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HomeMy WebLinkAbout1252 KurtzIn Re: Adam Kurtz File Docket: X -ref: Date Decided: Date Mailed: Before: Louis W. Fryman, Chair John J. Bolger, Vice Chair Daneen E. Reese Frank M. Brown Susan Mosites Bicket Donald M. McCurdy Michael Healey 01- 028 -C2 Order No. 1252 9/4/02 9/25/02 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 Act, Act 9 of 1989, P.L. 26, 65 P.S. §§ 401 et seq., as codified by Act 93 of 1998, Chapter 11, 65 Pa.C.S. § 1101 et seq., by the above -named Respondent. At the commencement of its investi9ation, the Investigative Division served upon Respondent written notice of the specific allegation(s). Upon completion of its investi9ation the Investigative Division issued and served upon Respondent a Findings Report identified as an "Investigative Complaint." An Answer was filed and a hearing was waived. The record is complete. A Consent Agreement and Stipulation of Findings were submitted by the parties to the Commission for consideration. The Stipulation of Findings is quoted as the Findings in this Order. The Consent Agreement was subsequently approved. Effective December 15, 1998, Act 9 of 1989 was repealed and replaced by Chapter 11 of Act 93 of 1998, 65 Pa.C.S. § 1101 et seq., which essentially repeats Act 9 of 1989 and provides for the completion of pending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. Kurtz 01- 028 -C2 Page 2 I. ALLEGATION: That Adam Kurtz, a public official /public employee, in his capacity as a member of the Shenandoah Valley School District Board of Directors, violated Section 1103(a) provision [sic] of the State Ethics Act (Act 93 of 1998) 65 Pa.C.S. §1103(a) when he used the authority of his office for the private pecuniary benefit of himself and /or a member of his immediate family and a business with which a member of his immediate family is associated by participating in discussions and actions of the school board of directors, including casting the deciding vote to award an insurance contract to a business owned by his wife. II. FINDINGS: 1. Adam Kurtz has served as a member of the Shenandoah Valley School Board of Directors (SVSB) since approximately December 1995. 2. Adam Kurtz is married to Regina Kurtz and shares a common residence with her located at 185 Arizona Avenue, Shenandoah, PA 17976. 3. Bolich & Burke Insurance is located at 1 South Main Street, Shenandoah, PA 17976. a. Regina Kurtz is the company president and operates the corporation on a daily basis. b. Adam Kurtz is the company vice - president (inactive). 4. In addition to the insurance business, Regina Kurtz has served as a West Mahanoy Township Supervisor since 1996. 5. Adam Kurtz represents himself as the vice - president "inactive" of Bolich & Burke, Inc., on annual Statements of Financial Interests forms he filed with SVSD for calendar years 1997 through 2000. a. Adam Kurtz does not list the receipt of any income from Bolich & Burke, Inc., on Statements of Financial Interests he filed with the SVSD. 6. Bolich & Burke, Inc., has maintained business relationships with municipal entities at times when the company president and vice - president have served as elected officials of those entities. a. Bolich & Burke has sold insurance to West Mahanoy Township and the Shenandoah Valley School District since at least 1997. b. Bolich & Burke has no other municipal clients. 7. The Shenandoah Valley School District annually solicits bids for property, injury and motor vehicle insurance coverage. a. Bid specifications are prepared by the district's business manager and /or staff. b. Bid advertisements are handled by the district's business manager. c. Legal advertisements are placed in the Pottsville Republican and Hazleton Standard Speaker. d. Competitive sealed bids are received and opened at a publicly advertised board meeting. Kurtz 01- 028 -C2 Page 3 e. Bid totals are made available to board members to review upon completion of the bid opening. 8. The Shenandoah Valley School Board follows provisions of the Public School Code of 1949, 24 P.S. pertaining to contract bidding and awarding, including Sections 3 -324 and 5 -508. 9. Section 5 -508 of the Public School Code of 1949, 24 P.S. § 5 -508, relates to a requirement for a majority board vote to approve purchases and contracts in excess of $100.00. Section 5 -508 states in part: a. "The affirmative vote of a majority of all the members of the board of school directors in every school district, duly recorded, showing how each member voted, shall be required in order to take action on the following subjects: Entering into contracts of any kind, including contracts for the purchase of fuel or any supplies, where the amount involved exceeds one hundred dollars F $100). ixing salaries or compensation of officers, teachers, or other appointees of the board of school directors." 10. Insurance contracts for the Shenandoah Valley School District annually exceeded $100.00. 11. During Adam Kurtz's tenure on the board (December 1995 to present), the SVSD has used the same process for bidding insurance coverage. 12. The SVSD typically takes action each December to award insurance coverages for the following calendar year commencing January 1, and running through December 31 of that respective year. a. Legal advertisements are generally run in October or early November annually. 13. Each bidding company must complete and submit a standard quotation form created by the district. a. The SVSD quotation form separated the district's coverages into five line items: Physical property - building and contents Personal injury and property damage liability Boiler insurance Business auto Umbrella b. An annual premium for each category is requested along with a total quote. 14. The SVSD has used a single insurance carrier for all five coverage areas since at least 1995. a. The district has no history of splitting the insurance among multiple carriers. 15. Records of the Shenandoah Valley School District reflect Bolich & Burke, Inc., submitted insurance bids to the District for calendar years 2000, 2001, and 2002. a. Bolich & Burke, Inc., was awarded insurance contracts for calendar years 2001 and 2002. Kurtz 01- 028 -C2 Page 4 b. The Nathan Lane Agency was awarded the insurance contract for calendar year 2000. c. Bolich & Burke, Inc., also was awarded other insurance contracts by the district during the 1990s. 16. In December of 1999 the SVSB advertised for insurance proposals for district insurance coverage for the 2000 calendar year. a. Bid specifications were prepared by the district's business manager and staff. b. Legal advertisements were placed in the Pottsville Republican and Hazleton Standard Speaker newspapers. c. Insurance bids were to be received, opened and acted upon during the board's December 15, 1999, meeting. 17. Business records of the Shenandoah Valley School District confirm that three (3) bids for insurance for calendar year 2000 were received. a. Bids were received from: Nathan Lane Agency, Inc., 545 Goffle Road, Wyckoff, NJ 07481 Willis Corroon Corporation of PA, 1495 Valley Center Parkway, Bethlehem, PA 18017 Bolich & Burke, Inc., 1 -3 South Main Street, Shenandoah, PA 17976 18. Each potential bidder was provided a bid packet by the school district which included a standard cover sheet and a quotation form to be submitted with each bid. 19. Willis Corroon, Nathan Lane and Bolich & Burke each submitted bid packets including the district's quotation form for insurance (bid cover sheet). a. Board members had access to all insurance bid materials submitted including the quotation form for insurance (cover sheets). 20. Bid tabulations for the 2000 calendar year insurance were compiled by Business Manager Thomas Kowalonek. Bid tabulations for 2000 were as follows: a. Willis Corroon Nathan Lane Bolich & Burke Physical Property $ 4,968.00 $12,407.00 $ 2,532.00 Injury & Damage $ 2,575.00 Included $ 4,226.00 Boiler $ 531.00 Included $ 1,037.00 Auto $ 4,975.00 Included $ 4,683.00 Umbrella $ 1,000.00 Included $ 3,000.00 $ 14,049.00 $12,407.00 $15,478.00 21. Board members were provided with bid tabulations for the 2000 insurance for their review prior to any official action of the board. 22. The SVSD has traditionally awarded the insurance package to one bidder even though they request quotes on each category of insurance bid. a. The district intended to select one company for 2000 to handle all the subcategories of the insurance package. b. The SVSD was not looking to award each category of insurance to different Kurtz 01- 028 -C2 Page 5 vendors. 23. Nathan Lane's bid quotation form for the 2000 insurance did not include an itemized breakdown of premium amounts for each category. a. They provided a total premium bid for all categories. b. The Nathan Lane Agency used the same insuring company for each category. c. The Willis Corroon and Bolich & Burke bids included an itemized premium amount for each category. 24. No questions or concerns were raised by any board member regarding any of the bids. 25. The bid format used by Nathan Lane for 2000 was accepted by the board as a valid bid for the 2000 insurance coverage. a. If the Nathan Lane bid had been disqualified the next low bidder was the Willis Corroon bid of $14,049.00. 26. Insurance bids for calendar year 2000 were reviewed and considered by the board at their [sic] December 15, 1999, meeting. a. Adam Kurtz was present and participated in the review of insurance proposals. 27. Minutes from the board's December 15, 1999, meeting include the following action taken to award insurance for the 2000 calendar year: "Moved by Christine Putalonis and seconded by Merilee Mataka that the Shenandoah Valley School District Board of Education award insurance bid to Nathan Lane Agency in the amount of $12,407.00, as recommended December 10 update #1" Roll Call — 6 yes — Mrs. Choplick, Mr. Griffin, Mrs. Mataka, Mrs. Mirocke, Mrs. Putalonis, Mrs. Sterner, abstain — Mr. Kurtz, absentees — Mrs. Carduff, Ms. Joyce. 28. Adam Kurtz participated in the review and discussion of insurance proposals for the 2000 calendar year insurance in his official capacity as a SVSB member. a. Kurtz participated in the review and discussions of the quotes but abstained on the vote to award the insurance package to Nathan Lane Co. 29. Adam Kurtz made no public disclosure regarding his familial relationship to Bolich & Burke, Inc., while insurance proposals from Bolich & Burke were before the board for consideration. 30. The district insurance for the 2001 calendar year was handled in the same manner as previous years. a. Legal ads were run in the Evening Herald and Hazleton Standard Speaker on November 29, 2000, December 4, 2001 [sic], and December 11, 2000. b. Bid packets were provided to interested parties upon request. 31. Sealed bids were received from the Nathan Lane Agency, 545 Goffle Road, Wyckoff, NJ, and Bolich & Burke, Inc., 1 South Main Street, Shenandoah, PA. 32. The SVSD used the same quotation form for insurance for the 2001 coverage as it had Kurtz 01- 028 -C2 Page 6 in prior years. a. The district did not state any desire to buy coverages from multiple companies for the 2001 insurance. b. Prices quoted per coverage area are based on purchasing the entire package. Individual rates per coverage area may be higher if purchased individually. 33. On December 6, 2000, Adam Kurtz participated in board action and vote which passed 7 -0, with two members absent to extend the deadline for insurance quotes to be received by the school district from December 6, 2000, until December 15, 2000. a. The request for the extension was made by school district business manager Thomas Kowalonek. 34. The SVSB held a special meeting on December 18, 2000, to open and review insurance bids for the 2001 calendar year. a. Adam Kurtz was present for the bid opening and participated in the review process. b. Bolich & Burke, Inc., was one of the competing companies for the district's insurance coverage. c. Adam Kurtz did not recuse himself from the review process. d. District Solicitor Michael O'Pake was not present for this meeting. 35. Business Manager Kowalonek reviewed both bids submitted and determined that each met at least the minimum coverage amounts. a. The Nathan Lane Agency bid was in the amount of $15,773.00. b. The Bolich & Burke, Inc., bid was in the amount of $21,028.00. c. Both companies bid at least the same minimum coverages. 36. Bolich & Burke, Inc., and the Nathan Lane Agency each submitted a "quotation form for insurance" to the district using quote forms prepared by the district. a. Bolich & Burke itemized premium costs for each of the five line item categories plus a cumulative total. b. The Nathan Lane bid did not itemize premium costs for each line item. A cumulative bid total with all categories included as a package deal was submitted. 1. This was the same format accepted by the district for the 2000 insurance coverage without question. c. The district had no intention of splitting coverages between companies. 37. Minutes from the board's December 18, 2000, special meeting include discussion regarding the bids received from both Nathan Lane, ($15,773), and Bolich & Burke, ($21,028). a. Board members Joyce, Choplick, Carduff and Mirocke questioned Business Kurtz 01- 028 -C2 Page 7 Manager Kowalonek and Superintendent Rakowsky about the bids and any difference in them. b. Regina Kurtz spoke before the board explaining that a free appraisal was included with her insurance. c. Business manager Kowalonek explained to the board that The Nathan Lane Agency bid did not include an appraisal, they were using stated values which the district provided them. d. An appraisal was not a bid requirement. e. Adam Kurtz participated in this discussion. f. Board Member Choplick directed that the bids be passed around for all of the members to review. 38. After the bids were distributed to board members, Choplick requested that the board go into executive session to discuss the bids. a. Adam Kurtz participated in this executive session discussion. b. Solicitor O'Pake was not present for this meeting. 39. During the executive session, Board Member Choplick lobbied the board to have Nathan Lane's bid eliminated. a. Adam Kurtz was present during this time. b. Board Member Choplick noted to the other board members that Nathan Lane's bid quotation did not include an itemized breakdown for all five coverage areas individually just a complete all encompassing total. c. Choplick asked Superintendent Rakowsky if the bid (Nathan Lane) had to be considered since the cover sheet was not itemized as to cost for each coverage. d. Rakowsky informed the members that a vote would have to occur for coverage to be awarded to anyone. e. Adam Kurtz added supportive comments for Bolich & Burke. f. At the conclusion of the executive session, Superintendent Rakowsky informed the board in public session that if they have a motion and five affirmative votes they could name an insurance carrier for the 2001 insurance. 40. Immediately after Rakowsky's comments the board took the following action during the December 18, 2000, meeting to award the insurance contract. Moved by Gerald Griffin and seconded by Jean Joyce that the Shenandoah Valley School District, Board of Education AWARD 20001 [sic] Insurance Bid for property, casualty, fire, liability, business /auto, boiler & machinery, umbrella submitted by Bolich & Burke at a cost of $21,028. Roll CaII: 4 — yes — Mrs. Choplick, Mr. Griffin, Ms. Joyce, Ms. Matakall abstain — Mr. Kurtzl2 no — Mrs. Carduff, Mrs. Mi roc kel2 absentees — Mrs. Putolonis, Mrs. Sterner. Kurtz 01- 028 -C2 Page 8 a. This motion failed since the board did not have five (5) affirmative votes necessary to approve the motion. 41. No consideration was given by the SVSB to the Nathan Lane bid during the meeting even though it was $5,255.00 lower than Bolich & Burke's bid. 42. Immediately after the failed vote to award the insurance to Bolich & Burke on December 18, 2000, the following discussion occurred on the insurance quote: Dr. Rakowsky — Need five to pass, your [sic] spending monies, that's one of the parts of the code that says you have to have majority of the board to spend this. Majority of the board is five, not of the majority of the quorum present. Mrs. Choplick — Mr. Kurtz cant vote. Dr. Rakowsky — No, I don't think he should. Mr. Kurtz — What? Dr. Rakowsky — Mrs. Choplick is saying whether you should vote, I said he can, but it's best what you did. Mr. Kurtz — That I vote? Dr. Rakowsky — No. Mrs. Choplick — No don't vote. Mrs. Carduff — We'II put in on the next meetin. Mrs. Choplick — When does this have to be in? Dr. Rakowsky — What has to be done right at this point, we're assuming that the record should show that the motion failed does not garner the five necessary votes. That being the case and the insurance is going out on the 30 of December, you can have Mr. Kowalonek review the materials and approve retroactive at the next meeting. Ms. Joyce — Question, why can't Mr. Kurtz vote? Dr. Rakowsky — He can vote, but it will be ill advised, I'm not sure it would be illegal, but would be ill advised to do it. Mr. Kurtz — I made my vote. Dr. Rakowsky — We're just responding what Ms. Joyce said. Mr. Kurtz — Did you vote no? Mrs. Carduff — Yes. Mrs. Choplick — Barbara voted no. Dr. Rakowsky — I'll tell you what we will have to do is research with Atty. O'Pake. Mrs. Choplick — I think we should[.] Dr. Rakowsky — That's all we can do, I will get back to you, and if he's in I'll have it in your update Friday. Mrs. Choplick — Ok, and when does this have to be in? Mr. Kowalonek — We have to have insurance come the beginning of next year, I don't know if our current carrier extend coverage without, I don't know, unfortunately I just don't know the answer. I just assume we would have insurance by the end of the year. Mr. Griffin — As of midnight New Year's Eve we have no insurance. Ms. Joyce — That's true. Dr. Rakowsky — Your [sic] getting into a tough time of year to have a meeting, people going away, and everything else, we could have the information probably if Atty. O'Pake if we can make connection there by Friday, and then your [sic] looking at the schedule next week Christmas being Monday. Mrs. Choplick — Why can't we have Atty. O'Pake, find out from Atty. O'Pake sooner? Dr. Rakowsky — I'll call him first thing tomorrow morning. Mrs. Choplick — Yes, and I will too. Dr. Rakowsky — We will call tomorrow, if you have another meeting we need a three day turn around for a meeting. Mrs. Choplick — I know, but we could have one Friday. Dr. Rakowsky — I we can get that tomorrow, yes, it's possible, I won't be here Friday, but that's ok, I'm going to be out of the area. You can have a meeting next week, Tuesday. Kurtz 01- 028 -C2 Page 9 Mrs. Mataka — Tuesday, it will still be December. Mrs. Choplick — Yes, we will see what Atty O'Pake says and then we will go on from there, we will call a special meeting. 43. The meeting of December 18, 2000, concluded with no action being taken to award the insurance package. a. A special meeting was scheduled for December 27, 2000. 44. Solicitor O'Pake was contacted by Superintendent Rakowsky and requested to attend another special meeting on the insurance bids scheduled for December 27, 2000. 45. A second special meeting to discuss the insurance bids was held on December 27, 2000. Solicitor Michael O'Pake was present for this meeting. a. Adam Kurtz was present and participated in the discussions on the bids at this meeting. 46. During the December 27, 2000, meeting, an Executive Session was held to discuss the insurance bids. a. At the conclusion of this Executive Session, Solicitor O'Pake rendered an opinion that "Nathan Lane Agency did not meet the advertised specifications for the district's 2000 (calendar year 2001) insurance package. Therefore, the directors could only consider the Bolich & Burke bid." 47. The basis for O'Pake's opinion that Nathan Lane's bid did not meet specifications was that Nathan Lane's bid cover sheet did not provide a line item breakdown of costs per category. 48. Following O'Pake's opinion regarding the Nathan Lane Agency bid, the following action occurred awarding the bid to Bolich & Burke, Inc. on December 27, 2000. a. Dr. Rakowsky proceeded with the action item noting that since Bolich & Burke, Inc., (B &BI) was the only bid to be considered, a motion to appoint B &BI as the District's insurance carrier for 2001 would be needed followed by five (5) affirmative votes of those directors present. b. It was then moved by Mrs. Choplick and seconded by Ms. Joyce that B &BI be named as S.V.S.D.'s insurance broker for 2001 for a total premium of $21,028. c. Following the motion, Dr. Rakowsky began the roll call: Mrs. Carduff /absent; Mrs. Choplick/Aye; Mr. Griffin /Aye; Ms. Joyce /Aye; Mr. Kurtz/ - asked that his vote be delayed until all other directors present had voted. Mrs. Mataka/Aye; Mrs. Mirocke /Nay; Mrs. Putalonis /absent; Mrs. Sterner /Nay. (4 aye, 2 nay) 1. Based on opinion of Solicitor O'Pake, Kurtz's request was granted. d. Dr. Rakowsky returned to Mr. Kurtz and invited him to cast his vote. e. Prior to voting Mr. Kurtz read the following prepared statement: "1 made an ethical disclosure stating that the person 1 am voting for is my family member, my wife, because without the insurance the district is unprotected (no insurance). 1 asked the solicitor, Attorney Michael O'Pake, of the legality of my voting. He stated that I can vote for Bolich & Burke, Inc., and my vote is in accord and within the ethics code in Pennsylvania." Kurtz 01- 028 -C2 Page 10 f. Adam Kurtz cast the fifth and deciding vote to award the insurance to Bolich & Burke. 49. Mr. Kurtz cast his vote for Bolich & Burke, Inc., following which Dr. Rakowsky announced the tally of the voting. a. Bolich & Burke, Inc., (5) votes in the affirmative, two (2) votes against, two (2) directors not casting votes due to being absent from the meeting. Based on compliance with Section 508 of the Pennsylvania School Code, inasmuch as Bolich & Burke, Inc., had received five (5) affirmative votes, Dr. Rakowsky stated that Bolich & Burke, Inc., would be the District's insurance carrier for 2001. 50. Neither Adam Kurtz nor Solicitor O'Pake contacted the State Ethics Commission for advice relative to Adam Kurtz voting on the insurance contract. 51. O'Pake did not research the State Ethics Act prior to rendering his advice to Kurtz. a. Solicitor O'Pake was not aware that Section 1103(j) of the State Ethics Act dealing with voting deadlocks was not applicable to nine (9) member boards such as a school board. 52. At the time Solicitor O'Pake ruled that Nathan Lane's bid did not entirely meet specifications, he was unaware that the board accepted a bid from Nathan Lane for 2000 calendar year insurance in the exact same format. a. O'Pake would not have reviewed Nathan Lane's bid unless directed to do so by the board. b. Nathan Lane's bid was brought to O'Pake's attention as a reason to disqualify their bid. 53. Adam Kurtz cast the deciding vote to award the insurance contract to Bolich & Burke, Inc. during the December 27, 2000, meeting of the school board. 54. Bolich & Burke, Inc., invoiced the Shenandoah Valley School District for insurance for the 2001 calendar year on or about January 1, 2001. a. Three (3) invoices were submitted in the following amounts: PolicyNo. ZE1901 I N P D2429712 -3 I N P D2429712 -3 Coverage Tyke Excess Liability Add'I Premium — Drivers ED Package Police Total Premium $ 3,000.00 $ 530.00 $ 18 028.00 $ 21,558.00 55. The additional premium invoiced in the amount of $530.00 was for a new drivers education car which the district did not include in the vehicle listings on the actual bid specifications. a. No separate board action occurred on this amount. b. The board approved insurance totaling $21,028.00 from Bolich & Burke, Inc., on December 27, 2000. No modification was made to the total to accommodate the additional vehicle. 56. These invoices generated district voucher number 024167 in the amount of Kurtz 01- 028 -C2 Page 11 $21,558.00 which was issued to Bolich & Burke, Inc., on January 23, 2001. 57. The SVSD payment to Bolich & Burke, Inc., for calendar year 2001 insurance was included as part of the district's monthly bill lists. a. Bill lists are voted on in their entirety by a single motion. b. Bill lists are distributed to board members as part of meeting packets several days prior to their meeting. c. The payment was approved during the board's March 7, 2001, meeting. d. Adam Kurtz abstained from the board action approving the bill list. e. This approval occurred almost six (6) weeks after the check was issued. 1. The payment was deemed authorized once the contract was approved on December 27, 2000. 58. SVSD check no. 024167 in the amount of $21,558.00 was deposited into the business account of Bolich & Burke, Inc., maintained at Merchants Bank/Leesport Bank on January 25, 2001. a. This account is in the sole control of Regina Kurtz. 59. Account activity during the time Bolich & Burke, Inc., insurance bid for 2001 was being considered by the SVSD reflects funds being shifted between that account and personal accounts jointly held by Regina and Adam as follows: a. Check numbers 150 dated December 13, 2000, in the amount of $525.00 and 152 dated December 21, 2000, in the amount of $600.00 were issued from a jointly held personal account and deposited into the business account of Bolich & Burke, Inc. b. A jointly held personal [sic] received three (3) check numbers 4063, 4093 and 4150 from the business account of Bolich & Burke, Inc., as follows: Check No. Date Amount 4060 11/03/00 $ 342.05 4093 12/01/00 $ 342.05 4150 01/26/01 $ ... [332.02] Total $ 1,066.12 [sic] 60. Bolich & Burke check number 4150 in the amount of $382.02 was deposited into Adam and Regina Kurtz' s personal account one day after Regina Kurtz deposited the district's insurance payment into the business account. 61. Bolich & Burke, Inc., received sales commissions as a result of insurance sold to the district. a. Any commissions earned are deducted from the amount invoiced to Bolich & Burke, Inc., from the insuring company. b. Commissions are actually paid directly to Bolich & Burke, Inc., by the customer. c. Commission amounts are included as part of the customers premium invoice total but are not specified. Invoice Company Coverage Premium Commission 02/06/01 $ 13,233.60 PSBA Inrust 3766 02/06/01 01/14/01 Swett & Crawford PSBA w/o School Board $ 3,000.00 $ 300.00 01/31/01 PSBA Property Casualty $ 16,542.00 $ 3,308.40 01/31/01 PSBA Fire Loss $ 1,486.00 Included 02/08/01 PSBA Property Casualty $ 530.00 $ 106.00 Total $ 21,558.00 $ 3,714.40 Check No. Date Amount Pa ee 3764 02/06/01 $ 13,233.60 PSBA Inrust 3766 02/06/01 $ 1,486.00 PSBA Ins. Trust 3770 02/09/01 $ 424.00 PSBA Ins. Trust 3772 02/12/01 $ 2,700.00 Swett & Crawford Total $ 17,843.60 Kurtz 01- 028 -C2 Page 12 62. Business records of Bolich & Burke, Inc., confirm that they were [sic] invoiced by both the Pennsylvania School Board Association, Inc., 774 Limekiln Road, New Columbia, PA 17070 -23 -9, 800 - 932 -0588, and Swett & Crawford, Jenkintown, PA 19046, (215) 576 -1500 for insurance coverages sold to Shenandoah Valley. B &B, Inc. [sic] a. These invoices reflect stated total premiums and commissions earned. b. Commission amounts were deducted from the amount required to be paid by B &B, Inc., to the insuring companies. 63. B &B, Inc. received the following vendor invoices which confirm premium costs and commissions. 64. Bolich & Burke invoiced the SVSD the total premium amounts listed in finding No. 82 [sic]. a. The stated commission amounts were deducted as part of payments made by Bolich & Burke to the insuring companies. b. Bolich & Burke, Inc., issued a total of four checks to purchase the insurance; one for each invoice listed above. These checks were in the amount of premium amounts minus any commission. c. Checks were issued as follows: d. All four checks were drafted on Bolich & Burke, Inc.'s, Merchant Bank Account and signed by Regina Kurtz on behalf of Bolich & Burke, Inc. 65. Bolich & Burke, Inc., received total commissions of $3,714.40 as the result of the sale of insurance to the Shenandoah Valley School District for calendar year 2001. III. DISCUSSION: Respondent Adam Kurtz (also referred to herein as "Respondent" or "Kurtz ") was at all times relevant to these proceedings a public official subject to the provisions of the Public Official and Employee Ethics Law, Act 9 of 1989, Pamphlet Law 26, 65 P.S. § 401, et seq., as codified by the Public Official and Employee Ethics Act, Act 93 of 1998, Chapter 11, 65 Pa.C.S. § 1101 et seq., which Acts are referred to herein as the "Ethics Act." Kurtz 01- 028 -C2 Page 13 The allegation is that Kurtz, in his capacity as a member of the Shenandoah Valley School District Board of Directors, violated Section 1103(a) of the Ethics Act when he used the authority of his office for the private pecuniary benefit of himself and /or a member of his immediate family and a business with which a member of his immediate family is associated by participating in discussions and actions of the school board of directors, including casting the deciding vote to award an insurance contract to a business owned by his wife. Pursuant to Section 1103(a) of the Ethics Act, a public official /public employee is prohibited from engaging in conduct that constitutes a conflict of interest. Section 1103(a) of the Ethics Act provides: § 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 pertaining to conflicts of interest are defined in the Ethics Act as follows: § 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. Section 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 employee himself, any member of his immediate family, or a business with which he or a member of his immediate family is associated. As noted above, the parties have submitted a Consent Agreement and Stipulation of Findings. The parties' Stipulated Findings are reproduced above as the Findings of this Commission. We shall now summarize the relevant facts as stipulated by the parties. Respondent has served as a Member of the Shenandoah Valley School Board of Directors (SVSB) from approximately December 1995 to the present. This case pertains to Respondent's actions as a SVSB Member with regard to the purchase of insurance through " Bolich & Burke, Inc." (also referred to herein as "Bolich & Burke "), a business with which both Kurtz 01- 028 -C2 Page 14 Respondent and Respondent's spouse are associated. Respondent's spouse, Regina Kurtz, is president of the corporation and operates the business on a daily basis. Respondent is the company vice - president, although he describes his status as "inactive." The Shenandoah Valley School District (SVSD) solicits bids for its insurance coverage every year. During Respondent's tenure on the Board, the SVSD has used the same process for bidding the insurance coverage. The bidding process requires, inter alia, that each bidder complete and submit a particular quotation form, created by the SVSD, which separates the district's coverages into five line items. An annual premium for each category is requested along with a total quote. However, the parties have stipulated that the SVSD has used a single insurance carrier for all five coverage areas since at least 1995, and that for the time periods under review, the SVSD had no intention of splitting the insurance among multiple carriers. Our review of Respondent's conduct begins in December of 1999, when three insurance bids had been received by the SVSB for the 2000 calendar year. The three bidders were Nathan Lane Agency, Inc. (also referred to herein as "Nathan Lane "); Willis Corroon Corporation of PA; and Bolich & Burke, Inc. Of the three bids, Nathan Lane's total bid was the lowest, and Bolich & Burke's total bid was the highest. However, Nathan Lane's bid deviated from the SVSD's bidding requirements in one significant respect: the quotation form did not include an itemized breakdown of premium amounts for each category. Both of the other bidders did include such an itemization. Nevertheless, in 1999, no questions or concerns were raised by any Board Member regarding any of the bids. The bid format used by Nathan Lane Agency, Inc. was accepted by the Board as a valid bid for the 2000 insurance coverage. The insurance package was in fact awarded by the SVSB to Nathan Lane Agency, Inc. at the Board's December 15, 1999, meeting. Respondent attended the meeting and participated in the review and discussion of the insurance proposals in his official capacity as a SVSB member. Respondent made no public disclosure regarding his relationship to Bolich & Burke, Inc. while insurance proposals from Bolich & Burke were before the Board for consideration. Respondent abstained from the vote awarding the insurance package to Nathan Lane Agency, Inc. The following year, 2000, the bidding process for the 2001 calendar year insurance was the same as in prior years. Only two bids were received, specifically from Nathan Lane Agency, Inc. and Bolich & Burke, Inc. The Nathan Lane bid was in the total amount of $15,773.00. The Bolich & Burke bid was in the total amount of $21,028.00. As in the prior year, Bolich & Burke itemized premium costs for each of the five line item categories and provided a cumulative total. As in the prior year, Nathan Lane did not do any itemization of premium costs for the five line item categories, but rather, gave only a total figure. This same format had been accepted without question by the SVSD as to the Nathan Lane bid for the 2000 insurance coverage. Respondent initially participated in the matter of the 2001 insurance coverage by participating in board action and a 7 -0 vote on December 6, 2000, to extend the deadline for insurance quotes from December 6, 2000, until December 15, 2000. We note that the record does not reflect any request by Bolich & Burke for the extension. Rather, the extension was requested by the SVSD Business Manager, Thomas Kowalonek. The SVSB then held a special meeting on December 18, 2000, to open and review insurance bids for the 2001 calendar year. The SVSD Solicitor, Michael O'Pake, was not present at this meeting. Respondent was present, and he participated in the review process. Minutes from the December 18, 2000, special meeting include discussion regarding the bids received from both Nathan Lane and Bolich & Burke, Inc., as set forth in Finding 37. Regina Kurtz spoke before the Board. Respondent participated in the discussion. Thereafter, the Board went into executive session to discuss the bids. During the Kurtz 01- 028 -C2 Page 15 executive session, Board Member Choplick lobbied the board to have Nathan Lane's bid eliminated. Respondent was present during this time. Board Member Choplick noted that Nathan Lane's bid quotation did not include an itemized breakdown for all five coverage areas individually, but rather, only a total. Respondent participated in the executive session discussion, adding supportive comments for Bolich & Burke, Inc. Following the executive session, the Board reconvened in public session, and a motion was made and seconded (by Board Members other than Respondent) that the SVSB award the 2001 insurance contract to Bolich & Burke, Inc., at a cost of $21,028. Four Board Members voted in favor of the motion, two voted against the motion, two were absent, and Respondent abstained from the vote. The motion failed because the Board did not have the five affirmative votes needed to approve the motion. Discussion then occurred, as set forth in Finding 42, which discussion included comments by Board Member Choplick and Superintendent Rakowsky to the effect that Respondent should not vote on the matter. It was determined that the Solicitor would be consulted and that the Board would schedule a special meeting prior to the end of the year. The meeting of December 18, 2000, concluded with no award having been made as to the insurance coverage. On December 27, 2000, a second special meeting was held as to the insurance coverage. Solicitor O'Pake was present for this meeting. Respondent was also present, and Respondent participated in the discussions on the bids at this meeting. During the meeting, Solicitor O'Pake rendered an opinion that Nathan Lane did not meet the advertised specifications for the SVSD's 2000 (calendar year 2001) insurance package, and that the directors could therefore only consider the bid from Bolich & Burke. The basis for Solicitor O'Pake's opinion was that Nathan Lane's quotation form did not provide a line item breakdown of costs per category. The parties have stipulated that at the time Solicitor O'Pake stated his opinion, he was not aware that the Board had accepted a bid from Nathan Lane for the 2000 calendar year insurance that was in the exact same format. A motion was made and seconded (by Board Members other than Respondent) that Bolich & Burke, Inc., be named as SVSD's insurance broker for 2001 fora total premium of $21,028. A roll call vote was taken. When Respondent's name was called, Respondent asked that his vote be delayed until all other directors present had voted. The initial votes cast resulted in 4 Board Members in favor and 2 Board Members opposed to the motion. Superintendent Rakowsky then returned to Respondent and invited him to cast his vote. Prior to voting, Respondent read the following prepared statement: "1 made an ethical disclosure stating that the person 1 am voting for is my family member, my wife, because without the insurance the district is unprotected (no insurance). 1 asked the solicitor, Attorney Michael O'Pake, of the legality of my voting. He stated that l can vote for Bolich & Burke, Inc., and my vote is in accord and within the ethics code in Pennsylvania." Respondent then cast the fifth and deciding vote to award the insurance to Bolich & Burke, Inc. The parties have stipulated that at the time the Solicitor rendered his advice to Respondent, the Solicitor lacked knowledge as to certain points of law under the Ethics Act. Further, neither Respondent nor Solicitor O'Pake had requested an advisory from this Commission regarding Respondent's participation in the matter of the SVSD's insurance coverage. The SVSD paid for the insurance, which payment was approved during the SVSB's March 7, 2001, meeting, as part of the monthly bill list. Respondent abstained from the Board's action approving the bill list. The parties have factually stipulated to the deposit of the SVSD's payment into the Bolich & Burke, Inc., business account controlled by Respondent's wife, and various transfers Kurtz 01- 028 -C2 Page 16 of funds between that account and personal accounts held jointly by Respondent and his wife. Finally, the parties have stipulated that Bolich & Burke, Inc., received total commissions of $3,714.40 as the result of the sale of insurance to the Shenandoah Valley School District for calendar year 2001. Having highlighted the Stipulated Findings and issues before us, we shall now apply the Ethics Act to determine the proper disposition of this case. The parties' Consent Agreement sets forth a proposed resolution of the allegations. The Consent Agreement proposes that this Commission find that an unintentional violation of Section 1103(a of the Ethics Act occurred as to Respondent Kurtz's actions in relation to participating in iscussions and actions of the School Board of Directors, including casting the deciding vote to award an insurance contract to a business owned by his wife, which actions were taken based upon the advice of the School Board Solicitor. Further, per the Consent Agreement, Respondent has agreed to make payment in the amount of $3,700 to the Commonwealth of Pennsylvania through this Commission within 30 days of the issuance of the final adjudication in this case, in settlement of this matter. In considering the parties' proposal, it is clear that Respondent Kurtz violated Section 1103(a) of the Ethics Act when he participated in discussions and actions of the SVSB relating to the purchase of insurance when Bolich & Burke, Inc., a business with which both Respondent and his wife are associated, was one of the bidders. Respondent had a clear conflict of interest and should have abstained fully from participation. However, Respondent participated in the SVSB's review of the proposals in both 1999 and 2000, and in 2000, Respondent cast the deciding vote to award the insurance package to Bolich & Burke, Inc. Such actions were taken by Respondent in his public capacity as a SVSB Member, and constituted uses of the authority of his public office. For the 2000 calendar year insurance coverage, Nathan Lane Agency, Inc., was the successful bidder. However, for the 2001 calendar year insurance coverage, as the direct result of Respondent's casting the deciding vote, a private pecuniary benefit in the nature of commissions resulted to Bolich & Burke, Inc. Each element of a violation of Section 1103(a) has been established. See, Kurtz, Order 1116; Gallen, Order 1198, aff'd., Gallen v. State Ethics Commission, No. 1497 C.D. 2001 (Pa. Cmwlth. August 9, 2002). Intent is not a requisite element for a violation of the Ethics Act. See, e.q., Yocabet v. State Ethics Commission, 531 A.2d 536 (Pa. Cmwlth. 1987) (holding that the township supervisor in that case violated Section 3(a) of the Ethics Act even if he did not intend to do so). Nevertheless, it would seem that the aforesaid violation was unintentional. Respondent's actions were based upon the advice of Solicitor O'Pake, who was under the mistaken impression that Respondent could participate as to the awarding of the insurance package to Bolich & Burke, Inc. without transgressing the Ethics Act. See, Findings 48, 50 -51. Based upon the above analysis, we agree with the parties that Respondent committed an unintentional violation of Section 1103(a ) of the Ethics Act when he participated in discussions and actions of the School Board of Directors, including casting the deciding vote to award an insurance contract to a business owned by his wife, which actions were taken based upon the advice of the School Board Solicitor. Finally, Respondent has agreed to make payment in the amount of $3,700 to the Commonwealth of Pennsylvania through this Commission in settlement of this matter. Based upon our review as reflected in the above analysis and the totality of the facts and circumstances, we accept the Consent Agreement submitted by the parties. Accordingly, Kurtz is directed to make payment in the amount of $3,700 payable to the Commonwealth of Pennsylvania through this Commission within 30 days of the date of mailing of this Order. Kurtz 01- 028 -C2 Page 17 Compliance with the foregoing will result in the closing of this case with no further action by this Commission. Noncompliance will result in the institution of an order enforcement action. IV. CONCLUSIONS OF LAW: 1. Adam Kurtz ( "Kurtz "), as a Member of the Shenandoah Valley School District Board of Directors, has at all times relevant to these proceedings 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." 2. Kurtz unintentionally violated Section 1103(a) of the Ethics Act when he articipated in discussions and actions of the Shenandoah Valley School District Board of Directors, including casting the deciding vote to award an insurance contract to a business owned by his wife, which actions were taken based upon the advice of the School Board Solicitor. In Re: Adam Kurtz ORDER NO. 1252 File Docket: 01- 028 -C2 Date Decided: 9/4/02 Date Mailed: 9/25/02 1. Adam Kurtz ( "Kurtz "), as a Member of the Shenandoah Valley School District Board of Directors, unintentionally violated Section 1103(a) of the Ethics Act when he participated in discussions and actions of the School Board of Directors, including casting the deciding vote to award an insurance contract to a business owned by his wife, which actions were taken based upon the advice of the School Board Solicitor. 2. Per the Consent Agreement of the parties, Kurtz is directed to make payment in the amount of $3,700 payable to the Commonwealth of Pennsylvania through this Commission within 30 days of the date of mailing of this Order. a. Compliance with the foregoing will result in the closing of this case with no further action by this Commission. b. Non - compliance will result in the institution of an order enforcement action. BY THE COMMISSION, Louis W. Fryman, Chair