HomeMy WebLinkAbout689 EshelmanMr. John C. Eshelman
Raymond S. Woodard, Esquire
Dale, Woodard, Montgomery,
Greenfield & Pemrick
1030 Liberty Street
Franklin, PA 16323
Re: 87- 155 -C, 88- 047 -C
Dear Mr. Eshelman:
STATE ETHICS COMMISSION
308 FINANCE BUILDING
HARRISBURG, PENNSYLVANIA 17120
ORDER OF THE COMMISSION
ORDER NO. 689
DATE DECIDED: December 6, 1988
DATE MAILED: December 15. 1988
The State Ethics Commission has received a complaint regarding
you and a possible violation of Act 170 of 1978. The Commission has
now completed its investigation. The individual allegations,
conclusions, and findings on which those conclusions
are based are as follows:
I. Allegation: That you, Supervisor for Sandycreek Township,
Venango County, violated the following provisions of the Ethics Act
(Lct 170 of 1978), when you as roadmaster, received compensation for
overtime and holiday pay without auditor approval and *,hen the
township paid your health and insurance premiums without auditor
approval:
Cection 3. Restricted Activities.
(a) No public official or public employee shall
use his public office or any confidential
information received through his holding public
office to obtain financial gain other than
compensation provided by law for himself, a member
of his immediate family, or a business with which
he is associated. 65 P.S. Code S403(a).
A. Findings:
1 . You serve as a Township
Venango County, Pennsylvania
a. You have served in
Supervisor in Sandycreek Township,
this positions since January, 1986.
Mr. John C. Eshelman
Page 2
b. You were appointed temporary road foreman on December 30,
1985, immediately prior to the time when you assumed office
as a township supervisor.
2. Sandycreek Township maintained hospitalization insurance for
township employees during 1986 and 1987.
a. This insurance was provided by Blue Cross/Blue Shield of
Western Pennsylvania.
3. You participated in the Township's hospitalization program.
4. Minutes of the Township Board of Supervisor meetings, reflect the
following in relation to the instant situation.
a. December 30, 1985: special meeting, Richey, Baker and Woods
are present.
Motion to appoint John Eshelman,, temporary road foreman,
seconded by Woods.
b. January 6, 1986: John Eshelman was appointed road foreman.
Roadmaster to receive $7.50 per hour.
Supervisors present: Chairman Richey, Vice Chairman Woods,
and Eshelman.
c. September 4, 1986: Richey made a motion to pay Eshelman
mileage and expenses for a two -day seminar. Seconded by
Woods.
d. January 5, 1987: Re- organizational meeting. Richey was
appointed Chairman. Woods appointed Vice - Chairman.
Eshelman appointed road foreman.
Road foremen to be paid $7.50 per hour.
Regular meeting: Richey defended Eshelman's qualifications
for road foreman.
Supervisors present: Richey, Woods and Eshelman.
e. April 2, 1987: Question concerning the auditors' report.
Solicitor Gent explained that the hospitalization is in
question, can be interpreted in different ways. It will
need court determination.
Mr. John C. Eshelman
Page 3
The question regards whether the Township can pay health
insurance benefits without the consent of the auditors.
Solicitor Gent recommends that the Auditors approve the
hospitalization as of today.
Supervisors present: Richey, Woods and Eshelman.
f. May 7, 1987: Richey made a motion that the Supervisors
recommend to the auditors that they approve the payment of
hospitalization and medical insurance premiums for Eshelman,
as supervisor and roadmaster to the extent that such
approval is required by law. Seconded by Woods. Eshelman
abstained.
Executive session regarding Bruce Taylor's appeal of the
report of the Township Auditors.
Supervisors present: Richey, Woods and Eshelman.
September 3, 1987: Township insurance and authorization of
overtime for the township was questioned.
Supervisors present: Richey, Eshelman, (Woods - absent).
h. November 12, 1987: Letter received from the township
auditors approving payment for health insurance for the road
master, who is also a supervisor.
An objection is made to the approval of hospitalization for
the roadmaster since it was not approved at the first of
the year.
g.
Letters of resignation from Auditors Paul Lackey and Willard
Burns effective December 31, 1987.
Letter from Solicitor Gent regarding appeal of the annual
auditors' report for the 1986 year.
Court dismissed the appeal with the exception of the one
days wages paid to Eshelman when he went to Coatesville,
Pennsylvania in August, 1986.
Amount in consideration - $60.00.
Received from Eshelman, $60.00 to reimburse the township for
the one day's wages at $7.50 per hour, for the first day of
August, 1986, with the understanding that Eshelman is not
making any admission that he was not entitled to it and is
being made to avoid further litigation.
Mr John C. Eshelman
Page 4
J
Supervisors present: Richey, Eshelman, (Woods - absent).
i. December 3, 1987: Richey made a motion to appoint Hiram
Nettles to the vacant Supervisor's position created by the
resignation of Supervisor Woods.
January 4, 1988: Re- organizational meeting. Supervisors
present: Eshelman, Nettles, Baker.
Nettles appointed Chairman, Baker appointed Vice - chairman,
Eshelman appointed Roadmaster.
Marlin Kennedy and Mr. Black were appointed to fill the
auditor's vacant positions.
4. Minutes of the Sandy Creek Township Board of Auditors meetings
indicate the following in relation to the instant situation:
a. January 5, 1984: Present, Larry Witherup, Glenn Steele and
Paul Lackey.
Road Foreman wage set at $6.50: per hour.
Mileage reimbursement rate - $.15 per mile for use of
personal car and /or truck when used by a supervisor acting
as a roadmaster.
b. 1985 minutes were not available from the township building.
c. January 28, 1986: Present, Willard Burns, Glenn Steele and
Paul Lackey.
Road Foreman wage set at $7.50 per hour.
Mileage reimbursement rate - $.17 per mile for use of
personal car and /or truck when used by a Supervisor acting
as a roadmaster.
d. January 20, 1987: Willard Burns, Glenn Steele and Paul
Lackey.
Road Foreman wage set at $7.50 per hour.
Mileage reimbursement rate - $.17 per mile for use of
personal car and /or truck when used by a Supervisor acting
as a roadmaster.
Mr. John C. Eshelman
Page 5
e. March 2, 1987: 1986 Audit Report Findings.
Purchases of hospitalization for Supervisor acting as
roadmaster was not approved by auditors. Consult with
solicitor regarding action that should be taken in this
matter and report to auditors in two weeks.
Roadmaster was paid one days wages as roadmaster when acting
in township supervisor capacity. This is improper and an
adjustment should be made.
Request for reimbursement for mileage when on •.ownship
business should be submitted on proper form and approved by
supervisors.
f. March 11, 1987: Regarding purchase of hospitalization and
medical insurance for supervisor /employee.
Letter to the supervisors from the auditors questioning the
opinion of Solicitor Gent on the above subject. The letter
quotes from the auditors' guide and the Second Class
Township Code which is contrary with the opinion that
Solicitor Gent gave.
October 30, 1987: Resignation
Lackey effective December 31,
h. November 2, 1987: Resignation
Burns effective December 31, 19
g.
letter from Auditor Paul
1987.
letter from Auditor Willard
87.
i. December 14, 1987: A limited audit was conducted due to the
resignation of Supervisor Robert Woods. Board of Auditors
found no exceptions to report.
j. December 15, 1987: Regarding special meeting of the
auditors on October 29, 1987.
Auditors approved payment for health insurance for the
roadmaster /supervisor for 1987.
A second special meeting was held on December 14, 1987 to
satisfy Solicitor Gents request to publish the reason for
the special meeting which was not done for the meeting held
October 29, 1987.
k. January 5, 1988: Lauricia, Kennedy and Black.
Mr. John C. Eshelman
Page 6
Motion to set a meeting date, January 20, 1988, to give
auditors time to consider recommendation.
Motion to approve reimbursement of money spent for phone
calls by Supervisors. Vote was unanimous.
Motion to set the rate of pay for supervisors and the road
inspections. Vote was unanimous.
Motion to continue to pay Eshelman at this current rate
till the meeting on January 20, 1988. Vote was unanimous.
Motion to continue Eshelman's fringe benefits, including
insurance, until the meeting on January 20, 1988. Motion
died for lack of a second.
1. January 20, 1988: Present,.Lauricia, Black, Kennedy.
Motion to not pass items 1 -6 of the letter from the
supervisors with recommendations to auditors; was made by
Kennedy and seconded by Black.
Motion by Kennedy to approve his original motion as
presented with the change that the auditors would approve
hospitalization if required by law. Vote was 2/1 in favor,
Black dissented.
Items 1 -6 in the letter, "Recommendations to Auditors" from
the Supervisors, dated January 18, 1988 were not approved.
Kennedy made a motion that mileage, as requested in the
letter "Recommendations to Auditors" be approved for all
supervisors. Vote was unanimous.
Lauricia made a motion that the auditors pay Eshelman, road
foreman, his regular wages of $7.50 for the year of 1988.
Vote was 2/1 in favor, Black dissented.
Public notice advertising a special meeting of the auditors
to be held on June 8, 1988, to set wages for Supervisor
Frank Baker.
5 Records of Sandy Creek Township indicate that the following
payments were made by the township for your participation in the Blue
Cross /Blue. Shield hospitalization plan during 1986:
July
August
September
194.23
194.23
194.23
Mr. John. C. Eshelman
Page 7
October 194.23
November 194.23
December 194.23
Total 1986 $1,359.61
6. Records of Sandy Creek Township indicate the following payments
made on your behalf for participation in the Blue Cross /Blue Shield
hospitalization plan during 1987:
January $206.13
February 206.13
March 206.13
April 206.13
May 206.13
December 206.13
Total 1987 $1,236.78
7. Records of Sandycreek Township indicate that from June, 1987
through and including November, 1987, you paid for your pa:i.icipation
in the township hospitalization program. Payment for your
participation, in this program was made from the checking account of
John C. Eshelman and Marjorie Eshelman at the American Federal Savings
Bank, as follows:
May 12, 1987
June 12, 1987
July 2, 1987
Angus 17, 1987
September 16, 1987
October 16, 1987
$206.13 June premium.
206.13 July, premium.
206.13 August premium
206.13 September premium.
206.13 October premium.
206.13 November premium.
Total $1,236.78
8. Records of Sandy Creek Township indicate that township funds were
used to reimburse you for the six (6) months of premiums that you paid
after the Township Board of Auditors retroactively approved the
hospitalization for 1987 and after the Court of Common Pleas of
Crawford County dismissed a surcharge action against the township
supervisors.
a. Reimbursement amounted to $1,236.78.
9. The total amounts paid by the Township for your participation is
the Blue:Cross /Blue Shield hospitalization program were as follows:
1986 - $1,259.61
1987 - $1,236.78 (This amount was paid by the township prior to
auditor approval).
1987 $1,236.78 (This amount was initially paid by you to cover the
period from June - November). You were later
reimbursed for this amount.
Total $3,733.17
a. This reimbursement was made on December 29, 1987 through the
issuance of Sandy Creek Township check No. 6507 in the
amount of $1,236.78 equalling six (6) months premium
reimbursement at $206.13 per month.
10. Invoice dated July 9, 1986 from Blue Cross /Blue Shield of Western
Pennsylvania, Pittsburgh, Pennsylvania, indicates that your coverage
under the Sandy Creek Township, Blue Cross /Blue Shield and Major
Medical Program, No. 758 -009 became effective on June 1, 1986.
11. Sandy Creek Township weekly, bi- weekly or semi - monthly payroll
report records indicate the following overtime pay to you from
township funds in 1986:
Week
1/5/86 -
1/19/86
2/2/86 -
2/16/86
3/2/86 -
3/30/86
6/8/86 -
8/3/86 -
8/17/86
8/31/86 -
9/14/86 -
11/2/86 -
11/16/86
11/20/86
12/14/86
12/28/86
Total
1/18/86
- 2/1/86
2/15/86
- 3/1/86
3/15/86
- 4/12/86
6/21/86
8/16/86
- 8/30/86
9/13/86
9/20/86
11/15/86
- 11/29/86
• 12/13/86
- 12/27/86
- 1/10/87
Mr. John C. Esheiman
Page 8
Rate Overtime Hours
$11.25
11.25
11.25
11.25
11.25
11.25
11.25
11.25
11.25
11.25
11.25
11.25
11.25
11.25
11.25
11.25
18
5
14.75
14.45
8.25
1
2.5
.7
.2
2
3.2
3.2
3.7
6.5
6.2
12.2
104.15 = $1,171.69
Page 9
12. Records of Sandy Creek Township indicate the
overtime payments made to you during 1987:
Week Overtime Hours
1/11/87 - 1/24/87
1/25/87 - 2/7/87
3/7/87 - 3/20/87
4/19/87 - 5/2/87
6/15/87 - 6/28/87
7/13/87 - 7/26/87
7/27/87 - 8/9/87
8/10/87 - 8/23/87
9/7/87 - 9/20/87
10/5/87 - 10/18/87
11/2/87 - 11/15/87
11/16/87 11/29/87
11/30/87 - 12/13/87
12/4/87 - 12/27/87
Totals
Week
1/20/88
1/24/88
2/7/88
2/21/88
3/6/88
3/20/88
5/1/88
5/14/88
Totals
Overtime Hrs.
.9
6.1
15.8
20.8
6.4
17.5
3.1
.7
71.3
Work Sheet Date
1/1/86 - 1/20/86
3/1/86 - 3/31/86
5/1/86 - 5/31/86
7/1/86 - 7/31/86
9/1/96 - 9/30/86
11.4
17.5
3.6
.2
4.9
17.8
39.9
1.6
3.1
.9
10.2
12.5
12.3
2.8
138.70
Rate
$11.25
11.25
11.25
11.25
11.25
11.25
11.25
11.25
11.25
11.25
11.25
11.25
11.25
11.25
Rate
$11.25
11.25
11.25
11.25
11.25
11.25
11.25
11.25
following regarding
Total O.T. Pay
13. Records of Sandy Creek Township indicate the following regarding
overtime payments to you by the township during 1988:
Total Overtime
$ 10.17
68.63
177.75
230.63
72.00
196.88
34.88
7.88
$798.82
14. The township roadmaster's worklog for the years 1986 and 1987
indicate the following in relation to holidays for which you received
pay:
Holiday
1/1/86 New Year's Day
3/28/86 Good Friday
5/26/86 Memorial Day
7/4/86 July 4th
9/1/86 Labor Day
$128.25
196.88
40.50
2.25
55.12
201.69
448.87
18.00
34.87
10.12
114.75
140.63
138.37
31.50
$1,561.80
11/1/86
12/1/86
1/1/87 -
4/16/87
5/21/87
6/30/87
9/3/87 -
11/26/87
jahli d:
Page 10
- 11/30/86
- 1
1/7/87
- 4/24/87
- 5/27/87
- 7/6/87
9:/9/87
- 12/3/87
12/22/87 - 12/28/87
11/27/86 Thanksgiving Day
11/28/86 Personal Day
12/1/86 Personal Day
12/25/86 Christmas
1/1/87 New Year's Day
4/17/87 Good Friday
5/25/87 Memorial Day
7/3/87 July 4th
9/7/87 Labor Day
11/26/87 Thanksgiving
11/27/87 Personal Day
11/30/87 Personal Day
12/25/87 Christmas
15. Records of the Township indicate that you were paid for eight (8)
hours per holiday at $7.50 per hour during 1986 and 1987. As a result
of this payment, you received the following amounts:
1986 - 9 holidays equals $540.
1987 - 9 holidays equals $540.
Total holiday pay was $1,080.00.
16. The Township Board of Supervisors approved holidays for township
employees.
17. In 1987, an action was filed in the Court of Common Pleas of
Venango County, Pennsylvania, seeking to have the Sandy Creek Township
Supervisors removed from office and have other individuals appointed
in their stead.
a. As part of that action, it was alleged that hospitalization
and medical insurance premiums were paid for John C.
Eshelman as a township supervisor and that such payments
were made in violation of the law.
b. On April 9, 1987, the rule to show cause issued in that
matter was dissolved in light of the fact that the court did
not find sufficient proof or evidence to warrant the removal
of the township supervisors.
c. The court did not specifically indicate any opinion as to
the specifics asserted in the law suit including the issue
of the insurance received from Mr. Eshelman.
Mr. John C. Eshelman
Page 11
18. On March 2, 1987, Township Solicitor Harry W. Gent, Jr.,
forwarded a letter to the Sandy Creek Township Supervisors regarding
the purchase of hospitalization and medical insurance for a
supervisor /employee.
a. This letter was written specifically in relation to payments
that had been made on behalf of John C. Eshelman from 1986
forward.
b. The opinion indicates that the Second Class Township Code
requires the township auditors, and not the supervisors, to
fix the compensation of a supervisor who serves as a
roadmaster.
c. Further, it notes that Second Class Township Code allows the
supervisors to purchase insurance. The solicitor concludes
that because the insurance premiums were paid for Mr.
Eshelman as well as two full -time road employees, such would
not result in the expenditures to Blue Cross as being
improper and requiring a surcharge.
19. By way of letter dated December 23, 1987 to the Township Board
of Supervisors in Sandy Creek Township, Solicitor Harry W. Gent, Jr.
addressed the issue of hospitalization and medical insurance coverage
for John C. Eshelman. Gent notes in this letter that this payment was
challenged in a 1987 court action that had been initiated by A. Bruce
Taylor.
a. The challenges were based on the contention that the
auditors never approved the payment of these premiums for
Mr. Eshelman as a supervisor /employee.
b. Mr. Gent indicates that he advised Mr. Eshelman in 1987 to
pay for the hospitalization and medical insurance coverage
on his own until the litigation is resolved.
c. The letter notes that on April 9, 1987, the Court of Common
Pleas of Venango County, Pennsylvania issued an order
dissolving the petition to remove the supervisors.
d. The letter further notes that on October 27, 1987, Mr.
Taylor's appeal from the 1986 audit which had been pending
was also discharged. The letter notes that no reason for
imposing a surcharge was found.
e. This letter indicates that on October 29, 1987, the auditors
met during a public meeting and approved the payments
through township funds for health insurance for Sandy Creek
Township roadmaster who also served as a supervisor.
Mr. John C. Eshelman
Page 12
f. It is further noted that on. December 14, 1987, the foregoing
action was. confirmed.
It is further noted that it is the opinion of Mr. Gent that
the Supervisors of Sandy Creek Township can now reimburse
Mr. Eshelman for the hospitalization and medical insurance
premiums which he paid on his own during 1987.
20. By way of letter dated October 17, 1988 to the Sandy Creek
Township Board of Supervisors from Harry W. Gent, Jr., Township
Solicitor, the question of overtime payment to John C. Eshelman is
addressed. The letter notes that the regular rate of pay was fixed
for Mr. Eshelman by the Township Board of Auditors.
g •
a. Mr. Gent notes the minimum wage Act of 1968, 43 P.S. 333
.104 and the exceptions thereto, 43 P.S. 333.105.
b. Mr. Gent finds, as a result thereof, that the wages paid to
Mr. Eshelman were being paid as a roadmaster and not as a
supervisor and, therefore, it is his opinion that Mr.
Eshelman is entitled to the overtime pay under the law.
c. Mr. Gent indicates that Mr. Eshelman should further contact
the State Association of Township Supervisors for a further
review.
21. By way of letter dated January 5, 1984 from Paul H. Lackey,
Secretary of Sandy Creek Township Board of Supervisors to Clint
Richey, Chairman of the Board of Supervisors, the supervisors are
informed that the Board of Auditors have requested certain documents
in order to complete their audit for 1983. The supervisors are
further advised that the auditors set wages at $6.50 per hour for
calendar year 1984 and mileage at $.15 per mile.
22. By way of letter dated January 28, 1986, from Paul H. Lackey,
Secretary to the Sandy Creek Township Board of Auditors to Clint
Richey, Chairman of the Township Board of Supervisors, the supervisors
are informed that wages were fixed for the road foreman at $7,50 per
hour for calendar year 1986 and $.17 per mile for use of a personal
vehicle or truck. Letter request various documents in order to
initiate the audit for calendar year 1985.
23. By way of letter dated January 20, 1987 from Paul H. Lackey,
Secretary to the Sandy Creek Township Board of Auditors to Clint
Richey, Chairman of the Township Board of Supervisors, the supervisors
are advised that the auditors have fixed the wages for the road
Mr. John C. Eshelman
Page 13
foreman at $7.50 per hour and $.17 per mile for use of a personal
vehicle or truck. The supervisors are also requested to provide
various documentation so the auditors may begin to audit the books for
1986.
24. By way of letter dated March 2, 1987, to the Sandy Creek Township
Board of Supervisors from the Sandy Creek Township Board of Auditors,
the Supervisors are informed that the audit report for calendar year
1986 has been completed. The auditors indicate as per this letter,
that certain points must be addressed. Included in this letter are
the following items:
a. Purchase of hospitalization for supervisors acting as
roadmaster was not approved by auditor. The supervisors are
requested to consult with their solicitor and report back to
the auditors within two (2) weeks.
b. The auditors note that a written policy should be
established to cover payments of overtime, vacation and
holidays. This policy, it is noted, should be reviewed and
approved on an annual basis.
By way of letter dated March 11, 1987, from Paul H. Lackey,
Secretary to the Sandy Creek Township Board of Auditors to the Sandy
Creek Township Board of Supervisors, the auditors acknowledge
receiving the opinion of Harry Gent dated March 2, 1987 regarding
purchase of hospitalization and medical insurance for
supervisor /employees. The auditors indicate that their contact with
the Pennsylvania Department of Community Affairs indicated that this
type of fringe benefit was considered compensation which must be
approved by the Township Board of Auditors or any supervisor acting as
a roadmaster /laborer or secretary /treasurer. The auditors indicate,
as per this letter, that there is a definite conflict between the
guidance that they have received from the Department of Community
Affairs and the opinion of the township solicitor.
26. By way of letter dated December 15, 1987, from Paul H. Lackey to
the Sandy Creek Township Board of Supervisors, the supervisors are
informed that the township board of auditors confirmed action taken at
a special meeting on October 29, 1987 to approve payment for health
insurance for the Sandy Creek Township Roadmaster for calendar year
1987.
27. Willard E. Burns supplied the following information in relation
to this situation:
a. Burns served as a Township Auditor from 1985 until 1987 . when
he resigned.
Mr. John C. Eshelman
Page 14
b. He formerly served as a township supervisor for 15 years.
c. When he served as a township supervisor, one set pay was
established for the roadmasterlsupervisor. All three
supervisors received the same pay. In 1987, the auditors
learned that the township had paid the 1986 insurance
premiums for John Eshelman.
d. The auditors, thus, requested an opinion from the solicitor.
e. The auditors subsequently approved the insurance premium
payment of the township to be retroactive based upon a court
decision brought against the supervisors by citizens.
f. The auditors approved the hospitalization for Eshelman
retroactively because they believed it was the appropriate
thing to do.
g •
Regarding overtime payments, Eshelman initialed his own
overtime sheets.
h. The auditors suggested that another supervisor should do
this.
i. He indicated that it was his belief that the auditors should
be responsible for fixing the wages, mileage and
hospitalization for supervisors.
Prior to the court action and the ultimate decision of the
auditors to approve insurance benefits in 1987, the auditors
were never requested to approve this benefit.
28. Glenn A. Steele provided the following information in relation to
this situation:
j
a. He served as a township auditor for approximately six (6)
years and is an accountant by profession.
b. Two court cases were initiated against the supervisors, one
brought by citizens to remove all three supervisors from
office and the second, a surcharge action against the
supervisors. All of the surcharges were dismissed except
one regarding a days wages paid to Eshelman when he went on
a trip to Coatesville.
c. The auditors discovered that Eshelman's hospitalization had
been paid by the township from June of 1986.
Mr. John C. Eshelman
Page 15
d. They, thereafter, asked the solicitor for his opinion on
this issue.
e. The auditors were, thereafter, satisfied that the court had
decided this issue and there was no further action that they
should take.
29. Paul Lackey provided the following information in relation to
this situation:
a. He served as an auditor for Sandy Creek Township until 1987.
Regarding the lawsuit initiated by the citizens to remove
the supervisors from office, the judge found that there was
no evidence of malfeasance or non - feasance and, therefore,
dismissed that action.
b. Regarding the hospitalization paid to Mr. Eshelman, the
auditors reviewed Ethics Commission cases pertaining to that
issue and were not sure if Eshelman was receiving this
insurance appropriately. They decided, therefore, to wait
for the court decision on this subject.
c. The auditors did not approve hospitalization for Eshelman in
1986.
d. After the surcharge was dismissed, they approved the
insurance for the 1987 calendar year which was a request
from the township board of supervisors. This approval was
retroactive and covered the entire 1987 calendar year.
e. The auditors believed that the court decision affirmed the
legality of the payments that had been made to Eshelman.
30. You provided the following information in relation to this
situation:
a. You have served as a township supervisor in Sandy Creek
Township since January, 1986. You were appointed road
foreman at the January 6, 1986 meeting.
b. Your participation in the township's Blue Cross /Blue Shield
program began in June, 1986.
c. The supervisors contacted various companies and you stated
that you set up the plan yourself with Blue Cross /Blue
Shield of Western Pennsylvania and that you had the
supervisors' approval to do this.
Mr. John C. Eshelman
Page 16
d. There was no vote taken by the supervisors in relation to
the insurance coverage.
e. No other township roadmaster /supervisor had ever received
hospitalization insurance prior to you.
f. The plan that you set up with Blue Cross /Blue Shield covered
two full -time road employees and yourself. The only full -
time employee that was not covered was the secretary for the
township.
g. While the supervisors did not vote on obtaining the
insurance, it was discussed and three to five insurance
representatives discussed plans with them. This did not
occur during township meetings but took place in the
evenings at the township building.
h. The solicitor's opinion was not requested at the time the
insurance was originally obtained.
i. The auditors did not approve the insurance in 1986, because,
at the time of the reorganizational meeting, it was not
being considered by the board of supervisors.
The auditors did approve the insurance for 1987 after the
court had decided that payments were appropriate. You
believed that the court also considered payment for. the 1986
insurance coverage and dismissed allegations that was
improper.
k. You received an opinion from the township solicitor, in
1987, indicating that there was no problem with your
receipt of this insurance coverage.
1. You did not reimburse the township for anything towards the
1986 insurance coverage.
m. Regarding your receipt of paid holidays, you indicate that
you did not receive payment for working January 1, 1986 in
that you had not yet taken office as a township supervisor
and thus, had not been appointed: roadmaster.
n. You also indicate that you have not taken any holiday pay in
1988 since such has not been approved- by the auditors.
o. Your counsel indicated that payment to township
supervisors /roadmaster for holidays has been a past. practice
with the township. All the or received includincr overtime
Mr. John C. Eshelman
Page 17
p. You believe you were entitled to overtime as a result of
state law and payment of overtime to you was not exempt from
that law.
B. Discussion: As a township supervisor, you are a public official
as that term is defined in the State Ethics Act. 65 P.S. 5402;
Sowers, Opinion 80 -050. As such, you are subject to the provisions of
the Ethics Act and the restrictions therein are applicable to you.
Section 3(a) of the State Ethics Act quoted above specifically
provides, in part, that a public official may not use public office to
obtain a financial gain for himself other than compenation provided by
law.
Within the above provision of law, this Commission has
previously determined that a township supervisor may not receive at
the township's expense, health, hospitalization, medical and life
insurance benefits when such supervisor acts only in the capacity of a
supervisor. Krane, Opinion 84 -001; Cowie, Opinion 84 -010.
Additionally, even if such a supervisor is employed by the township as
a superintendent, secretary /treasurer, roadmaster or laborer in
accordance with the Second Class Township Code, such benefits are
considered compensation and must, therefore, be fixed as such by the
township board of auditors. See Svnoski v. Hazle Township, 93 Pa.
Commw. 168 500 A.2d 1282, (1985); In re: Appeal of the Auditors
Report of Muncv Creek Township, 103 Pa. Commw. Ct. 168, 520 A.2d 1241,
(1987); Hunt, Order 348 -R. The foregoing principle was recently
reaffirmed by Pennsylvania Commonwealth Court in Yocabet v. State
Ethics Commission, 109 Pa. Commw. Ct. 432, 531 A.2d 536 (1987). In
the cited case, the Court held inter alia that a township supervisor
violated Section 3(a) of the Ethics Act when he received a salary for
the position secretary /treasurer which had not been set by the
auditors. The Court, in affirming the Order of the Ethics Commission
which required a restitution of the financial gain, noted on page 539
of its Opinion:
"Section 7 of the Ethics Act instructs the
Commission to investigate situations where there
is a reasonable belief that financial conflict may
exist, and if conflict is found, to require the
offender to remove himself from the conflict
without cxain." (Emphasis supplied.)
Any benefits received other than as provided for above, would
constitute a financial gain obtained in violation of the State Ethics
Act. See McCutcheon v. State Ethics Commission, 77 Pa. Cmwlth. 529
466 A.2d. 283 (1983); Conrad v. Exeter Township, 27 D & C 3d 253,
Mr. John C. Eshelman
Page 18
(1983). These principles of law are now well settled and constitute
the law under which this situation must be reviewed. See In re:
Report of Audit of South Union Township, 47 Pa. Commw. 1, 407 A.2d
906, (1979).
In the instant matter, you have served in the position of road
foreman / roadmaster since December 30, 1985. Although you were a
working supervisor, you did not receive the requisite auditor approval
for township paid insurance /health benefits. The lack of auditor
approval is reflected both. in the minutes of the auditor meetings as
well as from the statement of the auditors for the calendar year 1986.
As to the 1987 calendar year, the minutes of the auditors reflect
an approval of payment for health insurance on your behalf but this
action occurred on December 15, 1987. The question arises as to
whether there may be a retroactive approval for insurance coverage for
1987. This Commission has addressed the question of whether auditors
may retroactively approve insurance benefits in prior determinations:
Saunders, Opinion 85- 006 -R; Shaffer, Order 540. In these cases, it
was held that auditors in a January organizational meeting could not
retroactively approve insurance benefits for prior years. The instant
case is somewhat different factually from the above cases in that for
a period of six months you paid for the coverage rather than using
township funds. The aforecited decisions were based upon a provision
in the Second Class Township Code which states in part:
The auditors of townships shall meet
annually, at the place of meeting of supervisors,
on the day following the day which is fixed by
this act for organization of the township
supervisors; and shall organize by the election of
a chairman and secretary, and shall audit, settle,
and adjust the accounts of the supervisors,
superintendents, roadmaster, treasurer, and tax
collector of the township and fix the
compensations for the current year authorized in
Section 515 hereof." 53 P.S. S65542, (emphasis
added).
It is clear from the above quoted provision of law that the
auditors must set the compensation on the day following the
supervisors' organizational meeting. In this situation, you received
township provided benefits for the first half of 1987 without auditor
approval and pursuant to the above retroactive approval would not be
appropriate. We must take note, however, that for the second half of
1987 you personally paid for your coverage under the township
Mr. John C. Eshelman
Page 19
benefits program. While the township did in fact reimburse you for
the amount that you expended ($1,236.78) such was not done until after
the auditors had approved the benefits for you as part of your
compensation.
Thus, in effect we believe that because you did not use or
receive those township benefits until after the auditors had approved
such, there was no violation as to these funds.
In relation to the other benefits that you received, we have
determined that you violated Section 3(a) of the Ethics Act when you
received township paid health insurance benefits for 1986 and 1987
(half payment by the township) which amounts to $2,496.39.
Turning to the matter of holiday pay, the same legal principles
are applicable - did the auditors set paid holidays as part of your
compensation as a working supervisor. Although the Board of
Supervisors approved holidays for township employees, such action is
of no avail to you because the law requires that the auditors must set
such compensation for you as a supervisor employee. The auditors did
not approve any paid holidays for you, as reflected in their minutes
and statements, and hence you were not entitled to receive holiday
pay. Your receipt of holiday pay in the amount of $1,080.00 without
auditor approval violated Section 3(a) of the Ethics Act.
The last item for review concerns your receipt of overtime pay
for the years 1986 through 1988. Since the auditors did approve your
wages for the above three years at $7.50 per hour, such compensation
was duly authorized and you would be entitled to receive such
compensation. However, you received wages for overtime work at the
rate of $11.25 per hour which is time and a half. Although you argue
that you were entitled to time and a half under state law, such is not
the applicable law. The Minimum Wage Act of 1968 contains certain
exemptions from coverage:
(a) Employment in the following
classifications shall be exempt from both the
minimum wage and overtime provision of this act:
(12) Employees not subject to civil service
laws who hold elective office or are on the
personal staff of such an officeholder, are
immediate advisers to him, or are appointed by him:
to serve in a policy- making level. 43 P.S.
333.105
See also 1976 Op. Atty. Gen. No. 29 to the effect that the 1974
amendment to the Minimum Wage Act did not extend coverage to employees
Mr. John. C. Eshelman
Page 20
Therefore, although you were entitled to be paid at the rate of
$7.50 per hour set by the auditors for your time, you were not
entitled to be paid at the rate of $11.25. You violated Section 3(a)
of the Ethics Act by receiving an additional $3.75 per hour for your
overtime. Since your overtime for 1986 through 1988 totaled 314.15
hours, you received $1,178.06 (314.15 X $3.75) to which you were not
entitled.
It should also be noted that even if the above benefits had been
received in good faith, such would not be controlling. Good faith
receipt of such benefits, even when based upon a solicitor's advice,
will not alleviate the necessity of a public official reimbursing his
governmental body for the receipt of a financial gain for which he was
not entitled. See Allegheny County v. Gorier, 179 Pa. 639, 36 A. 353,
(1987); McCutcheon v. State Ethics Commission, supra; Kestler Appeal,
66 Pa. Commw. 1, 444 A.2d 761, (1982). As a result, you must
reimburse the township for this financial gain.
The State Ethics Act provides as follows: -
Section 9. Penalties.
(a) Any person who violates the provisions of
Section 3(a) and 3(b) is guilty of a felony and
shall be fined not more than $10,000 or
imprisoned for not more than five years, or be
both fined and imprisoned. 65 P.S. Section
§409(a).
(c) Any person who obtains financial gain from
violating any provision of this act, in addition
to any other penalty provided by law, shall pay
into the State Treasury a sum of money equal to
three times the financial gain resulting from such
violation. 65 P.S. Section S409(c).
In addition to the above, the State Ethics Act provides that the
Commission may forward the results of any investigation to the
appropriate prosecuting authority unless the alleged offender removes .
himself from the conflict of interest by divesting himself of any
financial gain received in violation of the State Ethics Act. 65 P.S.
5407 9(iii).. See also McCutcheon v. State Ethics Commission, supra.
This Commission may order restitution of financial gains received in
violation of the law.
In summary, you violated Section 3(a) of the Ethics Act by
receiving, without auditor approval, the following: $3,733.17 in
insurance benefits; $1,080.00 in holiday pay and $1,178.06 in
Mr. John C. Eshelman
Page 21
days of the date of this order to forward a check to the State Ethics
Commission payable to Sandycreek Township in the amount of $5,991.23.
Failure to comply with the above will result in the referral of this
matter to the appropriate law enforcement authority.
C. Conclusion and Order:
1. As a Sandycreek Township Supervisor, you are a public
official subject to the provisions of the Ethics Act.
2 . You violated Section 3(a) of the Ethics Act when you
received township paid insurance benefits for 1986 and half
of 1987, . without auditor approval in the amount of
$2,496.39.
3. You violated Section 3(a) of the Ethics Act when you
received holiday pay without auditor approval, in the amount
of $1,080.00.
4. You violated Section 3(a) of the Ethics Act when you
received overtime wages at the rate of $11.25 per hour when
the auditors set your wages at $7.50 per hour, which gain
amounts to $1,178.06.
5. The total gain you received in violation of Section 3(a) of
the Ethics Act, which is other than compensation provided by
law, amounts to $4,754.45.
6. You are hereby directed to forward a check to the State
Ethics Commission within thirty days, in the amount of
$4,754.45 payable to the order of Sandycreek Township.
7. Failure to comply with the provision in paragraph 6 of this
Order will result in the referral of this matter to the
appropriate law enforcement authority.
Our files in this case will remain confidential in accordance
with 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 15 days
after service (defined as mailing) unless you file documentation with
the Commission which justifies reconsideration and /or challenges
pertinent factual findings. See 51 Pa. Code §2.38. During this 15-
day period, no one, including the respondent unless he waives his
right to challenge this Order, may violate this confidentiality by
releasing, discussing or circulating this Order.
Mr. John C. Eshelman
Page 22
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,
V*
Joseph W. Marshall, III
Chairman
STATE ETHICS COMMISSION
308 FINANCE BUILDING
P.O. BOX 11470
HARRISBURG, PA 17108 -1470
TELEPHONE (717) 783 -1610
January 13, 1989
Mr. John C. Eshelman
R.D. 4, Box 682
Franklin, PA 16323
Re: Order No. 689, File Nos. 87- 155 -C, 88- 047 -C
Dear Mr. Eshelman:
On January 13, 1989, the State Ethics Commission received
your payment for reimbursing Sandycreek Township as required by
Order No. 689.
We have forwarded -your check No. 220 in the amount of
$4,754.45 dated January 9, 1989 to Sandycreek Township. r
This letter will be part of the Order and a public y record as
such.
JJC /na
cc: Public Binder
Si
no
ecut e Director