Loading...
HomeMy WebLinkAbout1174 SummersIn Re: David Summers File Docket: X -ref: Date Decided: Date Mailed: Before: Daneen E. Reese, Chair Susan Mosites Bicket John J. Bolger Frank M. Brown 99- 050 -C2 Order No. 1174 12/12/00 12/27/00 This is a final adjudication of the State Ethics Commission. Procedurally, the Investigative Division of the State Ethics Commission conducted an investigation 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., by the above -named Respondent. 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 not timely filed and a hearing was waived. The record is complete. A Consent Agreement was submitted by the parties to the Commission for consideration which was subsequently approved. Effective December 15, 1998, Act 9 of 1989 was repealed and replaced by Chapter 11, Act 93 of 1998, which essentially repeats Act 9 of 1989 and provides for the completion of pending matters under Act 93 of 1998. 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 Chapter 11 of Act 93 of 1998. 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. Summers, 99- 050 -C2 Page 2 I. ALLEGATION: That David Summers, a public official in his capacity as a Supervisor and Chairman of the Board of East Brandywine Township Supervisors, Chester County, violated the following provisions of the State Ethics Act (Act 93 of 1998) when he used the authority of his office for a private pecuniary benefit of himself and /or a business with which he was associated when he administered township uniform and non - uniform pension accounts held by his then employer, Downingtown National Bank; when he participated in actions of the township resulting in uniform and non - uniform pension accounts being transferred to the First Financial Bank where he is employed as a trust officer; and when the transfer was made to the bank without an open and public process including bid solicitation; when he, as a township official administered the pension accounts; and when he failed to file a properly completed Financial Interests Statement listing the source of any income over $1,300.00 and the nature of his employment in any business entity for the 1996 calendar year. Section 3/1103. Restricted activities (a) No public official or public employee shall engage in conduct that constitutes a conflict of interest. 65 P.S. §403(a)/65 Pa.C.S. §1103(a). Section 3/1103. Restricted activities (f) Contract. - -No public official or public employee or his spouse or child or any business in which the person or his spouse or child is associated shall enter into any contract valued at $500 or more with the governmental body with which the public official or public employee is associated or any subcontract valued at $500 or more with any person who has been awarded a contract with the governmental body with which the public official or public employee is associated, unless the contract has been awarded through an open and public process, including prior public notice and subsequent public disclosure of all proposals considered and contracts awarded. In such a case, the public official or public employee shall not have any supervisory or overall responsibility for the implementation or administration of the contract. Any contract or subcontract made in violation of this subsection shall be voidable by a court of competent jurisdiction if the suit is commenced within 90 days of the making of the contract or subcontract. 65 P.S. §403(f)/65 Pa.C.S. §1103(f). Section 2/1102. Definitions "Conflict" or "conflict of interest." Use by a public official or public employee of the authority of his office or employment or any confidential information received through his holding public office or employment for the private pecuniary benefit of himself, a member of his immediate family or a business with which he or a member of his immediate family is associated. "Conflict" or "conflict of interest" does not Summers, 99- 050 -C2 Page 3 include an action having a de minimis economic impact or which affects to the same degree a class consisting of the general public or a subclass consisting of an industry, occupation or other group which includes the public official or public employee, a member of his immediate family or a business with which he or a member of his immediate family is associated. 65 P.S. §402/65 Pa.C.S. §1102. Section 5/1105. Statement of financial interests (a) Form. - -The statement of financial interests filed pursuant to this chapter shall be on a form prescribed by the commission. All information requested on the statement shall be provided to the best of the knowledge, information and belief of the person required to file and shall be signed under oath or equivalent affirmation. 65 P.S. §405(a)/65 Pa.C.S. §1105(a). Section 5/1105. Statement of financial interests (b) Required information. - -The statement shall include the following information for the prior calendar year with regard to the person required to file the statement. (5) The name and address of any direct or indirect source of income totaling in the aggregate $1,300 or more. However, this provision shall not be construed to require the divulgence of confidential information protected by statute or existing professional codes of ethics or common law privileges. (8) Any office, directorship or employment of any nature whatsoever in any business entity. 65 P.S. §405(b)/65 Pa.C.S. §1105(b). II. FINDINGS: 1. David Summers was a member of the board of supervisors of East Brandywine Township, Chester County, Pennsylvania for the last twelve years. 2. Summers was first elected in November 1987. a. Summers was re- elected in November 1993. b. Summers did not run for re- election in November 1999. 3. Summers is also a former police officer in East Brandywine Township beginning part -time in 1974, and serving through November 1984 when he resigned holding the rank of Sergeant. 4. East Brandywine Township is classified as a second class township in Pennsylvania under the Second Class Township Code, 53 P.S. §65101 et. seq. 5. There are a total of three (3) supervisors on the board of supervisors of East Summers, 99- 050 -C2 Page 4 Brandywine Township. 6. East Brandywine Township has maintained defined benefit pension plans for its non - uniform and police employees since 1974 and 1976, respectively. a. The pension plans were created under the authority of Act 600, the Act of May 29, 1956, P.L. 1804, No. 600, as amended, 53 P.S. §767 et seq. b. The pension plans are funded under the authority of Act 205, the Act of December 18, 1984, P.L. 1005, No. 205, as amended, 53 P.S. §895.101 et seq. 7 Initially, management and administration of the East Brandywine Township pension funds was handled by the board of supervisors and the township secretary - treasurer who made all investment decisions. a. The pension funds were rotated among various local financial institutions depending upon the rates of return offered on statement savings or as certificates of deposit matured periodically. 8. From October 1985 through May 1991, Mr. Philip Fogli, who operated his own investment management firm, was hired by East Brandywine Township as custodian and asset manager of the township pension funds. 9. At the East Brandywine Township Board of Supervisors meeting held February 20, 1991, Supervisor David L. Summers made a motion to appoint fellow Supervisor John R. Cropper as Chief Administrator for the township police and non - uniform pension plans. a. The appointment carried by a unanimous vote. b. The position of a Chief Administrator for the township pension plans is required by Act 205, the Act of December 18, 1984, P.L. 1005, No. 205, as amended, 53 P.S. 895.101 et seq. 10. At the East Brandywine Township Board of Supervisors meeting held on May 15, 1991, Supervisor Cropper made a motion to transfer the township pension funds from the custody and management of Philip Fogli to Downingtown National Bank, having the bank maintain the accounts, and charging only quarterly custodial fees. a. Supervisor Alan McCausland seconded the motion. b. The motion was approved 2 -0. c. Supervisor Summers abstained from voting. d. Summers was manager of the Trust Division at Downingtown National Bank at the time of the vote. e. Summers became manager of the Trust Division at Downingtown National Bank on November 15, 1990. f. Downingtown National Bank records revealed that the township police pension fund account at Downingtown National Bank was already opened on May 15, 1991, prior to the vote taken to transfer the pension funds to Downingtown National Bank at the Board of Supervisors' meeting. Summers, 99- 050 -C2 Page 5 11. The transfer of the pension fund accounts was not done through an open and public process. 12. In 1993, Supervisor David L. Summers became East Brandywine Township's Chief Administrator of the township pension plans. 13. On October 22, 1996, the East Brandywine Township Board of Supervisors approved a resolution creating a newly formed township pension committee to assist the supervisors in the management of the township pension funds in an advisory only capacity as set forth in the pension committee minutes. 14. The Resolution creating the Pension Committee required only one member of the board of supervisors to be a member of the Pension Committee. 15. At the time of creation, the East Brandywine Township Pension Committee consisted of the following seven members: Supervisor Hudson L. Voltz, Chairman; Supervisor David L. Summers, Vice - Chairman; Supervisor Alan H. McCausland, Member; Scott T. Piersol, Member; Raymond W. Copp, Member; Raymond E. Sheller, Member; and Carolyn A. Burkholder, Member and Secretary. a. Member and vice - chairman Summers was manager of the Investment and Trust Services Department at Downingtown National Bank, a position he had held since November 15, 1990. 16. David Summers' continuous employment since November 1984 has been in the retail banking industry, specifically in the area of asset management and trust services to individual clients, corporations and municipalities, under the trust department of his employing bank. 17. During the time period from June 23, 1972, until July 21, 1997, David Summers was employed in various capacities by Downingtown National Bank whose main branch is located at 701 East Lancaster Avenue, Downingtown, PA 19325. 18. During his employment at Downingtown National Bank, Summers held the positions of Head Teller from 1972 -1979; Trust Officer from November 5, 1984 until November 15, 1990, and then Trust and Investment Services Manager in the Trust Division of the bank from November 15, 1990, until his departure on July 21, 1997. 19. Summers' general responsibilities at Downingtown National Bank from November 15, 1990, until July 21, 1997, made him responsible for managing the Trust and Investment Services Department, implementing strategies to achieve goals assigned to the Department; ensuring the Department's compliance with operating policies and procedures, as well as outside regulatory requirements; organizing the work and activities of the Department; communicating with appropriate personnel; directly supervising assigned personnel; and providing periodic reports for the Trust Department and his individual clients. 20. Specifically, Summers' job duties with Downingtown National Bank as specified in his written job description dated April 12, 1993, encompassed the following: 1. Managed the Trust & Investment Services Department in order to insure that bank customers were provided with complete financial (investment) services and to monitor the investment services administration function as follows: a. Coordinated the development of various sales reports and information Summers, 99- 050 -C2 Page 6 as requested. b. Provided ideas for new products and services designed to meet the needs of the financial services segment. c. Maintained an awareness of new business opportunities with customers; actively referred customers to other sales personnel as warranted when these opportunities are available. d. Established department objectives for the maintenance and development of corporate and personal trust business; directed the formulation and execution of plans and programs designed to achieve established departmental objectives. e. Worked closely with individual department officers on specific programs to achieve objectives in each designated area. f. Formulated policies and procedures relating to trust and estate administration and the general operation of the department; established appropriate management controls to assure that established policies and procedures were being followed and that the department was operating on a sound basis. Attended meetings of the Trust Committee; submitted and reviewed periodic reports of various types to this Committee for their approval. h. Assumed responsibility for complete administration and discharge of the bank's legal responsibility for all trust accounts. Made a preliminary analysis of all new accounts, i.e., nominating instruments, cash requirements, investments, methods of distribution, etc.,; delegated work requirements of the accounts to appropriate department personnel. 2. Provided direct trust services to customers including trust and estate administration, estate planning and investment counseling; interviewed prospective clients. g. 3. Maintained an active awareness of changes in legal requirements which may affect trust accounts. 4. Developed trust marketing programs and maintained the bank's trust public image, i.e., cooperated and supported national and state trust organizations regarding law changes, educational programs, and communication, and initiated local programs, i.e., public trust related education programs and attorney communication programs. 5. Determined profitability of department as follows: a. Analyzed fee schedule. b. Maintained projections of income and expenses. c. Determined profitability of accounts; prepared plans of action for those not profitable. Summers, 99- 050 -C2 Page 7 6. Implemented strategies to achieve goals assigned to the department as established in the Retail Banking Division's operating plan; assisted in the development of the annual budget for the department and adhered to budget parameters. 7 Insured that the department and all personnel adhered to established operating policies and procedures along with outside regulatory requirements. 8. Organized the work and activities of the Trust & Investment Services Department in order to achieve established goals. 9. Communicated with the Retail Banking Division Manager, other department managers, and appropriate staff personnel in order to integrate goals and activities. 10. Directly supervised assigned personnel as follows: a. Assisted in the selection of new personnel as appropriate. b. Made provisions for the proper orientation and training of new personnel. c. Reviewed employee performance throughout the probationary period and on a regularly scheduled basis thereafter. d. Organized, scheduled, and distributed work among assigned personnel. e. Kept personnel informed of pertinent policies and procedures affecting the department and /or their jobs; created an atmosphere in which upward communication from employees was encouraged. f. Administered personnel policies and procedures as established by bank policy. 11. Provided periodic reports to the Chief Executive Officer and other groups, or individuals, as required throughout the bank. 21. While at the Downingtown National Bank, Summers was issued and acknowledged receipt of an employee handbook on or about January 24, 1996, which included a copy of the bank's Code of Ethics. 22. Summers certified that he read, understood and would comply with the Code of Ethics on an acknowledgement form dated December 10, 1996. 23. The DNB Code of Ethics' acknowledgement form signed and completed by Summers was deficient and did not list under "outside employment" that Summers was compensated as a member of the board of supervisors of East Brandywine Township. 24. The DNB Code of Ethics required Summers to make full disclosure of any situation in which his private interests created a conflict or potential conflict with those of the bank. Summers, 99- 050 -C2 Page 8 a. Summers did not disclose to the bank that he was a member of the East Brandywine Township Pension Committee. b. Summers did not disclose that the township's pension funds were in the care, custody and control of Downingtown National Bank's Trust Division where Summers was the manager. 25. During Summers' course of employment at Downingtown National Bank, the two pension funds, uniform and non - uniform, of East Brandywine Township were in the care, custody, and control of Downingtown National Bank and its Trust Division. a. These funds were managed by Summers exclusively in his position with the bank from the time the account was opened at Downingtown National Bank in May 1991. 26. The East Brandywine Township Police Pension Fund, Downingtown National Bank, account no. 62 -00- 2036 -3S -8 held assets in excess of $500.00 from the time that the account was opened on May 15, 1991. 27. The East Brandywine Township Non - Uniform Pension Fund, Downingtown National Bank account no. 62 -00- 2035 -3S -4 held assets in excess of $500.00 from the time the account was opened on March 19, 1992. 28. On July 21, 1997, David L. Summers resigned from his position at Downingtown National Bank as its senior trust officer and vice president effective August 1, 1997. 29. On or about August 4, 1997, Summers began employment at First Financial Bank located at 100 East Lancaster Avenue, Downingtown, PA 19335. 30. While Summers was employed at Downingtown National Bank, the East Brandywine Township Police Pension Fund, Account No. 62 -00- 2036 -3S -8, contained assets having a total market value as follows: a. December 31, 1995: $627,701.77. b. December 31, 1996: $728,973.37. c. December 31, 1997: $59,596.01. d. April 30, 1998: $0.00. 31. While Summers was employed at Downingtown National Bank, the East Brandywine Township Non - Uniform Pension Fund, Account No. 62 -00- 2035 -3S -4, contained assets as follows: a. December 31, 1995: $72,081.52. b. December 31, 1996: $99,459.61. c. December 31, 1997: $59,596.01. d. April 30, 1998: $0.00. 32. From 1991 to 1998 when East Brandywine Township Police and Non - Uniform Pension funds were administered by Downingtown National Bank, deposits to the accounts were made through contributions by the township, Commonwealth of Summers, 99- 050 -C2 Page 9 Pennsylvania allocations and member contributions. a. These contributions were received by Township Secretary Carolyn Burkholder. b. Burkholder did not have the authority to make deposits of the contributions received. 33. David Summers directed Burkholder to prepare a township check for deposit into the pension accounts at Downingtown National Bank. a. This would include contributions made by the township, state allocation and member contributions. 34. Summers then deposited the funds into the pension fund accounts. 35. Deposits were made to the Police Pension Fund Account No. 62 -00- 2036 -3S -4 and Non - Uniform Pension Account No. 60 -00- 2035 -3S -4 at Summers' direction as follows: a. Police Pension Account No. 62 -00- 2036 -3S -4 Date Amount Source 09/29/94 $ 5,355.14 State Allocation 09/26/95 $ 8,900.00 Township 07/24/96 $ 7,500.00 Township 10/03/96 $ 11,534.00 State Allocation b. Non - Uniform Account No. 60 -00- 2035 -3S -4 Date Amount Source 09/24/94 $ 27,121.27 State Allocation 09/26/95 $ 30,000.00 State Allocation 07/24/96 $ 7,000.00 Township 10/08/96 $ 32,956.14 State Allocation 36. In addition to the pension funds East Brandywine Township Police Pension Fund also maintained a money market account no. 860 -393 -7 at Downingtown National Bank. a. David Summers, along with Supervisors Hudson Voltz and Alan McCausland and the township secretary had signature authority. b. This account was utilized mainly to issue payments to annuitants. c. The account was closed on February 1, 2000. 37. Summers' regularly signed checks, in his capacity as a township supervisor, authorizing payments from this account. a. This account was gradually closed with the funds therein being transferred to the First Financial Bank, Summers' new employer. 38. On October 12, 1999, the township issued check number 435 drawn on Downingtown National Bank, Account No. 860 -393 -7 to First Financial Bank in the Summers, 99- 050 -C2 Page 10 amount of $39,932.00. a. The memo portion of the check indicates transfer to pension investments. b. The check bears the signatures of David Summers, Hudson Voltz and Mary Beth Smedley (township secretary). 39. Account No. 860 -393 -7 was closed on February 1, 2000, with the transfer of $3,713.35 to First Financial Bank. 40. In addition to the foregoing accounts, East Brandywine Township also maintained a money market account at Downingtown National Bank for the Non - Uniform Fund with an Account No. 861 - 885 -2. a. The account was opened on November 2, 1990, by David Summers. b. Three signatures were required for withdrawal. c. The three township supervisors and township secretary were listed as authorized signators for this account. 1. Summers was one of the signators. 41. David Summers, in his capacity as an East Brandywine Township Supervisor, regularly signed checks authorizing payments from Account No. 861 - 885 -2. 42. On October 12, 1999, Summers was one of the two signators authorizing a payment from Account No. 861 -885 -2 to First Financial Bank. a. This account was gradually closed with the funds therein being transferred to the First Financial Bank, Summers' new employer. b. Check No. 120 was issued in the amount of $12,462.00 to First Financial Bank. c. The check was signed by Summers and Supervisor Hudson Voltz. d. The memo portion of the check reflects the purpose of payment as transfer to non - uniform investments. e. Following this transaction the account balance was $1,801.27. 43. Records of Account No. 861 -885 -2 confirm deposits totaling $10,159.00 were made on October 9, 1997. a. Summers directed that these deposits be made. 44. On November 18, 1997, a check number 119, in the amount of $10,000.00, made payable to First Financial Savings Bank, was drawn on Account No. 861 - 885 -2. a. Check No. 119 was signed by Supervisor Hudson Voltz and township secretary Cheryl Burkholder. 45. In his capacity as township supervisor, Summers also authorized transfers from Account No. 861 -885 -2 to other pension investments held by Downingtown National Bank. Summers, 99- 050 -C2 Page 11 a. On July 23, 1995, Summers authorized a deposit to Account No. 861 -885 -2 in the amount of $7,850.00. 1. Summers signed check number 117 on July 24, 1996, authorizing a payment to Downingtown National Bank for pension investments. 46. According to the schedule of fees and fiduciary charges in effect at Downingtown National Bank's Trust Division since 1991, the fee schedule for a custodial account without investment supervision is computed on the market value of its assets at the following rates payable quarterly. a. 1991 — 1993 $1.00/$1,000.00 or .10% b. 1994 — 1995 $1.50/$1,000.00 or .15% c. 1996 — 1997 $2.00/$1,000.00 or .20% 47. In accordance with its fee schedule for custodial accounts without investment supervision, Downingtown National Bank collected the following fiduciary fees from its custody of East Brandywine Township's Police Pension Fund from opening in May 1991 until closing in early 1998: Date Time Period Income 12/31/91 Trust Dept. Fee for Year ended 12/31/91 $ 209.41 12/31/92 Trust Dept. Fee for Year ended 12/31/92 $ 424.08 12/31/93 Trust Dept. Fee for Year ended 12/31/93 $ 647.83 12/31/94 Trust Dept. Fee for Year ended 12/31/94 $ 740.69 12/31/95 Trust Dept. Fee for Year ended 12/31/95 $ 809.71 12/31/96 Trust Dept. Fee for Year ended 12/31/96 $ 1,065.11 12/31/97 Trust Dept. Fee for Year ended 12/31/97 $ 2,089.82 12/31/98 Trust Dept. Fee for Year ended 12/3198 Closed Grand Total Fees $ 5,986.65 48. In accordance with its fee schedule for custodial accounts without investment supervision, Downingtown National Bank collected the following fiduciary fees from its custody of East Brandywine Township's Non - Uniform Pension Fund from opening in March 1992 until closing in early 1998: Date Time Period Income (Cash) 12/31/92 Trust Dept. Fee for Year ended 12/31/92 $ 37.50 12/31/93 Trust Dept. Fee for Year ended 12/31/93 $ 46.09 12/31/94 Trust Dept. Fee for Year ended 12/31/94 $ 119.81 12/31/95 Trust Dept. Fee for Year ended 12/31/95 $ 100.20 12/31/96 Trust Dept. Fee for Year ended 12/31/96 $ 147.18 12/31/97 Trust Dept. Fee for Year ended 12/31/97 $ 431.23 12/31/98 Trust Dept. Fee for Year ended 12/31/98 Closed Grand Total Fees $ 882.01 49. The fees charged by Downingtown National Bank for the administration of the Summers, 99- 050 -C2 Page 12 uniform and non uniform pension fund accounts as delineated above were reasonable and within industry standards. 50. On July 21, 1997, David L. Summers resigned from his position at Downingtown National Bank as its senior trust officer and vice president effective August 1, 1997. 51. On or about August 4, 1997, Summers began employment at First Financial Bank located at 100 East Lancaster Avenue, Downingtown, PA 19335. 52. Summers' new position at First Financial Bank beginning August 4, 1997, was Vice President, Investment Services and Trust Department, running the newly formed investment services and trust division of First Financial Bank. a. The new trust division held no assets at the time Summers began his employment at First Financial Bank. 53. Summers' new role at First Financial Bank was generally to develop and manage the Investment Services and Trust Department of the bank in a manner which maximized return while minimizing risk, as well as the management of personnel and activities of the Investment Services and Trust Department to insure optimum efficiency and services. 54. Specifically, Summers' job duties with First Financial Bank as specified in his written job description dated July 15, 1998, encompass the following: 1. Develop and manages the Investment Services and Trust Department in order to insure that bank customers are provided with complete financial (investment) services and to monitor the investment services administration function as follows: a. Establish department objective for the development of the Investment Services and Trust Department; directs the formulation and execution of plans and programs designed to achieve established departmental objectives. b. Coordinates the development of various reports and information as requested. c. Provides ideas for new products and services designed to meet the needs of the financial services segment. d. Maintain an awareness of new business opportunities with customers, actively refers customers to other sales personnel as warranted when these opportunities are available. e. Develop and maintain policies and procedures relating to investment services, trust and estate administration and the general operation of the department; establishes appropriate management controls to assure that established policies and procedures are being followed and that the department is operating on a sound basis. f. Assumes responsibility for complete administration and discharge of the bank's legal responsibility for all Investment Services and Trust Department accounts. g. Make a preliminary analysis of all new accounts, i.e., nominating Summers, 99- 050 -C2 Page 13 instrument, cash requirement, methods of distribution, etc.; delegates work requirements of the accounts to appropriate department personnel. 2. Develop Centers of Influence (Attorneys, Accountants etc.) as referral sources through networking and participation in local community functions and through calling efforts. 3. Provides direct investment and trust services to customers, including estate administration, estate planning and investment counseling; interviews prospective clients. 4. Maintain an active awareness of changes in legal requirements which may affect investment services and trust accounts. 5. Maintains the bank's public image, i.e., cooperates and supports national and state investment and trust organizations regarding law changes, educational programs, and communication, and initiates local programs, i.e., public investment services and trust related education programs and attorney communication programs. 6. Determines profitability of department by developing and utilizing: a. Fee schedule b. Maintain projections of income and expenses c. Determine profitability of accounts 7 Implement strategies to achieve goals assigned to the department; assists in the development of the annual budget for the department and adhere to budget. 8. Directly supervise assigned personnel. 9. Performs other duties as assigned. 55. Summers' schedule of compensation at First Financial Bank, in addition to a full range of general benefits and a starting base annual salary of $51,000, included an incentive pay package with a maximum payout of $7,500 for fiscal 1998. a. The compensatory package plan also included the following: (1) A $2,500 bonus will be paid in January of 1998 when the following criteria are met: Establishment of a fully functional Trust Department with full Trust Powers by 12/31/97. Including written Trust Procedures and Policy approved by the Bank's internal auditing firm of Barry Rein. Establishment of the Trust service product line and a marketing and community awareness plan within the designated budget. Establishment of a Trust Committee of the Board of Directors and an Investment Policy Committee. As well as designating Trust Legal Counsel, Accounting System Providers, Investment Advisors, Pension Administrators and Record Keepers. Conduct employee awareness sessions and training to facilitate referral sources. Establish relationships with at least five firm Centers of Influence (Accountants or Attorneys) which will provide future referrals. Summers, 99- 050 -C2 Page 14 (2) A $2,500 bonus will be paid in July of 1998 when the following criteria are met: Establish Trust managed assets of $4.5 million by 06/30/98 and maintain expenses within the designated budget. (3) A $2,500 bonus will be paid in July of 1998 when the following criteria are met: Establish Trust managed assets of $7.5 million by 06/30/98 and maintain expenses within the designated budget. 56. Summers' compensation package at the bank as delineated above provided for incentive and bonus pay dependent upon how much money he brought to the bank. 57. Summers' compensation package at First Financial Bank was reasonable and within industry standards. 58. Summers actively attempted to get his former Downingtown National Bank customers to transfer their accounts to First Financial Bank. 59. David Summers actively solicited township and other trust business. 60. Beginning in November 1997, Summers began to actively solicit the East Brandywine Township Board of Supervisors and its Pension Committee, of which Summers was a member, to transfer its pension fund accounts to First Financial Bank where he recently obtained employment. 61. During the pension committee meeting on November 11, 1997, Vice - Chairman Summers addressed the other members of the East Brandywine Township Pension Committee and requested the township pension plans be moved from Downingtown National Bank to First Financial where he (Summers) could keep a closer watch on the plans. a. The meeting was the first Pension Committee meeting scheduled after Summers began his employment as Manager of the Trust Division at First Financial Bank. 62. At the meeting of the East Brandywine Township Pension Committee held on Tuesday, November 11, 1997, based on Summers' report to the Committee: a. It was the general consensus of the pension committee members that the pension plans with Downingtown National Bank were doing extremely well. b. The Pension Committee members felt that the pension plans should continue on the same path. 63. During the same pension committee meeting on November 11, 1997, the issue was raised concerning transfer of the pension funds from Downingtown National Bank to First Financial Bank. a. Summers initiated the discussion concerning transfer of the pension funds. b. Summers requested transfer of the pension funds to First Financial Bank. Summers, 99- 050 -C2 Page 15 c. Summers proposed to oversee the pension funds closely at First Financial Bank. d. Summers proposed placing the pension funds in custodial accounts with the bank to save money in fees. e. A motion to transfer the pension funds to First Financial Bank was unanimously approved. f. Vice - Chairman Summers abstained from the vote. 64. On November 11, 1997, at the time of the vote by the pension committee to transfer the pension funds to First Financial Bank, Summers was employed by First Financial Bank as Vice - President and Manager of its Investment and Trust Services Department. a. At no time during the meeting did Summers disclose that his compensation plan at First Financial Bank was dependent upon the amount of assets he brought into the bank. 65. The decision by the pension committee on November 11, 1997, to transfer the township pension funds to First Financial Bank did not occur in an open and public meeting. a. The Pension Committee meeting was not advertised. b. The Pension Committee meeting was not attended by the general public. 66. The East Brandywine Township Board of Supervisors did not vote at a public meeting to ratify the action of the township pension committee to transfer the pension funds to First Financial Bank. a. On December 15, 1997, at the regular East Brandywine Township Board of Supervisors meeting, Supervisors Summers, McCausland and Voltz voted to approve the minutes of the November 11, 1997, Pension Committee meeting. 67. On November 17, 1997, East Brandywine Township and First Financial Bank entered into a custodial account agreement by which First Financial Bank received authority to contact Downingtown National Bank to effect the transfer of both the East Brandywine Township Police and Non - Uniform pension funds to First Financial Bank. a. A closing fee of $150.00 per account (total $300.00) was assessed by Downingtown National Bank. 68. The documentation which created the custodial account agreements with respect to the East Brandywine Township Police Pension Funds contained the signatures of all three township supervisors; Supervisors Hudson L. Voltz and Alan H. McCausland authorized the said transfers on behalf of the township and Supervisor David L. Summers, acting on behalf of First Financial Bank, affixed his signature approving the custody agreement and accepting the funds on behalf of First Financial. 69. On January 4, 2000, another custodial account agreement was created between East Brandywine Township and First Financial Bank to effect the transfer of the Summers, 99- 050 -C2 Page 16 East Brandywine Township General Fund from Downingtown National Bank to First Financial Bank. 70. The custodial account agreement dated January 4, 2000, concerning the East Brandywine Township General Fund was authorized by the signatures of Township Supervisors Hudson L. Voltz and James J. Charley, Jr., and Township Secretary - Treasurer Mary Beth Smedley, as well as David L. Summers acting as Investment Services and Trust Department Manager for First Financial Bank affixed his signature to the custody agreement approving it and accepting the funds on behalf of First Financial. 71. The East Brandywine Township Police Pension Fund, Account No. 61-00- 2044 -01- 6 contained assets at First Financial Bank having a total market value as follows: a. December 31, 1997: $854,882.51 b. December 31, 1998: $1,115,604.65 c. December 31, 1999: $1,254,119.62 d. June 4, 2000: $1,252,730.31 72. The East Brandywine Township Non - Uniform Pension Fund, Account No. 61 -00- 2045 -01 -3 contained assets at First Financial Bank having a total market values as follows: a.. On December 31, 1998, the East Brandywine Township Non - Uniform Pension Fund contained assets at First Financial Bank having a total market value of $159,824.67. b. On December 31, 1999, the East Brandywine Township Non - Uniform Pension Fund contained assets at First Financial Bank having a total market value of $185,976.56. c. As of June 2, 2000, the East Brandywine Township Non - Uniform Pension Fund contained assets at First Financial Bank having a total market value of $197,657.09. 73. On December 31, 1998, the East Brandywine Township General Fund contained assets at First Financial Bank having a total market value of $567,824.79. a. As of June 2, 2000, the East Brandywine Township General Fund contained assets at First Financial Bank with a total market value of $282,750.97. 74. In addition to the pension fund accounts, two township money market accounts were also transferred to the First Financial Bank after David Summers became an employee of that entity. (See Findings No. 49 to 58). a. David Summers actively participated in the transfer of those accounts to his new employer. 75. According to the newly adopted schedule of fees and charges in affect since August 1997 at the First Financial Bank Investment Services and Trust Division, the fee schedule for a custodial account without investment supervision is computed on the market value of its assets, at the rate of 0.20 percent payable quarterly. Summers, 99- 050 -C2 Page 17 76. In accordance with its fee schedule for custodial accounts without investment supervision, First Financial Bank collected the following fiduciary fees from its custody of East Brandywine Township's Non - Uniform Pension Fund to date: Date Time Period Income (Cash) 01/13/98 Trust Dept. Fee for Qtr. ended 12/31/97 $ 31.69 04/10/98 Trust Dept. Fee for Qtr. ended 03/31/98 $ 70.50 07/08/98 Trust Dept. Fee for Qtr. ended 06/30/98 $ 71.32 10/08/98 Trust Dept. Fee for Qtr. ended 09/30/98 $ 65.90 01/07/99 Trust Dept. Fee for Qtr. ended 12/31/98 $ 79.91 02/19/99 1998 Tax Letter Fee $ 25.00 04/08/99 Trust Dept. Fee for Qtr. ended 03/31/99 $ 81.38 07/08/99 Trust Dept. Fee for Qtr. ended 06/30/99 $ 83.42 10/05/99 Trust Dept. Fee for Qtr. ended 09/30/99 $ 80.25 Grand Total Fees $ 589.37 77. In accordance with its fee schedule for custodial accounts without investment supervision, First Financial Bank collected the following fiduciary fees from its custody of East Brandywine Township's Police Pension Fund to date: Date Time Period Income (Cash) 01/13/98 Trust Dept. Fee for Qtr. ended 12/31/97 $ 209.07 04/10/98 Trust Dept. Fee for Qtr. ended 03/31/98 $ 479.22 07/08/98 Trust Dept. Fee for Qtr. ended 06/30/98 $ 503.27 10/08/98 Trust Dept. Fee for Qtr. ended 09/30/98 $ 471.82 01/07/99 Trust Dept. Fee for Qtr. ended 12/31/98 $ 557.80 02/19/99 1998 Tax Letter Fee $ 25.00 04/08/99 Trust Dept. Fee for Qtr. ended 03/31/99 $ 563.21 07/08/99 Trust Dept. Fee for Qtr. ended 06/30/99 $ 598.56 10/05/99 Trust Dept. Fee for Qtr. ended 09/30/99 $ 566.97 Grand Total Fees $ 3,974.92 78. The fees charged by First Financial Bank for the administration of the uniform and non uniform pension fund accounts as delineated above were reasonable and within industry standards. 79. At subsequent township pension committee meetings held May 15, 1998, October 14, 1998, and November 11, 1998, there was also discussion as to whether requests for proposals and a public bidding process were necessary for the pension committee to validly transfer the pension funds from Downingtown National Bank to First Financial Bank or any other financial institution. 80. In early November, 1997, the East Brandywine Township Pension Committee contacted the solicitor of the board of supervisors for an opinion as to any legal impediments that might exist to their decision to transfer the township pension funds from Downingtown National Bank to First Financial Bank. 81. On November 21, 1997, the township solicitor prepared a "non- confidential attorney /client communication" in the form of a written memorandum to the members of the pension committee in which he recommended that in order to legally transfer the township pension funds from Downingtown National Bank to First Financial Bank the following action should be followed: a. Transfer of the township pension funds to First Financial Bank should occur only after an open and public bid process has occurred. Summers, 99- 050 -C2 Page 18 b. David Summers cannot be involved in the management or supervision while at First Financial bank with respect to the township pension funds. c. Summers cannot vote to award the contract to First Financial Bank if it is determined to be lowest responsible bidder. d. If First Financial Bank is awarded custody of the township pension funds it cannot be Summers that monitors the plans. 82. Despite the recommendations of the township solicitor, the vote for the transfer of the township pension funds was not rescinded and the process of transferring the township pension funds from Downingtown National Bank to First Financial Bank continued as scheduled based on the documents executed on November 17, 1997. 83. Supervisor David Summers continued his oversight of the township pension funds at First Financial Bank after the transfer of the funds began in November 1997, just as he did while the funds were with Downingtown National Bank under his management at the Trust Division. 84. At a pension committee meeting held on October 14, 1998, it was decided that the pension committee's finalized request for proposals to provide investment management and trust services for the two township pension plans would be advertised with bids received by November 30, 1998, for award in approximately January 1999, with the bids to be opened by the board of supervisors at its meeting scheduled for December 15, 1998. 85. Pension Committee Members Scott Piersol and David Summers had been designated as the committee members assigned to prepare the request for proposals at the previous meeting held May 15, 1998. 86. The request for proposals was advertised on November 3 and 4, 1998, in the Daily Local News, West Chester, Pennsylvania. a. Several proposals were received by the township. b. To the present date, no official action has been taken to award the management of the township pension funds to any financial institution other than First Financial Bank. 87. Summers' oversight of the township pension funds was an active role consisting of: a. Summers managed the township pension funds first at Downingtown National Bank from May 1991. b. Summers then managed the township pension funds at First Financial Bank beginning November 1997. c. Summers made or approved all investment decisions for the pension funds. d. Summers handled the administrative documentation required by the pension accounts. e. Summers directly handled the deposit money received from the township for placement in the respective pension funds at the bank. 88. Summers' role on the East Brandywine Township Pension Committee was an active Summers, 99- 050 -C2 Page 19 role consisting of: a. Attendance at the township pension committee meetings. b. Providing to the other members of the committee information on fees, asset growth, investment performance and other details with respect to the management and custody of the township pension funds. c. Preparation of all reports, charts, summaries and other documents with respect to the township pension funds. 89. Other pension committee members had little, if any, knowledge of the financial services industry, they did not take an active role in the management and decision making with respect to the assets of the township pension funds, but rather permitted Summers to handle that responsibility exclusively beginning in May 1991 through the present. 90. Summers' responsibility for and management of the township pension funds has existed since May 1991 during his employment at Downingtown National Bank and continuing up through the present with his employment at First Financial Bank. 91. In the tax year 1997, Summers was paid salary in the amount of $21,037.92 during the time of his employment at First Financial Bank, beginning on or about August 4, 1997. a. The remainder of his income for 1997 was paid by Downingtown National Bank until his resignation. 92. On July 30, 1998, Summers received payment of a cash bonus from First Financial Bank in the amount of $5,000 as a result of his meeting performance objectives and because net income growth and asset growth in the Trust Division exceeded $7.5 million in assets by June 30, 1998, as provided for in his schedule of compensation. a. The total assets of the East Brandywine Township Pension Funds under custody of the Trust Division of First Financial Bank on June 30, 1998, was $15,200,000.00. b. The portion of Summers' bonus pay of $5,000.00 received on July 30, 1998, attributable to custody of the pension funds of East Brandywine Township was 15% of the total assets of the Trust Division on June 30, 1998, or approximately $750.00. 93. Beginning in 1998 and into 1999, East Brandywine Township transferred the assets of its General Fund to First Financial Bank with three members of the township pension committee approving the transfer, including David L. Summers accepting the transfer of assets and signing the contracts on behalf of First Financial Bank. 94. On or before May 1, 1997, Summers, as an elected public official with East Brandywine Township, was required to complete and file with the township a copy of a Financial Interests Statement for the calendar year 1996. 95. Summers' Financial Interest Statement for the 1996 calendar year required him to list the source of any income over $1,300, as well as the nature of his employment in any business entity for the 1996 calendar year. a. Summers filed the Statement of Financial Interests form on March 1, 1997. Summers, 99- 050 -C2 Page 20 b. Summers did not disclose that he had income received from East Brandywine Township and Downingtown National Bank. c. Summers did not disclose that he was employed at Downingtown National Bank. 96. The total financial gain received by David Summers and the businesses with which he was associated as a result of the administration of the previously delineated township accounts was as follows: a. Downingtown National Bank – Total fees received from December 31, 1995, through December 31, 1998 - $4,643.25. (See Findings Nos. 47 and 48). b. First Financial Bank – Total fees received from January 13, 1998, through October 5, 1999 - $4,564.29. (See Finding Nos. 76 and 77). c. Prorated commission paid to David Summers by First Financial Bank resulting from the transfer of the township accounts from Downingtown National Bank to First Financial Bank is $750.00. (See Finding No. 92) III. DISCUSSION: At all times relevant to this matter, the Respondent, David Summers, hereinafter "Respondent" or "Summers," 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 hereinafter referred to as the "Ethics Act." The issue before us is whether Summers violated Sections 3(a)/1103(a), 3(f)/1103(f), and 5(b)(5), (8)/1105(b)(5), (8) of the Ethics Act as to the allegation that he: (1) administered township uniform and non - uniform pension accounts held by his then employer, Downingtown National Bank; (2) participated in actions of the township resulting in uniform and non- uniform pension accounts being transferred to the First Financial Bank where he was —and still is— employed as a trust officer, which transfer was made to the bank without an open and public process including bid solicitation; administered the pension accounts in his capacity as a township official; and (4) failed to file a properly completed Financial Interests Statement listing the source of any income over [$1,000.00] and the nature of his employment in any business entity for the 1996 calendar year. Pursuant to Section 3(a)/1103(a) of the Ethics Act quoted above, a public official /public employee is prohibited from engaging in conduct that constitutes a "conflict of interest." The term "conflict of interest" is defined under Act 9 of 1989 as set forth above. Subject to certain exceptions delineated in the definition of "conflict" or "conflict of interest," Section 3(a)/1103(a) of the Ethics Act prohibits a public official /public employee from using the authority of public office /employment or confidential information received by holding such a public position for the private pecuniary benefit of the public official /public (3) Summers, 99- 050 -C2 Page 21 employee himself, any member of his immediate family, or a business with which he or a member of his immediate family is associated. Section 3(f)/1103(f) of the Ethics Act quoted above imposes certain restrictions as to contracting. Section 3(f)/1103(f) of the Ethics Act specifically provides in part that no public official /public employee, his spouse or child, or business with which he or his spouse or child is associated may enter into a contract with his governmental body valued at five hundred dollars or more unless the contract is awarded through an open and public process including prior public notice and subsequent public disclosure. Pursuant to Section 4(a)/1104(a) of the Ethics Act, each public official /public employee must file a Statement of Financial Interests for the preceding calendar year, each year that he holds the position and the year after he leaves it. Section 5(a)/1105(a) of the Ethics Act quoted above requires that the Statement of Financial Interests be filed on the form prescribed by this Commission, and that the filer provide all information requested on the Statement of Financial Interests to the best of the filer's knowledge, information and belief. The Statement of Financial Interests is signed subject to the penalties prescribed by 18 Pa.C.S. §4904 (unsworn falsification to authorities) and Section 9(b)/1109(b) of the Ethics Act, 65 P.S. §409(b)/65 Pa.C.S. §1109(b). Pursuant to Section 5(b)(5) of Act 9 of 1989, 65 P.S. §405(b)(5), a public official /public employee, candidate, or nominee would be required to list on the Statement of Financial Interests the name and address of any direct or indirect source of income totaling in the aggregate $1,000 or more. We would note that by action of this Commission on February 21, 1997, the $1,000 disclosure threshold was increased to $1,300 effective for forms filed in 1998. The substantive requirements of Section 5(b)(5) and the $1,300 disclosure threshold continue in effect under Section 1105(b)(5) of Act 93 of 1998, 65 Pa.C.S. §1105(b)(5). facts. Having noted the issues and applicable law, we shall now summarize the relevant East Brandywine Township is a second class township with a three - member board of supervisors. Summers served as a member of the board of supervisors of East Brandywine Township for approximately twelve years. Summers was first elected Township Supervisor in November 1987 and was re- elected in November 1993. Summers did not run for re- election in November 1999. East Brandywine Township has maintained defined benefit pension plans for its non - uniform and police employees since 1974 and 1976, respectively. Initially, the management and administration of the pension funds was handled by the board of supervisors and the township secretary- treasurer, who made all investment decisions. Approximately two years before Summers became a township supervisor, the township hired Philip Fogli, the owner /operator of an investment management firm, to be the custodian and asset manager of the township pension funds. Fogli served in that capacity from October 1985 until May 1991. In 1991, the management of the township pension funds changed. The changes which occurred in 1991 took place just a few months after Summers (who by that time was a township supervisor) was promoted to the position of manager of the Trust Division at Downingtown National Bank. The sequence of events was as follows. On November 15, 1990, Summers assumed the new position as manager of the Trust Division at Downingtown National Bank. Just a few months later, at a meeting of the board of supervisors on February 20, 1991, Summers took action in his capacity as a township supervisor to remove control of the township pension funds from Philip Fogli. Summers, 99- 050 -C2 Page 22 Specifically, Summers made a motion to appoint fellow Supervisor John R. Cropper as Chief Administrator for the township police and non - uniform pension plans. The appointment carried by a unanimous vote. Shortly thereafter, at a meeting of the board of supervisors on May 15, 1991, Supervisor Cropper made a motion to transfer the township pension funds from the custody and management of Philip Fogli to Downingtown National Bank. Supervisor Alan McCausland seconded the motion, and the motion was approved 2 -0, with Summers abstaining. Although Summers abstained from the May 15, 1991, vote, in actuality, the township police pension fund account at Downingtown National Bank had already been opened that very day, prior to the board's vote. The East Brandywine Township Police Pension Fund, Downingtown National Bank account no. 62 -00- 2036 -3S -8, was opened on May 15, 1991. The East Brandywine Township Non - Uniform Pension Fund, Downingtown National Bank account no. 62 -00- 2035 -3S -4, was opened later, on March 19, 1992. Each of the above accounts at Downingtown National Bank held assets in excess of $500 from the time the account was opened, yet the transfer of the pension fund accounts was not done through an open and public process. In 1993, while the township's two pension funds remained in the care, custody, and control of Downingtown National Bank and its Trust Division, managed by Summers, Summers became the township's Chief Administrator for the township pension plans. Summers took official actions in his public capacity relative to the township pension funds that he managed in his private capacity with the bank. Deposits were made to both pension funds at Summers' direction and with his involvement, as detailed in Finding 35. Such deposits consisted of contributions by the township, Commonwealth of Pennsylvania allocations and member contributions. These contributions were received by Township Secretary Carolyn Burkholder, who did not have the authority to make deposits of the contributions received. Summers directed Burkholder to prepare a Township check for deposit into the pension accounts at Downingtown National Bank. Summers then deposited the funds into the pension fund accounts. In 1996, approximately 3 years after Summers became the Chief Administrator for the township pension plans, the board of supervisors created a township pension committee to assist in the management of the township pension funds in an advisory only capacity. Summers was vice - chairman of the pension committee. Summers played an active role on the pension committee. He attended pension committee meetings; provided to the other committee members information on fees, asset growth, investment performance and other details with respect to the management and custody of the township pension funds; and prepared all reports, charts, summaries and other documents with respect to the township pension funds. Other pension committee members had little, if any, knowledge of the financial services industry. They did not take an active role in the management and decision making with respect to the assets of the township pension funds, but rather, permitted Summers to handle that responsibility exclusively, on a continuing basis, to the present time. On July 21, 1997, Summers resigned from his position at Downingtown National Bank effective August 1, 1997. On or about August 4, 1997, Summers commenced employment at another bank, First Financial Bank, as Vice President, Investment Services Summers, 99- 050 -C2 Page 23 and Trust Department, running the newly formed investment services and trust division of First Financial Bank. The new trust division held no assets at the time Summers began his employment at First Financial Bank. Summers' responsibilities at First Financial Bank included, inter alia, developing the Investment Services and Trust Department. Summers' compensation package included incentive and bonus pay which was based upon how much money Summers brought to the bank (see, Finding 55). Beginning in November 1997, Summers began to actively solicit the East Brandywine Township Board of Supervisors and its pension committee, of which Summers was still a member and vice - chairman, to transfer the township's pension fund accounts from his former employer, Downingtown National Bank, to his new employer, First Financial Bank. On November 11, 1997, at the first pension committee meeting held after Summers began his new job at First Financial, Summers initiated discussion concerning transferring the pension funds. Summers asked that the pension funds be transferred from Downingtown National Bank to First Financial where he (Summers) could keep a closer watch on the plans. Summers proposed placing the pension funds in custodial accounts with the bank to save money in fees. Based upon Summers' report to the Committee, it was the general consensus of the pension committee members that the pension plans were doing extremely well. The members felt that the pension plans should continue on the same path. A motion to transfer the pension funds to First Financial Bank was unanimously approved at the November 11, 1997, meeting, with Summers abstaining from the vote. At no time during the meeting did Summers disclose that as Vice - President and Manager of First Financial Bank's Investment and Trust Services Department, his own compensation was based upon the amount of assets he brought into the bank. The pension committee's decision on November 11, 1997, to transfer the township pension funds to First Financial Bank did not occur in an open and public meeting. The pension committee meeting was neither advertised nor attended by the general public. Following the November 11, 1997, meeting, the pension committee contacted the solicitor of the board of supervisors for an opinion as to any legal impediments to the committee's decision to transfer the township pension funds from Downingtown National Bank to First Financial Bank. Meanwhile, on November 17, 1997, the township and First Financial Bank entered into a custodial account agreement by which First Financial Bank received authority to contact Downingtown National Bank to effect the transfer of both the East Brandywine Township Police and Non - Uniform pension funds to First Financial Bank. The documents which created the custodial account agreements with respect to the East Brandywine Township Police Pension Funds were signed by Supervisors Hudson L. Voltz and Alan H. McCausland, authorizing the said transfers on behalf of the township, and by Summers acting on behalf of First Financial Bank. On November 21, 1997, the township solicitor prepared a "non- confidential attorney /client communication" in the form of a written memorandum to the members of the pension committee in which he recommended that in order to legally transfer the township pension funds from Downingtown National Bank to First Financial Bank the following action should be followed: a. Transfer of the township pension funds to First Financial Bank should occur only after an open and public bid process had occurred. Summers, 99- 050 -C2 Page 24 b. David Summers could not be involved in the management or supervision while at First Financial bank with respect to the township pension funds. c. Summers could not vote to award the contract to First Financial Bank if it would be determined to be lowest responsible bidder. d. If First Financial Bank would be awarded custody of the township pension funds, Summers could not monitor the plans. Despite the recommendations of the township solicitor, the vote for the transfer of the township pension funds was not rescinded, and the process of transferring the township pension funds from Downingtown National Bank to First Financial Bank continued as scheduled based upon the documents executed on November 17, 1997. By December 31, 1997, the township's Police Pension Fund Account at First Financial Bank, Account No. 61 -00- 2044 -01 -6, already had assets with a total market value of $854, 882.51, while the old Police Pension Fund Account at Downingtown National Bank, Account No. 62 -00- 2036 -3S -8, had remaining assets valued at only $59,596.01. Supervisor Summers continued his oversight of the township pension funds at First Financial Bank, just as he had done while the funds were with Downingtown National Bank. Summers made or approved all investment decisions for the pension funds. Summers handled the administrative documentation required by the pension accounts. Summers directly handled the deposit money received from the township for placement in the respective pension funds at the bank (see, Finding 87). The East Brandywine Township Board of Supervisors never voted at a public meeting to ratify the action of the pension committee to transfer the pension funds to First Financial Bank. On December 15, 1997, at the regular East Brandywine Township Board of Supervisors meeting, Supervisors Summers, McCausland and Voltz merely voted to approve the minutes of the November 11, 1997, pension committee meeting. At subsequent pension committee meetings held May 15, 1998, October 14, 1998, and November 11, 1998, there were discussions as to whether requests for proposals and a public bidding process were necessary for the pension committee to validly transfer the pension funds from Downingtown National Bank to First Financial Bank or any other financial institution. Summers and one other pension committee member, Scott Piersol, were designated to prepare a request for proposals. At the pension committee meeting on October 14, 1998, it was decided that the pension committee's finalized request for proposals to provide investment management and trust services for the two township pension plans would be advertised; bids would be received by November 30, 1998, and opened by the board of supervisors at a meeting scheduled for December 15, 1998; and an award would be made in approximately January 1999. The request for proposals was advertised on November 3 and 4, 1998, in the Daily Local News, West Chester, Pennsylvania. Several proposals were received by the township. However, as of the issuance of the Investigative Complaint in this matter (on September 18, 2000), no official action had been taken to award the management of the township pension funds to any financial institution other than Summers' employer, First Financial Bank. While Summers was employed at Downingtown National Bank, the East Brandywine Township Police Pension Fund, Account No. 62 -00- 2036 -3S -8, contained assets having a total market value as follows: a. December 31, 1995: $627,701.77 Summers, 99- 050 -C2 Page 25 b. December 31, 1996: $728,973.37 c. December 31, 1997: $59,596.01 d. April 30, 1998: $0.00 Downingtown National Bank collected fiduciary fees totaling $5,986.65 for its custody of East Brandywine Township's Police Pension Fund from opening in May 1991 until closing in early 1998 (Findings 30, 47). While Summers was employed at Downingtown National Bank, the East Brandywine Township Non - Uniform Pension Fund, Account No. 62 -00- 2035 -3S -4, contained assets as follows: a. December 31, 1995: $72,081.52 b. December 31, 1996: $99,459.61 c. December 31, 1997: $59,596.01 d. April 30, 1998: $0.00 Downingtown National Bank collected fiduciary fees totaling $882.01 for its custody of East Brandywine Township's Non - Uniform Pension Fund from opening in March 1992 until closing in early 1998 (Findings 31, 48). At First Financial Bank, the East Brandywine Township Police Pension Fund Account No. 61 -00- 2044 -01 -6 contained assets having a total market value as follows: a. December 31, 1997: $854,882.51 b. December 31, 1998: $1,115,604.65 c. December 31, 1999: $1,254,119.62 d. June 4, 2000: $1,252,730.31 First Financial Bank collected fiduciary fees totaling $3.974.92 for its custody of East Brandywine Township's Police Pension Fund(s) (including the New Brandywine Regional Police Pension Fund) through 7/12/00 (Findings 71, 77). At First Financial Bank, the East Brandywine Township Non - Uniform Pension Fund Account No. 61 -00- 2045 -01 -3 contained assets having a total market value as follows: a. December 31, 1998: $159,824.67 b. December 31, 1999: $185,976.56 c. June 2, 2000: $197,657.09 First Financial Bank collected fiduciary fees totaling $589.37 for its custody of East Brandywine Township's Non - Uniform Pension Fund through July 12, 2000 (Findings 72, 76). In addition to the pension funds themselves, Summers has taken action as a Summers, 99- 050 -C2 Page 26 township supervisor with regard to other township - related accounts with his employers. The East Brandywine Township Police Pension Fund maintained a money market account at Downingtown National Bank designated as Account No. 860 - 393 -7. This account was utilized mainly to issue payments to annuitants. Summers, along with Supervisors Hudson Voltz and Alan McCausland and the township secretary had signature authority. Summers regularly signed checks in his capacity as a township supervisor authorizing payments from this account. East Brandywine Township also maintained another money market account at Downingtown National Bank for the Non - Uniform Fund. This account was designated as Account No. 861 - 885 -2. The account was opened on November 2, 1990, by Summers. Summers was listed as one of the authorized signators for this account, and in his capacity as an East Brandywine Township Supervisor, Summers regularly signed checks authorizing payments from this account. Summers took other actions as to this account as set forth in Findings 41 -43, 45. Both of the aforesaid money market accounts were transferred from Downingtown National Bank to First Financial Bank after David Summers became an employee of the latter (see Findings 37 -39, 42 -44). Summers actively participated in the transfer of these accounts to his new employer. Beginning in 1998, the township also transferred the assets of its General Fund to First Financial Bank. The custodial account agreement dated January 4, 2000, was signed by Summers in his capacity as Investment Services and Trust Department Manager for First Financial Bank. The East Brandywine Township General Fund contained assets at First Financial Bank having a total market value as follows: a. December 31, 1998: $567,824.79 b. June 2, 2000: $282,750.97 Pursuant to Section 8(m)/1108(m) of the Ethics Act, this Commission may conduct an investigation within five years after the alleged occurrence of any violation of the Act. Thus, our review in this case must focus upon that five year period. As set forth in Finding 96, the total financial gain received by David Summers and the businesses with which he was associated during the past five years as a result of the administration of the previously delineated township accounts was as follows: a. Downingtown National Bank — Total fees received from December 31, 1995, through December 31, 1998 - $4,643.25. (See Findings Nos. 47 and 48). b. First Financial Bank — Total fees received from January 13, 1998, through October 5, 1999 - $4,564.29. (See Findings Nos. 76 and 77). c. Prorated commission paid to David Summers by First Financial Bank resulting from the transfer of the township accounts from Downingtown National Bank to First Financial Bank - $750.00. (See Finding No. 92). The fees charged by Downingtown National Bank and First Financial Bank for the administration of the township pension funds were reasonable as within industry standards. Likewise, the compensation package for Summers at First Financial Bank was within industry standards. Finally, we shall review the facts pertaining to the allegation as to Summers' Summers, 99- 050 -C2 Page 27 Financial Interests Statement for calendar year 1996. On or before May 1, 1997, Summers, as an elected public official with East Brandywine Township, was required to complete and file with the township a copy of a Financial Interests Statement for calendar year 1996. Summers' Financial Interests Statement for the 1996 calendar year required him to list the source of any income over $1,000 as well as the nature of his employment in any business entity for the 1996 calendar year. Summers filed the Statement of Financial Interests form on March 1, 1997. Summers did not disclose that he had received income from East Brandywine Township and Downingtown National Bank. Summers did not disclose that he was employed at Downingtown National Bank. The parties have submitted a Consent Agreement together with a Stipulation of Findings wherein they propose to resolve the case by finding the following: A technical violation of Section 3(a)/1103(a) of the Ethics Act occurred when Summers, in his position as supervisor of the East Brandywine Township Board of Supervisors, used the authority of his office for a private pecuniary benefit of himself and /or a business with which he was associated when he administered township uniform and non - uniform pension accounts held by his former employer, Downingtown National Bank, from 1995 through July 1997 while acting as manager of the bank's Trust Division, which administration included the authorization of the deposit of township funds into the Downingtown National Bank accounts; Summers violated Section 3(a)/1103(a) of the Ethics Act when he participated in actions of the township resulting in uniform and non - uniform pension accounts being transferred to First Financial Bank where Summers had recently obtained employment as manager of its Trust Division in August 1997; Summers violated Section 3(f)/1103(f) of the Ethics Act when he participated in actions of the township resulting in the transfer of the township pension accounts to First Financial Bank following a vote on November 11, 1997, without an open and public process, including bid solicitation; Summers violated Section 3(a)/1103(a) and 3(f)/1103(f) of the Ethics Act when he, as a township official and member of the board of supervisors and its pension committee administered the pension accounts while he was employed as manager of the Investment Services & Trust Division at both Downingtown National Bank and First Financial Bank; A technical violation of Section 5(b)(5)/1105(b)(5) and 5(b)(8)/1105(b)(8) of the Ethics Act occurred when Summers, as supervisor, an elected public official with the East Brandywine Township Board of Supervisors, filed a deficient Statement of Financial Interests for the calendar year 1996 which failed to list the sources of any income over [$1,000] and the nature of his employment in any business entity for the report year; Summers did not violate the Ethics Act as to the vote by the township board of supervisors to transfer the township pension funds to the Downingtown National Bank, as Summers abstained from such vote; Summers did not violate the Ethics Act as to the vote by the township pension committee to transfer the township pension funds to the First Financial Bank, as Summers abstained from such vote; and Summers agrees to make payment of $10,000 payable to the Commonwealth of Pennsylvania and forwarded to the Pennsylvania State Ethics Commission within thirty (30) days of the issuance of the final adjudication in this matter. Summers, 99- 050 -C2 Page 28 With the stipulated findings and issues as set forth by the parties, we shall apply the Ethics Act to the allegations seriatim. As to the Section 3(a)/1103(a) allegation regarding Summers administering the pension accounts held by Downingtown National Bank between 1995 and 1997, such actions were uses of authority of office by Summers. See, Juliante, Order 809. In particular, Summers administered both the township uniform and non - uniform pension accounts as part of his public position. But for the fact that Summers was a supervisor, he could not have taken such actions, as for example, authorizing the deposit of the township pension funds with Downingtown National Bank. Given that Summers had administrative responsibility over the pension accounts held by Downingtown National Bank which received fees for such accounts, there was a private pecuniary benefit to Downingtown National Bank, a business with which he was associated as the term is defined under the Ethics Act. Accordingly, Summers technically violated Section 3(a)/1103(a) of the Ethics Act when he used the authority of office through administering the township pension accounts between 1995 and 1997 held by Downingtown National Bank, a business with which he was associated. In Crisci, Opinion 89 -013, we held that whenever a public official's public and private interests are in conflict with each other, the private interest must yield to the public interest which is paramount. In this case, Summers' actions reflect conduct that was totally contrary to our holding in Crisci. A review of the stipulated findings reflect a continuous and deliberate pattern on the part of Summers to have the pension accounts deposited in whatever bank Summers was then employed. Such actions on the part of Summers contravened both the spirit and letter of the Ethics Act. The next Section 3(a)/1103(a) allegation concerns Summers' involvement in the transfer of the pension accounts to First Financial Bank after Summers became the manager of its Trust Division in August of 1997. After Summers left Downingtown National Bank and became employed by First Financial Bank, Summers used the authority of his office to transfer the pension accounts from Downingtown to First Financial. In his new position at First Financial, Summers had to develop a Trust Department and his compensation included incentives and bonus pay based upon how much money Summers brought to the bank. Such desire for financial gain motivated Summers to implement a plan for moving the funds from Downingtown to First Financial. Summers actively lobbied the other supervisors to transfer the pension funds to his new employer, First Financial. In addition, Summers was very active on the pension committee regarding the transfer of such funds. Following Summers' report to the committee, a motion was made to transfer the pension funds to First Financial. Summers abstained on the vote. At no time during this process did Summers disclose that he was vice president and manager of the Investment and Trust Services Department of First Financial Bank. Given the very deliberate actions of Summers, we find that Summers violated Section 3(a)/1103(a) of the Ethics Act when he used the authority of office to transfer township pension accounts to First Financial Bank after Summers obtained employment as Manager of the Trust Division of that bank, a business with which he was associated. The third allegation involves the same factual issue as above but pertains to Section 3(f)/1103(f), the contracting provision of the Ethics Act. This section of the Ethics Act provides in part that a public official or a business with which the public official is associated may contract with his governmental body, but if the contract is $500 or more, it must be awarded through an open and public process. In this case, the contract with First Financial Bank was over $500 and was not awarded through an open and public process as required by the Ethics Act. Accordingly, Summers violated Section 3(f)/1103(f) of the Ethics Act when First Financial Bank, a business with which he is associated, entered into a contract with East Brandywine Township as to the transfer of pension accounts from Summers, 99- 050 -C2 Page 29 Downingtown Bank, which contract was in excess of $500 and was awarded without an open and public process. The next allegation charges violations of Section 3(a), 3(f)/1103(a), (f) of the Ethics Act when Summers, as a supervisor and member of the pension committee, administered the pension accounts while he was employed at Downingtown National Bank and then First Financial Bank. In applying the above Crisci analysis relative to Section 3(a)/1103(a) as well as the contracting analysis regarding 3(f)/1103(f), we find violations of both provisions of the Ethics Act concerning Summers' administration of the pension accounts as a public official while he was employed at Downingtown National Bank and then at First Financial Bank. The next allegation concerns whether Summers violated Section 5(b)(5), (8)/ 1105(b)(5), (8) of the Ethics Act as to the allegation that he failed to list income of $1,300 or more and his employment for the calendar year 1996. Preliminarily, we note that the income reporting threshold for the calendar year 1996 was $1,000. However, if Summers had income over $1,300, such income obviously exceeded $1,000, and hence, the result would be the same. The stipulated findings in this case reflect that Summers had such income in 1996 and failed to disclose that income on his Financial Interests Statement. In addition, Summers failed to disclose his employment with Downingtown National Bank for that calendar year. Accordingly, Summers technically violated Section 5(b)(5), (8)/1105(b)(5), (8) when he failed to list on his Financial Interests Statement for the 1996 calendar year income in excess of $1,000 as well as his employment with Downingtown National Bank. As to the specific allegation that Summers violated the Ethics Act by voting to transfer the pension funds to the Downingtown National Bank, we find no violation because the Stipulation of Findings reflects that Summers abstained from that vote. In this regard, we note that the allegation is very specific and relates solely to the issue of his use of authority of office as to a particular vote. The last allegation is whether Summers violated the Ethics Act as to the vote to transfer the pension funds from the Downingtown National Bank to the First Financial Bank. In this regard, the Stipulation of Findings reflects that there was no vote by Summers who abstained as to the vote. Hence, we again find no violation as to this very specific allegation on voting. 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, Summers is directed to make payment of $10,000 through the Commission 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. Noncompliance will result in the institution of an order enforcement action. IV. CONCLUSIONS OF LAW: 1. David Summers ( "Summers "), as a Supervisor and Chairman of the Board of East Brandywine Township Supervisors, Chester County, was at all times relevant to this case 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. 2. A technical violation of Section 3(a)/1103(a) of the Ethics Act occurred when Summers, in his position as supervisor of the East Brandywine Township Board of Summers, 99- 050 -C2 Page 30 Supervisors, used the authority of his office for a private pecuniary benefit of himself and /or a business with which he was associated when he administered township uniform and non - uniform pension accounts held by his former employer, Downingtown National Bank, from 1995 through July 1997 while acting as manager of the bank's Trust Division which administration included the authorization of the deposit of township funds into the Downingtown National Bank accounts. 3. Summers violated Section 3(a)/1103(a) of the Ethics Act when he participated in actions of the township resulting in uniform and non - uniform pension accounts being transferred to First Financial Bank after Summers obtained employment as manager of its Trust Division in August 1997. 4. Summers violated Section 3(f)/1103(f) of the Ethics Act when he participated in actions of the township resulting in the transfer of the township pension accounts to First Financial Bank, without an open and public process. 5. Summers violated Section 3(a)/1103(a) and 3(f)/1103(f) of the Ethics Act when he, as a township official and member of the board of supervisors and its pension committee administered the pension accounts while he was employed as manager of the Investment Services & Trust Division at both Downingtown National Bank and First Financial Bank. 6. A technical violation of Section 5(b)(5)/1105(b)(5) and 5(b)(8)/1105(b)(8) of the Ethics Act occurred when Summers, as supervisor, an elected public official with the East Brandywine Township Board of Supervisors, filed a deficient Statement of Financial Interests for the calendar year 1996 which failed to list the sources of any income over $1,000 and the nature of his employment in any business entity for the report year. 7 Summers did not violate the Ethics Act as to the vote by the township board of supervisors to transfer the township pension funds to the Downingtown National Bank, as Summers abstained from such vote. 8. Summers did not violate the Ethics Act as to the vote by the township pension committee to transfer the township pension funds to the First Financial Bank, as Summers abstained from such vote. In Re: David Summers : File Docket: 99- 050 -C2 : Date Decided: 12/12/00 : Date Mailed: 12/27/00 ORDER NO. 1174 1 A technical violation of Section 3(a)/1103(a) of the Ethics Act occurred when Summers, in his position as Supervisor of the East Brandywine Township Board of Supervisors, used the authority of his office for a private pecuniary benefit of himself and /or a business with which he was associated when he administered township uniform and non - uniform pension accounts held by his former employer, Downingtown National Bank, from 1995 through July 1997 while acting as manager of the bank's Trust Division which administration included the authorization of the deposit of township funds into the Downingtown National Bank accounts. 2. Summers violated Section 3(a)/1103(a) of the Ethics Act when he participated in actions of the township resulting in uniform and non - uniform pension accounts being transferred to First Financial Bank after Summers obtained employment as manager of its Trust Division in August 1997. 3. Summers violated Section 3(f)/1103(f) of the Ethics Act when he participated in actions of the township resulting in the transfer of the township pension accounts to First Financial Bank, without an open and public process. 4. Summers violated Section 3(a)/1103(a) and 3(f)/1103(f) of the Ethics Act when he, as a township official and member of the board of supervisors and its pension committee administered the pension accounts while he was employed as manager of the Investment Services & Trust Division at both Downingtown National Bank and First Financial Bank. 5. A technical violation of Section 5(b)(5)/1105(b)(5) and 5(b)(8)/1105(b)(8) of the Ethics Act occurred when Summers, as supervisor, an elected public official with the East Brandywine Township Board of Supervisors, filed a deficient Statement of Financial Interests for the calendar year 1996 which failed to list the sources of any income over $1,000 and the nature of his employment in any business entity for the report year. 6. Summers did not violate the Ethics Act as to the vote by the township board of supervisors to transfer the township pension funds to the Downingtown National Bank, as Summers abstained from such vote. 7 Summers did not violate the Ethics Act as to the vote by the township pension committee to transfer the township pension funds to the First Financial Bank, as Summers abstained from such vote. 8. As to the Consent Agreement of the parties, Summers is directed to make payment in the amount of $10,000 payable to the Commonwealth of Pennsylvania and forwarded to the Pennsylvania State Ethics Commission within thirty (30) days of the issuance of the final adjudication in this matter. 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, DANEEN E. REESE, CHAIR