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994 Catone
TRis adjudication is final and will be made available as a public document thirty days after issuance. However, reconsideration may be requested which will defer public release of this adjudication pending action on the request by the Commission. A request for reconsideration does not affect the finality of this adjudication. A reconsideration request must be received at this Commission within thirty days of issuance 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). The files in this case will remain confidential in accordance with Act 9 of 1989, 65 P.S. 5408(h). Any person who viola 'Ees confidentiality of the Ethics Law is guil of a misdemeanor subject to a fine of not move than $1,000 or imprisonment for not more than one year, 65 P.S. 5409(e). Confidentiality does not preclude discussing this case with an attorney at law: STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 In Re: John D. Catone File Docket: 93- 085 - C2 Date Decided: 12/7/95 Date Mailed: 12/15/95 Before: Daneen E. Reese; Chair Austin M. Lee, Vice Chair Roy W. Wilt Allan M. Rluger John R. Showers Rev. Joseph G. Quinn Boyd E. Wolff The Investigative Division of the State Ethics Commission conducted an investigation regarding a possible violation of the State Ethics Law, Act 9 of 1989, P.L. 26, 65 P.S. §401 gt sec. Written notice of tFie specific allegation(s) was served at the commencement of the investigation. A Findings Report was issued and served upon completion of the investigation which constituted the Complaint by the Investigation Division. An Answer was filed and a hearing was held. The record is complete. This adjudication of the Commission is hereby issued which sets forth the individual Allegations, Findings of Fact, Discussion, Conclusions of Law and Order. Catone, 93- 085 -C2 Page 2 I. ALLEGATION: That, John D. Catone, as a public official /public employee, in his capacity as an Assistant Deputy Chief of Staff for Operations and Administration for the Commonwealth of Pennsylvania, violated provisions of the State Ethics Act (Act 9 of 1989) when he utilized Commonwealth equipment for personal purposes; when he performed private work while on Commonwealth time; when he attempted to use confidential information obtained from his public position to further his private business interests; and when he solicited and received items of monetary value in return for the exercise of his official action and judgement in an effort to obtain contracts for a business with which he is associated. Section 3. Restricted Activities (a) No public official or public employee shall engage in conduct that constitutes a conflict of interest. 65 P.S. 5403(a). (c) No public official, public employee or nominee or candidate for public office shall solicit or accept, anything of monetary value, including a gift, loan, political contribution, reward, or promise of future employment based on any understanding of that public official, public employee or nominee that the vote, official action, or judgment of the public official or public employee or nominee or candidate for public office would be influenced thereby. 65 P.S. 5403(c). Section 2. Definitions "Conflict" or "conflict of interest." Use by a public official or public employee of the authority of his office or employment or any confidential information received through his holding public office or employment for the private pecuniary benefit of himself, a member of his immediate family or a business with which he or a member of his immediate family is associated. "Conflict" or "conflict of intereg£" does not include an action having a de minithis economic impact or which affects .4, to the sable 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 Catone, 93- 085 -C2 Page 3 a business with which he or a member of his immediate family is associated. 65 P.S. §402. II. FINDINGS: A. 1. Plea4jngs Mr. Catone was personally served with the letter advising him of the investigation on March 14, 1994, by the Director of Investigations. a. Service was made in the offices of the Director of Investigations of the State Ethics Commission. 2. John D. Governor February 3. Catone's Governor Catone served as Deputy Special Assistant to the of Pennsylvania from January 2, 1992 to 12, 1993. duties as Deputy Special Assistant to the included the following: a. Served as Trustee to the Pennsylvania Employees Benefit Trust Fund acting as liaison to the Governor's office. b. Reviewed cases presented to the Pennsylvania State Employees Retirement System. c. Meet with representatives of various state and federal agencies concerning the relocation of residents from the Centralia fire using state and federal funding. d. Performed' related functions as assigned. 4. Catone's office was located in Room 614C of the Main Capitol Building. 5. Catone held the position of President with NeuroMetric Vision Systems (NMVS) [sic] of Fort Lauderdale, Florida. 6. NeuroMetric Vision Systems Hutcheson and his brother, market computer systems for and facial recognition. 7. Catone is a relative of Hamby Hutcheson's wife. 8. Catdne did not work on a full -time basis for NeuroMetric Vision Systems, Inc. is a company founded by Hamby Tim Hutcheson, to develop and the detection of bank check fraud Catone, 93- 085 -C2 Page 4 a. Catone [performed some] duties at NMVS [which] involved the development of contacts with members of the Federal Reserve Banking System. (1) Catone had contacts through previous - employment with the Pennsylvania Bar Association. b. Catone also participated in meetings of the company's board of directors. 9. Catone was also told that he would receive a salary once NeuroMetric Vision Systems received financial backing. 10. Catone received 11,111 shares of NMVS stock. a. Catone received 22,222 shares of stock. b. The advances of stock were made at the request of John Catone. 11. NeuroMetric Vision Systems records project that the President and CEO would be paid $6,000, a month, beginning in August of 1991. a. The documents also projected that the salary would be increased to $7,000, a month, in August of 1992. b. These project[ion]s were based on the company receiving financial backing. 12. Catone did not receive the projected salary. 13. In 1992, John Catone sought to receive additional compensation of NMVS. 14. Catone solicited additional income [from NVS] to supplement his Commonwealth salary. 15. On March 3, 1992, Catone sent a letter to Hamby and Tim Hutcheson titled "Various Items of Interest." The text of the letter provided as follows: I was talking to Albie yesterday and he said that Peipers was preparing a letter and sending another check for $50k. .,.Bill Clark also thought that if we accepted this check for $50k that we were pretty much tied into doing a deal with the NYC people. Among whatever else, Albie is affiliated with a company called Corporate Leasing, Inc. He Catone, 93- 08 -C2 Page 5 and I have discussed this company a couple of times in the 'last few days. He is sending me info on this company. The Commonwealth of Pennsylvania spends millions of dollars a year on leasing of all types of items. I had my interview with the Deputy Secretary of Health last week for the position over there. I will it and wait. I an also expecting to hear the results of my interview from last week with the Supreme Court and will keep both of you abreast. Tim, Hamby knows about this and I want you to know emphatically that this....in no way.... shades 'my goal of moving to Florida and becoming a full -time NVS player at the instant that move is possible for the company. While on this subject let me identify for you wfiat I do at present. I am the immediate and sole - subordinate to the Governor's Chief Counsel and Deputy Chief of Staff for Operations and Administration. If you think about THEIR two titles for a'moment, you can see the wide range of latitude of assignments that I receive. You can also perceive the great amount of ACCESS and INFLUENCE and ENTREE that I enjoy as a result of this affiliation. Currently, you are aware of one of my assignments regarding the mine fire...where my job is to coordinate the efforts of several state agencies, one federal agency, seven legislative offices and two Congressional offices on this $42M project. I am also management liaison to the Pennsylvania Employee Benefit Trust Funds," a $300 +M Fund that provides for the health and welfare benefits of 77,000 active state employees and 55,000 retired state employees. Obviously, this subject matter is very timely. As another example, I am the Governor's point man on an assignment that will hopefully result in the USPS's location of a mail facility in Harrisburg, one in`York and one in Catone, 93- 085 -C2 Page 6 Scranton. There is considerable diplomacy used in a quid pro quo manner here. I sit on the Board of Directors of. Rutherford House, a senior citizens center in Harrisburg. The governor is /has appointed me to the Council of Trustees of my elm* matter, Edinboro University of Pennsylvania •... near Erie, Pennsylvania. The letter contained the signature of John. 16. By letter 4ated March 12, 1992, Catone wrote, the following to Hamby and Tim Hutcheson: Gentlemen: This letter is a follow -up to my note of yesterday and to a telephone discussion that I have had with each of you. I would first point out, emphatically, that I wish to join NVS, full -time in Florida ASAP. In the interim, you both know that I recently secured a position in the Office of the Governor. Within in the past few days, I have been offered two other positions ( I had previously interviewed for them) -- one as the Administrator of the Supreme Court's Disciplinary Board ( Not a state job) and the other, as Director, State Health Data Center in the Pennsylvania Department of Health. Both of these positions pay significantly more than Oy present position. The administrator is about 14k more and the Director position is about 18.5k' more. If NVS did not exist, my choice would be easy. However, given NMVS and my position in NVS, I felt that I should open this matter up to the two of you for discussion. I am proposing that I remain in my present position as a Special Assistant to the Governor and that NVS pay me x amount per month until such time that I can join NVS in a full-time capacity. ;atone, 93- 085 -C2 page 7 The following is some reasoning /rationale for this request: 1. The work that I presently do on behalf,of WETS and the work I have done in the past on behalf of NVS. Other factors: 2. The ACCE: 'SS AND INFLUENCE that I can attract on befa,,f of_ NVS, its investors, friends, etc. can be much more easily secured from my cuiirent position... than either of tie other two. ;would like to emphasize this point. Presently, I can open a lot of ,doors from the "level" of my present position. For example, access that I can gain into the U.S. Congress, access to' the City of Philadelphia on behalf of Corporate Leasing, Inc. (I have previously briefed both of you on this.) Another example is that I just left a one -on- one meeting in the Governor's Conference Room (which impresses people) with a lady who is a member of the Board of Governors of the United States Postal Service. There is a quid pro quo between the state and the USPS that I am brokering which requires me to move the bureaucracy in the DOT. In any case, I cite this as an example because this woman is one of seven members of the Board of Governors of USPS and will serve through December 1998...She may be of help to us in the future. And the point is that, if I were NOT in my present position, I would have never made this connection. Another thing is that I have an office on the fifth floor of the Capitol and my supervisors are on the second floor...I am also the only one in my suite who works for the Gov...hence, to a great extent I can come and go as I please and I have already used this privilege to the benefit of NVS. 1. Unrestricted use of a PC and a printer. 2. US -wide telephone calls at no expense to the NVS. Catone, 93- 085 -C2 Page 8 3. US -wide telephone three -party calling at no expense to NVS. 4. Stationary, paper, envelopes at no expense to NVS. 5. Postage at no expense to NVS. 6. Fax.transmission /reception at no expense to NVS. As you can image, not any offices in government would allow this. Since arriving here on January 2, the Governor has appointed me to the Council of Trustees of Edinboro University of Pennsylvania...as a Trustee to the Pennsylvania Employee Benefit Trust Fund, a 300 million dollar Trust Fund...and to the Capital Area Labor /Management Council. While sitting on these Boards, I am accruing knowledge and gaining an education that can have a direct /indirect benefit to NVS now, and in the future. If I leave, I would have to resign from them. Unfortunately, my only compensation is actual expense. As another' example, I tract my time during the course of a normal business yesterday, and I spent 2 hours and 45 minutes on NVS business...and I submit that I could not do that elsewhere. My abilities to do this is a combination of ... (Sentence Incomplete) I think that both of, you get the idea. I want you to know that tone is cordial and polite and appreciative. And I know that the financial situation of the company will be a large part of your consideration. Please also _ know that, as more good faith to the two of you and NVS that I do not expect NVS make up the complete difference of 14k to 18.5k. Perhaps, in the future, this may be a possibility, but I understand our present financial situation. ---As part of your consideration, please that my present boss has agreed to sweeten my present,,ra of compensation, by $2,000 fo% the balance of this year, effective immediately. Catone; 93- 083 -C2 Page 9 Of course, I would be happy to discuss this matter with you. Cordially, John D. Catone 17. By letter dated March 27, 1992, Catone again wrote to the Hutcheeons. The letter provided, in part, the following: Tim arid' Hamby: Ads' you know, I mitt with Albie last Sunday in New York. He then presented me with background info on a company called Bedminster Bioconversion Corporation of New Jersey (info enclosed). This company deals with commercial composting. As you can see, Peipers is Chairman of the Board. THIS PIQUED MY INTEREST...and sent my antenna up... thinking that here we have a corporate interest of direct concern to Peipers himself... and my /our serving the best interests of this corporation should only yield positive things to NVS. Subsequently, I had a conference call with Peipers, Albie and I and we discussed this company...a problem they were having with the Northeast Governors Conference...othe r governmental concerns...and the good of the company. After they made their presentations, I summed up what I thought I could do for them in the short and long range... and Peipers seemed extremely impressed. Gentlemen, please note that this is another way that I can serve our company while occupying my present position...for the good of the three of us. This one will take some time...but I have already begun. I am working, to varying degrees, as 'a follow- -J up on all of these matters in my effobt tb keep everyone happy and to allow NVS to "reap the benefits, therefrom. Catone, 93- 085 -C2 Page 10 Please know that I have assigned a high priority to the commercial composting, given that Peipers is directly involved. Typed at the end was "John Catone." 18. [John Catone] use [d] the [Commonwealth] telephone [system] to engage in long distant telephone calls with Ti m and Hamby Hutcheson, NVS Attorney William Clark and financial backer Albert Myers. a. The fax machine located in the Press Office of the Governor ([717] 783- 1396) was utilized to send fax transmissions to NVS. 19. John Catone utilized the fax machine in the Office of the Governor to send a letter to Tim and Hamby Hutcheson on June 30, 1992. The letter contains the following information at the top which indicates it was faxed: "06 -30 -1992 11:52 717- 783 -1396 Press Office /PA. Gov. P.01" To Tim + Hamby 305/972 -0197 Fr: JDC Briefing Status Burr and NYC (Albie, David, Bedminster el al) As you knot', several weeks ago; I met with the principals of BURR. Ostensibly, this meeting with td discuss the possibility of business in Peny1,ttania and how it can be secured. In Each, the principal thrust of the meeting was the securing of abridge loan in the amount of $ # 060 from NYC...using me as a conduit. Subsequently, I have discussed this matter on several occasions with NYC and BURR. I have released to NYC, with the approval of BURR, BURR' s business plan, a proposal meet, and a brief status report on the action in the Caymais and a. newspaper article regarding some activity on behalf of BURR in Michigan. -.During my de=scussions with BURR, I, have: inquired as to what their reactjon would be if I able to negotiate something above aad•,beyotid with NYC--- BURR's reaction' Wes favorable Catone, g3-085-C2 Page-11 We= are now at this point have gone round and round with most parties and NYC is willing to talk to BURR about joint venturing and partial /full ( ?) funding- of the joint' venture as it relates to the Caymans, Michigan, etc. You should also know that NYC is not, repeat not...interested in carving out the 250k bridge and doing that solely. (As background, you should also- know that the people at BURR do not think highly, of the Bedminster technology...and that the people at Bedminster do not think highly of i URR's technology!) I have not communicated anything in the previous three paragraphs to BURR...but will do so shortly. Obviously, the next step in to put NYC and BURR in contact with each other. I WILL NOT do this until you have executed what we discussed yesterday. I have not identified the principals by NYC. Know that my deal with BURR is for 10% of the bridge. Know that my discussion with BURR beyond the bridge is some interest in stock, a directorship in case ... However, there (Letter ends) 20. Catone faxed a letter dated October 28, 1992, to Hamby Hutcheson using the fax machine in the Governor's Press Office which contains the following information: "10 -28 -1992 14:42 717 - 783 -1396 Press Office /PA Gov. P.01" 305/972 -0197 10/28 Hamby- As discussed this morning, use a "pseudonym" -'and contact: James Endsley 717/787 -9851 ask for specs on 92 -09 -01 To provide electronic authorization, data capture and processing of credit cards and Catone, 93- 085 -C2 Page 12 debit Bards in Pennsylvania Wine + Spirit Shoppes throughout PA. Duration: 5 years (3 + 2, one -year options) 21. Catone faxed a ;letter dated October B0, 1992, to Hamby Hutcheson using the fax machine in the Governor's Press Office: "10 -30 -1992 12:52 717- 783 -1396 Press Office /PA Gov. P.01" Hamby- 10/30 As Discussed yesterday have someone call the following: Arthur Florio 717/986 -4731 REF #SP176760 This is regarding appx. 1,000 Instant Ticket Vending Machines for the Bureau of State Lotteries, PA Department of Retenue. I am concerned about the timing. Please have someone call ASAP. JpC 22. On %Tune 3Q, 1992, William Clark, Attorney for NeuroMetric 1 ision Systems, faxed to Catone at (717) 783-3369, a four page agreement between Peipers and Company and NeuroMetric Vision Systems outlining Peipers and Company's financial investment is NeurpMetrics . a, Fax Number (717) 783 -3369 is to a fax machine located in the Governor's Office of the Budget. 23. Catone then faxed the document seat by Clark to NeuroMetric Vision Systems using fax machine number (7I7)' 783 -1396 in the Governor's Press Office. 24. In 1992,, Catone contacted Cheryl Kevish, Information Systems Manager for tlae Houses of Representatives., Democratic Callous, regarding the pncohase of NV..S' stook a. Kevish also maintained an office-In the' Room 614 complex. 25. Catone called mby Hutcheson., using his ofice phone, in Florida and back Huttc'.hes exglain the details of the proposed sale of NVS stook to Kevish.and her husband. Catone, 93- 085 -C2 Page 13 26. On July 16, 1992, in a letter addressed to John D. Catone, President, NeuroMetric Vision Systems, Inc., P.O. Box 163224, Miami, FL 33116 -3224, 1evish and her husband purchased 500 shares of stock for $5,000.00 and included a check for that amount. 27. During the summer and fall of 1992, Albert Myers provided Catone sums of money on the following dates: a . b. Check No: 4945 Pay To The Order For: Loan Account Number: Check No: 4986 Pay To The Order For: Advance Account Number: c. Check No: 5030 Pay To The Order For: Loan Account Number: e. Check No: 5154 Pay To The Order For: Advance - L Account Number: B. Stipulations Date: 7/20/92 Of: John Catone 067003985:4945 Date: 8/26/92 of: John Catone 067003985:4986 Date: 10/14/9[21 Of: John Catone 067003985:5030 d. Check No: 2802 Date: 11/12/92 Pay To The Order Of: John Catone For: Loan - Exchange Account Number: 067003985:2802 Date: 2/18/93 Of: John Catone oans 067003985:5154 Account Name: Albert B. Myers Amount: $1,000.00 Signature: Albert B. Myers 1196304998 Account Name: Albert B. Myers Amount: $1,000.00 Signature: Albert B. Myers 1196304998 Account Name: Albert B. Myers Amount: $1,000.00 Signature: Albert B. Myers 1196304998 Account Name: Albert B. Myers Amount: $5,000.00 Signature: Albert B. Myers 1595199873 Account Name: Albert B. Myers Amount: $1,000.00 Signature: Albert B. Myers 1196304998 28. On February 1, 1993, Catone turned over his 33,333 shares of NVS stock to Albert Myers. a. Catone and Myers assert that this was in return for the payments made by Myers to Catone as outlined in the Finding above. 29. Catone filed Statements of Financial Interests with the State Ethics Commission on May 8, 1993, for the 1992 calendar year. 30. Catone resigned his position with NVS on February 13, 1993. 31. Catone resigned his position as Deputy Special Assistant to the Governor February 12, 1993. 32. Mr. Catone never met with Governor Casey on any matter Catone, 93- 085 -C2 Page 14 33. Mr. Catone's work for James Brown consisted of reviewing appeal cases from the State Employees' Retirement System (SERS) for completeness and clarity and providing. Mr. Brown with an oral summary. Mr. Catone never made any personal recommendations to Mr. Brown. All recommendations were made by the SERS staff and were included in the case reports. Mr. Catone had authority to tell Mr. Brown that he did not agree with the SERS staff recommendation. 34. Mr. Catone was never assigned regular hours of employment, but he devoted an average of at least seven and one -half hours per day to Commonwealth business. 35. Mr. Catone had minimal working contact with James Haggarty. 36. Mr. Catone performed research and fact - finding functions for James Haggarty. Discussions with Mr. Haggarty concerned reporting the results of his research and fact - finding. 37. The Commonwealth office telephone number for John Tighe was 717 -787 -4450. 38. The Commonwealth office telephone number for Catone was 717 - 783 -1645. C. Testimony: 39. John Tighe III (Tighe) is currently an employee of Keystone Health Plan East. a. Tighe previously served as Deputy Chief of Staff for Operations and. Administration in the Governor's Office from 12/87 to 8/34. (1) The position of Deputy Chief of Staff and Secretary of Administration were also held by Tighe. h: Catone became employed by the Governor's Office in 1/92. (1) Tighe hired Catone as Deputy Special Assistant to the Governor. (2) Catone reported directly to Tighe. (a) The primary responsibility of Catone was assisting Tighe with the Pennsylvania Employee Benefit Trust Fund (PEBTF) . (bn) Catone also had responsibilities as to some specific projects of the General Counsel. Catone, 93- 085 -C2 Page 1.5 (3) As to the Centralia Mine Fire, Catone worked on the project with James Haggerty, the General Counsel, and with Tighe. (a) Catone. dealt with the volatile public situation resulting from the determinat4.031 that people had to leave Centralia for safety reasons. (4) Catone had involvement in locating a postal service facility in Pennsylvania. (5) PEBTF is a jointly administered trust fund to handle employee health benefits. (a) The management trustees represent the Commonwealth as Commonwealth employees. (b) Tighe needed a liaison to help him in his role as trustee. (1) A trustee has a fiduciary responsibility in the management of the fund. (2) Trustees have the power to hire /fire the management of the trust fund, to determine how money is spent, profit levels and investment policy (c) After Catone worked for Tighe for a few months, Catone was appointed as trustee to the fund around 3/92. (d) A travel voucher for Catone in 9/92 reflects involvement in a matter involving the merger of a group of unions into the fund. (e) Trustees have the authority to vote. (f) PEBTF is not part of the Commonwealth (6) Catone filed Financial Interest Statements (FIS's) (7) When Catone was hired by Tighe, Gatone's work in Tighe's office was intended to be temporary until Catone could be placed in the administration. (8) There was no formal job description for Catone. (9) Catone had no independent authority to mace decisions to bind Tighe while he worked in that office. Catone, 93- 085 -C2 Page 16 (10) Catone was an assistant to the Deputy Chief of Staff. (11) In 1992 there was a difference between PEBTF and the Pennsylvania Employees Health and Welfare .Paid (PEHWP) which handled ancillary health benefits. (a) Catone was not a trustee of PEHWF. (12) ,Catone was a full time Commonwealth employee with full benefits. 40. Carl Fonash pcna4h):has been employed by PEBTF as Executive Director from 38/93 to the present. a. Fonash has care, custody and control of the PEBTF records. ( 70 ,Exhibit 19 is photocopies of the PEBTF minutes from 3/92 through 1/93. f(2) ;. Fonash has served as a trustee of PEBTF. ja) The trustees inherited the basic health system from the Commonwealth. b. Catone was .a trustee when Fonash was a board trustee. (!1) ;fit a 11/92 meeting, Catone seconded a motion made by Fonash. c.. The Trust Fund Board selected providers /consultants. d. •Fonash's first contact with the Investigative Division of the SEC was -probably subsequent to 2/7/95. e. Employees of PEBTF do not file FIS's. f. Catone was .employed by PEBTF after his service on the Board of Trustees. (1) Catone wes terminated for cause by a Board Officer. . Willi,em H. ,Clark, Tr. (Clark) is a lawyer affiliated with the firm pf R1ett, 4L1eber, Rooney & ,Schorling. a. NeuroM Va., . Systems, -Inc. ' (NVS) is a client of the law .f (1) Clark performed various legal services for NVS. Catone, 93- 085 -C2 Page 17 (2) Hamby and Tim Hutcheson were officers of NVS. (3) Albert Myers acquired a financial interest in kilt. (4) Catone was an officer and shareholder in NVS. (5) James Kyne served as counsel for NVS: b. Clark sent by fax transmission a document concerning NVS to Catone to a fax number supplied by Catone. c. Exhibit 31 is photocopies of a fax cover letter with eight additional pages concerning NVS from the law firm to Catone on 6/19/92 to the fax number on the sheet. (1) A fax was sent on 6/25/92 with cover sheet and four pages relative to NVS from the law firm to Catone to the fax number indicated. (2) Another fax concerning NVS was received 11/13/92 by the law firm with a cover sheet of Press Office /Pa., 717- 783 -1396 on with four additional pages. (3) Another fax relative to NVS was received by the law firm consisting of a cover sheet and nine pages. d. Clark made telephone calls to Catone at his office in the Commonwealth. e. On more than one occasion, Clark asked Catone to fax a document to NVS in Florida because Clark was having trouble getting through. . Some of the telephone calls between Clark and Catone were during or after working hours. Clark believed Catone was an NVS officer who was to be compensated by stock. (1) Clark thought Catone had either the title of CEO or President of NVS. h. +Catone sold shares of his NVS stock to Myers. 42. Eamby Hutcheson is a resident of Miami, Florida. a. Hamby Hutcheson is oi:e of the founders of NVS. (2) Clark believed that the stock Catone received was for services going back to the early days of NVS, that is, for 1992 and prior years. Catone, 93- 085 -C2 Page 18 b. NVS was started by Hamby Hutcheson and his brother Timothy Hutcheson to do research in advanced check Processing systems. (1) Hamby Hutcheson's wife Marilyn was also involved in the start -up of NVS. c. Catone was retained as President and CEO of NVS in 1990. (1) Catone was to receive 11,111 shares of NVS stock for his services for each of three years, that is, a total of 33,332 shares. (2) From 1990 through, 1992, Catone's principal purpose was to act as a iiaison in government matters as to d the Federal Reserve and banking. (a) On a state level, Catone would have experience as to legislation and state banking laws. [1] Catone demonstrated knowing people,at the state level who write that type of law. d. Catone also purchased additional shares of NVS stock. e. Exhibit 24 is photocopies of the share re§istry for NVS. (1) Certificate 3 is 11,111 shares for Catone issued on 8/7/91. (2) Certificate 38 is 150 shares for Catone issued on 3/9/92. (3) Certificates 47 and 48, both for 11,111 shares, issued in 4/7/92 t� Catone. (4j. Certificates 59 and 60 for 25 shares and 60 [sic] shares respectively were bought by Catone on 6/1/92. f. NVS was interested in part in marketing in the government sector at the federal, state and local levels. g. Exhibit it is a photocopy of the NVS business plan in effect for 1/32. .+. (i) Marketing plans were for meetings, presentations and demonstrations with local, state and federal agencies. h. Exhibit 10 id d "private placement memorandum under an SEC - Florida rule for solicitation of investor cdsts. Catone, 93-- 085 -C2. Page 19 (1) The document was designed to solicit capital funds for NVS. j ' (a) Catone is identif.ed as: President /CEO /Board Chairman of NVS. i. Exhibit: 21 is photocopies Of the outline of- the objectives as to marketing plans. for NVS, Various- telephone conversations and written communications. occurred between- Hwy Hutcheson- and • Catone. k Exhibit. 25 is a photocopy of a letter f Cato to Hamby Hutcheson advising of Catone's CQmmor employment and other matters. (1) The letter references the millions of 4ollara spent by the. Commonwealth on leasing, other Commonwealth job possibilities for Catone, his position in the Governor's office with access /influence., thg breadth of his duties as to several state /federal agencies, legislative offices and PEBTF. (2) The letter contains Catone's signature. 1. Exhibit 26 is a photocopy of a fax that Hamby Hutcheson received from Catone. (1) Catone acknowledged drafting and sending the letter. (2) Hamby Hutcheson was distressed by Catone's letter. (a) Catone had already agreed on compensation as an officer of NVS. (b) Hutcheson believed that Catone was asking him to pay Catone for staying in the position that he held with the State. (1) Catone was telling Hutcheson that he, Catone, was valuable by continuing to work for the State. (2) Hutcheson believed that Catone was -�* soliciting funds from NVS in the amount of approximately $20,000 which Catone!, other jobs would pay in -return for Catone's influence in his position in the Governor's Office. Catone, 93- 085 -C2 Page 20 m. Hamby Hutcheson never asked •Catone tor .his influence (1) Catone's solicitation was unrequested. (3) Hutcheson and his brother had conversations about Catone's letter. (a) The •Hutchesons agreed they could not fund Catone's position. (1) Hamby Hutcheson felt the letter was inappropriate (2) Hamby Hutcheson did not take adv of the solicitation. n. NVS gave Catone a credit card for phone calls and mai.1ing so that NVS would pay such expenses. o. Exhibit 28 is a photocopy of a memo of Catone which he ,acknowledged forwarding to Hutcheson. (1) In the memo, Catone makes . reference to Albert Myers and David Pipers who eventually provided investment in NVS. (a) Myers and Pipers provided between $700,000 to 1 million dollars. p. Some faxes Hamby Hutcheson received from Catone were from the Governor' Press Office. (1) Catone had previously communicated that he could receive fax transmissions at no expense to NVS as part of Catone's official position. Catone had discussions with Hamby Hutcheson about a signieicant state contract which could be good for NVS which woui4 have a "shot at winning it." (1) Catone wanted a pseudonym used since he had disclosed his affiliation with NVS and did not want NVS revealed. (a) Hamby Hutcheson used a pseudonym to obtain the information. (b) NVS subseggently- withdrew out of concerns of ethics and legality. r. There was a deterioration in,relations between Catone and Hutcheson. WrippFilk, 93,-085-,C2 Page 21 t.. Hamby Hutcb.eson's wife is a first- cousin of Catone. NVS was incorporated on 12/11/89 in Florid e with Catone as President. ( The irh9.9.spora.tors were Hamby and • Mary 14ou Httcheeon 4 aawasy (2) Ntupapfetric of, F,gtoda., Inc.. was the predecessor 9.°F.W.SY 9.A u . Ac.coreling to Hamby, Hutch.eson., NVS -• had five payiUT 4uszcanexst,: Sad.a 4ak4.cana,1: Lahjonetories, Discon-„, noosi in+, an Tyco Industr,4.4eft. WS. did not do . bus ip.gs s with the Commonwealth- of Pennsylvanka. NVS started. in 19_89 but 44.d not recestiv,e, income, other than inveitors, until 1992, wit k cRnaullting fees . 4 . Hamby Hutcheson worked as a. CAnsAltant for EmAterte,. aiza As to NVS- Hamby Hutcheson and his brother each held 094- of; the stock, 35 investors , held abou 10.5r ark4.; Catone, held; 113%. Catone dig., not receive ad salary from wb Etamhy.- Hutchrieson was viith aa Haz.tcheson, his wife, brother . awl certain othex people Wire ,paid byNVS,„. bh. Haxaby Hu,t c he s on believe4 that NV, S, comp I et ed: some* contracti , 1993/94. (1) N9 contrac . ts, were compl e t whe.n Hutcheson,- was.- with„ MTS. cc, Ca.toxl.e. transferred hc sh4res in to. Myer3.0 d. Hay. e the. psev.clogyza of Wayl SogurAty in 43 , C.ey1 Ke Ofe:FiFlii is, an ew4oyee of , the pe4.Asyksrani Hou o 4 Repfe Caggus. a. Cattpe.e moveddint.c?an adjacent to.. isz; the Capitol ; in- JanuiFy,, 1992. Catone, 93- 085 -C2 Page 22 (1) In June, 1992, Catone approached Kevish about investing in NVS. (a) Prior to June, 1992, Catone had discussions with Kevish about his hoping to have a long profitable relationship wibh NVS. (1) Catone stated he was an officer of NVS in which he also had a financial interest. (b) Kevish invested $5,000 in NVS around July 16, 1992. (1) Catone arranged a telephone interview between Kevish, her husband- and .,Hamby Hutcheson in his Capitol "office using the speaker phone after 5 p.m. (a) The , conversation ;involved technology, business' prospects, business plans and other matters. (c) Kevish received various documents from Catone about NVS. (1) All business dealings between datone and Kevish occurred at the Capitol building. 44. Gene ~Gochenauer is an employee of PNC Bank as a legal processing administrator. a. Exhibit 23 is photocopies of records of Catone's account, #45625833. 45. Charles. T. Sciotto is Deputy Secretary for Employee Relations for the Commonwealth of Pennsylvania since 1985. a. Sciotto's office responsible for statewide personnel policy, labor relations policy and negotiations and oversight of 37 agencies under the Governor. b. Exhibit ll is photocopies of the FIS's.for Catone. c. Exhibit 12 is a photocopy'of the personnel computer history for Catone. Catone' was • hired as a full time employee on is /92 as Deputy Assistant to the Governor. (2) Catone's pay category of 99 is for positions that are not part of the Executive Board's standard pay schedule. Catone, 93-08T-C2- raga 23 (a) d. e. Exhibit 16 is photocopy of a travel expense voucher for Catone f. Exhibit - .29 is a photocopy of a memo dated 6/29/92 from Sciotto to the Executive Director of the. SEC. g• Such a pay category is for Cabinet - Secretaries, Deputy Secretaries and senior staff: to the Governor. Ekhibit 13 is photocopies of Catone's Governor's Code of Ccntiuct disclosure forms. (1) The subject of the memo is FIS compliance. Each agency under the Governor reports the individuals required to file FIS's and the compliance status. (1) Catone is included for FIS filing as Deputy Special Assistant to the Governor. (2) The F.IS filing criteria are used to. determine whether an individual must file the Governor's Code of Conduct. The duties that an individual performs are the criteria for determining whether an individual is required to file an FIS. (a) (1) Agency heads determine who are required to file FIS's. (2) If an individual believes he is not required to file an FIS, there is an appeal process to the SEC. 46. Ann McKeehan is the Director for Office of Fiscal Affairs and Management. a. In 1992, McKeehan was the personnel fiscal officer in the Casey administration with the same duties. b. McKeehan is responsible for personnel matters, budgetary purchasing, fiscal and other matters, telecommunications, etc. c. .,.Tighe was McKeehan's supervisor. d. A pay range category 99 is for senior staff who are not in the Commonwealth pay plan. Catone, 93- 085 -C2 Page 24 (1) Deputy Special Assistant to the Governor is a 99 pay range. (a) The code A reflects .officers /administrators. 47. Robert P. Caruso is Deputy Executive Director and Director of Investigations of SEC in charge of all SEC ;state -wide investigations. a. Investigations are commenced by a sworn complaint or by own :motion of the Executive Director. (1) Complaints that are non - jurisdictional or deficient are dismissed. ( Complaints that meet the threshold requirements are docketed as preliminaries and assigned to an investigator. (a Within 60 days, a synopsis is made vi a recommendation to the Executive Director as to whether a full investigation should be pursued. b.. When a full investigation is commenced, .a notice is sent to the complainant and the respondent. c. No member of the SEC sees any documents or information as to a preliminary or full investigation or investigative complaint. d. Investigations are completed within 180 days subject to two.90 day extensions. e. A findings report is the same as an investigative complaint f. Caruso participated in some of the investigative activity as to Catone. (1) Exhibit :1 in part is a photocopy of the redacted complaint. (2) The Executive Director of the SEC authorized the preliminary inquiry against Catone. (3) Exhibit 2 is a photocopy of the notice of investigation to Catone. Caton@, 93- D85 -C2 Page. 25 (a) Exhibit 3 is a photocopy of a memo reflecting the return of the' notice by the postal authorities which had been unclaimed /refused. (b) After an unsuccessful attempt to serve Catone with the investigative notice at the PEBTE, Catone called the SEC offices to indicate that he would accept the notice. (4) Exhibit 5 is photocopies of the 90 day notices of status of- the investigation. (5) Exhibit 6 is a photocopy of a request for 90 day extensich as to the investigation. (6) In an interview with Catone with his attorney present; Catone admitted that he authored and sent the letters, identified as Exhibits 25, 26, and 28, to Hamby Hutcheson. (a) Catone acknowledged preparing and faxing letters identified as Exhibit 27 to Hamby Hutcheson. (b) Catone admitted selling shares of NVS to Myers for $9,000. (c) Catone admitted that he was an administrative liaison as to PEBTF. (d) Catone admitted that he met with representatives of the U. S. Postal Service regarding locating a facility in Scranton. (e) Catone admitted that he was a proactive employee as to meetings /recommendations. An investigation is not continued after the 360th day. (1) For hearing preparation, individuals are contacted, subpoenaed or requested to bring documents. h. The triggering of investigative activities is done by the Executive Director of the SEC who is a lawyer. . During hearings, the Investigative Division may be .+ 0 requested to produce witnesses to authenticate documents ghat have been obtained during the investigation. 48. Catone ' was employed in 1/92 in the Governor's office. Catone, 93- 085 -C2 Page 26 a. After working in the Governor's Office, Catone obtained the position of Assistant tb the Ad.inistrator :of PEBTF until 1/9B. b. When Catone started employment, he was not `given a statement of duties. c. When Catone did not get a position in any other administrative office, it was deterned that Catone would assist Tighe. (1) Many assignments given to Catone by Tighe related to PEBTF. d. Catone was appointed a PEBTF trustee in 3/92. <1) Catone continued as a liaison to Tighe. e. Catone"s title was Deputy Special Assistant to the Governor. f. In 1987 /88 Catone first became associated with NVS. (1) After learning about certain technology from May Lou Hutcheson, Catone began exchanging letters with Hamby Hutcheson. (a) Catone and Hutcheson discussed securing capital for funding a company then called Neurometrics of Florida. g. NVS was incorporated in 1989. (1) Catone was an officer of NVS until 2/93. h. While employed in the Governor's Office, Catone was requested to fill Out FIS's and Governor's -Code of Conduct forms. Catone asserts that his duties as to a Scranton Postal Facility and Centralia were attending meetings and reporting back Catone claims that his principal duty with do 's wads to attract investors. Catone admits app■rdaahix peopie', d Ein'g his Commonwealth e►iployMei3.t,- to obtain firiantial hacking /contracts" for NVS. Catone, 93- 085 -C2 Page' 27 P- q. k. Catone asserts that the 33,313' shares of NVS stock was compensation fora his services- to NVS dating back to 1987/88. (1) Catone claims that he was to receive a salary of $6,000.00 per month from NVS starting in 8/91 which was to be increased to $7,000.00 per month in. 8/92. 1. Exhibit R -8 is a photocopy of a letter from Catone to. Tim and Hamby Hutcheson. m. Catone asserts that any attempts on his part to gain financial status as to NVS related to work he had previously done. n. As to Catone!s statement to Hutcheson's about Catone's access /influence within the Commonwealth of Pennsylvania, Catone asserts that he was referring- to Pennsylvania as a geographical state and not as a body politic. o. Catone claims that the telephone calls, faxes, letters and meetings, while employed by the Commonwealth were on. his own time. As to Catone's references to access /influence in his - letter to the Hutcheson's, Catone asserts that he was referencing what any employee has learned prior to coming to a new employer. (1) Catone claims that he told the Hutcheson's that..he, Catone, would not use his Commonwealth employment for access, influence or entree on behalf of NTS. As to the 3/12/95 letter from Catone to the Hutcheson's, Catone asserts that he was merely trying to obtain money for his previous services to NVS. (1) Regarding references by Catone as to his office in. the Capital, the ability to do personal matters and the use of Commonwealth equipment and supplies, Catone claims he was merely informing the Hutcheson's of things he and other people could do in the Governor's Office. r. In the 3/17/92 letter from Catone to the Hutcheson's, Catone asserts that his purpose was to inform of his .,:effort to obtain financing for NVS. s. Catone claims it was Hamby Hutcheson who advocated that a pseudonym be used for NVS as to an RFP within the Commonwealth of Pennsylvania Catone, 93- 085 -C2 Page 28 t. Catone asserts that certain business prospects appeared in the Pennsylvania Bulletin as to which NVS did not submit any proposal nor receive any business. u. As to the meeting between Catone and the Revish's, Catone asserts that Cheryl made the suggestion for a meeting in Catone- Capitol office. v. ATbieMyers Moaned Catone $8,000.00 in 1992 and $1000.00 in 1993. (1) Ca -tone did not list Myers as a creditor on his 1992 calendar year PIS. w. Catone started Commonwealth service as a Senate Clerk and then became a director on a Senate Committee. x. ,After the Senate employment, Catone worked Pennsylvania Turnpike Commission (PTC). (1) Catone worked as a Director of Public Information, Director of'Patron Services and Assistant to the PTC Commissioners. In 1979, Catone left with the Pennsylvania (1) Catone left PTC at PTC for the PTC to work as a research analyst House of Representative until 1982. 'due to a change of administration z. :Part of Catone' s duties .in the Senate, PTC and House involved letter drafting . aa.. after Catone left the •employment of the House, he worked with the Pennsylvania Bar Association (PHA). (1) lath PHA, Catone held director positions of committees and sections, communications coordinator and Director of Government Affairs. (a) As Communication Coordinator, _ Catone performed functions of photography, editing, making dummies and drafting articles. (b) As Director of •Government Affairs, Catone was a registered lobbyist with the General Assembly. (2)) .Catone left the PHA after nine years 'to start his own business. Catone, 93- 085 -C2 Page 29 bb. cc. After PCS, Catone was unemployed for a period of time before he was employed by the Governor's Office. dd. Catone terminated employment with the Governor's Office in 2/93 to take a position with PEBTF. ee. Catone became employed by PEBTF in 1993 and worked for two years until 1/95. (1) Catone did not resign voluntarily from PEBTF. ff. Catone admits having a good working knowledge of Pennsylvania government and the individuals therein. Exhibit 16 is a photocopy of a travel expense voucher for Catone. g g- (a) Complaints were rare as to Catone's written or verbal communication skills. After a year's time as a consultant, Catone worked for the chiropractic society. (1) Catone's duties included enunciating the Pennsylvania Chiropractic Society (2) Within a year of employment, Catone resign or be fired. was asked to policies of (PCS) . Catone attended meetings that did not rea.ate to is position as a PEBTF employee. The position of Catone listed in the voucher is Special Assistant to the Governor. The expenses incurred by Catone were as a, Commonwealth employee. hh. Catone voted on an investment policy as. to PEBTF. (1) Catone voted on a policy matter of PEBTF. ii. Catone, while employed in the Governor's Office, performed some assignments for Ms. Shmink in DPW. (1) Catone wrote news releases for DPW. jj. With Catone as a PEBTF trustee, the Board voted' unanimously as to a service audit contract. kk. Catone was a PEBTF trustee and also a liaieon - Tisghe . Catone, 93- 085 -C2 Page 30 11. Exhibit 17 is a photocopy of a document which identifies Catoze.as President and CEO of NVS. mm. While in the Governor Office, Catone,' at Brown's request, reviewed and made reports to Brown'about appeals from the. State Employees' Retirement. System (SERS) ' nn. Catone received certain assignments from Haggerty. (1) The traffic light matter and possibly. the ?ent'rralia mine fire issue came from Haggerty. (2) Catone would give Haggerty oral summaries of reading materials. oo. Catone met with 'Tack Carlin in the Senate Office of the Coximonwealth regarding the Centralia fire. pp, Although the bankruptcy records of Catone show an obligation to First Pennsylvania Bank (FPB) in 'the amount of $17,137.57 in 1991, Catone did not list FPB as a creditor on his 1991 calendar year FIS. (.) Cat©ne failed to include Dauphin Deposit Bank, Signal Consumer Discount Company and Fidelity Bank of Philadelphia as creditors which were owed in excess of $5,008.00 on his FIS. Catone received in 1992 $11,000.00 from Dennis Hollein, who obtained at least $6,000 from gbusandid Finance Corporation (RFC) and who gave the money' to Catone: (1) Catone did not list this financial information op his FIS. rr. As to the $8,000.00 loan from Myers to Catone in 1992, Catone did not report the loan on his FIS. ss. While employed by the ,Governor's Office, Catone did no, have on -site supervision within or outside of his office. tt,. As an employee in the.Goyernor' Office, Catone received assignments from De1m ith, .the Chief in the Pennsylvania Department o:f Educatibn. (1) Catone was directed to _review prapossd legislation a and make reports. uu.. For all the money = ,Catone received frgm . Myers, ; Catone signed an cknow10dgment 4ocument .�,riich wa8 ;r .t eel :to igyers. _ - Catone, 93 - 085 -C2 Page 31 vv. Catone admits that his statements in a letter to the Hutcheson's, that he was the sole subotdinate to the Governor•' s Chief Counsel and to the Deputy Chief of Staff for Operations and Administration, were untrue. - (1) The statement Catone coord'i sdreral- state agencies, one federal agency, sevettel legislative of and two congressional offices wad aki4 "embellishment" by Catone. (2Y Catone's statement that he was the Governo 's "'point man" as to US postal facility was an "embellishment." (3) Certain "embellishments" made by Catone, such as salary increases if he obtained positions with the Department of Health or the Disciplinary Board were to increase the ability of Catone to obtain a compensated position with NVS. (4) Catone admits that his reference to "access arid" influence" in his letter to the Hutcheson's would include contacts that Catone had in his position with the Commonwealth. (5) Catone's reference in the letter as to his ability to come and go was used to the benefit of NVS. (6) Catone states that his reference td using Commonwealth facilities and equipment for t7 - benefit of NVS was an "embellishment." (a) Catone admits to instances of: Commonwealth facilities /equipment but agIgetiseer it was only five or six times with a wattle-Foe less than $100.00. (7) As to Catone's claim to the Hutcheson's of other job offers, Catone referenced salary increased ih7 those jobs in order for the Hutcheson's make'up the difference to a certain extent so that- Catone would stay with the Commonwealth. (a) Catone was soliciting compensation f<rtt3a t,= Hutcheson's. ww. Catone admits that he "Would embellish- ugett a sit3ta`tiotG "" if it were to ..... fir3nca.a3. btaefa.''t'. "` xx. As to the need for an NVS pseudonym, g zf. G" rdne" `s- assertion that he /NVS would not do- btisities s with tit Catone, 93- 085 -C2 Page 32 yy• 49. Joseph Lopez is an investment banker in hose and Associates. Lopez met Catone through Albert Myers who 'Lopez knew for four years. b. Because David Piper's company was considering- investing in NVS, Piper requested Lopez to review,NVS. (1) The initial reaction by Lopez to the facial recognition 'system of NVS was favorable. (2) Lopez saw 'certain problems when he reviewed the books of NVS. (3) Lopez learned that NVS. issued checks without sufficient funds. (4) Lopez testified that `Hamby Hutcheson made misrepresentations about NVS technology and 'the existence of contrast .`between -NVS and other companies. c. When Lope 'did a business management review, -no financial audit was done. 50. Albert Myers is a finandia capitalist. a-. Myers met with Hamby Hutcheson around 12/91 on the subject of NVS technology. Myers became interested in-NVS -and provided funding. c. Lopez wt's retained by Myers and David Piper to do a business management review of -NVS. �d. Myers and Piper first - invested in 'NVB in 2/12. e. Exhibits R-11 to R -26 are photocopies of between Myers and Catone. f. 'Myers tettified that he had concerns. about 'Hamby "ftttcheson as to making payments to the `-iRS and as to issuing payroll checks without suffidierrt funds. Commonwealth, Catone states that he did -ndt know who the final bidding entity would be. Catone 'never told 'Tighe that he, Catone, .was using 'the Commonwealth telephones /faxes for personal purpcmem or .:for the .purpose of NVS. Catone, 93- 085 -c2 Page 33 Exhibit R -24 is a photocopy of a letter Myers referencing the assignment of one of certificates in NVS to Myers. h. The first investment in NVS by Myers $50,000.00 in 2/92 which was a loan Conversion, g- from Catone to Catone's stock and Piper was subject to a in 1992, a total of $400,000.00 was invested in NVS by Myers and Piper. Their total investment in NVS was 1.7 million dollars which was loaned through a partnership oalled Cross Roads Limited. (a) $200,000.00 of the 1.7 million dollars was loaned by David Hertz. i. The $9,000.00 that Myers gave to Catone was a loan. (1) Catone did not repay the loan but transferred his NVS stock to Myers. Catone and Myers had a discussion about the possil?ii tji of Corporate Leasing doing business in Pennsylvans.+ 51. Stephen C. MacNett is an acquaintance of Catone. a. MacNett believes that Catone has a good reputaglde id the community. b. MacNett considers Catone to be articulate in Milliaakim4 Sid writing. 52. Catone makes the following legal arguments: a. The investigation by the Investigative Division of the State Ethics Commission continued after 360 days ads set forth in 65 P.S. 408. b. The evidence of record does not comport in part- vVit t the allegations against Catone. c. Catone is not a public official /em Sldyee' shillejede 43 the Ethics law, Act 9 of 19'89 d. The hearing of fade er in ci: to ., nc�i' �'c3€ Bred criminal record of Hamby Huedheeda bed upen ai loafillig Of irrelevancy, 53. Catone solicited a pecuai aey i ti-t froal are: liteditievnthe ledir upon an understanding that the of'fixtial actioYi o jiff tent. 6f Catone, 93- 085 -C2 Page 34 Catone as a public official /employee would be influenced thereby. 54. Catone used Commonwealth offices, telephones and fax machines for personal purposes and /or for NVS. 55. Catone performed private work on Commonwealth time. D. Documents 56. Exhibit 1 is .a photocopy of a redacted Complaint filed against Catone with various exhibits attached. 57. Exhibit 2 is a photocopy in part Of a letter dated 2/18/94 from the EJtecutive Director of the Investigative Division to Catone advising of the commencement of an investigation. 58. Exhibits 6 and 7 are photocopies of the requests for two 90- day investigative extension requests which were granted by the State Ethics Commission. 59. Exhibit 11 consists of photocopies of Financial Interests Statements (FIS's) and amendments filed by Catone for the calendar years 1991 through 1994. a. The 1991 calendar year FTg of Catone dated 2/11/92 lists Ford Motor. Company as a creditor; PA. Chiropractic Society as a source of income and transportation, lodging or hospitality; and NVS as to an office, directorship or employment (Chairman and president) and financial intet"est (shareholder) . b. The 1991 calendar year VIZ of Catone dated 4 /22$92 lists his public position as Assistant Deputy Chief of Staff; Ford ]Motor Credit Company as a creditor; Pa. Chiropractic afe a source of income; and NVS as to an office, directorship or employment (Officer -and Director) . c. the "re=submitted'' [sic] 1992 . calendar year PIS of Catone dated 5/8/93 lists pOSition sosght as Edinboro U'niversity' Board of Trustees; position held as Governor's Office; creditof as Ford Motor Company; Commonwealth of Pennsylvania as a source of income; PEBTF and NVS as transportation, lodging of hospitality; and NVS as office, directorship or employment (Chairman, CEO, director, pies ideat) ; and financial interest i5. business " ° (shareholder) a. The 1993 calendar year F1S of Catone dated 4/29/94 lists creditors of Homestead Savi$gs, AFC and Mellon Bank; Albert Myers as a soutve of income; -NVS as to Catone 93- 085 -C2 Page 35 trandportation, lodging and hospitality; NVS as to' office directorship or employment (officer; director - and' shareholder), and NVS as a'financial interest in business (shareholder) (1) By an_addendum letter dated 5/2/94, Catone added Penn Credit Corporation as a creditor. e. The 1994 calendar year FIS of Catone dated 4/28/95 lists his position as trustee; his occupation as unemployed; creditors as Homestead Savings /Farmers Trust, HFC, Mellon Bank, Penn Credit Corporation; B Q Video as a source of income; Edinboro University of Pennsylvania as to transportation;_ lodging and hospitality, and "no office or directorship" as to office, directorship or employment. 60. Exhibit 12 is a photocopy of a Commonwealth of Pennsylvania document which lists Catone's position as a Deputy Special Assistant tb the Governor under a "99" pay range. 61 Ejchibit . 13 is photocopies of the 1991 -1993 Code of Conduct forms of Catone for the calendar years 1990 -1992. 62. Exhibit 15 is photocopies of Management Director 205.16 amendment date 2/27/92, which provides information as to FITS procedures and coverage with a list of persons required td file including in part "all Executive Assistants or Special Assistants . . . "; and Management Director 205.9, amended date 2/19/92, relative to the same FIS subject matter. 63. Exhibit 16 is a photocopy of a travel expense vouche submitted in 1/92, #276486, by Catone as Deputy Spec'`ii Assistant to the Governor relative to a trip to Philadelphia for the following listed purpose: Attending meetings with lawyers and actuaries regarding the possibility of an upcoming merger . . going over draft agreements . . . between the COP and various bargaining units." 64. Exhibit 17 is a photocopy of a Business Plan of NVS dated W92 which provides detailed statements about NVS including its Corporate offices. a. The NVS Business Plan states the following as to Catone as one of the Corporate officers: "President, Chief Executive Officer John D. Catone Age 39 Catone, 93- 085 -C2 Page 36 65 Exhibit 18 consists of photocopies of `a letter from _Clieryl A. •Kevish to Catone: dated 7/16492 `'infortati§h .received ' as to 'NVS an 7 a discussion with Hamby H'utdheeiq i Rar by, Catone and the ' enclosure of a check in the amount of $5,000.00 for .500 shares of NVS. a. Page 2 of the-Exhibit is a photocopy of a "check of Lawrence G. Woods and Cheryl A. Kevish, #2543, dated 7/16/92 payable to NVS, Inc. 66. Exhibit 19 consists of photocopies of the PEBTF trus greeting minutes for 3/19/92, 5/21/92, 7/23/92, '9/17/92, 11/19/92 and 11/14/93. At all meetings, Catone is listed as present as a trustee for the Commonwealth of Pennsylvania. At the 3/1 meeting, Catone is introduced as a new trustee for the Governor's Office. (1) i!n`der other 'business, reference is made of the attendance of Catone and another person to the meeting of the Capital Area Labor. and Management committee to discuss the possible development of a coalition for health are cost containment. c. At the 5/21/92 meeting, the following occurred in part: (1), The unanimous. approval as to an investment policy, an RFP for "the work on the financial credit and the fiscal proposal. (2) A review of the proposed travel policy by Catone which po'iicy was approved unanimously. d. At the 7'%23/92 meeting, the following occurred in part: (i) From September 1983 to December 1989, Mr. Catone was the Director of governmental Affairs of, ;the Pennsylvania Bar Association. Mr. Catone has since 1989 been the Chief Executive Officer :''of NeuroMetrics and in that cap4city tics devgte4 his time ' to the development of the Fe ai .d State banking relationships needed for the proposed technology." Cat4Dne inbred to accjpt the amended investment policy Which was seconded and unanimously approved: (2) estof a reviewed how chiropractic claims are paid by the Fluid. Catone, 93- 08'5 -C2' Page 37 g- e. At the 9•/17/9 meeting, the. following reflects. actio p of Catone: (1) Catone references the review of the budget by the Finance Committee followed by the unanimous vote to accept that and another budget. (2 : ) Catone presented a new draft of the travel policy which was unanimously adopted. f. At the. 11/19/91, meeting, the following occurred in part: (1) Catone volunteered to oversee the PEBTF newsletter preparation which was unanimously approved. (2) Unanimous approval of an AT &T proposal to increase the number of 800 lines. (3) Unanimous approval as to acceptance recommendations of COBRA administration. (4) Approval of employment of TH Services, Inc. with abstention of Young. (5) Catone seconds the motion to accept clarification of definition of immediate family which is unanimously approved. (6) Catone seconds the motion as to the Eligibility Committee's five policy recommendations which was accepted by the remaining Board members. At the 1/14/93 meeting, the following reflect actions of Catone: (1) The acceptance of the Williams, Thacker and Rand report for allocation of administrative expenses is unanimously approved. (2) Acceptance of Finance Committee report is unanimously approved. (3) The resolution to effectuate the merger is approved by resolution of the Board. (4) The acceptance of Casey's report is unanimously approved. (5) The acceptance of the Eligibility report is unanimously approved. Catone, 93- 085 -C2 Page 38 (6) Catone reports on the announcement regarding the newsletter. 67. Exhibit 20 is a photocopy of an Offering Circular for NVS at $10.00 per share. a. The following is set forth render management as to Catone: Number of Name and address Age Office Shares Owned John p. Catone 38 President (None vested) 217 ,Greseent Drive Chief Executive Officer Hershey, PA 17033 Chairman, Board of.Directors Employment Contracts John ca tone, P- esi4ent & Chief Executive Officer Mr. Catone has • agreed to a 3 year Employment Contract which includes salaryy, stock and stock incentives. This employment contract will be effective when the Company reaches the Maximum Shares distribution as noted in the Offering Memorandum, at which time Mr. Catone shall assume his full time duties with the Company. John Catone, President & Chief Executive Officer Imo. Catone will receive an annual salary of $70,000 as President of the Company and will devote his full time efforts tq the business of the Company. 68. Exhibit 22 consiata of photocopies of a fax cover sheet and a four page draft dated 1/30/92 sent from Bill Clark to Catone at fax #717- 783 -3369. a. the above fax number (receiving) is the Governor's office. b. The draft relates to a proposal agreement between NVS and Pei.per--s & Co., Inc. (PCI) 69. Exhibit 23 is phctoeepiea of bank statements, deposit slips amAd cheeks iaaue4 to Catone. a. There a three checks.. each in the amount of $1,000.00 and rune. Cheek in the amount of $5,000.00 from Albert Myelts pa ehle to Catone. Catone, 93- 085 -C2 Page 39 b. The deposit slip shows a deposit of $1900.00 in cash • to Catone's checking account. 70. Exhibit 24 is photocopies of the NVS share certificate numbers issued to various persons. a. No. 3 reflects an issue of 11,111 shares to Catone. b. No. 38 reflects 150 shares issued to Catone. c. Nos. 47 and 48 each reflect 11,111 shares issued to Catone. d. Nos. 59 and 60 reflect an issue of 25 and 100 shares respectively issued to Catone. e. No. 78 reflects 500 shares issued to Lawrence G. Wood and Cheryl A. Kevish. 71. Exhibits 25 through 28 are photocopies of communications sent by Catone to Tim and Hamby Hutcheson as excerpted in the Pleadings. a. Exhibit 27 bears a fax transmission notation from the Governor's Press Office. 72. Exhibit 29 is a photocopy of a memo from the Deputy Secretary for Employee Relations dated 6/29/92 reflecting the list of public officials in the Executive Board who filed FIS's. a. Catone is listed in the Governor's Office as the Deputy Special Assistant to the Governor. 73. Exhibit 31 is a group of photocopies of fax transmissions to or from Catone as sender /receiver and Clark and /or Kyne. a. The fax transmissions at Catone's end were sent or received at the Governor's Office. 74. Exhibit R -1 is a photocopy of a letter dated 11/11/92 of Attorney Bill Clark to Hamby Hutcheson raising concerns about a letter Hutcheson sent to NVS stockholders offering them the opportunity to buy additional shares. a. Clark advised that the letter was a soliciting document so as to be a prospectus for offering that was subject to Florida and Federal securities laws. 75. Exhibit R -3 is a photocopy of a letter dated 10/17/88 relative to NeuroMetrics of Florida, Inc. from Hamby Hutcheson to Andrew Krause, Esquire which references in part a research document and oral presentation as to the check processing Catone, 93- 085 -C2 Page 40 concept which was made at the Venture Investment Forum of Central Pennsylvania at the suggestion of Catone as Director of the Pennsylvania Bar Association. 76. Exhibit R -4 is a photocopy of a letter dated 12/1/88 from Hamby Hutcheson to Tim Hutcheson and John Haggis regarding NeuroMetrics providing a status report of the company. a. Reference is made to Catone's efforts with a suggestion that we should plan some kind of remuneration based on the new stock distribution. We need his continued support and assistance in the future." 77. Exhibit R -5 is a photocopy of a letter dated 12/16/88 from Hamby Hutcheson to Catone advising of Catone's nomination to the Board of NeuroMetrics of Florida, Inc. 78. Exhibit R -6 is a photocopy of a consent as to Discon Industries,. Inc. executed 6/8/92 with Catone, listed as Chairman of the Board and CEO. 79. Exhibit R -10 is a photocopy of a letter from Catone to Albie [Myers] dated 4/27/93 making inquiry as to whether "to ;show the loan from you to me in the appropriate block." 80. Exhibit R -13 is a photocopy of a letter from Catone to Albie [Myers] dated 1/11/92 which recites in part: "However, please know that I am not able to get involved in this matter without going through the proper protocols in the Governor's office even though this project seems to benefit Pennsylvania from the description." 81. Exhibit R -14 is a photocopy of a letter to Albie [Myers] dated 3/13/92 from Catone which states in part: "Please know that there is no way that I can get involved with any business dealing with the state government of Pennsylvania." 82. Exhibits R -18 and R -19 are photocopies of letters from Myers to Catone dated 7/8/92 and 10/7/92 referencing loans of money from Myers to Catone. 83. Exhibit R -23 is a photocopy of a letter dated 1/27/93 from Myers to Catone which recites a final advance from Myers to Catone with a requirement of collateral consisting of Catone's stock in NVS. 84. Exhibit R -25 is a photocopy of a letter from Catone to Albie [Myers] dated 2/3/93 which states in part: Catone, 93- 085-C2 Page 41 "I also want to thank you for accepting my offer to have my stock certificates in lieu of my repayment." 85. Exhibit R -26 is a plio of a letter from A1bie Myers to Hotuard Kahn of Atlans, Pearlman, Trop _and Borkson dated 12/6/94 and five checks Myers sent to Catone. The letter" states in part: III. DISCUSSION: The last payment as a loan' was €he ultimate' final money which was tied into thy receiving the stock' of NeuroMetric' Vision Systems, I. since it became evident that he could not repay the loans in a timely fashion which was stated-at the outset." As a Deputy Special Assistant to the Gokerhar, John D. Catone hereinafter Catone, was a public official • and public employee as those terms are defined under Act 9 of 1989. 65 P.S. §402. As such, his conduct is subject to the provisions of the Ethics Law and the restrictions therein are applicable to him. Initially, it is noted that Section 9 of Act 9 of June 26, 1989 provides, in part, as follows: This amendatory act shall not apply' to violations committed prior to the effective date of this act, and causes of action initiated for such violations shall be governed by the prior law, which is continued in effect for that purpose as if this act were not in force. For the purposes of this section, a violation was committed prior t� the effective date of this act if any elements of the violation occurred prior thereto. Since the occurrences in this case transpired after the effective date of Act 9 (June 26, 1989), we must apply the provisions of Act 9 to determine whether the Ethics Act was Violated. Under Section 3(a) of Act 9 of 1989, a public official /employee shall not engage in conduct that constitutes a conflict of interest as defined above. Section 3(c) of Act' 9 of 1989 quoted above provides in pare that a public official /public employee shall not solicit or accept' anything: of monetary value based upon any understanding that hiss vote, official action or judgment would be influenced thereby: Catone, 93- 085 -C2 Page 42 Initially, we must address four preliminary - arguraehts bade by Catone: that the investigation was not concluded within the 3' 6b day period as set forth in 65 P.S. §408; that the evidence at 'the hearing is =not in conformity with one of the a .legati.bns; that Catone Was not a `public official /employee; and that the hearing officer's 'exclusion of the criminal record of Hamby •Hutchesoh c . relevancy grounds was in error. As to the issue of the length of the investigation Th this case, Section 8 of Act 9 of 1989 provides in part: The commission shall, within 180 days of the 'initiation of an investigation, either terminate the investigation pursuant t=o subsection (d) �r issue a findings regbet pursuant to subsection (e). Upon a showing, by the executive director - of the ,need for extension of this period, the commission may extend an investigation for up to two 90 -day periods - , provided that each 90 -day extension shall be approved by -a majority vote of Members present. In no event shall a findings report be issued later -than 360 days after initiation of an investigation. _ 65 'P.-S. 4408(c) . Catone argues that because certain ;activities occurred after the -60 day investigative period in this case, the Investigative Division has failed to comply with the above deadline-of Section 8 =of -Act 9 of 1989. The above provision Merely - requires that either "the 'investigation be terminated or an investigative complaint be 'issued within the prescribed period. That requirement was met. The 'issuance of the findings report within the prescribed time provides - the framework for the proceedings by setting forth the "auk and total of the results of the 'investigation. Subsequent activity which, as in this case, is '-merely hearing `preparation cannot reasonably be characterized as further "investigative' activity. To hold otherwise would allow a respondent to challenge, for } example, the subpoenaing of a custodian of records to authenticate documents as an "improper `extension" of the inveSti.g'ation. We do no"t 'subscribe to such a convoluted theory. All statutory investigative deadlines Were by the Investigative Division in this case, and we ` reject Catone's argument. Catone'• second argument, which relates to conformity between the fourth allegation and tthe avideifce of 'record, is also without merit. It is established that in administrative groceedings the record must be in conformity with and limi -ted to the allegations. 1 Pennsy v. Departxix=it of State, _ ?a. ~ Commw. 594 1 A.2d 845 Catone, 93- 085 -C2 Page 43 (1991). However, the courts have not construed this requirement so restrictively that an insignificant disdrepancy in an allegation 1duld violate this principle. See Straw v. Human Relations Coamissioa, 10 Pa CoMMw. 99, 308 A.2d 619 (1973) . Catone argues that because the fourth allegation references "contracts," the lack Of evidence as to "contracts" eliminates that portion of the allegation. pie reject the argument for the reasons that the term "dontract" as defined by Act 9 of 1989 and as used in the context of the allegation as a whole reflects a broader meaning, namely, t Obtain business. Since the allegation meets the legal requirements set forth in the above judicial precedent, we believe that due prodass has been Satisfied as to the phraseology of the allegation. We shall now address the third argument proffered by Catone, that he is not a public dfficial /employee subject to Act 9 Of 1989. At 9 of 1989 defines "Public Employee" and "Public Official" as follows: Section 2. Definitions "Putblic Employee." Any individual employed by the Commonwealth or a political subdivision who is responsible for taking or recommending official action of a non - ministerial nature with regard to (1) contracting or procurement; (2) administering or monitoring grants or subsidies; (3) planning or zoning; (4) inspecting, licensing, regulating or auditing any person; or (5) any other activity where the official action has an economic impact of greater than a de minimi.s nature on the interests of any person. "Public Employee" shall not include individuals who are employed by the State or any political subdivision thereof in teaching ''''as distinguished from administrative duties. "Public Official." Aty person elected by the public or elected or appointed by a governmental body, or an appointed official in Catone, 93- 085 -C2 Page 44 the Executive, Legislative or Judicial Branch of the State or any political subdivision thereof, provided that it shall not include members of advisory boards that have no authority to expend public funds other than reimbursement for personal expense, Sr to otherwise exercise the power of the State Or any political subdivision thereof. The term "governmental body" is defined as follows under Act 9 of 1989: 65 P.S. §402. The regulations of the Commission which are applicable, 51 Pa. Code 1.1, elaborate upon the definition of a public employee. Section 1.1. Definitions. Public Employee - -- (i) The term includes an individual: "Governmental body." Any department, authority, commission, committee, council, board, bureau, division, service, office, officer, administration, legislative body, or other establishment in the Executive, Legislative or Judicial Branch of a state, a nation or a political subdivision thereof Or any agency performing a governmental function. (A) Who is employed by the Commonwealth or a political subdivision and who is responsible for taking or recommending official action of a non - ministerial nature with regard to: (I) Contracting or.prOcurement. (II) Administering of monitoring grants or subsidies. (III) Planning or toning. (IV) Inspecting, licensing, regulating or auditing a portion. (V) An acti where the official action has greater than A de miniZeis edonnmio impact. Caton., 93- 085 -C4 Page 45 (B) who meets the criteria subc (I) or (III: (I) The individual is a person: ( -a -) who: of either The individual.. is: (-a -) A person who normally performs his responsibility in the field without on -site supervision. ( -b -) The immediate supervisor of a person who normally perfcrafs his responsibility in the .field without on -site supervision. (-c-) The supervisor highest level field office. ( -1 -) Has the authority to make final decisions. ( -2 -) Has the authority to forward or stop recommendations from being sent to the person or body with the authority to make final decisions. (-3-) Prepares or supervises the preparation of final recommendations. (-4-) Makes the final technical recommendations. --- ( -b -) whose recommendations or actions: ( -1 -) Are an inherent and recurring part of his position. ( -2 -) Affect organizations other than his e4nn organization. (ii) The term,:dogs nct include ,individuals who are employed by 4b.e Commoz a7;` h % q_r'a ` rtl i cal sigbASPisicin of the t'G ionwea1th in . teaching as fisting ir4ihred ;,a ,ni3trative uti s 51 Pa. Code §1.1. Catone, 93- 085 -C2 Page 46 (iii) Persons in . the positions listed in subparagraphs (A) -(F) are generally„considered public employees. (A) directors . directly governing (E) Court assistants for deputies for the (F) School principals. • Executive and special or assistants reporting to the agency _head or .body. (B) Commonwealth bureau director, division chiefs, or heads of equivalent organization "elements and other governmental body`dePartment heads. (C) Staff attorneys engaged in representing the department, agency, or other governmental bodies before the pubic. (D) Solicitors, engineers, managers, and secretary- treasurers acting as managers, police chiefs, chief clerks, chief purchasing agents, grant and contract managers, housing acid building inspectors, sewer enforcement officers and zoning officers in governmental bodies. administrators, fiscal affairs and minor judiciary. business managers and (iv) Persons in the positions list -end in subparagraphs CA), -(C) are generally not considered public `employees 4 (A) City. clerks, other- cler -i al staff, road masters, secretaries, police officers, welfare case_:, ' workers, maintenance workers, co workers, detectives, equipment operators and,. recreation directors. (B) Law ,clerks, court. criers,, court reporters, probation officers, security guards - and writ servers: . (C1 School- . teachers and clerk of the schools: Catone, 93- 085 = Page 47 As to whether an is a public employee, our inquiry . necessarily focuses on the job i - not on the individual incumbent in the position, the variable functions of the position, or the manner in which a particular individual occupying a position. may carry out those functions: See, Phil i s v CommissioA, 79 Pa. Commw. 491, 470 A.2d 659 (1984); and State Ethiv. $an; k, 531. Fed. Supp. 402 M.D. Pa. 1982) "' Also in reviewing-this issue, the Commonwealth Court in its . ruling in Phillips, supra, at page 661, directs that coverage of the. Ethics Act be construed broadly, rather than narrowly, and conversely, directs that exclusions from the Ethics Law should be narrowly construed. In reviewing the facts of record, we find that Catone fall within both the definition of public official and public employee. in this case, Catone was appointed to the position of Deputy Special Assistant to the Governor. Catone was appointed by Tighe, the Governor's Deputy Chief of Staff who was an officer in the Executive Branch.. Hence Catone was an appointed public official. Under the Ethics Law, Catone is also a public employee Catone was first a liaison and subsequently a member of PEBTF for the Commonwealth. Although PEBTF is not a Commonwealth agenclt, Catone was the Commonwealth representative from the Governor office. The management trustees of PEBTF represent the Commonwealth as Commonwealth employees. Action taken by P Board does have an economic impact greater than a de minimis ati e on the interests of any person. In addition, Catone also was: involved in major matters such as the Centralia fire and a testa l facility in Scranton. Catone, while in the Governor's Office, 444 assignments for DPW, for the. Chief of Staff in the De p t.rii§ut Of" Education, for James Brown, such as reviewing case app4a3.s• frpm SERS and for James Haggerty. Catone admitted that he did not 44e on -site supervision within or outside of the GovernQr's Given Catone's position itself, the major and signifcazit act�.o` "i took and his independence (no on -site supervision) ; Oatople wad public employee. If Catone were not a public employee; difficult to imagine who would be We reject Catone's arg e t ay totally spurious. by The fourth and final objection by Catone relate; to a y the hearing officer which excluded, based upon relivancy, e criminal record of Hamby Hutcheson. That criminal recoia' aim ' references to matters involving Hutcheson which occurred pv years ago with some being more than 20 PQ has made 'an anal sis of c Ye`a'r old. •T� �&esPo�d�t Y criminal cases and the admissibi1 y prior criminal records both In terms of the nature of 'the 14 offenses and the time when such offenses occurred. lie n,e.exi° not address such issues. '' Catone, 93- 085 -C2 Page 48 Under administrative agency law, an agency azas ..broad discretion in admitting or rejecting evidence. Stump v. 4epartment of Labor and Induptrv, 154 Pa. Commw. Ct. 471,624A.2229 3t9Q3) . A decision of agency-will not be remamder3';by a Reviewing Court . u n],ess the contents of a document that is.catakert of the record is critical- to the finding of the agency. Bert6Iix v. PennDOT, :32 Pa. Commw. Ct. 516, 379 A.2d 1078 ;(1977).. Administrative agencies are not bound by the technical rut tff evidence so that an agency may consider relevant evidence which has reasonably probative value. Murphy v. Department of vb1i.c Welfare, 85 Pa. Commw. Ct. 23, 480 A.2d 382 (1984). ..Conversely, an administrative agency may exclude evidence that is not - relevant. Creason v. Unemployment Compensation Bo -rd, 123 Pa. Commw. Ct. 441, 554 A.2d 177 (1989) We believe that the hearing officer properly excluded the proferred document. The criminal record of Hamby Iivac.heson is neither critical nor relevant to this case. We .do -not view Hutcheson's testimony as particularly suspect in any -event in that it supports the balance of the evidence before us. Furthermore, based upon our analysis below, the result that we reach would be the same with or without the testimony of Hamby Hutcheson We therefore reject Catone's argument as to the exclusionary ruling. We shall now consider the four allegations against Catone: the utilization of Commonwealth equipment for personal purposes; the performance of private work while on Commonwealth time; the attempt to use 'confidential information obtained from his public position . to further private interests; and the solicitation and receipt of items of monetary value in return for the exercise of his official action and judgment in an effort to obtain contracts "for a business with which he is associated. Factually, Catone served as Deputy Special Assistant to the Governor from January 2, 1992 to February 12, 1993. In a private capacity, Catone was president of NVS (some documents also listed him as CEO) with stock holdings in the company. NVS was founded by Hamby Hutcheson and his brother Tim to develop market computer systems for the detection of bank check fraud and for facial recognition (Fact Finding 6). Catone did not work full time for NVS but attempted to develop contacts for NVS (Fact Finding 8). Catone received several blocks of NVS stook (Fact Finding 10) but was told that he would receive a salary once NVS received financial backing (Fact Finding 9). NVS records projected that Catone would receive a salary as President and CEO of $6,000 a month beginning in August 1991, which would. be increased. tQ $7,000 per month`' in August 1992, with such projections based upon the assumption that NVS would receive financial backing' (Fact Finding 11) . Catpxie, 93-085-C2 Page 449 Wh Catone did not receive the projected salary, he contacted NVS in 1992 to seek additional compensation (Fact Findings 11, 12). Such solicitation was made by Catone to supplement his Commonwealth salary (Fact Finding 14). The various communications Catone made to the Hutchesons in writing are set forth in Fact Findings 15 -17. Siece such communications are extremely significant, they are summarized below. In the March 3, 1992 letter from Catone to the Hutchesons (Fact Finding 15), Catone initially referenced his contacts and the possibility of investments in NVS. Specific reference was made to Catdzie's discussion with Myers who advised that Peipers was sending a check for $50,000 to invest in NVS. Catone noted that the Commonwealth of Pennsylvania spends millions of dollars a year on leasing all types of items. Catone referenced two job interview* that he had in the Executive and Judicial Branches of the Commonwealth of Pennsylvania followed by a statement that his goal remained moving to Florida to become a full time NVS player. Catone noted his position and the access, influence, and entree that he enjoyed as a result of his Commonwealth position. The fetter concluded with Catone referencing his various assignments and contacts that he had as the "Governor's Point Man." In a second letter dated March 12, 1992 to the Hutchesons (Fact Finding 16), Catone restated that he emphatically wanted to join NVS on a full time basis but secured an interim position in the Governor's Office. Catone stated that he had been offered positions as the Administrator of the Supreme Court's Disciplinary board and as the Director of the State Health Data Center in the Department of Health and that both positions would pay Significantly higher salaries: the Administrator position would pay $14 more while the Director position would pay $18,500 more. Catone asserted that if NVS did not exist, his choice would be easy, but he noted his position in NVS and suggested that he would Open the matter (of salary) for discussion with the Hutchesons. Catone proposed that he remain in his Commonwealth position but NVS pay him a monthly salary until he could join NVS in a full time - capacity. Catone stated the rationale for his request was based upon his present and past work for NVS, noting the "access and influence" that he could attract for NVS in his position and noting that he could "open a lot of doors." After citing several examples of his connections arising out of the Governor's Office, Catone stated that he could come and go as he - pleased and that he used such privileges to the benefit of NVS. Catone cited other "factors" such as unrestricted use of a PC and printer .U.S. -wide telephone calls at no expense to NVS including third party calling, "vario'us Commonwealth supplies and postage at.no expense to NVS, and finally FAX transmission /reception at no expense to NVS Catone referenced various appointed positions he received from the for from which he obtained knowledge which could be beneficial 'ixb 4VM. -After noting the amount of time that he spent on ; NVS laAt ;,news during the normal course of business, Catone stated that Catone, 93- 085 -C2 Page 50 he did not expect the Hutchesons to make up the full difference between the $14,000 or $18,500 given their present financial situation. Catone then stated that his current Commonwealth salary was increased by $2,000 a year and requested that he and the Hutchesons discuss the matter. In a letter to the Hutchesons from Catone dated March 27, 1992 (Fact Finding 17), Catone referenced various matters of interest to NV$ including governmental conferences and governmental once and then noted that this was " . another way that . . . [he] can 9erve . . . [the] company while occupying . . [his present position . . . for the good of fall] . ". In a FAX transmission via the Governor's Press Office on Jii 30, 1992 from Catone to the Hutchesons (Fact Finding 16), Catone referenced various meetings with certain businessmen relative to the possibility of business in Pennsylvania. After Catone detailed his activity, he concluded his letter by noting his interest in the one business and then added " . . . a directorship. ix case however, there." The foregoing appears to be a hint by Catone tel the Hutchesons that Catone would consider a directorship in another company in case his needs with NVS were not met. In a FAX transmission dated October 28, 1992 via the Governor's Press Office from Catone to the Hutchesons (Fact Finding 2G), Catone referenced a discussion with Hamby Hutcheson and the use of a "pseudonym" in the context of electronic authorization, . data capture, and creditfdebit card processing in Pennsylvania Wine and Spirit Shoppes. On October 30, 1992, Catone sent another . letter by FAX to Hamby Hutcheson from the Governor's Press Office (Fact Finding 21) wherein Catone suggested that Hamby Hutcheson have someone make a telephone call to Arthur Florio relative to . 1,.0,00 instant ticket vending machines for the Bureau of State • Lotteries in the Pennsylvania Department of Revenue with Catone expressing concern about the timing of events. Catone used the Governor's Press Office or Governor's Office . of the Budget FAX' machines on other occasions (Fact Findings 22, 23). . also used the Commonwealth telephones in taut Oove r Qx' s Office for long distance calls to the Hutchesons, N7S Attorney William. Clark- and . financier Albert Myers.. Facet Finding 18. Parenthetically, such. usage of Commonwealth equcipmen - t az1 fac occurred after Catone noted his capabilities- is that. re%zel. . in his March, 1992 communication to the Hutchesons'. 14 ,1992 Cato contacted Cheryl. Nevish who is an InfOrmat.ton Systems- Manager for the. House. of Representatives. Capone weed government office as well as the Commonwealth phones' tooarraage a telephone hook -up whereby Hamby Hutcheson explained 'the: details of a proppsed sale of NETS. stoc]c to Ravish_ and her husband (Fact Finding 2$) Thereafter, on July 1]6r, 1992:, Revish and hez= husband purchase4 50 0 shares. oft NVS stock•: fbr $.5,T0"0. Catone, 93- 085 -�2 Page 51' During the summer and fall of 1992, Albert Myers provided Catone with various sums of money. Following- a deterioration in relations between Catone and Hamby HLrtcheson, Catone= turned over his shares of NVS stock to Albert Myers on February 1, 199 and . resigned his position with NVS on February 13, 1991. Catone resigned his position as Depiuty Speeial Assistant to the Governor on February 12, 1993. During his tenure in the Governor's office, Catone filed FIS's. TheFIS's that Catone filed contained certain deficiencies as outlined in Fact Finding 48 pp -rr. During cross examination, Catone claimed that the telephone calls, FAX transmissions, letters and meetings were on his own time As to the references in his letters regarding access or influence, Catone asserted that he was merely referencing what any employee learns prior to coming to a new employer and that he told the Hutchesons that he would not use his Commonwealth employment for access, influence, or entree on behalf of NVS. Catone further testified that he was merely trying to obtain money from NVS for the previous services that he performed. As to the references by Catone as to his office in the Capitol and his ability to do personal matters with the use of Commonwealth equipment and facilities, Catone testified that he was merely informing the Hutchesons of things he and other people could do in the Governor's Office. Catone asserted that the purpose of his March 17, 1992 letter was merely to inform the Hutchesons of his efforts to obtain financing for NVS. Despite the reference in Catone's communication about using a pseudonym, Catone asserts that it was Hamby Hutcheson who advocated the use of the pseudonym for NVS regarding an RFP within the Commonwealth of Pennsylvania. During his testimony, Catone characterized many of his statements as mere "embellishments". The following are some examples of the "embellishments" that Catone made: the statement that he coordinated several State Agencies, one Federal Agency, several Legislative Offices, and two Congressional Offices the statement that he was the Governor's "Point Man "; the statement that he would receive salary increases for positions in the Judicial or Executive Branch; and the statements regarding using Commonwealth facilities and equipment. Catone admitted that he "would embellish upon a situation if it were to [his] financial benefit." ' We shall now apply the above highlighted and summarized facts pto the four allegations before 'us. As to the first allegation that . C a .zone violated Section 3(a) of -Act 9 of 1989 regarding the tilization of Commonwealth equpment :for personal purposes, we find a Violation used Upon the facts of record. The evidence esablis 'ripeat d usage by 'Catone "Of the FAX in the Governor's Office . ` U ` the : Hutchesons rand other ' i'eop1e • relative to NVS. Such Catone, 93- 085 -C2 Page 52 FAX transmissions do leave a "paper trail" as to the time, location, origin and destination of the transmission. tn addition, Catone used Commonwealth telephones and even the offices and facilities, as for example, When he used the Governor's Office and phones for an NITS presentatiaa by Hamby Hutcheson to the'kevishes which resulted in their $5,000 investment in NVS. Catone even boasted to the Hutchesons that he had unrestricted use ,of a PC and printer. U.S. -wide telephone calls and third party calling at no expense to NVS; stationary, papers, and envelopes at no,expense to NVS; postage at no expense to NVS; and FAX transmissions /receptions at no expense to NVS due to his Commonwealth `service Such utilization was by no means' de minimis, esPetially since it resulted in a $5,000 investment in the business with which,Catone was associated. Accordingly, we find that Catone violated Seution 3(a) of Act 9 of 1889 when he used Commonwealth egiipmehE for personal purposes. Vreir4, Order 800. Turning to the second allegation that Catone performed private work while on Commonwealth time, we also find a violation of Section 3(a) of Act 9 of 1989. The prime basis for finding a violation as to.this allegation consists of Catone's own statements that he made in his letters to the Hutchesons. For example, Catone specifically referenced how in the course of "a normal business [day]" he spent 23( hours on NVS business. In his March 12, 19.92 letter, Catone specifically noted that his supervisors in the Governor's Office were on the second floor of the Capitol while his office was on the fifth floor which allowed him to come and go as he pleased. Catone specifically noted that he used "this privilege to the benefit of NVS." Even though Catone did not have regular hours of employment with they Commonwealth, he certainly performed private work while on Commonwealth time. We find a violation of Section 3(a) of At g of 1989; Williams, Order 734. As to the third allegation that Catone attempted.ta use confidential information obtained from his public position t0 further his private business interests, we find no violation of Sectiom.3a (a of Act 9 of 1989. Our review of the record does not estaiblis& that Catone used or attempted to obtain any confidential information and on that basis we find no violation of Section 3(a) of. Act 9 of 1,98.9: We. now shat-1 consider the fou=rth and final allegation that Catone: solicited slid received items' of monetary value in return for thee. exercise• of his official action and judgment in an .effort to obtain. contracts for a business with. which he was associated.' As noted. above, Section 3 (V) provi'des' in' part that nQ public offic t/ emcpl'oyee shall solicit- or' accept= anythi'rig of - based an. avay.• understarrdin ` that- his official action dr judgment wold be influenced thereby. Cattanr viola eed Stet - tion 3(c) Of Act.. "9` of 1989 in • that he solicited' souretithic. df` value, con istirigr o- a. monthly salary at Catone, 93-- 085' -C2: Page. 53 NVS, which was based on an understanding that Catone's official action and judgment would be influenced thereby. Such solicitation. by Catone was specifically linked to his position in the Governor's Office.and his ability through that office to take various- actions and make various connections' for the benefit of NVS... Cat implicated himself through his own written word in his communications to the Hutchesons at NVS. A central theme in these: letters from Catone to the Hutchesons is his solicitation of a monthly salary for himself from NVS. The solicitations made by Catone to the Hutchesons took different approaches: the good that he; could do for NVS and the Hutchesons based upon his Commonwealth position, influence' and access; his alleged sacrifice of other employment both in the Executive and Judicial Branch frr considerably higher salaries; the investors that he could attract due to his position and contacts in the Governor's Office; his ability to come and go and use the various Commonwealth office equipment and facilities at no expense to NVS; the other appointments that he received while serving in the Governor's Office; and his ability to do NVS business during the normal business time in the Governor's Office. Catone's feeble attempts to explain away his written word by asserting that it does not mean what it clearly states or that it is an "embellishment" does nothing more than accentuate Catone "s total. lack of credibility. Catone's actions in this case reduce to a.blatant, intentional solicitation of money from the Hutchesons of NVS in return for Catone's official action and judgment in his position as a Deputy Special Assistant to the Governor on behalf of NVS. Catone violated Section 3(c) of Act 9 of 1989 when he solicited something of monetary value in return for the exercise of his official action and judgment in an effort to obtain contracts for NVS, a business with which he, as president, was associated. 65 P.S. 402. Our decision as to the Section 3(c) violation is in accord with our prior precedent in Yezzi, Order 825, affirmed, Yezzi v. State Ethics Commission, Opinion filed. in Commonwealth Court at 693 C.D. 1992 on December 15,. 1992, allocatur denied in the Pennsylvania Supreme Court on July 15, 1993 at 10 W.D. Allacatur Dn_cke.t. 199.3; see also, Helsel, Order No. 801. This has the express statutory authority to refer cases to, law enforcement officials. 65 P.S. §408(a). Given tie.. egregious nature of Catone's actions, this case demands such a referral. A, pub:tic- official /employee's private interests must yield to: the publ'.i.cc in ezast Crisci, Opinion. 726. But the public interest meant" no xhinp toD Cattme.... To him, public office was solely and entirsry a. vehi'c, tto pursue his own financial gain. Catone, 93- 085 -C2 Page 54 The evidence in this case reveals the .vort of grasping self- dealing -- at the public's expense -- whirl# the Ethics :Law , was designed to prevent. We have used the full measure flf this Commission's powers to denounce Catone's conduct, yet we find that the mandate •o'f the Ethics Law requires more Accordingly,, we shall refer this matter to` the appropriate law enforcement authority for review and appropriate action as to a criminal prosecution against Catone. IV . CONCLUSIONS O F LAW 2. 3. 4. 1» John Catone, as the Deputy Special - Assistant to the Governor. was a public official and public employee subject to the provisions of Act 9 of 1989. , Catone violated Section 3(a) of Act 9 of 1989 when he utilized Commonwealth equipment for personal purposes. Catone violated Section 3(a) of Act 9 of 198 When he performed private work for NVS while on Commonwealth time.. information from his public position business interests in that the record use of confidential information. Catone did not violate Section 3(a) of the allegation that he attempted Act 9 of 1989 regarding to use confidential to further his private does not establish. Amy 5. Catone violated Section 3(c) of Act 9 of 1989 when he solicited something of monetary value from the e of 1WS in return for the exercise of his official action and judgment in an effort to obtain contracts for NVS. In Re: John D. Catone Catone violated Section 3(c) solicited something of monetary NVS in return for the exercise judbment in an effort to obtain • File Docket; 93- 085 -C2 Date Decided: 12/7/95 Date Mailed: 12/15/95 ORDER NO . 9 94 1. John. D. Catone, as the Deputy Special Assistant to the GovethOr, was a public official and public employee who violated. Section 3(a) of Act 9 of 1989 when he utilized Commonwealth' equipment for personal. purposes. �'. Catone. violated- Section 3(a) of Act 9 of 1989 when he performed private work for NVS while on Commonwealth time. 3. Catone' did not violate Section 3(a) of Act 9 of 1989 regarding the allegation that he attempted to use confidential information from his public position to further his private: business interests in that the record does not establisk any use of confidential information. of Act 9 of 19'89 Wien, hg value from the Hutcheson* og, of his official action and contracts for NVS. This matter will be referred to the appropria ]et. enfozcemont authority for review and appropriate action a * to a+ ctiminal prosecution against Catone. BY commiS$ION' DANEEN E. REESE,, CHAIM