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HomeMy WebLinkAbout438-R FydaMs. Marianne Fyda Box 84 Troutville, PA 15866 RE: 84 -165 -C STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 ORDER OF THE COMMISSION Order No. 438 -R DECIDED! 2 0 1986 MAILED diiim :6 Dear Ms. Fyda: The State Ethics Commission has received a complaint regarding you and a possible violation of Act 170 of 1978. The Commission has now completed its investigation. A hearing was held on May 22, 1986 and the evidence and testimony from that hearing are Included as part of this Order. The individual allegations, conclusions and findings on which those conclusions are based are as follows: I. Allegation: That you, a hoard member of the DuBois Area School District, violated Section 3(a) and /or 3(c) of the Ethics Act, which respectively prohibit a public official's use of public office for confidential information and contracting with one's governmental body without an open and public process if the contract involves $500 or more, by engaging in business dealings with the DuBois Area School District as an owner of Peaceable Kingdom without an open and public process. A. Findings: 1. You have served as a member of the DuBois Area School District since June of 1982 and are subject to the provisions of the State Ethics Act (Act 170 - 1978). 2. You and your hushand are joint owners of a business known as Peaceable Kingdom, an art and photo framing business. 3. School district minutes show that Peaceable Kingdom received the following payments from the school district. a. August 5, 1982, payment of $60.12, you abstained from voting. h. August 26, 1982, payment of $74.92, you voted to approve payment of all hills. c. September 23, 1982, payment of $146.65 approved, you seconded the motion to pay all hills. Ms. Marianne Fyda Page 2 d. December 2, 1982, payment of $43.76 approved, you abstained from voting. e. The total payment to Peaceable Kingdom from the DuBois Area School District in 1982 was. $325.45. f.: January 27, 1983, payment of $80.60 approved, you abstained. g. February 24, 1983, payment of $182.83 approved, you voted for payment of all bills. h.. March 22, 1983, payment of $46.22 approved, the minutes do not reflect the votes_ of the members. i. April 28, 1983, payment of $82.66, you voted for the payment of all bills. j. August 4, 1983, paymenii of $109.95 approved, you abstained. k. August 30, 1983, payment of $92.00 was approved, you abstained. 1. November 22, 1983, payment of $111.99 was approved, you voted for the the payment of all bills.. m. The total payment to Peaceable Kingdom by the DuBois Area School District in 1983 was $706.25. n. March 22, 1984, payment of $224.02 approved, you abstained. o. April 26, 1984, payment of $178.50, you abstained. p. May 24, 1984, payment of $254.12 approved, you vozed for the payment of all bills. q. October 4, 1984, payment of $61.60 approved, you abstained. r. December 4, 1984, payment of $37.86 approved, you abstained. s. The total payment to Peaceable Kingdom from the DuBois Area School District in 1984 was $756.10. 4. At a special general meeting of the DuBois Area School District on August 5, 1982, you stated that you would abstain from voting on Peaceable Kingdom bills to avoid a conflict of interest. Ms. Marianne Fyda Page 3 a. You believe you have abstained from voting on all Peaceable Kingdom bills and state that if you did vote, it was because you were not aware that a bill from Peaceable Kingdom was included in the list of bills being voted on. b. The secretary to the DuBois Area School District Board believes you : have abstained, despite the indication in the minutes, that you did vote. He states that he may have failed to list your abstention or Peaceable Kingdom bills may have been added to the list of bills at the last moment and you would not be aware of this. c. The school superintendent states that he initiates the business transactions with Peaceable Kingdom, that you have not attempted to get business in the school district and that you have avoided voting on Peaceable Kingdom invoices. d. Until 1984, Peaceable Kingdom was the only business of its kind in the DuBois Area. 5. The school superintendent states that he contacted the competing business and they have stated they have no interest in doing business with the school district. 6. You admit the findings above with the following exceptions: a. You do not concur with those parts of Finding #3 which stated that you voted to pay bills to Peaceable Kingdom. You do not agree that the board minutes are totally accurate. 7. You believe that the necessary elements to establish a violation of Section 3(a) are absent. In this respect, you assert as follows: a. You did not use your public office or confidential information to contract or to influence a contract for your gain. The purchases from Peaceable Kingdom decreased after you became a board member and you did not initiate purchases by the board from Peaceable Kingdom or influence the initiation of these purchases. b. Although the board paid Peaceable Kingdom, you did not realize a financial gain from your position as school director because the business transactions between the board and your company decreased while you were on the school hoard. c. Section 3(a) is designed to prevent a public official's use of his position for personal gain and the information above shows that you did not do so. Ms. Marianne Fyda Page 4 d. The same arguments apply to a possible violation of Section 3(c) and you disagree with the Commission's decision that the $500 provision is a per year requirement. e. There are no competing shops or stores in the DuBois area. Although a similar business began in a local mall area in 1984, owners of that business notified the school superintendent that they did not wish to participate in the random purchases which the board made from Peaceable Kingdom. f. You followed board policy which had been established by solicitor's opinion. The solicitor had opined that it was proper for a board member to be a vendor providing the bidding laws were followed, the member abstained from voting, and did not influence the purchase in any way. The board does not vote on each individual bill. All bills are voted under one motion and approved together. h. The board secretary and other school board members: state that they do not remember you voting for a group of bills that i nclo-�ded a Peaceable Kingdom bill. B. Discussion: As a member of the Board of School Directors, you are a public official as that term is defined in the State Ethics Act. 65 P.S. §402; Coon, 79 -016. As such, your conduct must conform to the requirements thereof. 9. Generally, the Ethics Act provides that: Section 3. Restricted activities. (a) No public official or public employee sAil use his public office or any confidential information received through his holding public office to obtain financial gain other than compensation provided by law for himself, a member of his immediate family, or a business with which he is associated. 65 P.S. 403(a). Business with which associated is defined as follows: Section 2. Definitions. "Business with which he is associated." Any business in which the person or a member of the person's immediate family is a director, officer, owner, employee or holder of stock. 65 P.S. 402. Ms. Marianne Fyda Page 5 Within this provision of law, we have on a number of occasions determined that a public official may not, through his public position, approve for himself or otherwise accept or receive a financial gain other than the compensation that is provided by law. See Huff, 84 -015, Domalakes, 85 -010. In order to determine whether a public official would be in • iolation of this provision of law, it must naturally be determined if the financial gain that the official has obtained through his public office is part of the compensation provided by law. The Public School Code provides the relevant statutory provisions in making this determination. The Code provides as follows: All persons elected or appointed as school directors shall serve without pay except as hereinafter provided. 24 P.S. §3 -321. The Code also provides as follows: No school director shall, during the term or which he was elected or appointed, as a private person engage in any business transaction with the school district in which he is elected or appointed, be employed in any capacity by the school district in which he is elected or appointed, or receive from such school district any pay for services rendered to the district except as provided in this act: 24. P.S. §3 -324. While there are certain exceptions to this provision, see e.g., 24 P.S. §24- 751(e) there appears to be no provision for the receipt of payment by a school director for the type of supplies provided to the district in the instant matter. The funds received by you from the school district did not constitute part of the compensation provided by law and was a financial gain for your business. In fact, such appears to be specifically prohibited by the Public School Code. You are clearly associated with the business as set forth in the Act. Consistent with our previous Opinion in Weaver, 85 -014, you may not accept any payment from the district that is not provided for by law. The Public School Code specifically regulates the compensation to be paid to school directors and also restricts business transactions between the district and its directors. Acceptance of financial gain not authorized by said provisions would be a violation of the State Ethics Act. We note that you did abstain on several occasions regarding the payment to your business. Even so, we have determined that such abstention cannot authorize the receipt by a public official of a financial gain that is specifically prohibited by law. See Domalakes, 85 -010. Ms. Marianne Fyda Page 6 In additon to the foregoing, the Act provides: Section 3. Restricted activities. (c) No public official or public employee or a member of his immediate family or any business in which the persc.1 or a member of the person's immediate family is a director, officer, owner or holder of stock exceeding 5% of the equity'at fair market value of the business shall enter into any contract valued at $500 or more with a governmental body 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. Any contract made in violation of this subsection shall be voidable by a court of competent jurisdiction if the suit is commenced within 90 days of making of,the contract. 65 P.S. 403(c). We have consistently determined when a public official contracts or does business with his or her own governmental body in excess of $500 the open and public process must be employed. In Howard, 79 -044 and Fields, 82 -006, this Commission stated that an open and public process is met by applying the following standards: 1. prior public notice of the employment or contracting possibility; 2. sufficient time for a reasonable and prudent competitor /applicant to be able to prepare and present an application or proposal; 3. public disclosure of all applications or proposals considered; and 4. public disclosure of the contract awarded or offered and accepted. See Cantor, 82 -004. Here, while you abstained from voting on a number of the payments to your company, the open and public process was nevertheless not employed. Our past opinions have set forth that when the total or cumulatide business exceeds $500 per year, this requirement is applicable. Donati, No. 204,, During the course of our investigation and hearings, we have received information that your failure to abstain was primarily based upon the fact that you were not aware that the bills for your business were on the agenda. We were also provided with information to indicate that you had conducted such business with the district based upon a solicitor's advice. With the above in mind, we believe that while there was a violation of the State Ethics Act, such was technical in nature and that your actions may have been based upon good faith. Ms. Marianne Fyda Page 7 We cannot ignore, however, that you did in fact receive a financial gain to which you as a public official were not entitled. This gain was received from the governmental body on which you served. The records show that you voted for payment of bills which resulted in the receipt of this gain. The Ethics Act was promulgated in order to ensure the publii that the financial interests of their public officials do not conflict with the public trust. 65 P.S. §401. In this respect the State Ethics Act provides that: Section 7. Duties of the commission.. (ii) Provide written advice to any person upon their request with respect to such person's duties under this act. Such advice shall be provided within 21 working days of the request, provided that the time may be extended for good cause. It shall be a complete defense in any enforcement proceeding initiated by the commission, and evidence of good faith conduct in any civil or criminal proceding, if the requester, at least 21 working days prior to the alleged violation, requested written advice from the commission in good faith, disclosed truthfully all the material facts and committed the acts complained of either in reliance on the advice or beacuse of the failure of the commission to provide advice with 21 days of the request of such later extended time. 65 P.S. 407(11). Judicial decisions have indicated that the State Ethics Commission may offer a public official the opportunity to divest himself of any financial gain received in violation of the Act. McCutcheon v. State Ethics Commission, 77 Pa. Commw. 529, 466 A.2d 283, (1982). This would appear to be so even if the gain was received in good faith. County of Allegheny v. Grier, 179 Pa. 639, 36A53, (1977); Coltar v. Warminster Township, 8 Pa. Commw. , 163, 302 A.2d 859, (1973); Kestler Appeal, 66 Pa. Commw. 1, 444 A.2d 761. We believe this result is appropriate here. While we believe the gain received is the total amount paid to you by the district ($1,787.80), we are aware of the fact that our ruling in Weaver was only recently issued. Because of this, we believe that the financial gain received should be determined based upon Section 3(c) of the State Ethics Act. The amount received in violation of that Section was the funds in excess of the $500 limit. Ms. Marianne Fyda Page 8 Our calculations are as follows: 1983 - $206.25 1984 - $256.10 Total $462.35 C. Conclusion: Your actions as G school board member in voting for the school district's payment of bills relating to items purchased from your private business, and your receipt of a financial gain from your governmental body to which you were clearly not entitled is not in accord with the State Ethics Act. While you may have acted in good faith and while any violation of the State Ethics Act . may have been technical in nature, you did receive a financial gain as a result . thereof to which you were not entitled. We, therefore, believe that some form of restitution should be made to the school district. We have calculated this gain based upon Section 403(c) of the Ethics Act and as such you should remit payment to the State Ethics Commission of the above amount ($462.35) within thirty days of the date of this Order. The check or other payment shoul,d be made payable to the DuBois Area School District. Upon receipt of said check payment, we will close our files in this matter. Section 8(a) of the Ethics Act, 65 P.S. 408(a). However, this Order is final and will be made available as a public document 5 days after service (defined as mailing) unless you file documentation with the Commission which justifies reconsideration and /or challenges pertinent factual findings. See 51 Pa. Code 2.38. During this 5 -day period, no one, including the Respondent unless he waives his right to challenge this order, may violate this confidentiality by releasing, discussing or circulating this Order. Any person who violates the confidentiality of a Commission proceeding is guilty of a misdemeanor and shall be fined not more than $1,000 or imprisoned for not more than one year or both, see 65 P.S. 409(e). By the Commission, G. Sieber Pancoast Chairman Ms. Marianne Fyda Box 84 Troutville, PA 15866 EMS /na cc: Public Binder State Ethics Commission 308 Finance Building P. 0. Box 11470 Harrisburg, Pa. 17108 -1470 September 15, 1986 Re: 84 -165 -C Dear Ms. Fyda: On September 15, 1986, the State Ethics Commission received payment for reimbursing the DuBois Area School District as required by Order No. 438 -R. We have forwarded your check No. 2097 in the amount of $462.35 to the DuBois Area School District, Business Manager, Robert Wray. This letter will be part of the Order and a public record as such. Sincerely, Edward M. Seladones Executive Director State Ethics Commission • 308 Finance Building • Harrisburg, Pennsylvania