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HomeMy WebLinkAbout1339 NaderIn Re: Ray Nader File Docket: X -ref: Date Decided: Date Mailed: Before: Louis W. Fryman, Chair John J. Bolger, Vice Chair Donald M. McCurdy Paul M. Henry Raquel K. Bergen 03 -042 Order No. 1339 9/20/04 10/1/04 This is a final adjudication of the State Ethics Commission. Procedurally, the Investigative Division of the State Ethics Commission conducted an investigation regarding a possible violation of the Public Official and Employee Ethics Act, Act 9 of 1989, P.L. 26, 65 P.S. § 401 et seq., as codified by Act 93 of 1998, Chapter 11, 65 Pa.C.S. § 1101 et seq., by the above -named Respondent. At the commencement of its investigation, the Investigative Division served upon Respondent written notice of the specific allegation(s). Upon completion of its investigation, the Investigative Division issued and served upon Respondent a Findings Report identified as an "Investigative Complaint." An Answer was filed and a hearing was waived. The record is complete. A Consent Agreement and Stipulation of Findings were submitted by the parties to the Commission for consideration. The Stipulation of Findings is quoted as the Findings in this Order. The Consent Agreement was subsequently approved. Effective December 15, 1998, Act 9 of 1989 was repealed and replaced by Chapter 11 of Act 93 of 1998, 65 Pa.C.S. § 1101 et seq., which essentially repeats Act 9 of 1989 and provides for the completion of pending matters under Act 93 of 1998. This adjudication of the State Ethics Commission is issued under Act 93 of 1998 and will be made available as a public document thirty days after the mailing date noted above. However, reconsideration may be requested. Any reconsideration request must be received at this Commission within thirty days of the mailing date and must include a detailed explanation of the reasons as to why reconsideration should be granted in conformity with 51 Pa. Code § 21.29(b). A request for reconsideration will not affect the finality of this adjudication but will defer its public release pending action on the request by the Commission. The files in this case will remain confidential in accordance with Chapter 11 of Act 93 of 1998. Any person who violates confidentiality of the Ethics Act is guilty of a misdemeanor subject to a fine of not more than $1,000 or imprisonment for not more than one year. Confidentiality does not preclude discussing this case with an attorney at law. Nader, 03 -042 Page 2 I. ALLEGATION: That you, Ray Nader, a public official /public employee in your capacity as a Supervisor for Greenwood Township, Crawford County, violated Sections 1103(a) and 1103(f) of the Public Official and Employee Ethics Law (65 Pa.C.S. §1101 et seq.) when a business with which you are associated, Nader's Concrete Leveling Company and Nader Farm, entered into contracts with the township in excess of $500 without an open and public process; when you participated in discussion of the board resulting in Nader's Concrete Leveling being selected; and when you participated in the approval of payments issued to Nader's Concrete Leveling and Nader's Farm. II. FINDINGS: 1. Raymond P. Nader served as a Supervisor for Greenwood Township, Crawford County from January 1998 through December 2003. a. Nader served as the Superintendent of Roads from 1998 through 2003. b. Nader has served as the Roadmaster from November 1, 2001 through the present. 2. At their annual reorganization meetings, the supervisors appoint a member of the board to serve as the superintendent of roads. a. The superintendent of roads serves as a liaison between the road department and the board of supervisors. b. The superintendent of roads is not a compensated position with the township. 3. From at least January 1998 through October 2001, the supervisors appointed a non - supervisor employee to serve as roadmaster and oversee the road department. a. The road department consisted of the roadmaster and one or two other employees. b. None of the supervisors served as full -time employees for the township during this period. 1. The supervisors were authorized to work on an as- needed basis for the township typically in the winter months plowing snow. 4. Effective November 2001, Nader was appointed as the roadmaster for the township to replace John Shilling, who resigned in August 2001. a. The board reappointed Nader as roadmaster in January 2004. b. Nader served as roadmaster and superintendent of roads until December 2003 when his term on the board expired. 5. Greenwood Township is a second -class township governed by a three - member board of supervisors. a. The board typically holds one regularly scheduled public meeting per month. 6. The township does not have an administrative building or office. a. A part -time township secretary works from her home. Nader, 03 -042 Page 3 b. Bills and invoices for the township are typically sent to the township secretary at her home. c. The secretary prepares a bill list of all bills received from the date of the last supervisors meeting to present to the supervisors at their meetings. d. All invoices are pre- approved for payment by the supervisors. 7 The supervisors vote to pay outstanding bills at their regular public meetings. a. A bill list is voted on in its entirety. b. Motions and seconds are recorded but individual votes are not noted. c. Abstentions and negative votes are noted in the meeting minutes when they occur. 8. All three of the supervisors and the secretary have signature authority on township financial accounts. a. Township checks require the signatures of the secretary and any two supervisors. 9. While serving as a Supervisor for Greenwood Township, Nader has operated private businesses including Nader's Concrete Leveling and Nader's Farm. a. These entities have performed services for Greenwood Township following Nader's election to the board of supervisors. b. Prior to Nader's service on the board of supervisors, neither company did work for the township. 10. Nader was the President of Nader's Concrete Leveling, Inc. from March 1997 until 2000. a. The company specialized in concrete restoration and repair. b. This company was incorporated on March 24, 1997. c. Nader's son, Joseph, was the vice - president and co -owner of the business. d. This company was sold to Technical Construction Specialties, based in Akron, OH, in late 2000. 11. Nader served as a laborer and mechanic for Nader's Concrete Leveling. a. His son, Joseph Nader, was responsible for preparing estimates, bids, billings, and labor. b. Nader's wife, Patricia Nader, did bookkeeping for the company. c. Nader and Joseph Nader each received a salary of approximately $600.00 per week from the business. 12. Nader's Concrete Leveling typically based its prices on a time and material basis as follows: a. Labor Rate: $30.00 per Hour b. Concrete Pump Charge: $85.00 per Hour (Actual Time of Use) Nader, 03 -042 Page 4 c. Average Mark -up: 20% 1. Mark -up would vary based on size and location of job. 13. In or about the spring of 2000, the board discovered that water run -off was eroding the soil near a bridge abutment on Scott Road located in the Township. a. The road department made several unsuccessful attempts to correct the erosion problem. 14. During a road inspection in the Spring of 2000 the board of supervisors discussed possible remedies to the erosion. a. All three supervisors, the roadmaster, and the secretary were present for the road inspection. b. Nader suggested at this time that his company could solve the erosion problem. c. The supervisors verbally approved Nader to do the repair. 15. In August 2000, Nader's Concrete Leveling installed an erosion control mat on Scott Road where the problem was occurring. a. An erosion control mat is a nylon bag filled with concrete placed around a bridge abutment to control erosion. 16. There was no official action of the board of supervisors to approve Nader's Concrete Leveling to install the erosion control mat. a. As the road superintendent and supervisor, Nader was involved in discussions and the decision for his company to install the erosion control mat. b. The installation of the erosion control mat was not publicly advertised or bid. 17. Nader submitted an invoice to the township that outlined the following work completed by Nader's Concrete Leveling: Invoice Date: August 29, 2000 Monday August 28, 2000- 1 Man 4 Hours Total Tuesday August 29, 2000- 2 Men 10 Hours Total Description: Erosion control mat and bag on Scott Road. Prep site, 7 yards of grout, materials, labor, and pump charge. Amount: $1,476.00 18. The work completed by Nader's Concrete Leveling totaling $1,476.00 included the following costs that were not delineated on the invoice: a. Cost of nylon mat and bag: $342.60 b. Cost of concrete (grout): $530.54 c. Cost of Portland cement: $12.86 Nader, 03 -042 Page 5 d. Pump Charge: $170.00 ($85.00 /Hr X 2 Hrs) e. Labor: $420.00 (14 Hrs at $30.00 /Hr) f. Total: $1,476.00 g. Total without materials: $590.00 19. The Nader's did not charge the township the 20% average profit to the bill. a. The mark -up would have been $295.20 ($1,476.00 x 20 %). b. The total costs for labor and the pump were the same as charged to other customers. 20. Nader provided labor on this project on Tuesday, August 29, 2000. a. Nader worked for a total of five (5) hours on that date. b. Nader did not work on this project on Monday, August 28, 2000. c. The charge to the Township for the cost of Nader's labor on this project totaled $150.00 (5 Hours at $30.00 per Hour). 21. The Township issued check no. 946 to Nader's Concrete Leveling, Inc. in the amount of $1,476.00 dated September 5, 2000 for the installation of the erosion control mat. a. Nader voted in favor of issuing check no. 946 to Nader's Concrete Leveling at the September 5, 2000 board meeting. 1. The board vote was unanimous. b. Nader signed check no. 946 as an authorized signer of the Township. c. Nader did not publicly disclose that he was a principal owner of Nader's Concrete Leveling. 1. Nader's affiliation with the concrete leveling business was common knowledge among township officials, employees, and the public. 22. Nader has owned a farm known as Nader's Farm since at least 1980. a. Nader operated the farm from his residence at 2286 Lake Road, Cochranton, PA. b. Nader primarily grew grain on the farm. c. The farm is currently non - operational. 23. In or around August 2000, the Township decided to replace its brine tanks located at the township maintenance buildings. a. The existing tanks at that time were leaking. b. Nader advised the Supervisors that he had two 5000 - gallon tanks that he would sell to the Township that could be used to replace the existing brine tanks. Nader, 03 -042 Page 6 1. Nader owned the tanks as a result of a liquid fertilizer delivery business that he operated from the mid -1980s until the mid- 1990s. 24. At the August 7, 2000 board of supervisors' meeting, the supervisors voted to purchase the tanks from Nader. The meeting minutes reflect the following regarding the purchase of the tanks: "Cecil (Stevenson) explained the salt brine tanks were leaking and Ray (Nader) had tanks, Cecil and Ron (Wood) went down to look at the tanks, they would work for our needs. Ron made a motion to purchase the two tanks at $1,000.00 each, Cecil Seconded, motion carried with Ray abstaining." a. The motion passed by a 2 -0 vote with Nader abstaining. b. The purchase of the tanks was not publicly advertised or bid. c. No other price quotes were received for the purchase of the tanks. 25. Nader submitted an invoice to the Township dated August 2000 for a total of $2,000.00 for the tanks. a. The invoice incorrectly listed the tanks as being 1,000 - gallon tanks rather than 5,000 - gallon tanks. 26. In a Sworn Statement provided to the Investigative Division of the State Ethics Commission, Nader claimed that he did not base the price of the tanks on their worth but rather on giving the Township a fair price. a. Nader could not provide a specific value of the tanks sold to the Township. 27. The Township issued check no. 952 to Nader's Farm in the amount of $2,000.00 dated September 5, 2000 for the purchase of the tanks. a. Nader voted in favor of issuing check no. 952 to Nader's Farm at the September 5, 2000 board meeting. b. Nader signed check no. 952 as an authorized signer of the Township. c. Nader did not publicly disclose that he was the owner of Nader's Farm at the time of this vote. 1. It is common knowledge in the community that Ray Nader is the owner of Nader Farms. 28. Nader's Concrete Leveling and Nader's Farm, businesses owned by Nader, received a private pecuniary gain of $2,590.00 when Nader participated in discussions and actions of the board of supervisors, resulting in contracts being awarded without an open and public process and payments being made to those businesses. a. Nader's Concrete Leveling: $ 590.00 b. Nader's Farm: $ 2,000.00 c. Total: $ 2,590.00 III. DISCUSSION: Nader, 03 -042 Page 7 At all times relevant to this matter, the Respondent, Ray Nader, hereinafter Nader, has been a public official subject to the provisions of the Public Official and Employee Ethics Law, Act 9 of 1989, Pamphlet Law 26, 65 P.S. § 401, et seq., as codified by the Public Official and Employee Ethics Act, Act 93 of 1998, Chapter 11, 65 Pa.C.S. § 1101 et seq., which Acts are referred to herein as the "Ethics Act." The allegations are that Nader, as a Supervisor for Greenwood Township, Crawford County, violated Sections 1103(a) and 1103(f) of the Ethics Act when businesses with which he is associated, Nader's Concrete Leveling Company and Nader Farm, entered into contracts with the township in excess of $500 without an open and public process; when he participated in discussions of the board to select Nader's Concrete Leveling, and participated in the approval of payments to Nader's Concrete Leveling and Nader's Farm. Pursuant to Section 1103(a) of the Ethics Act, a public official /public employee is prohibited from engaging in conduct that constitutes a conflict of interest. The term "conflict of interest" is defined under Act 9 of 1989/Act 93 of 1998 as follows: Section 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. "Conflict" or "conflict of interest" 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. 65 Pa.C.S. § 1102. Section 1103(a) of the Ethics Act prohibits a public official /public employee from using the authority of public office /employment or confidential information received by holding such a public position for the private pecuniary benefit of the public official /public employee himself, any member of his immediate family, or a business with which he or a member of his immediate family is associated. Section 1103(f) of the Ethics Act imposes certain restrictions as to contracting. Section 1103(f) of the Ethics Act provides: Section 1103. Restricted activities (f) No public official or public employee or his spouse or child or any business in which the person or his spouse or child is associated shall enter into any contract valued at $500 or more with the governmental body with which the public official or public employee is associated or any subcontract valued at $500 or more with any person who has been awarded a contract with the governmental body with Nader, 03 -042 Page 8 which the public official or public employee is associated, unless the contract has been awarded through an open and public process, including prior public notice and subsequent public disclosure of all proposals considered and contracts awarded. In such a case, the public official or public employee shall not have any supervisory or overall responsibility for the implementation or administration of the contract. Any contract or subcontract made in violation of this subsection shall be voidable by a court of competent jurisdiction if the suit is commenced within 90 days of the making of the contract or subcontract. 65 Pa. C. S. § 1103(f). Section 1103(f) of the Ethics Act provides in part that no public official /public employee or spouse or child or business with which he or the spouse or child is associated may enter into a contract with his governmental body valued at five hundred dollars or more or any subcontract valued at five hundred dollars or more with any person who has been awarded a contract with the governmental body with which the public official /public employee is associated unless the contract is awarded through an open and public process including prior public notice and subsequent public disclosure. As noted above, the parties have submitted a Consent Agreement and Stipulation of Findings. The parties' Stipulated Findings are reproduced above as the Findings of this Commission. We shall now summarize the relevant facts as contained therein. Nader served on the three - member board of supervisors in Greenwood Township, Crawford County, from January of 1998 through December of 2003. Nader also served as superintendent of the roads, an uncompensated position, and as roadmaster. In a private capacity, Nader operates private businesses, Nader's Concrete Leveling and Nader's Farm. Neither of Nader's companies did work for the township until after he was elected to the board of supervisors. Since the township does not have an administrative building or office, the part -time township secretary works out of her home. The supervisors vote to pay outstanding bills at a public meeting on a bills list which is voted on in its entirety. Township checks require the signature of the secretary and any two supervisors. In early 2000, the board of supervisors had to correct a water runoff /erosion problem near a bridge abutment. After the road department made several unsuccessful attempts to fix the problem, the supervisors did an inspection of the site. Nader at that time suggested that his private company could solve the erosion problem and the supervisors verbally approved Nader to do the repair. In August of 2000, Nader's Concrete Leveling installed an "erosion control mat" at the site of the bridge abutment to control the erosion. Nader then submitted an invoice to the township in the amount of $1,476.00 for the project, the details of which appear in Fact Finding 17. There were other costs relative to the project which were not delineated in the invoice. See, Fact Finding 18. Although Nader did not charge the township the 20% average profit per bill, the total costs for labor and a pump were at regular prices. Parenthetically, the cost to the township for Nader's labor on the particular project was five hours of work at $30.00 per hour or $150.00. When the township issued a check in payment, Nader participated in the unanimous vote of the board. Nader, in addition, co- signed the township check payable to Nader's Concrete Leveling, Inc. Nader, 03 -042 Page 9 In a separate matter in August of 2002, when the township decided to replace its leaking brine tanks, Nader advised the board that he had two 5,000 gallon tanks that he could sell to the township to replace the existing brine tanks at a price of $1,000 per tank. On August 7, 2002, at a board meeting, the supervisors voted to purchase the tanks from Nader which passed on a 2 -0 vote with Nader abstaining. Nader voted in favor of issuing a check to Nader's Farm in the amount of $2,000 for the purchase of the tanks and also co- signed the township check. Having highlighted the Stipulated Findings and issues before us, we shall now apply the Ethics Act to determine the proper disposition of this case. The parties' Consent Agreement sets forth a proposed resolution of the allegations. The Consent Agreement proposes that this Commission find: "a. That an untintentional [sic] violation of Section 1103(a) occurred when Nader participated in discussions and approval of payments issued to businesses with which he was associated. b. By agreement of the parties, all charges related to Section 1103(f) are dismissed." In addition, Nader agrees to pay $420.00 to the Commonwealth of Pennsylvania through this Commission within 30 days of the issuance if this order. As to Section 1103(f) of the Ethics Act, the charges have been dismissed. Since as part of the Consent Agreement process, the Investigative Division has the prosecutorial discretion to non -pros charges, we recognize that and hence need not address that charge which is no longer before us. Turning to the Section 1103(a) allegation, there were uses of authority of office on the part of Nader. But for the fact that Nader was a supervisor, he would not have been in a position to suggest to the other two supervisors to use Nader's Concrete Leveling as to the erosion problem and Nader's Farm as to selling the two tanks to replace the township's leaking brine tanks. In addition, Nader participated as to the issuance of checks for the transactions with Nader's Concrete Leveling and Nader's Farm and also signed township checks in payment as to both matters. Such actions were uses of authority of office. See, Juliante, Order 809. The uses of authority of office resulted in private pecuniary benefits consisting of the profits that Nader's companies made on these transactions. Lastly, the private pecuniary benefits inured to businesses with which Nader is associated as that term is defined under the Ethics Act. Accordingly, Nader unintentionally violated Section 1103(a) of the Ethics Act when he participated in discussions and the approval of payments to businesses with which he was associated as to transactions between those businesses and the township. See, Luzier, Order 1300. We determine that the Consent Agreement submitted by the parties sets forth the proper disposition for this case, based upon our review as reflected in the above analysis and the totality of the facts and circumstances. Accordingly, Nader is directed to pay $420.00 to the Commonwealth of Pennsylvania through this Commission within 30 days of the mailing date of this order. Compliance with the foregoing will result in the closing of this case with no further action by this Commission. Noncompliance will result in the institution of an order enforcement action. IV. CONCLUSIONS OF LAW: 1. Nader, as a Greenwood Township Supervisor, is a public official subject to the provisions of Act 9 of 1989 as codified by Act 93 of 1998. Nader, 03 -042 Page 10 2. Nader unintentionally violated Section 1103(a) of the Ethics Act when he participated in discussions and the approval of payments to businesses with which he was associated as to transactions between those businesses and the township. In Re: Ray Nader ORDER NO. 1339 File Docket: 03 -042 Date Decided: 9/20/04 Date Mailed: 10/1/04 1 Nader, as a Greenwood Township Supervisor, unintentionally violated Section 1103(a) of the Ethics Act when he participated in discussions and the approval of payments to businesses with which he was associated as to transactions between those businesses and the township. 2. Per the Consent Agreement of the parties, Nader is directed to pay $420.00 to the Commonwealth of Pennsylvania through this Commission within 30 days of the mailing date of this order. a. Compliance with the foregoing will result in the closing of this case with no further action by this Commission. b. Non - compliance will result in the institution of an order enforcement action. BY THE COMMISSION, Louis W. Fryman, Chair