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HomeMy WebLinkAbout04-536 BlackDavid D. Black, Esquire Richards & Associates, P.C. 100 State Street, Suite 440 Erie, PA 17108 -1470 Dear Mr. Black: ADVICE OF COUNSEL April 29, 2004 04 -536 Re: Conflict; Public Official /Employee; Third Class City; Treasurer; Fidelity Bond; Citizen's Offer to Issue Guarantee to Underwriter; Gift. This responds to your letter of March 30, 2004, by which you requested advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65 1a. =S. 1101 et sec)., presents any prohibition or restrictions upon a city treasurer as to accepting a citizen s offer to issue a guarantee to a surety company to induce that surety company to issue a treasurer's fidelity bond. Facts: You represent Christopher E. Maras ( "Maras "), the Treasurer for the City ooErie ( "City "), a City of the Third Class. You have been retained to assist Maras in obtaining a fidelity bond in accordance with the requirements of Section 36402 of the Third Class City Code, 53 P.S. § 35101 et seq. Maras is currently serving his first term as City Treasurer, having taken office on January 6, 2004. You state that as Treasurer, Maras function is purely ministerial; he collects and deposits tax revenue but has no power or influence upon how the taxes are spent. You state that the City Treasurer is statutorily required to obtain a fidelity bond in such amount as City Council may direct by ordinance. You further state that in the past, City employees have taken the steps necessary to obtain the bonds. Maras was sworn in believing incorrectly that the required bond had been obtained. When Maras realized that he lacked the required fidelity bond, he set about obtaining one, but ran into a number of obstacles. Recently, however, a prominent citizen offered to issue a guarantee to the underwriter. Given the offer of guarantee, several surety companies have now indicated their willingness to issue the required bond. Black/Maras, 04 -536 April 29, 2004 Page 2 You state that the prospective guarantor owns a business that has a services contract with the City. You further state that the contract pre- exists Maris' term in office and in no way involves the office of the City Treasurer. Given the foregoing facts, you ask whether Maras may accept the offered assistance, and if so, what disclosure Maras must make. Discussion: It is initially noted that pursuant to Sections 1107(10) and 1107 (11) of the Ethics Act, 65 Pa.C.S. §§ 1107(10), (11), advisories are issued to the requestor based upon the facts which the requestor has submitted. In issuing the advisory based upon the facts which the requestor has submitted, the Commission does not engage in an independent investigation of the facts, nor does it speculate as to facts which have not been submitted. It is the burden of the requestor to truthfully disclose all of the material facts relevant to the inquiry. 65 Pa.C.S. §§ 1107(10), (11). An advisory only affords a defense to the extent the requestor has truthfully disclosed all of the material facts. It is further initially noted that, pursuant to the same aforesaid Sections of the Ethics Act, an opinion /advice may be given only as to prospective (future) conduct. If the activity in question has already occurred, the Commission may not issue an opinion /advice but any person may then submit a signed and sworn complaint which will be investigated by the Commission if there are allegations of Ethics Act violations by a person who is subject to the Ethics Act. To the extent you have inquired as to conduct which has already occurred, such past conduct may not be addressed in the context of an advisory opinion. However, to the extent you have inquired as to future conduct, your inquiry may, and shall be addressed. As City Treasurer, Maras is a public official as that term is defined in the Ethics Act, and hence Maras is subject to the provisions of that Act. Section 1103(a) of the Ethics Act provides: § 1103. Restricted activities (a) Conflict of interest. - -No public official or public employee shall engage in conduct that constitutes a conflict of interest. 65 Pa.C.S. § 1103(a). The following terms are defined in the Ethics Act as follows: § 1102. Definitions "Conflict" or "conflict of interest." Use by a public official or public employee of the authority of his office or employment or any confidential information received through his holding public office or employment for the private pecuniary benefit of himself, a member of his immediate family or a business with which he or a member of his immediate family is associated. The term does not include an action having a de minimis economic impact or which affects to the same degree a class consisting of the general public or a subclass consisting of an industry, occupation or other group which includes the public official or public employee, a member of his immediate family or a business with which he or a member of his immediate family is associated. Black/Maras, 04 -536 April 29, 2004 Page 3 "Authority of office or employment." The actual power provided by law, the exercise of which is necessary to the performance of duties and responsibilities unique to a particular public office or position of public employment. "Gift." Anything which is received without consideration of equal or greater value. The term shall not include a political contribution otherwise reported as required by law or a commercially reasonable loan made in the ordinary course of business. 65 Pa.C.S. § 1102. In addition, Sections 1103(b) and 1103(c) of the Ethics Act provide in part that no person shall offer to a public official /employee anything of monetary value and no public official /employee shall solicit or accept anything of monetary value based upon the understanding that the vote, official action, or judgment of the public official /employee would be influenced thereby. Reference is made to these provisions of the law not to imply that there has been or will be any transgression thereof but merely to provide a complete response to the question presented. Section 1103(j) of the Ethics Act provides as follows: § 1103. Restricted activities (j) Voting conflict. - -Where voting conflicts are not otherwise addressed by the Constitution of Pennsylvania or by any law, rule, regulation, order or ordinance, the following procedure shall be employed. Any public official or public employee who in the discharge of his official duties would be required to vote on a matter that would result in a conflict of interest shall abstain from voting and, prior to the vote being taken, publicly announce and disclose the nature of his interest as a public record in a written memorandum filed with the person responsible for recording the minutes of the meeting at which the vote is taken, provided that whenever a governing body would be unable to take any action on a matter before it because the number of members of the body required to abstain from voting under the provisions of this section makes the majority or other legally required vote of approval unattainable, then such members shall be permitted to vote if disclosures are made as otherwise provided herein. In the case of a three - member governing body of a political subdivision, where one member has abstained from voting as a result of a conflict of interest and the remaining two members of the governing body have cast opposing votes, the member who has abstained shall be permitted to vote to break the tie vote if disclosure is made as otherwise provided herein. 65 Pa.C.S. § 1103(j). In each instance of a conflict, Section 1103(j) requires the public official/ employee to abstain and to publicly disclose the abstention and reasons for same, both orally and by filing a written memorandum to that effect with the person recording the minutes or supervisor. Black/Maras, 04 -536 April 29, 2004 Page 4 In the event that the required abstention results in the inability of the governmental body to take action because a majority is unattainable due to the abstention(s) from conflict under the Ethics Act, then voting is permissible provided the disclosure requirements noted above are followed. See, Pavlovic, Opinion 02 -005. In applying the above provisions of the Ethics Act to the instant matter, pursuant to Section 1103(a) of the Ethics Act, a public official /public employee is prohibited from using the authority of public office /employment or confidential information received by holding such a public position for the private pecuniary benefit of the public official/ public employee himself, any member of his immediate family, or a business with which he or a member of his immediate family is associated. In the instant case, you have not provided any particulars as to the offer of guarantee or the circumstances underlying said offer; therefore only the following general guidance may be given. If Maras would accept the citizen's offer to issue a guarantee to a surety company to induce that surety company to issue a treasurer's fidelity bond, such would constitute a "gift" under the Ethics Act. There is no per se prohibition under the Ethics Act as to the receipt of true, "no- strings- attached" gifts by a public official /employee. See, Cooper, Opinion No. 92 -009 (Citing Wolfgang, Opinion No. 89 -028). Of course, aiff or gifts valued in the aggregate at $250 or more must be disclosed on the Statement of Financial Interests, pursuant to Section 1105(b)(6) of the Ethics Act. 65 Pa.C.S. §1105(b)(6). Such disclosure must include the name and address of the source, the amount of the gift or gifts, and the circumstances of each gift. Gifts which do not meet the aggregate threshold of $250 need not be disclosed. As for the question of conflict of interest, there have been various cases before this Commission where the Commission has found violations based upon particular facts where public officials have accepted gifts from vendors or individuals and acted upon matters which the donors had pending loefore the governmental body. In Sickles, Order No. 901, the State Ethics Commission held that a school district Food Service Director violated Section 3(a) of the Ethics Law, Act 9 of 1989, when she used the authority of her position as Food Service Director to select and place orders with a particular vendor who offered "premium points" - that could be used to receive gifts - and then used the premium points for a wicker furniture set for herself rather than for a credit to the district's account. In Helsel, Order No. 801, the State Ethics Commission held that a School Director violated Section 3(a) of the State Ethics Act (Act 170 of 1978) by using public office to obtain a financial gain for himself and members of his immediate family by supporting or voting for vendors as to school district contracts in return for gifts or gratuities. The Commission further held that Helsel violated Section 3(b) of the Ethics Act by soliciting or receiving gifts or gratuities of value from vendors who held school district contracts based upon the understanding that his vote, official action or judgment would be influenced thereby. In Volpe, Order No. 579 -R and Smith, Order No. 578 -R, township supervisors were found to have violated Section 3(a) (now Section 1103(a)) of the Ethics Act by using office to obtain an all expense paid trip to Europe for two weeks for themselves and various family members from a developer who had matters pending before the township. Volpe and Smith were also found to have violated Section 3(b) (now Section 1103(b)) of the Ethics Act in that they received the trip to Europe based upon the understanding that it would influence their action as township supervisors relative to matters that were pending before the township by the developer. In Montemayor, Order No. 574, one of the other township supervisors who did not accept the trip to Europe but who did travel to New York City with the same developer, did not violate Section 3(a) (now Section 1103(a) where he paid for his own share of the travel expenses and lodging but did accept opera tickets from the developer (valued at $13 each). However, Black/Maras, 04 -536 April 29, 2004 Page 5 the Commission noted that the fact that the supervisor traveled with the developer who had been actively seeking township action on various proposals, and the fact that he accepted opera tickets from that developer, created the "appearance" of a conflict of interest (Note: The current Ethics Act has no basis for finding "appearances" of conflicts). In Feller, Order No. 576 -R, a township manager was found not to have violated either Section 3(a) or Section 3(b) (now Sections 1103(a) and 1103(b)) by accepting free chlorine for his private swimming pool from the owner of a corporation which had contracts with the township, where there was insufficient evidence to establish the use of public office or acceptance of anything of value to influence his official action relative to the receipt of the chlorine. A technical violation of Section 3(a) (now Section 1103(a)) was found as to Feller's acceptance and use of free tickets for sporting events from a cable television corporation which had a contract with the township. No violation was found as to the acceptance of blankets, vice grips, and flasks from the cable company which were turned over to the Pennsylvania Association of First Class Township Commissioners. In a related case, Zollo, Order No. 577, a township supervisor did not violate Section 3(a) or 3(b) (now S 1103(a) and 1103(b)) where he received a thirty -five pound container of swimming pool chlorine from the township manager (Feller) who had received it from the aforesaid owner of the chemical company, or where he accepted three sets of free tickets from the cable corporation two years after the contract was awarded and before any rate increase request was submitted. In that case, Zollo offered to pay Feller for the chlorine; did not personally use the tickets but passed them on to others; and further denied that his acceptance of said tickets or of the chlorine affected any township decisions that he made. Finally, in Greevy, Advice 90 -564, it was determined that Section 3(a) of the Ethics Law would not restrict or prohibit a solicitor from entertaining township supervisors and township employees at a breakfast where the solicitor was deemed to be making a gift to the supervisors and employees. However, that Advice was expressly conditioned upon the assumption that there were no understandings as to the solicitor's entertainment of these people with periodic breakfasts in exchange for his retention as solicitor, which agreements would transgress Sections 3(b) and 3(c) (now Sections 1103(b) and 1103(c)) of the Ethics Law. The analysis of Greevy, was based upon the Commission's decision in Confidential Opinion, 89 -029. The decision as to whether a conflict of interest is presented by the receipt of a gift is determined on a case -by -case basis. Given that there are insufficient facts, a determination cannot be made as to whether Maras would have a conflict of interest assuming he would use the authority of office or confidential information in matter(s) related to the donor. Thus, although the Ethics Act would not preclude Maras from accepting the aforementioned gift, he may, depending upon additional facts, have a conflict of interest in matters involving the donor. Where a conflict of interest would exist, Maras would be required to abstain from participation and to satisfy the disclosure requirements of Section 1103(j) as set forth above. In addition, as noted above, as per Section 1105(b)(6), Maras would be required to make full disclosure as to any gift or gifts valued in the aggregate of $250 or more. The propriety of the proposed conduct has only been addressed under the Ethics Act; the applicability of any other statute, code, ordinance, regulation or other code of conduct other than the Ethics Act has not been considered in that they do not involve an interpretation of the Ethics Act. Conclusion: As Treasurer for the City of Erie ( "City "), Christopher E. Maras (Maras "), is a public official subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq. If Maras would accept the citizen's offer to issue a guarantee to a surety company to induce that surety Black/Maras, 04 -536 April 29, 2004 Page 6 company to issue a treasurer's fidelity bond, such would constitute a "gift" under the Ethics Act. A gift or gifts valued in the aggregate at $250 or more must be disclosed on the Statement of Financial Interests, pursuant to Section 1105(b)(6) of the Ethics Act. 65 Pa.C.S. §1105(b)(6). Such disclosure must include the name and address of the source, the amount of the gift or gifts, and the circumstances of each gift. Gifts which do not meet the aggregate threshold of $250 need not be disclosed. The acceptance of a gift may potentially form the basis for a conflict of interest in matters pertaining to the donor which would come before Maras in his capacity as a public official. The decision as to whether a conflict of interest is presented by the receipt of a gift is determined on a case -by -case basis. Given that there are insufficient facts, a determination cannot be made as to whether Maras would have a conflict of interest assuming he would use the authority of office or confidential information in matter(s) related to the donor. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. Pursuant to Section 1107(11), an Advice is a complete defense in any enforcement proceeding initiated by the Commission, and evidence of good faith conduct in any other civil or criminal proceeding, provided the requestor has disclosed truthfully all the material facts and committed the acts complained of in reliance on the Advice given. This letter is a public record and will be made available as such. Finally, if you disagree with this Advice or if you have any reason to challenge same, you may appeal the Advice to the full Commission. A personal appearance before the Commission will be scheduled and a formal Opinion will be issued by the Commission. Any such appeal must be in writing and must be actually received at the Commission within thirty (30) days of the date of this Advice pursuant to 51 Pa. Code § 13.2(h). The appeal may be received at the Commission by hand delivery, United States mail, delivery service, or by FAX transmission (717-787-0806). Failure to file such an appeal at the Commission within thirty (30) days may result in the dismissal of the appeal. Sincerely, Vincent J. Dopko Chief Counsel