HomeMy WebLinkAbout00-583 MaioranoW. Thomas Andrews, Esquire
Mansell & Andrews
First Federal Bank Building
25 North Mill Street
New Castle, PA 16101 -3791
Dear Mr. Andrews:
STATE ETHICS COMMISSION
309 FINANCE BUILDING
P.O. BOX 11470
HARRISBURG, PA 17108 -1470
(717) 783 -1610
1 -800- 932 -0936
ADVICE OF COUNSEL
June 13, 2000
00 -583
Re: Conflict; Public Official /Employee; Council Member; City Council; Municipal
Pension Fund; Vote; School Board; Client; Vendor.
This responds to your letter of May 22, 2000, by which you requested advice from
the State Ethics Commission.
Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65
Pa.C.S. §1101 et seq., presents any prohibition or restrictions upon a city council
member as to voting to invest funds through an investor who is also a school board
member when the city council member is a vendor with that school district.
Facts: You are the Solicitor for the City of New Castle Municipal Pension Fund
(sion Fund "). The New Castle Municipal Pension Fund Ordinance provides that the
New Castle City Council ( "City Council ") shall collectively be the Trustee for the Pension
Fund.
One member of the City Council, Nick Maiorano ( "Maiorano "), is in the business of
testing, recharging, and selling fire extinguishers. Maiorano has a contract with the New
Castle Area School District ("School District ") to inspect, recharge, and replace fire
extinguishers as needed. The contract is a continuing one, which Maiorano secured
through a bidding process. From 1997 -1999, Maiorano has received a yearly average of
$2,016.95 from the School District on the contract.
The Pension Fund is approximately twenty-five million dollars of which six million
is invested with Goldman- Sachs. The local representative for Goldman -Sachs is David
Domenick ("Domenick"). Domenick is also an elected member of the New Castle Area
School Board ( "School Board "), the same School District with which Maiorano has the fire
extinguisher contract. Domenick will receive a commission and /or fees from the sale of
the Pension Funds.
You seek an advice as to whether Maiorano has a conflict of interest as to voting
to invest funds through Goldman -Sachs and its Sales Representative, Domenick.
FAX: (717) 787 -0806 • Web Site: www.ethics.state.oa.us • e -mail: ethics @state.pa.us
Andrews, 00-583
June 13, 2000
Page 2
If it is determined that Maiorano has a conflict of interest with regard to voting to
invest the Pension Funds, he will join Council Members Deblasio and Elisco who also
have conflicts of interest with the School District. You interpret this to result in all three
members being permitted to vote on issues involving Domenick and the Pension Fund
pursuant to Section 11030) of the Ethics Act.
You also seek advice as to whether your interpretation of Section 11030) is
correct.
Discussion: It is initially noted that pursuant to Sections 1107(10) and 1107(11) of
the Ethics Act, 65 Pa.C.S. § §1107(10), (11), advisories are issued to the requestor based
upon the facts which the request has submitted. In issuing the advisory based upon the
facts which the requestor has submitted, the Commission does not engage in an
independent investigation of the facts, nor does it speculate as to facts which have not
been submitted. It is the burden of the re uestor to truthfully disclose all of the material
facts relevant to the inquiry. 65 Pa.C.S. § §1107(10), (11). An advisory only affords a
defense to the extent the requestor has truthfully disclosed all of the material facts.
As a Council Member for the City Council, Maiorano is a public official as that term
is defined in the Ethics Act, and hence Maiorano is subject to the provisions of that Act.
Section 1103(a) of the Ethics Act provides:
Section 1103. Restricted activities.
(a) Conflict of interest. - -No public official or public
employee shall engage in conduct that constitutes a conflict of
interest.
65 Pa.C.S. §1103(a).
The following terms are defined in the Ethics Act as follows:
Section 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. The term does not 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.
"Authority of office or employment." The actual
power provided by law, the exercise of which is necessary to
the performance of duties and responsibilities unique to a
particular public office or position of public employment.
Andrews, 00 -583
June 13, 2000
Page 3
65 Pa.C.S. §1102.
In addition, Sections 1103(b) and 1103(c) of the Ethics Act provide in part that no
person shall offer to a public official /employee anything of monetary value and no public
official /employee shall solicit or accept anything of monetary value based upon the
understanding that the vote, official action, or judgment of the public official /employee
would be influenced thereby. Reference is made to these provisions of the law not to
imply that there has been or will be any transgression thereof but merely to provide a
complete response to the question presented.
Section 1103(j) of the Ethics Act provides as follows:
Section 1103. 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 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 Pa.C.S. §1103(j).
In each instance of a conflict, Section 1103(j) requires the public official /employee
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 or
supervisor.
In the event that the required abstention results in the inability of the governmental
body to take action because a majority is unattainable due to the abstention(s) from
conflict under the Ethics Act, then voting is permissible provided the disclosure
requirements noted above are followed. See, Mlakar, Advice 91- 523 -S.
Having set forth the applicable sections of the Ethics Act, a general review of the
State Ethics Commission precedent will now be set forth.
In Bassi, Opinion No. 86- 007 -R, the State Ethics Commission held, inter alia, that
a County missioner (Edward Paluso) could not enter into a lease with a municipal
authority, where one of the members of the authority (Norman Carson) was a county
employee directly responsible to the commissioners of the county, unless the execution
Andrews 00 -583
June 13, 2000
Page 4
of the lease was accomplished after an open and public process, with the authority
member abstaining from participating in the review and award of said lease, and the
county commissioner abstaining from participating in any matter relating to the authority
member in his position as a county employee. The Commission stated, inter alia:
. we cannot ignore the fact that Mr. Carson is an authority member and
has influence and control over authority decisions. In this respect, Mr.
Carson, by voting on the final adoption of a lease, would be voting on a
matter directly related to his employer. Even though that employer is .
another governmental body, we have held, in the past, that a public official
may not vote or participate in a matter if it somehow relates to a financial
interest which he may have. See, Welz 86 -001. In the instant situation, Mr.
Carson would be called upon tcdtermine the advisability of renting
property for the authority. The property which they are seeking to rent is
owned by the individual or one of the individuals who currently supervises
him and controls his public employment with the county. As a result of this,
Mr. Carson, as an authority member, should abstain from participating in
any matter relating to this particular lease.
See, Bassi 86 -007 at 3. The Commission further stated:
Mr. Paluso as a county commissioner, is, in part, responsible for the
general supervision of Mr. Carson. Mr. Carson, on the other hand, is an
authority member in a position to grant Mr. Paluso a lease which results in
Mr. Paluso receiving a financial gain. It may be difficult for the public to
perceive how Mr. Paluso's actions as a county official, would not somehow
be influenced by this potential leasing arrangement. It may be argued that
Mr. Paluso, in dealing with Mr. Carson, to date, has done so in order to
effect the favorable outcome of this lease. Additionally, it could be argued
that Mr. Carson voted in favor of the lease in order to advance his position
as a full -time county employee. The above factual scenarios, while
hypothetical in nature, nonetheless create the types of conflicts of interest
that are to be addressed by this Commission.
Id. at 4.
In Woodrin , Opinion No. 90 -001, the State Ethics Commission reviewed a similar
situation. esJ se Woodrng, Chairman of the Sunbury Redevelopment Authority, had
applied to the City for a rehabilitation grant through the Federal Rental Rehabilitation
Program (hereinafter, the "Program "). Kenneth Pick, who was employed as the Executive
Director of the Redevelopment Authority (chaired by Woodring) also served as the
Community Development Coordinator for Sunbury. In the latter capacity, Pick was
administrator in charge of the Program for the City. Pick's functions included
administering the Program, reviewing all applications, and determining eligibility. The
Commission stated:
we are concerned that Mr. Pick, who is an employee of the
Redevelopment Authority of which you are Chairman, has the duty of
reviewing all applications and determining eligibility in his capacity as
Community Development Coordinator for the city. In particular, the potential
exists, given the employer - employee relationship between the
Redevelopment Authority and Mr. Pick, that your application might be
reviewed in a more favorable light than other applications. To forestall such
a situation, you must not participate or take any action as to Mr. Pick if your
application is approved and you receive benefits. Bassi, Opinion 86-007.
In addition, Section 3(j) of the Ethics Law would require you to
publicly note that you would have a conflict as to any matter involving Mr.
Andrews 00 -583
June 13, 2000
Page 5
Pick. In addition, you must file a written memorandum to that effect with the
person responsible for recording the minutes.
Woodrinq Opinion No. 90 -001 at 6.
Furthermore, the Commission generally has determined that a conflict of interest
exists pursuant to Section 1103(a) of the Ethics Act where a public official /public
employee, in his official capacity, participates, reviews or passes upon a matter involving
a business with which he is associated and/or private clients. Miller Opinion No. 89 -024;
Kannebecker, Opinion No. 92 -010.
In Miller supra the Commission held that a zoning hearing board officer who
worked for a private firm had a conflict regarding any matters presented by that firm or its
clients before a governmental body. In addition, in Kannebecker, supra, the State Ethics
Commission determined that a township supervisor, who in his private capacity was an
attorney, would have a conflict of interest as to matters before the township involving
ongoing client(s) or client(s) for whom he was on retainer, even if he would not represent
such client(s) as to the matter pending before the township.
Based upon the above Commission precedent, Maiorano would have a conflict of
interest with regard to voting to invest funds through Domenick. Maiorano must abstain
and observe the disclosure requirements of Section 1103(j) of the Ethics Act.
As to your inquiry regarding whether the three City Council Members who have
conflicts of interest with the School District are permitted to vote, this Advice cannot
address the application of Section 11030) to all three Council Members because this
Advice relates to Maiorano. As to DeBlasio and Elisco, their conduct is not addressed
herein. Their conduct was addressed in Advice 00 -530, which was appealed to the full
Commission. On April 13, 2000, the Commission considered the appeal and affirmed the
Advice of Counsel.
Generally, however, an application of Section 1103(j) to a five member Board
requires that at least three of the members have a conflict under the Ethics Act in order
for the members to vote during the second round of voting after they each make the
necessary disclosures required pursuant to Section 1103(j). See, Mlakar, supra.
The propriety of the proposed conduct has only been addressed under the Ethics
Act; the applicability of any other statute, code, ordinance, regulation or other code of
conduct other than the Ethics Act has not been considered in that they do not involve an
interpretation of the Ethics Act. Specifically not addressed herein is the applicability of
the respective municipal code.
Conclusion: As a Council Member for the New Castle City Council, Maiorano is a
public official subject to the provisions of the Public Official and Employee Ethics Act
( "Ethics Act "), 65 Pa.C.S. §1101 et seq. As a City Council Member, Maiorano would
have a conflict of interest with regard to voting to invest funds through Goldman -Sachs
and its Sales Representative, Domenick, who is a Member of the School Board with
which Maiorano has a fire extinguisher contract. In each instance of a conflict of interest,
Maiorano would be required to abstain and observe the disclosure requirements of
Section 11030) of the Ethics Act. In the event that the required abstention results in the
inability of the overnmental body to take action because a majority is unattainable due to
the abstention(s) from conflict under the Ethics Act, then voting is permissible provided
the disclosure requirements noted above are followed. Lastly, the propriety of the
proposed conduct has only been addressed under the Ethics Act.
Pursuant to Section 1107(11), an Advice is a complete defense in any
enforcement proceeding initiated by the Commission, and evidence of good faith conduct
Andrews, 00 -583
June 13, 2000
Page 6
in any other civil or criminal proceeding, provided the requestor has disclosed truthfully all
the material facts and committed the acts complained of in reliance on the Advice given.
This letter is a public record and will be made available as such.
Finally, if you disagree with this Advice or if you have any reason
to challenge same, you may appeal the Advice to the full Commission.
A personal appearance before the Commission will be scheduled and a
formal Opinion will be issued by the Commission.
Any such appeal must be in writing and must be actually received
at the Commission within thirty 30) days of the date of this Advice
pursuant to 51 Pa. Code §13.2(h). The appeal may be received at the
Commission by hand delivery, United States mail, delivery service, or
by FAX transmission (717-787-0806). Failure to file such an appeal at
the Commission within thirty (30) days may result in the dismissal of
the appeal.
erely,
C s-
Vi cent ,10 pko
Chief Counsel