palovich, 99- 074 -C2 Page 3 12. The contract for the building of the borough garage was awarded at the May 26, 1995, special meeting of the Vintondale Borough Council with the minutes of the meeting reflecting the following: "Motion made by Mr. Sheesley and seconded by Mr. Jansura to hire Michael Palovich, Jr., to build the borough garage at $9,990.00." 13. The vote which awarded the contract to Michael Palovich, Jr. for building the new borough garage carried unanimously with no abstentions recorded on the official vote: a. The motion carried with no abstentions recorded. b. Four members of council were present, including Michael Palovich, Sr. c. Council President Bruno Cassol did not participate in the vote. d. Three votes of the councilmen present were necessary to approve the motion. 14. Michael Palovich, Jr. submitted an invoice for payment for building the borough garage dated July 20, 1995, in the amount of $4,651.85, representing the labor costs of the job after deducting the material cost from the approved bid of $9,990.00. a. The costs for the material were directly billed to the borough by the suppliers. 15. During the July 20, 1995, meeting of the Vintondale Borough Council, a motion to approve payment to Michael Palovich, Jr., for the labor was approved. a. The motion carried by a 6 to 0 vote, with no abstentions recorded on the official vote. b. Michael Palovich, Sr. was one of six council members present at the meeting. c. Michael Palovich, Jr. presented the invoice to council in person for payment. d. A separate vote was taken to approve payment of the bills which included payments to the local business which provided the materials used in building the borough garage. 16. Vintondale Borough General Fund check number 3236 dated July 20, 1995, payable to Michael Palovich, Jr., for garage labor, was issued in the amount of $4,651.85. 17. Michael Palovich, Jr. endorsed and cashed borough check number 3236 on July 21, 1995, at US National Bank. 18. Michael Palovich, Jr., provided documentation to the Investigative Division of the State Ethics Commission showing distribution of the $4,651.85 received from the Vintondale Borough for labor costs that he was paid for building the borough garage as follows: Palovich, 99- 074 -C2 Page 4 Michael Palovich, Jr. $2,150.00 Ronald Leidy 2,150.00 Jum Wray 270.00 for clean -up work Tom Stives 25.00 for limited assistance $4,595.00 19. An additional sum of $56.85 was used to purchase miscellaneous materials by Michael Palovich, Jr., when storm damage caused some needed repair to the borough garage while construction was in progress. 20. As a result of the Vintondale Borough Council's vote to award the contract for building the borough garage to Michael Palovich, Jr., the Respondent's son received a financial gain of $2,150. 21. Michael Palovich, Sr. did not himself receive any pecuniary benefit from the contract. 22. Michael Palovich, Sr. was not involved in any discussions with respect to contacting Michael Palovich, Jr. about his interest in bidding on or being awarded a contract for the building of the borough garage, nor did Michael Palovich, Sr. assist his son in any way in preparing the estimate for the job. 23. Michael Palovich, Sr. did not abstain from the vote in favor of his son receiving the borough garage contract on May 26, 1995, when it was awarded to Michael Palovich, Jr. 24. Michael Palovich, Sr.'s failure to abstain during the May 26, 1995, vote to award the borough garage construction contract to Michael Palovich, Jr. resulted in his silence being taken for assent and recorded in the official record as part of the unanimous vote in favor of the contract award. III. DISCUSSION: At all times relevant to this matter, the Respondent, Michael Palovich, Sr., hereinafter Palovich, has been a public official subject to the provisions of the Public Official and Employee Ethics Law, Act 9 of 1989, Pamphlet Law 26, 65 P.S. §401 et seq., as codified by the Public Official and Employee Ethics Act, Act 93 of 1998, Chapter 11, 65 Pa.C.S. §1101 et seq., which Acts are referred to herein as the "Ethics Act." The issue is whether Palovich violated Section 403(j) of the Ethics Act as to the allegation that he used the authority of his office for the private pecuniary benefit of a member of his immediate family by participating in discussions and actions of council resulting in the award to his son of a contract without an open and public process. Section 403. Restricted activities. (j) Voting conflict. - -Where voting conflicts are not otherwise addressed by the Constitution of Pennsylvania or by any law, rule, regulation, order or ordinance, the following procedure shall be employed. Any public official or public employee who in the discharge of his official duties would be required to vote on a matter that would result in a conflict of interest shall abstain from voting and, prior to the vote being taken, publicly announce and disclose the Palovich, 99- 074 -C2 Page 5 nature of his interest as a public record in a written memorandum filed with the person responsible for recording the minutes of the meeting at which the vote is taken, provided that whenever a governing body would be unable to take any action on a matter before it because the number of members of the body required to abstain from voting under the provisions of this section makes the majority or other legally required vote of approval unattainable, then such members shall be permitted to vote if disclosures are made as otherwise provided herein. In the case of a three - member governing body of a political subdivision, where one member has abstained from voting as a result of a conflict of interest, and the remaining two members of the governing body have cast opposing votes, the member who has abstained shall be permitted to vote to break the tie vote if disclosure is made as otherwise provided herein. 65 P.S. §403(j). Section 3(j) quoted above requires that a public official /employee who has a conflict to abstain and to publicly disclose the abstention and reasons for same, both orally and by filing a written memorandum to that effect with the person recording the minutes. Palovich currently serves on the seven member board of Vintondale Borough Council (Council) as a result of two separate appointments to fill vacancies. Between 1992 and 1995, Council had numerous discussions regarding the dilapidated condition of a borough building which was used to store borough equipment and supplies. It was contemplated that a new borough garage would be built to house borough vehicles, equipment, and supplies. Borough vehicles had been previously stored in the Vintondale Volunteer Fire Company which asked the borough to relocate its vehicles because the Fire Company needed space for a new fire truck. Council member Sheesley assumed the responsibility for researching prices for the construction of the garage. No formal requests for proposals were advertised because it was not determined what the total cost would be for the garage construction. In May 1995, Council member Sheesley contacted Michael Palovich, Jr., the son of Palovich, to submit a bid for building the new borough garage. Palovich, Jr. submitted a proposal of $9,990 based upon materials in the amount of $5,248.15 plus labor of $4,742. At a May 26, 1995, special meeting of Council, a motion was made to award the contract to Palovich, Jr., to build the borough garage for $9,990. The contract was awarded by a unanimous vote of the four council members present including Palovich. Council president did not participate in the vote so that the three votes of the other council members were needed to approve the motion. No abstentions were recorded as to that vote. On July 20, 1995, Palovich, Jr. submitted a bill to Council in the amount of $4,651.85 representing labor costs only since the invoices for the building materials were directly billed to the Council by the suppliers. Palovich, 99- 074 -C2 Page 6 At the July 20, 1995 meeting of Council, a motion was made to approve the payment to Palovich, Jr. for his labor. That vote carried by a 6 -0 vote with no abstentions recorded. Palovich was one of the six council members present at that meeting. Subsequently, a check in the amount of $4651.85 was paid to Palovich, Jr. for labor on the garage project. Palovich, Jr. retained $2,150 of that amount and paid the remainder to other individuals who assisted on the project. As to the borough garage project, Palovich did not receive any pecuniary benefit and had no involvement in any discussions with respect to the contracting between the Council and his son. However, Palovich did not abstain from the vote in favor of his son receiving the borough garage contract on May 26, 1995. Palovich apparently failed to abstain during the May 26, 1995, vote to award the borough construction contract to his son which resulted in his silence being taken as an affirmative vote in the official record which reflects a unanimous vote. Having summarized the above relevant facts, we must now determine whether the actions of Palovich violated Section(s) of the Ethics Act. The parties have submitted a Consent Agreement together with a Stipulation of Findings wherein it is proposed to resolve the case by finding that Palovich technically violated Section 3(1) of the Ethics Act when he attended on May 25, 1995, a Vintondale Borough Council meeting at which a contract was awarded for the building of a borough garage to his son, and when he failed to acknowledge his conflict of interest in the vote involving his son by specifically abstaining from voting and, prior to the vote being taken, publicly announcing and disclosing the nature of his interests as a public record in a written memorandum filed with the person responsible for recording the minutes of the meeting at which the vote was taken. In addition, Palovich agrees to make a payment of $100 within 30 days of the issuance of this Order through this Commission to the Commonwealth of Pennsylvania. In applying the provisions of the Ethics Act of the instant matter, the facts establish that Council had a contract regarding the award for the construction of the borough garage to Palovich's son who is a member of his immediate family as that term is defined under the Ethics Act. That situation created a conflict for Palovich who was required to comp) with the provisions of Section 3(j) of the Ethics Act quoted above. Section 3(j) of the Ethics Act requires both a verbal and written disclosure of conflict as per the requirements noted above. However, Palovich did not comply with provisions of Section 3(j) of the Ethics Act. To the contrary, Palovich did not give a verbal or a written statement of his conflict as required by law. Accordingly, Palovich technically violated Section 3(j) of the Ethics Act when he attended a meeting of the Vintondale Borough Council on May 26, 1995, regarding the award of the contract for building the borough garage to his son and when he failed to acknowledge this conflict both orally and in writing and failed to disclose the nature of that conflict. As to the Stipulation of Findings and Consent Agreement, we believe that the Consent Agreement is the proper disposition for this case based upon our review as reflected in the above analysis and the totality of the facts and circumstances. Accordingly, Palovich is directed to make the payment of $100 to the Commonwealth of Pennsylvania within 30 days of the date of this Order. Compliance with the foregoing will result in the closing of this case with no further action by the Commission. Non - compliance will result in the institution of an order enforcement action. Palovich, 99- 074 -C2 Page 7 IV. CONCLUSIONS OF LAW: 1. Michael Palovich, as a Councilman in Vintondale Borough, is a public official subject to the provisions of Act 9 of 1989/Act 93 of 1998, Chapter 11 2. Michael Palovich, Sr., technically violated Section 3(j) of the Ethics Act as to the vote of Council which awarded a contract for the building of a borough garage to Michael Palovich, Jr., his son, when Palovich failed to acknowledge his conflict of interest in the vote involving his son by specifically abstaining from voting and, prior to the vote being taken, publicly announcing and disclosing the nature of his interests as a public record in a written memorandum filed with the person responsible for recording the minutes of the meeting at which the vote was taken. In Re: Michael Palovich, Sr. File Docket: 99- 074 -C2 Date Decided: 9/20/00 Date Mailed: 10/5/00 ORDER NO. 1164 1. Michael Palovich, Sr., as a Councilman for Vintondale Borough, technically violated Section 3(j) of the Ethics Act as to the vote of Council which awarded a contract for the building of a borough garage to Michael Palovich, Jr., his son, when Palovich failed to acknowledge his conflict of interest in the vote involving his son by specifically abstaining from voting and, prior to the vote being taken, publicly announcing and disclosing the nature of his interests as a public record in a written memorandum filed with the person responsible for recording the minutes of the meeting at which the vote was taken. 2. Per the Consent Agreement of the parties, Michael Palovich is directed to make the payment of $100 to the Commonwealth of Pennsylvania within 30 days of the date of this Order. a. Compliance with the foregoing will result in the closing of this case with no further action by the Commission. b. Non - compliance will result in the institution of an order enforcement action. BY THE COMMISSION, Louis W. Fryman, Vice Chair